Piper Report
Blog on Medicare, Medicaid, health reform, and more. Insights and resources on hot issues. Kip Piper, editor.
Healthcare consultant, speaker, and writer. Expert on Medicare, Medicaid, health reform, and pharma, biotech, and medical technology industries. President, Health Results Group LLC. Senior advisor to Sellers Dorsey, TogoRun, and Fleishman-Hillard. Visit KipPiper.com. Or email Kip here.
Cartoon

American Flag

Medicare
posted: December 10, 2010

Medicare Payment Primers for 2010.jpgThe federal Medicare program has an array of complex payment policies for health care providers, health plans, and prescription drug plans. Fortunately, the outstanding staff at the Medicare Payment Advisory Commission (MedPAC) offer a series of crisp primers on Medicare reimbursement policy. MedPAC updates these annually to reflect changes in CMS payment rules and Congressional legislation.


Medicare Hospital Payment Policies:


  • Inpatient Hospital Payment (Inpatient Prospective Payment System or IPPS)

  • Outpatient Hospital Services Payment (Outpatient Prospective Payment System)

  • Critical Access Hospital (CAH) Payment

  • Psychiatric Hospital Services Payment

  • Medicare Post-Acute Provider Payment Policies:


  • Skilled Nursing Facility (SNF) Payment (SNF Prospective Payment)

  • Home Health Care Services Payment (Home Health Agency Prospective Payment)

  • Inpatient Rehabilitation Facility Payment

  • Long-Term Care Hospital (LTCH) Payment

  • Hospice Services Payment

  • Medicare Payment Policies for Physicians and Other Ambulatory Providers:


  • Physician Services Payment System

  • Ambulatory Surgical Centers (ASCs) Payment

  • Outpatient Dialysis Services Payment (including new fully bundled payment method)

  • Medicare Health Plans and Prescription Drug Plan Payment Policies:


  • Medicare Advantage Plan Payment (Medicare Part C)

  • Medicare Prescription Drug Plan Payment (PDPs and MA-PDs in Medicare Part D)

  • Medicare Payment Policies for Other Providers, Labs, Medical Equipment, and Supplies:


  • Durable Medical Equipment (DME) Reimbursement

  • Clinical Laboratory Services Reimbursement

  • Outpatient Therapy Payment

  • Oxygen and Oxygen Equipment Payment

  • posted: September 8, 2010

    Thumbnail image for ACO Primer by Kip Piper.jpgThe Accountable Care Organization (ACO) model is a new Medicare option for physicians, hospitals, and other providers to share in cost-savings. ACOs represent a dramatic change in Medicare policy and an opportunity to transform care delivery and provider alignment.


    The Medicare Gain Sharing Program, part of the newly enacted healthcare reform law, creates the option for healthcare providers to form ACOs. Through an ACO, providers will take responsibility for quality and overall care of their Medicare patients. Medicare will
    then share with ACO providers the savings from improved quality, fewer hospitalizations, and the elimination of unnecessary costs.


    Starting in 2012, the ACO model will be a nationwide option in Medicare fee-for-service (FFS). In addition to shared savings, the ACO option includes freedom of choice for Medicare beneficiaries, national quality measures, evidence-based medicine, patient-centered care delivery, advanced care coordination, and information sharing.


    Because the ACO model is designed to break down old barriers for providers to work together to improve care and reduce medical costs, state Medicaid programs and private health insurers will likely join Medicare in supporting the ACO model. Medicare may give preference to ACOs that are participating in similar arrangements with Medicaid, private payers, and other third parties - that is, multi-payor ACOs.


    Specifically, Section 1899 of the Social Security Act governs the new Medicare Shared Savings Program and the option for providers to form ACOs. The law was created by Section 3022 of the Patient Protection and Affordable Care Act of 2010 (PPACA). The Centers for Medicare and Medicaid Services (CMS) must implement the ACO option no later than January 1, 2012. CMS plans to release proposed rules by late 2010.


    To learn more about Accounable Care Organizations, please read my primer article on ACOs in the journal American Health & Drug Benefits.

    posted: September 1, 2010

    Piggy bank with stethoscope.jpgUnder the Patient Protection and Affordable Care Act (PPACA) of 2010, Medicare providers, including physician groups and hospitals, will soon have the option to form Accountable Care Organizations (ACOs) to improve quality and efficiency.


    ACO providers may share financial gains generated from improved clinical and economic performance, provided that quality goals and patient safeguards are met. Through future regulations, the Centers for Medicare and Medicaid Services (CMS) must implement the Medicaid ACO option no later than January 1, 2012. Proposed rules are expected by late 2010.


    In this interview, Dr. Mark B. McClellan, former CMS Administrator and FDA Commissioner, discusses the extraordinary implications of the new ACO option for improving patient care and reducing unnecessary costs.


    Mark is director of the Engelberg Center for Health Care Reform at the Brookings Institution, a influential think tank in Washington, DC. The Engelberg Center is engaged in several interesting projects.


    To read this interview in the journal American Health & Drug Benefits, click here (opens PDF).

    posted: July 27, 2010

    Primer on CER.jpgComparative Effectiveness Research holds extraordinary implications for healthcare stakeholders, notably the pharmaceutical, biotechnology, and medical technology industries; patients; physicians; hospitals; the federal Medicare program; state Medicaid programs; and health plans. In addition to guiding and hopefully improving day-to-day decisions by clinicians and patients, Comparative Effectiveness Research will be extraordinarily influential in coverage and reimbursement decisions.


    Here is a quick primer on the massive new Comparative Effectiveness Research program in the U.S., including major changes enacted in the new health reform law.


    Comparative Effectiveness Research Defined:


    Comparative Effectiveness Research (CER) means research evaluating and comparing health outcomes and the clinical effectiveness, risks, and benefits of two or more medical treatments, services, or items (e.g., drugs, biologics, devices).


    More specifically, this includes comparisons of:

    • Prescription drugs and biologics
    • Medical devices
    • Diagnostic tests and diagnostic tools
    • Surgical procedures
    • Protocols or guidelines for patient treatment
    • Care management practices
    • Prevention activities

    Conceptually, CER looks at medical interventions across the range of prognostic, preventive, diagnostic, therapeutic, rehabilitative, and palliative care. Health policy experts have increasingly proposed that CER should also assess the effectiveness of models or systems of health care delivery. Therefore, there is a degree of interaction and overlap between CER and health services research.


    CER studies may compare similar treatments - like comparing several drugs in a therapeutic class - or compare clinical effectiveness of different approaches, like comparing a drug and a surgical procedure for the treatment of the same condition.


    CER employs a variety of research methods, including randomized controlled trials, meta-analyses, and observational cohort analyses. In addition to conducting the clinical effectiveness and comparative effectiveness research itself, CER also involves building of the necessary infrastructure (data, research methods, staff, training, etc.). To meet the demands of CER, researchers are developing and testing new methodologies and data sources.


    To have any real value, the results of CER must be actionable, with findings effectively translated for and disseminated to the full range of decision makers.


    Challenges and Controversies in Comparative Effectiveness Research:


    The goal of CER is to increase our collective knowledge of what works and to improve decision making by physicians, patients, purchasers, and payors. However, by its very nature and because of the aggresive use of CER in the UK and other countries, CER raises many difficult or controversial questions. Here are a just a few examples:

    1. Should CER look only at clinical effectiveness, with eye to giving physicians and patients more information to guide their decisions?
    2. Should CER also look at cost effectiveness and cost-benefit analysis?
    3. Should CER influence or drive coverage and reimbursement decisions by Medicare and other government health programs?
    4. Who should set research priorities? How should research priorities be set? What are the research priorities?
    5. Since many studies look at large populations, how do we ensure research reflects special populations and doesn't unintentionally discriminate against sub-groups? For example, if a drug, device, or surgical procedure works best for 80% of patients, what about the other 20%?
    6. How should CER guide physician decision making or should government and payor policies be used to incent or require physicians and other providers to practice consistent with CER findings?

    In a new issue brief, Gene Rich, MD from Mathematica Policy Research and Elizabeth Docteur, MS from the Center for Studying Health System Change discuss key challenges to successful implementation of the large and ambitious federal CER program. They explain how resolution of these challenges "may prove critical to the future role of this research in U.S. health care."


    Comparative Effectiveness Research in Other Countries:


    Here is an interesting new comparison on the Use of Comparative Effectiveness Research in Drug Coverage and Pricing Decisions in Denmark, England, France, Germany, the Netherlands, and Sweden.


    Comparative Effectiveness Research Prior to 2009:


    In the U.S., federally sponsored Comparative Effectiveness Research has been conducted largely by the HHS Agency for Healthcare Research and Quality (AHRQ). The bulk of the AHRQ managed CER is conducted through university-based research centers under contract with AHRQ.


    Prior to 2009, the AHRQ Effective Health Care Program spent a modest $15-$30 million annually. The AHRQ Effective Health Care Program was established under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).


    AHRQ posts a wealth of reader-friendly information at www.effectivehealthcare.ahrq.gov.


    Expansion of Federal Comparative Effectiveness Research in 2009:


    In 2009, as part of the ARRA (Recovery Act), Congress appropriated $1.1 billion for comparative effectiveness research - $300 million for the Agency for Healthcare Research and Quality (AHRQ), $400 million for the National Institutes of Health, and $400 million for allocation at the discretion of the HHS Secretary.


    Congress created a Federal Coordinating Council through which various federal agency heads could set CER priorities. Under a federal contract, an Institute of Medicine (IOM) committee recommended 100 priorities for CER.


    HHS' latest status report on Recovery Act spending details how AHRQ, NIH, and the Secretary's office are using the $1.1 billion.


    Major Changes to Federal Comparative Effectiveness Research in Health Reform Law:


    In the new federal health reform law - Patient Protection and Affordable Care Act (PPACA) - Congress created several major changes to the federal Comparative Effectiveness Research program.


    Starting October 2010, a new Patient Centered Outcomes Research Institute (PCORI) will be responsible for overseeing the federal comparative effectiveness research program. PCORI will set the national CER agenda and conduct research through contracts with federal agencies and grants and contracts with universities and researchers.


    PCORI will operate as federally funded quasi-independent non-profit organization. The PCORI 19-member governing board will have 17 members appointed by Comptroller General of the US (head of the Government Accountability Office, an agency of Congress) plus directors AHRQ and NIH. The Comptroller General will designate the board chair and vice chair. Congress disbanded the Federal Coordinating Council for CER.


    Patient Centered Outcomes Research Institute has a a very broad mission in the law:

    Assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of medical treatments, services, and items.


    The actual research will be delegated by PCORI to AHRQ and NIH. AHRQ and NIH, in turn, will contract out work to universities and research centers.


    The Patient Centered Outcomes Research Institute will use a variety of expert panels. To help to ensure rigor of research methods, this includes a 15-member Methodology Committee appointed by the Comptroller General.


    By law, PCORI is required to use open, transparent processes for decision making and include peer review. Wide, fast dissemination of research finding is also required. AHRQ will be responsible for translation and dissemination of evidence from CER to patients, clinicians, and other decision makers.


    Expect to see federal officials, particularly the Obama Administration, using terms like "patient-centered research" instead of comparative effectiveness.


    Permanent Funding Stream for Comparative Effectiveness Research:


    PPACA, the health reform law, establishes a new, permanent funding stream for CER that, once fully implemented, will generate about $600 million annually for PCORI research priorities.


    Specifically, health plans and self-insured employers (via TPAs) must pay a new federal tax of $2 per person they insure, generating $300 million or more each year starting in FY 2013. Another $150 million will come annually from Medicare. Finally, Congress also appropriated $50 million in FY 2011 and $150 million annually from FY 2012 through FY 2019. In effect, PCORI will also have unused ARRA CER funding at its disposal.

    posted: June 30, 2010

    Medicare Data Book 2010.jpgMedPAC released its Medicare Data Book for 2010, with a wide range of useful information on Medicare spending, utilization, beneficiaries, providers, health plans, drug plans, access, and quality. The format is reader-friendly charts and tables with bulleted summaries.


    Specifically, the latest MedPAC Data Book includes information on:


  • Medicare spending, including Medicare spending compared to national health care spending.

  • Medicare beneficiary demographics.

  • Dual-eligible beneficiaries.

  • Medicare quality and access.

  • Medicare beneficiary cost sharing and other payer liability.

  • Medicare Part B drugs and biologics.

  • Medicare Advantage program, including Medicare Advantage plans, Special Needs Plans (SNPs), and enrollment figures.

  • Medicare Part D prescription drug program.

  • MedPAC also provides an array of charts and tables on Medicare providers and care settings, with data on Medicare spending, percent of beneficiaries using the service, number of providers, volume, length of stay, and, where available, profit margins, if
    applicable. Provider types covered include inpatient hospitals, outpatient hospitals, physicians, skilled nursing facilities, home health agencies, long-term care hospitals, inpatient rehabilitation facilities, ambulatory surgical centers, dialysis facilities, and hospice.


    MedPAC - the Medicare Payment Advisory Commission - advises Congress on Medicare policy.

    posted: May 4, 2010

    Health Reform Impact MA and PDP.jpgMedicare Advantage plans and Medicare Part D prescription drug plans face an extraordinary array of changes as a result of the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA). These include:


  • New payment benchmarks for Medicare Advantage (MA) plans, phased in and based on relative fee-for-service (FFS) costs.
  • Other payment related changes including bonuses for higher quality, minimum Medical Loss Ratio (MLR), and annual calculation of the MA coding intensity adjustment.
  • Benefit design changes, including changes to Part D drug coverage.
  • New requirements for MA Special Needs Plans (SNPs), including need for all SNPs to be NCQA accredited.

  • Following the legislation is tricky, since HCERA amends or replaces language Congress adopted a few days earlier in PPACA.


    Fortunately, Milliman actuaries Earl Whitney, Matt Chamblee, and Jian Yu just released an exceptionally clear and concise 7-page briefing paper on the PPACA and HCERA changes affecting Medicare Advantage plans and Medicare prescription drug plans (PDPs).


    Meanwhile, Troy Filipek and Brian Anderson, also from Milliman, have written an excellent summary of the changes made to the Part D drug benefit, including the closing of the coverage gap (donut hole) and elimination of federal tax deductibility of the retiree drug subsidy for employers. They nicely lay out the provisions and key implications.


    These two briefs may help to tide you over pending release of more detailed guidance and rule changes from CMS.

    posted: April 25, 2010

    AHDB Wellness.jpgCreating a wellness-based healthcare system is the focus on a new series of articles published by American Health and Drug Benefits, a peer reviewed journal. They cover a wide spectrum of topics on how to build and support prevention and wellness, particularly for chronic conditions. The ideas and information are particularly timely given the array of prevention and wellness initiatives in the Patient Protection and Affordable Care Act (PPACA):


    The 5 Eras of Healthcare Finance: Wellness as a Clinical Model by Thomas McCarter, MD, FACP; Farrah N. Daly, MD, MBA; and Keri Cooper


    Epidemiology and Impact of Chronic Diseases: The Promise of Prevention by Nirav R. Shah, MD, MPH


    Bending the Curve, Changing Provider Organization: Implications for Wellness-Based Healthcare by Lawton Robert Burns, PhD, MBA


    Wellness-Based Healthcare: Economic Incentives and Benefit Design by Gene Reeder, RPh, PhD


    Wellness-Based Healthcare Policy: Medicare, Medicaid, and Private Insurance by Kip Piper, MA, FACHE


    FDA Policies and Wellness-Based Healthcare: Approving and Paying for Prevention by Scott Gottlieb, MD


    The Diabetes Ten City Challenge: Value-Based Benefit Design for Wellness-Based Care by Toni Fera, BPharm, PharmD


    The Role of Wellness for Large Corporations: Trends and Models by Wayne M. Lednar, MD, PhD


    Employers and a Culture of Health by Alberto M. Colombi, MD, MPH


    Healthcare Reform: Impacts on Business by F. Randy Vogenberg, RPh, PhD


    Pharmaceutical R&D Strategy and the Transition to Personalized Healthcare Planning by Michael F. Murphy, MD, PhD


    The Role of Health Plans in Prevention and Wellness by Gary M. Owens, MD


    Patient Engagement: From Medication Adherence to Health and Wellness by James T. Kenney, Jr, RPh, MBA


    The Geisinger Model: Research Is a Core Asset by
    Nirav R. Shah, MD, MPH; J.B. Jones, PhD, MBA; and Walter F. Stewart, PhD, MPH


    Click here to read or download the above collection on Wellness-Based Healthcare System of Chronic Diseases: Prevention, Intervention, and Innovation (PDF).


    Kip Piper is health policy editor of American Health and Drug Benefits. The journal's 30,000 subscribers include decision makers in health plans, drug plans, Medicare, and Medicaid.

    posted: March 18, 2010

    MedPAC March 2010.jpgThe Medicare Payment Advisory Commission (MedPAC) has released its Medicare payment recommendations to Congress for 2011. In addition to specific recommendations for payment updates for fee-for-service providers and Medicare Advantage plans, MedPAC's report includes interesting information and analysis on spending trends, consequences of rapid spending on Medicare and the overall health care system, and the process of assessing payment adequacy.


    MedPACs informative, 381-page report includes detailed Medicare reimbursement recommendations for:

    • Inpatient hospital services (Inpatient Prospective Payment System or IPPS)
    • Outpatient hospital services (Outpatient Prospective Payment System or OPPS)
    • Physician services
    • Ambulatory surgical centers
    • Outpatient dialysis services
    • Hospice services
    • Post-acute care providers: Skilled nursing facility services, home health services, inpatient rehabilitation facility services, and long-term care hospital services
    • Medicare Advantage plans (Medicare Part C)

    The report also includes:

    • Status report on the Medicare Part D prescription drug program.
    • Comparison of quality among Medicare Advantage plans and between Medicare Advantage and fee-for-service Medicare.

    To read or download the full report, click here (PDF). To select specific topics in the report, click here.

    posted: March 4, 2010

    AHDB Jan Feb 2010.jpgHere are articles from the latest issue of American Health & Drug Benefits. AHDB is a peer-reviewed journal for 30,000 decision makers in health plans, PBMs, Medicare, Medicaid, and the pharma and biotech industries:


    Orphan Drug Pricing and Payer Management in the United States: Are We Approaching the Tipping Point? by Rebecca Hyde and Diana Dobrovolny, with Stakeholder Perspective by Kavita V. Nair, PhD.


    Physicians' Perceptions of Reimbursement as a Barrier to Comprehensive Diabetes Care by Alyssa Pozniak, PhD; Lois Olinger, MA; and Victoria Shier, MA, with Stakeholder Perspective by Gary M. Owens, MD


    Hypertension Management: An Update by Quang Nguyen, DO; Joann Dominguez, MD; Loida Nguyen, PharmD; and Nageshwara Gullapalli, MD.


    Competition from Biosimilars an Incentive for Innovation by Dalia Buffery, MA, ABD


    Emerging Trends in Breast Cancer Management by Caroline Helwick


    Rheumatology Pipeline Boasts Innovation, ID Line Is Drying Up: ACR/IDSA 2009 by Alice Goodman


    Cardiology Pipeline Is Promising: AHA 2009 by Wayne Kuznar


    Learn More:


    American Health & Drug Benefits is available in print and online at www.AHDBonline.com. To view the current or past issues or download in PDF format, click here.


    Kip Piper is health policy editor of American Health & Drug Benefits.

    posted: February 4, 2010

    Health Spending to 2019.jpgThe Centers for Medicare and Medicaid Services' Office of the Actuary (CMS/OACT) has released its projections of U.S. health care spending for the ten years 2010 through 2019, with premliminary estimates of 2009 health spending. The projections, released each year around this time, offer a fascinating, detailed look at patterns and trends in public and private health spending across programs and provider types.


    Health Care Spending in 2009:


    In 2009, National Health Expenditures (NHE) is projected to have reached $2.5 trillion, up 5.7 percent from 2008. This compares to 1.1 percent GDP decline in 2009. Health spending grew by a slow rate of 4.4 percent in 2008.


    The health care share of GDP is expected to jump from 16.2 percent of GDP in 2008 to 17.3 percent in 2009 - the largest one-year increase in history.

  • National health spending accelerated in 2009 due to several factors, notably:

  • Fast grow in Medicaid, driven by higher enrollment in the recession. Medicaid grew by 9.9 percent in 2009, compared to the 4.7 percent increase in 2008.

  • Medicare spending growth of 8.1 percent.

  • Higher utilization of services by consumers seeking treatment for the H1N1 virus.

  • Increased take-up rate for COBRA coverage due to federal subsidies of COBRA premiums.

  • Medicare, Medicaid, and Private Health Insurance in 2009:


    In 2009, Medicare was projected at $507.1 billion, a 8.1 percent increase over 2008. Medicaid spending is estimated at $378.3 billion (federal and state funds), an increase of 9.9 percent.


    The fast grow in Medicare and Medicare compares to continued slow growth in spending on private health insurance premiums, again largely due to the poor economy and unemployment. CMS projects spending on private health insurance premiums at $808.7 billion in 2009, up 3.3 percent from 2008.


    Hospital, Physician, and Prescription Drug Spending in 2009:


    Estimating Health Spending.jpgIn 2009, hospital spending increased by 5.9 percent to $760.6 billion (inpatient and outpatient). Physician and clinical services spending is expected to have reached $527.6 billion or a 6.3 percent increase in 2009. Note that in 2008 hospital and physician spending increased at more moderate rates of 4.5 percent and 5.0 percent, respectively.


    Prescription drug spending increased by an estimated 5.2 percent, for total of $246.3 billion in 2009. Part of this increase was driven by higher use of antiviral drugs. Political perceptions and grandstanding notwithstanding, drug spending continues to grow more slowly than other, much larger components of health spending and has declined as a proportion of total health costs.


    Projected Health Care Spending in 2010:


    Assuming that Congress stops the 21.3 percent cut in Medicare physician payment rates required under the Sustainable Growth Rate (SGR) provisions of current law, total U.S. health care spending is projected to increase by 4.7 percent in 2010. If Congress fails to stop the physician rate cuts, overall NEHs would grow by a more modest 3.9 percent. Fixing SGR could easily cost over $300 billion but a fix is likely, especially given the enormity of the cuts and fact this is an election year.


    Private health care spending in 2010 is projected to grow by 2.8 percent because of declining private health insurance enrollment because of high unemployment and the expiration of federal subsidies for COBRA coverage.


    Out-of-pocket spending is expected to have slowed from 2.8 percent in 2008 to 2.1 percent in 2009, reaching $283.5 billion in 2009. The recession slowed the ultization of medical services, thereby slowing growth in out-of-pocket spending on co-payments and deductibles.


    Ten Year Projection Through 2019:


    For 2010 through 2019, the CMS team of actuaries and economists project:


  • Overall national health spending will grow by average annual rate of 6.1 percent (compared to projected GDP growth of 4.4 percent annually).

  • Medicare spending will grow at average annual rate of 6.9 percent.

  • Medicaid spending will grow at average annual rate of 7.5 percent.

  • Out-of-pocket spending will grow by an average 4.8 percent per year.

  • Hospital spending will increase by an average 6.1 percent per year.

  • Physician and related clinical spending will grow by average annual rate of 5.9 percent.

  • Perscription drug spending will grow by average 6.3 percent per year.

  • Not surprisingly, public sector spending on health care is projected grow faster on average than private spending for 2009 through 2019. Average annual growth rate of 7.0 percent for taxpayer financed health care versus 5.2 percent for private spending (by employers and individuals).


    Public health care programs (Medicare, Medicaid, CHIP, VA, TRICARE, et al) will account for half of all health spending by 2012.


    By 2019, CMS Office of the Actuary projects that U.S. health spending will reach $4.5 trillion or about 19.3% of the economy as measured by GDP. (Yikes!)


    Learn More About Health Spending Projections:


    The CMS Office of the Actuary projections for U.S. health spending are nicely summarized in a new article in Health Affairs. To read the article, click here (PDF).


    To learn more, check out CMS' projections, historical tables, and methodology here.

    posted: November 19, 2009

    Global Payments Report.jpgPayment reform is an integral part of national and state-based health reform efforts. Indeed, payment reform is essential to moving from quantity-based reimbursement to a performance-based health care system. That is, moving from fee-for-service to fee-for-value. Payment innovations, such as global payment, are designed to reward efficiency and higher quality, while supporting providers as they invest in patient-centered models of care.


    Massachusetts, a leader in health policy innovation, is exploring global payment concepts in an effort to rein in costs and improve care coordination and quality. The Massachusetts Medicaid Policy Institute (MMPI) has released a new report on global payment in the Medicaid context.


    The report, prepared by Mark Heit of Sellers Dorsey and Kip Piper of Health Results Group, assesses global payment options while addressing the concerns of applying the innovative payment mechanism to MassHealth, the Massachusetts Medicaid program.


    To read the report, click here (PDF).


    Global payments have been recommended for public and private payors by the Commonwealth's Special Commission on Health System Payment and the Massachusetts Health Care Quality and Cost Council.


    The MMPI report was funded through a grant from Blue Cross Blue Shield of Massachusetts (BCBSMA). BCBSMA is implementing global payments with select hospitals and physician groups.


    The Massachusetts Medicaid Policy Institute is an independent and non-partisan source of information about the Massachusetts Medicaid program. Learn more at www.massmedicaid.org.

    posted: November 8, 2009

    AHDB Sept and Oct 2009.jpgHere are articles from the latest issue of American Health & Drug Benefits. AHDB is a peer-reviewed journal for 30,000 decision makers in health plans, PBMs, Medicare, Medicaid, and the pharma and biotech industries:


    Predictive and Prognostic Models: Implications for Healthcare Decision-Making in a Modern Recession:

    F. Randy Vogenberg, RPh, PhD examines the role of predictive modeling in the healthcare decision-making process and its impact on clinical outcomes. Dr. Vogenberg discusses the difference in the value of modeling to patients, providers, employers, and health insurers. He describes how applying predictive modeling can enhance patients' and providers' ability to make the best clinical decisions. Dr. Vogenberg is principal, Institute for Integrated Healthcare, Sharon, MA; adjunct Instructor, University of Rhode Island College of Pharmacy; and senior fellow, Jefferson University School of Population Health, Philadelphia, PA.


    Estimates of Commercial Population at High Risk for Cardiovascular Events: Impact of Aggressive Cholesterol Reduction:

    Kathryn Fitch, RN, MEd; Sara W. Goldberg, FSA, MAAA; Kosuke Iwasaki, FIAJ, MAAA; Bruce S. Pyenson, FSA, MAAA; Andreas Kuznik, PhD; and Henry A. Solomon, FACP, FACC analyze the effects of statin therapies on working age people at high-risk for cardiovascular disease. Using a target population of between ages 35-69, the authors found that 4 percent of the target population generated 22 percent of the risk for coronary heart disease and stroke, and that aggressive cholesterol-lowering statins significantly reduced the potential for events and is cost-neutral for payers. Ms. Fitch is healthcare management consultant, Ms. Goldberg is consulting actuary, Mr. Iwaski is consulting actuary, and Mr. Pyenson is principal and consulting actuary, at Milliman. Dr. Kuznick is associate director of outcomes research and Dr. Solomon is medical director at Pfizer.


    Impact of Prescription Benefit Coverage Limits on Sevelamer Hydrochloride Adherence for Patients with ESRD:

    Bharati Bhardwaja, PharmD, BCPS; Nikki Carroll, MS; Eli Korner, PharmD; and Kavita V. Nair, PhD discuss a new study that assesses the effects of prescription benefit coverage on medication adherence among Medicare beneficiaries diagnosed with end-stage renal disease (ESRD) taking sevelamer hydrochloride. The authors draw on lessons learned from caps on total drug spending and its impact on medication adherence, and conclude that caps on adherence negatively impact adherence and healthcare costs. Dr. Bhardwaja is a nephrology clinical pharmacy specialist, Kaiser Permanente and clinical assistant professor, University of Denver School of Pharmacy. Ms. Carroll is biostatistician at Institute for Health Research, Kaiser Permanente. Dr. Korner was research investigator, Kaiser Permanente during this study and is currently medical liaison, virology and hepatology, Roche Laboratories. Dr. Nair is associate professor, School of Pharmacy, University of Colorado at Denver.


    Private Health Plans Perspectives: Electronic Personal Health Records and Electronic Prescribing:

    Nancy M. McGee, JD, MPH; Gene Reeder, RPh, PhD; Timothy S. Regan, BPharm, RPh, CPh; J.D. Kleinke; and Steve Arnold, MD, MS, MBA, CPE analyze the results of a survey of commercial payers representing 16 national plans and 80 million covered lives to better understand payer involvement in electronic personal health records (ePHR) and e-prescribing. While respondents were enthusiastic about ePHRs and have aggressively moved to implement them, there was also disappointment in members' low utilization of these electronic systems. The authors suggest that Americans' concern about their health data being used inappropriately may be at the root. Ms. McGee is senior vice president and chief operating officer, Lash Group, San Bruno, CA. Dr. Reeder is director of payer market research at Xcenda. Mr. Regan is executive director, customer insights, at Xcenda. Mr. Kleinke is chief executive officer, Mount Tabor Online Services, Portland, OR. Dr. Arnold is vice president and chief medical officer, Touchstone Health Plan, Lagangeville, NY.


    Debate on the Elderly and End of Life Care Under Health Reform:

    In The Politics of Epidemiology, by Robert E. Henry, and End-of-Life Choices Are Necessary in Any Healthcare Reform by Gary M. Owens, MD, the authors tackle the thorny issue of how to address the elderly and end-of-life, both in healthcare reform and as a society. Mr. Henry argues that it is not a part of America's fundamental character to adopt policies that would determine what kind of care a person gets based on age and infirmity and that the government should avoid mandating processes that might ultimately encourage terminally ill patients to die quickly and efficiently. Dr. Owens argues that meaningful conversations between physician and family members and patients about their wishes at the end of their lives are important and should be encouraged to avoid potentially aggressive treatments that the patients themselves may not want. While he agrees that a health system should support the health of citizens, it should also respect the values of those facing end-of-life decisions. Mr. Henry is editor-in-chief of American Drug and Health Benefits. Dr. Owens is president, Gary Owens Associates, Philadelphia, PA.


    Can Generics Help Heal Our Ailing Healthcare System:

    Dalia Buffery, MA, ABD discusses the current struggle in Congress over the role and place of biosimilars. Recent legislative skirmishes in the House Energy and Commerce Committee defeated the 5-year exclusivity period for biosimilars proposed by Chairman Henry Waxman in favor of a 12-year exclusivity period. She asserts that while generic oral drugs have saved over $734 billion in the last decade, it will be important to craft a bill on biosimilars that both encourages and rewards innovation while also reducing costs to the system in the long run. Ms. Buffery is editorial director, American Health and Drug Benefits.


    Learn More:


    American Health & Drug Benefits is available in print and online at www.AHDBonline.com. To view the current or past issues or download in PDF format, click here.


    Kip Piper is health policy editor of American Health & Drug Benefits

    posted: November 7, 2009

    Brain Scan.jpgA series of new articles from the journal American Health and Drug Benefits address key issues in stroke prevention and management, with a special focus on transient ischemic attacks. A transient ischemic attack (TIA), a transient stroke that lasts only a few minutes, can be a warning sign that a person is at risk for a more serious, debilitating, and potentially deadly stroke.


    Many strokes can be prevented by heeding the warning signs of TIAs, a carotid ultrasound test, and treating underlying risk factors (e.g., smoking, high blood pressure, obesity, and high cholesterol). Unfortunately, our health care system under diagnoses and under treats patients at risk for stroke, leading to preventable deaths and disabilities and significant costs, particularly for Medicare and Medicaid.


    The articles are based on presentations given at a symposium earlier this year on stroke prevention and treatment strategies:


    Epidemiology of Stroke:

    Nirav R. Shah, MD, MPH discusses stroke as the third-leading cause of death in the U.S. and a crushing burden on patients, families, the healthcare system and the economy. Dr. Shah gives an overview of the two main types of stroke, ischemic and hemorrhagic, as well as describes typical patients. He highlights areas of stroke and TIA incidence throughout the U.S., as well as the average Medicare cost in per region. Dr. Shah is assistant professor of Medicine, New York University School of Medicine, and a researcher and clinical investigator, Geisinger Health System, Danville, PA.


    TIA and Stroke: Pathophysiology, Management, and Prevention:

    Mitchell S.V. Elkind, MD, MS explores the risk factors for both TIA and stroke as well as how advances in imaging techniques have enhanced the understanding of stroke and called into question the traditional definitions of the difference between TIA and stroke. These advances have also led to new concepts of managing stroke, and have, in turn, led to new advances in therapies, with several new compounds now in clinical trials. Dr. Elkind is associate professor of neurology, and associate chairman for research and training, Columbia University.


    An Actuarial Analysis of TIA and Recurrent Stroke Costs to Commercial Payers and Employers:

    Kathryn Fitch, RN, MEd, examines the link between TIA and stroke and the costs to health plans and employers. Ms. Fitch outlines the risk factors for key populations and underscores the overall costs to employers and insurers for both primary and secondary strokes and TIA. She concludes that educating patients about risk and implementing stroke prevention initiatives can dramatically reduce the exposure of employers and insurers to these conditions. Ms. Fitch is a principal and healthcare management consultant at Milliman and based in New York.


    TIA and Recurrent Stroke Prevention Practices: Current and New Developments:

    Robert J. Adams, MS, MD looks at the gaps in the U.S. healthcare system in its approach to TIA and ischemic stroke. Dr. Adams concludes that these gaps result in barriers to the delivery of proper stroke management and prevention. He examines the unresolved issues of stroke prevention and management, as well as the place of stroke in the disease pantheon in the U.S. Unlike diabetes or heart disease, stroke does not receive its due attention as the third largest killer despite its enormous financial and human toll. Dr. Adams is a professor of neuroscience; director, South Carolina Center of Economic Excellence; and director, MUSC Stroke Center, Medical University of South Carolina.


    Care Management for TIA and Stroke Patients: Riding the Quality Improvement Wave:

    Barbara Lennert, RN, BSN, CRRN, MAOM connects the quality improvement movement to the problem of stroke management and discusses how many quality-focused organizations still do not see stroke and stroke prevention as key concerns. Ms. Lennart asserts that while there is widespread agreement on the seriousness of stroke and TIA, there is also agreement that these diseases are not taken seriously enough by health plans and quality / safety groups leading to inadequate attention to prevention and care. Ms. Lennart is director of quality improvement at Xcenda, part of the AmerisourceBergen Specialty Group.


    Healthcare Reform and Public Programs: Opportunities for TIA / Recurrent Stroke Prevention:

    Kip Piper, MA, FACHE links stroke prevention and management to health policy changes underway as a result of health reform, particularly as they relate to Medicare and Medicaid. These two programs provide valuable models as to how to include stroke care in policy. As health reform moves forward there are risks that stroke prevention and management may be left out of the equation. Mr. Piper insists that it is critical to ensure that elements of health reform are aligned with stroke prevention, care, and management.


    Integrating Patient-Centered Care and Clinical Support: A New Research Paradigm:

    Nirav M. Shah, MD, MPH explains how a "smart" electronic health record (EHR) can increase efficiency and substantially improve outcomes in the prevention and care of stroke. Dr. Shah describes how EHRs can identify and target risk factors and help modify patient behavior by allowing shared decision-making, thus improving outcomes. Dr. Shah and his colleagues at the Geisinger Health System have developed one of the nation's most sophisticated and flexible health information platforms to support patient care and clinical research.


    TIA and Recurrent Stroke: The Case for Prevention in Working Populations:

    Alberto M. Colombi, MD, MPH addresses the importance of ensuring that working populations are included in programs that focus on prevention and management of cerebrovascular diseases. With more and more people delaying retirement, government and employers must find ways to confront stroke and TIA proactively through a broad range of health programs that will reduce costs and improve outcomes among older working populations. Dr. Colombi, a top thought leader in health and productivity management (HPM). is corporate medical director, PPG Industries


    For all the articles in a single PDF, click here.


    Kip Piper is health policy editor for American Health and Drug Benefits, a peer review journal with 30,000 subscribers. Issues are available at www.ahdbonline.com.

    posted: November 2, 2009

    Medicare Payment Primers.jpgThe Medicare Payment Advisory Commission (MedPAC) has updated its excellent series of reader-friendly primers on Medicare payment methodologies for hospitals, physicians, Medicare Advantage plans, prescription drug plans, and other health care providers. MedPAC is an advisory agency to Congress and is highly influential, particlarly on payment methods, delivery systems, and Medicare reforms.


    Medicare Part A Reimbursement of Hospitals:


  • Medicare Inpatient Prospective Payment system (IPPS) for acute care hospitals

  • Critical Access Hospital payment system

  • Psychiatric hospital services payment system

  • Hospice services payment system

  • Medcare Part A Reimbursement of Post-Acute Providers:


  • Home health agency (HHA) services payment system

  • Skilled Nursing Facility (SNF) services payment system

  • Inpatient Rehabilitation Facilities (IRF) payment system

  • Long-Term Care Hospitals (LTCH) payment system

  • Medicare Part B for Physician Services, Other Outpatient Services, Medical Equipment, ad Supplies:


  • Physician services payment system

  • Outpatient hospital services payment system

  • Clinical laboratory services payment system

  • Ambulatory surgical centers payment system

  • Durable medical equipment payment system

  • Outpatient dialysis services payment system (ESRD facilities)

  • Outpatient therapy services payment system

  • Oxygen and oxygen equipment payment system

  • Medicare Payment of Health Plans and Drug Plans:


  • Medicare Advantage plan payment system (Medicare Part C)

  • Medicare Part D Prescription Drug Plans (PPDs and MA-PDs)

  • posted: August 8, 2009

    ARHQ CER Spending Plan.jpgThe HHS Agency for Healthcare Research and Quality (AHRQ) has announced plans for spending its $300 million share of the $1.1 billion Congress appropriated for comparative effectiveness research (CER) under the American Recovery and Reinvestment Act of 2009 (ARRA or Recovery Act for short). AHRQ plans to solicit grant applications this fall and award grants and contracts by spring 2010. The $300 million must be encumbered by end of FFY 2010.


    AHRQ Spending Plan for Comparative Effectiveness Research in 2010:


    New Grants ($198.5 million):


    $148 million for evidence generation, including prospective studies and patient registries:

    • $100 million for the Clinical and Health Outcomes Initiative in Comparative Effectiveness (CHOICE), a new national effort to establish a series of prospective pragmatic clinical comparative effectiveness studies that measure the benefits treatments produce in routine clinical practice. This will include novel study designs focusing on real-world and under-represented populations (children, elderly, racial and ethnic minorities, and other understudied populations).
    • $48 million for the establishment or enhancement of national patient registries that can be used for researching the longitudinal effects of different interventions and collecting data on under-represented populations.

    $29.5 million to support innovative translation and dissemination grants.


    $20 million to support training and career development.


    $1 million for other grants.


    New Contracts ($19.5 million):


    $9.5 million to establish an infrastructure to identify new issues for comparative effectiveness research.


    $10 million to establish a citizen's forum to engage stakeholders and to expand and standardize public involvement in the federal comparative effectiveness research program.


    Expand Existing Contracts ($79 million):


    $50 million for evidence synthesis.


    $24 million for evidence generation.


    $5 million for translation and dissemination.


    Administration ($3 million):


    $3 million for salary and benefits for new AHRQ staff to administer the CER program.


    Health Conditions Selected for Comparative Effectiveness Research:


    For the time being, AHRQ is going to use the same 14 priority conditions designated earlier by the HHS Secretary under the Medicare Modernization Act. The priority conditions were selected because of their high interest for Medicare, Medicaid, and the Children's Health Insurance Program (CHIP):

    1. Arthritis and non-traumatic joint disorders
    2. Cancer
    3. Cardiovascular disease, including stroke and hypertension
    4. Dementia and other brain and nerve conditions, including Alzheimer's Disease
    5. Depression and other mental health disorders
    6. Developmental delays, attention-deficit hyperactivity disorder, and autism
    7. Diabetes mellitus
    8. Functional limitations and disability
    9. Infectious diseases including HIV/AIDS
    10. Obesity
    11. Digestive system conditions (peptic ulcer disease and dyspepsia)
    12. Pregnancy including preterm birth
    13. Pulmonary disease and asthma
    14. Alcohol and drug abuse


    For more information on AHRQ's CER program, visit effectivehealthcare.ahrq.gov.

    posted: May 18, 2009

    AHDB_0509.jpgHere are articles from the latest issue of American Health & Drug Benefits. AHDB is the peer-reviewed journal for 30,000 decision makers in health plans, PBMs, Medicare, Medicaid, and the pharma and biotech industries:


    May 2009 Issue:


    The Paradox of Public Policy Reform: Change or Continuum?
    By Robert E. Henry


    Are You Kidding Me? Clinical Comparative Effectiveness or Evidence-Based Medicine
    By Thomas Kaye RPh, MBA, FASHP


    MIPPA: First Broad Changes to Medicare Part D Plan Operations
    By Jean D. LeMasurier and Babette Edgar, PharmD, MBA
    Stakeholder Perspective by Mark Newsom, MSc


    ProvenCare: Geisinger's Model for Care Transformation through Innovative Clinical Initiatives and Value Creation
    Interview with Ronald A. Paulus, MD, MBA


    Perspective: The Integrated Patient-Centered Medical Home: Tools for Transforming Our Healthcare Delivery System
    By Matias A. Klein


    Increased Patient Cost-Sharing, Weak US Economy, and Poor Health Habits: Implications for Employers and Insurers
    By Melinda C. Haren, RN; Kirk McConnell; Arthur F. Shinn, PharmD, FASCP
    Stakeholder Perspective by Paul Anthony Polansky, BSPharm, MBA


    New Legislations on Generics and Biosimilars Brewing in Congress
    By Dalia Buffery, MA, ABD


    Paying for Cancer Care: Economic Models Start to Emerge, Dovetailing Healthcare Reform
    By Caroline Helwick


    Read Current and Past Issues:


    American Health & Drug Benefits (AHDB) is available in print and online at www.AHDBonline.com. To view the current or past issues, click here.


    AHDB also published web exclusives, available for reading here.


    Kip Piper is health policy editor of American Health & Drug Benefits.

    posted: February 17, 2009

    Medicare%20Changes%20for%202009.jpgAs the new Obama Administration and the 111th Congress focus on health care issues, here is a quick list of some of the Medicare policy changes Democrats will likely seek in 2009-2010:


    Likely Changes in Medicare Advantage:


    1. Phase-out of difference between Medicare Advantage plan rates and Medicare fee-for-service:


  • Some Medicare Advantage (MA) plans will see lower annual increase. Others a net decrease in rates.

  • The private fee-for-service (PFFS) plans, which tend to serve rural areas, will see the biggest hit.

  • Of course, because of the unique characteristics of Medicare Advantage bidding and ratesetting process, beneficiaries will see the biggest hit. That's because the rate difference goes mostly toward lower cost sharing and greater benefits for those beneficiaries deciding to receive their Medicare Part A and Part B services through plans instead of traditional fee-for-service.

  • Likely a three to five-year phase down period. Perhaps starting in 2010, especially if Congress acts before the bids arrive in June, 2009.

  • Congress will use savings (~$60 billion over five years) to help fix physician payment formula.

  • 2. Significant increase in MA plan oversight, especially on marketing, quality, data reporting, and process compliance. Expect new CMS requirements via both rules and guidelines, plus tighter audits and faster action on plan sanctions.


    3. Special Needs Plan (SNP) law sunsets on December 31, 2010. Reauthorization prospects depend largely upon:


  • How well SNPs work with state Medicaid programs.

  • If SNPs stay focused on their target market segments (especially dual eligibles), build more enrollment (increase from current ~1.3 million), and better differentiate themselves (politically and otherwise) from other Medicare Advantage plans.

  • Likely Changes in Medicare Part D Drug Benefit:


    1. Federal negotiation of prescription drug prices in Medicare Part D. Political symbolism with no budget savings unless feds unwisely use the authority to:


  • Create a national drug formulary (like VA) or preferred drug list (like some state Medicaid programs), thereby limiting access to drive better rebate deals.

  • Regulate prices. May include further use of AMP and/or ASP to set baseline for drug and biologic prices in U.S. market.

  • Mandate minimum rebates (see below).

  • 2. Create a "Public Plan" option in Part D. This would be a government-run Part D drug plan to compete with commercial plans (MA-PDs and PDPs). Would mean federal government getting far more and directly involved in marketplace and key decisions over formularies and pricing. Huge implications for health plans, drug plans, PBMs, pharma manufacturers, and pharmacies.


    3. Require Medicaid-like best price drug rebates in the Medicare Part D benefit. Initially, this will likely apply only to prescription drugs used by dual eligibles. However, in future, it will likely extend to all of Part D. The political temptation will be too great.


    4. Like with Medicare Advantage plans (for Part A and Part B services), increased federal compliance oversight of MA-PDs and PDPs for Part D benefits.


    Other Likely Changes in Medicare Program:


    1. Development of new payment models in Medicare, notably demos of bundled hospital-physician payments, episode-based payment, and gainsharing. These reform will create new opportunities, realign incentives in the marketplace, and could help focus federal policy makers on fixing the biggest drivers to high costs.


    2. More transparency. Public reporting of prices, quality, and safety. Reporting will be increasingly tied to payment penalties for non-reporting. Policy makers are losing patience with provider trade groups balking at disclosure.


    3. Promote use of patient-centered care models and medical home concept, especially for the chronically ill.


    4. Reform Medicare physician payments, either another temporary fix or permanent change. Otherwise, docs face an automatic 20% rate cut in 2010. The current system is absurd but permanent fix will cost $262 billion to $460 billion over ten years (depending on whether rates are frozen or docs get modest annual increases).


    The changes described here range from the necessary to the useful, from the shortsighted to the unwise. But the Obama Administration and Dem leaders in the House and Senate have a long, ambitious wish list of changes for Medicare. And it is still unclear how the tough economy, budget realities, and larger health reforms will affect their Medicare agenda. Regardless, buckle up for a wild ride.

    posted: January 13, 2009

    Management%20Challenges.jpgThe incoming leadership at the U.S. Department of Health and Human Services (HHS) face a number of serious management challenges. These challenges, recently identified by the Office of the Inspector General (OIG), will require close, sustained attention by the Secretary's Office and the agency heads, particularly at CMS and FDA.


    The nominees for Secretary and Deputy Secretary - Tom Daschle and Bill Corr, respectively - are wise choices, especially given President-elect Obama's policy perspective and strong interest in national health reform. They are smart, seasoned policy gurus with strong relationships on the Hill. However, as the Obama Administration populates the agencies with appointees, the White House and HHS leadership should seriously consider the need for strong executives and senior management types for top positions at agencies like CMS, FDA, CDC, and NIH. Yes, they will need requisite policy and technical expertise, but at the agency level management savvy should be a priority.


    The reason is simple. The existing management challenges certainly require attention. Further, the ultimate success of the Obama Administration's health care agenda may well depend on fixing these problems. Also, the HHS Secretary's Office and the new White House Office of Health Reform will have their hands full with health reform legislation, Medicare fixes, and FDA legislation. And the White House and HHS leadership will need strong executives to effectively implement the range of major, complex new policies expected in 2009 and 2010. The Democrats have a fairly deep bench when it comes to policy wonks, researchers, and academics generally. Their bench for executives and managers is relatively thin - but they could look within the agencies themselves and in state government for management talent friendly to the Administration's policy views.


    Here is the OIG's list of top management challenges at HHS:


    Oversight of Medicare Part D Prescription Drug Benefit:

  • Drug pricing and rebates

  • Fraud and abuse safeguards

  • Access to accurate information

  • Medicare Program Integrity:

  • Contractor oversight

  • DME fraud, including error rate and competitive bidding

  • Medicare Advantage

  • Integrity of Medicaid and State Children's Health Insurance Program:

  • Prescription drugs, including fraud and pharmacy reimbursement

  • SCHIP reauthorization and eligibility

  • Home and community-based care in Medicaid

  • Quality of Care:

  • Quality measurement

  • Pay for performance (P4P)

  • Failure of care and never events

  • Transparency of ownership and performance

  • Indian health care

  • Emergency Preparedness and Response:

  • Pandemic influenza

  • Select agent transfers

  • Laboratory security

  • Oversight of Food, Drugs, and Medical Devices by FDA:

  • Food safety and security

  • Drug and medical device safety

  • Transparency of provider financial interests

  • Grants Management:

  • Grant oversight and closeout

  • President's Emergency Plan for AIDS Relief expansion

  • Head Start facility safety and compliance

  • Integrity of Information Systems and the Implementation of Health Information Technology:

  • Security of sensitive and personally identifiable information

  • Safeguards and controls over HHS information systems

  • Electronic health records and e-prescribing

  • Ethics Program Oversight and Enforcement:

  • Management of conflicts of interest by extramural grantees

  • Oversight of financial interests of clinical investigators and advisory board members

  • Oversight of HHS employees' outside and post-employment activities
  • posted: December 23, 2008

    Drug%20Use%20in%20SNP%20and%20MAPD.jpgMedicare beneficiaries in Special Needs Plans (SNPs) have higher Part D prescription drug utilization and costs than enrollees in other Medicare Advantage Prescription Drug Plans (MA-PDs) do. This is no surprise since, by design, Special Needs Plans serve higher-risk Medicare patients, including many dual eligibles. However, despite higher drug utilization rates in SNPs, SNP enrollees and other MA-PD enrollees have similar rates of inappropriate drug pairs (therapeutic duplications and drug-drug interactions).


    Compared to enrollees in other (non-SNP) Medicare Advantage drug plans, SNP enrollees fill 11% more scripts. The average annual prescription cost per SNP beneficiary is 49% higher compared to that of other MA-PD beneficiaries. The difference in per capita drug costs between SNPs and other MA-PDs appears due to a combination of factors: SNP beneficiaries' higher utilization, use of costlier drugs, lower utilization of 90-day prescriptions, and SNPs paying more for some highly utilized drugs.


    While SNP beneficiaries fill more prescriptions on average than other MA-PD beneficiaries, SNP and other MA-PD beneficiaries are exposed to potentially inappropriate drug pairs at similar frequencies. However, at higher levels of drug utilization, SNP beneficiaries are less likely to be exposed to a potentially inappropriate drug pair than other MA-PD beneficiaries.


    Most inappropriate drug pairs (65%) in SNPs and MA-PDs are drug-drug interactions. Of these, 83% presented a moderate risk and 17% a serious or severe risk of an adverse drug event. The remaining potentially inappropriate drug pairs (35%) are therapeutic duplications. The majority of inappropriate drug pairings - in both SNPs and other MA-PDs - recur and involve drugs prescribed by the same physician and filled by the same pharmacy.


    These findings, from a new analysis of 2006 data by the HHS OIG, provide further evidence for the urgent need of e-prescribing nationwide. There is also a need for genuine medication therapy management programs and more information and decision support tools for physicians and pharmacists - as well as sharpened accountability for those relatively small number of prescribers and dispensers who apparently generate the majority of potentially dangerous drug pairings.

    posted: December 21, 2008

    Adverse%20Events.jpgHistorically, traditional payment policies - coupled with lax oversight by regulators, weak leadership from many corners of the hospital and physician communities, and an uninformed, reverential public - have served to perpetuate (sometimes even reward) the use of unsafe practices and antiquated technologies in the hospital industry. This, in turn, resulted in a frightening number of adverse events - instances where patients are harmed by medical care. The consequences are tens of thousands of deaths and millions of injuries - the vast majority quite avoidable.


    Fortunately, reduction of adverse events is now a priority. This is led by new payment and reporting policies by Medicare and some state Medicaid programs, influential players like IHI and the Leapfrog Group, the Hospital Quality Alliance, and a growing demand for disclosure of hospital and physician performance. Through realigned payment policies, public reporting of adverse events, and readily available best practices, hospitals are being given powerful new incentives to use safer practices.


    Key Issues in Adverse Event Reporting by Hospitals:


    The HHS Office of the Inspector General (OIG) has identified key issues affecting reporting of adverse events in hospitals:


  • Estimates of the incidence of adverse events in hospitals vary widely. Measurement remains difficult, although methods and tools to support proper reporting are advancing quickly.

  • Nonpayment policies for adverse events are gaining in prominence. Stakeholders see this as a powerful incentive to reduce preventable medical errors. However, there are potential drawbacks, such as perhaps discouraging hospitals from admitting complex cases and encouraging gaming in reporting.

  • Hospitals heavily rely on managers and staff to report adverse events internally, but barriers (cultural, organizational, physician relations, etc.) often inhibit reporting.

  • Hospitals report adverse events to various oversight entities. However, experts suspect substantial underreporting.

  • Public disclosure of adverse events benefits patients but also raises liability concerns.

  • Information on how to prevent adverse events is widely available. Nonetheless, many hospitals and clinicians are slow to adopt or use recommended patient safety practices.

  • The OIG believes we are finally "on the threshold of accelerated progress" in reducing the incidence of adverse events in hospitals. Yeah, their optimism is heavily couched but there has been some genuine progress. The OIG identifies a series of strategies that could hasten this.


    For the OIG report on key issues in reporting and reducing adverse events in hospitals, click here (PDF).


    State Requirements for Reporting Adverse Events:


    Today, 26 states now have adverse event reporting programs. The Institute of Medicine (IOM), which supports mandated reporting, says reporting helps hold individual hospitals accountable for performance while providing information to improve patient safety and save lives. States vary somewhat by the list of reportable events and criteria for identifying reportable events. Most of the 26 state systems focus on adverse events in hospitals but some also require or support reporting in other care settings.


    Most states told the OIG that "hospitals do not always report when adverse events occur." Underreporting is apparently common and probably substantial. To encourage better reporting, states have implemented various strategies. For example:


  • Legal protections to prevent improper disclosure.

  • Monetary penalties for failing to report an adverse event.

  • Giving feedback to hospitals about reported events.

  • Audits or state-led investigations of the hospitals' handling of reported events.

  • Promote learning through reports, training, and patient safety bulletins and alerts.

  • For the OIG report on state reporting programs, click here (PDF).

    posted: December 18, 2008

    CBO%20Health%20Budget%20Options.jpgTo aid the incoming 111th Congress and Obama Administration, the Congressional Budget Office (CBO) released a 235-page report outlining 115 budget options for health care reform. The report catalogs most of the hottest legislative ideas on Capitol Hill, with useful background information and scores of costs and savings. Here's the list of reform ideas in the report:


    The Private Health Insurance Market:


  • Foster the Formation of Association Health Plans

  • Allow Individuals to Purchase Non-Group Health Insurance Coverage in Any State

  • Impose a Pay-or-Play Requirement on Large Employers

  • Establish a National High-Risk-Pool Program

  • Establish a National Reinsurance Program to Provide Subsidies to Insurers and Firms for Privately Insured Individuals

  • Require States to Use Community Rating for Small-Group Health Insurance Premiums

  • Create a Voucher Program to Expand Health Insurance Coverage

  • Limit Awards from Medical Malpractice Torts

  • The Tax Treatment of Health Insurance:


  • Reduce the Tax Exclusion for Employment-Based Health Insurance and the Health Insurance Deduction for Self-Employed Individuals

  • Replace the Income Tax Exclusion for Employment-Based Health Insurance with a Deduction

  • Replace the Income and Payroll Tax Exclusion with a Refundable Credit

  • Allow Self-Employed Workers to Deduct Health Insurance Premiums from Income That Is Subject to Payroll Taxes

  • Expand Eligibility for an "Above-the-Line" Deduction for Health Insurance Premiums

  • Disallow New Contributions to Health Savings Accounts

  • Allow Health Insurance Plans with Coinsurance of at Least 50 Percent to Qualify for the Health Savings Account Tax Preference

  • Levy an Excise Tax on Medigap Plans

  • Changing the Availability of Health Insurance Through Existing Federal Programs:


  • Raise the Age of Eligibility for Medicare to 67

  • Create a Medicare Buy-In Program for Individuals Ages 62 to 64

  • Eliminate or Reduce Medicare's 24-Month Waiting Period for Recipients of Social Security Disability Benefits

  • Create a Medicaid Buy-In Program

  • Require States to Adopt Premium Assistance Programs for Medicaid Enrollees

  • Expand Eligibility for Medicaid Family Planning Services

  • Expand Medicaid Eligibility to Include Young Adults with Income Below the Federal Poverty Level

  • Expand Medicaid Eligibility to Include Parents with Income Below the Federal Poverty Level

  • Establish a Medicaid Outreach Program with Mandatory Funds

  • Permanently Extend the Transitional Medical Assistance Provision in Medicaid

  • Allow People and Firms to Buy Health Insurance Plans Through the Federal Employees Health Benefits Program

  • End Enrollment in VA Medical Care for Veterans in Priority Groups 7 and 8

  • Reopen Enrollment for VA Medical Care Among Priority Group 8 Veterans for Five Years

  • The Quality and Efficiency of Health Care:


  • Bundle Payments for Hospital Care and Post-Acute Care

  • Reduce Medicare Payments to Hospitals with High Readmission Rates

  • Expand the Hospital Quality Incentive Demonstration to All Hospitals

  • Deny Payment Under Medicaid for Certain Hospital-Acquired Conditions

  • Establish Regional Centers of Excellence for Selected Surgical Procedures Covered by Medicare

  • Convert Medicare and Medicaid Disproportionate Share Hospital Payments into a Block Grant

  • Consolidate Medicare and Federal Medicaid Payments for Graduate Medical Education Costs at Teaching Hospitals

  • Allow Physicians to Form Bonus-Eligible Organizations and Receive Performance-Based Payments

  • Pay Primary Care Physicians in Medicare Using a Partial-Capitation System, with Bonuses and Penalties

  • Pay for a Medical Home for Chronically Ill Beneficiaries in Fee-for-Service Medicare

  • Require Medicare Carriers to Provide Information About Peer Profiling to Physicians

  • Require Prior Authorization for Imaging Services Under Medicare

  • Encourage Wider Use of Patient Shared-Decision Aids by Physicians in Medicare

  • Expand Medicare's Least Costly Alternative Policy to Include Viscosupplements

  • Require Drug and Device Manufacturers to Disclose Their Relationships with Physicians Who Participate in Medicare

  • Fund Research Comparing the Effectiveness of Treatment Options

  • Create Incentives in Medicare for the Adoption of Health Information Technology

  • Require the Use of Health Information Technology as a Condition of Participation in Medicare

  • Support Development of VistA to Meet Standards and Encourage Adoption

  • Sponsor Regional Markets for Health Information Technology

  • Geographic Variation in Spending for Medicare:


  • Reduce Medicare's Fees for Physicians in Areas with Unusually High Spending

  • Reduce Medicare's Payment Rates for Hospitals in Areas with a High Volume of Elective Admissions

  • Reduce Medicare's Payment Rates Across the Board in High-Spending Areas

  • Impose a Surcharge on Medicare Cost Sharing in High-Cost Areas and Prohibit Medigap Plans from Covering the Surcharge

  • Paying for Medicare Services:


  • Reduce Annual Updates in Medicare Fee-for-Service Payments to Reflect Expected Productivity Gains

  • Reduce the Update Factor for Hospitals' Inpatient Operating Payments Under Medicare by 1 Percentage Point

  • Reduce the Update Factor for Payments to Providers of Post-Acute Care Under Medicare by 1 Percentage Point

  • Eliminate Inflation-Related Updates to Medicare's Payment Rates for Home Health Care for Five Years

  • Reduce the Update Factor for Medicare's Payments for Skilled Nursing Facilities by 1 Percentage Point

  • Modify the Sustainable Growth Rate Formula for Updating Medicare's Physician Payment Rates

  • Create Service-Specific Updates for Medicare's Physician Payment Rates

  • Use the Medicare Economic Index to Update Physician Payment Rates for Evaluation and Management Services and Create Four Service-Specific Updates for Remaining Services

  • Modify the Equipment Utilization Factor for Advanced Imaging in Calculating Physicians' Fees in Medicare

  • Set the Benchmark for Private Plans in Medicare Equal to Local Per Capita Fee-for-Service Spending

  • Convert Medicare to a Premium Support System

  • Establish Benchmarks for the Medicare Advantage Program Through Competitive Bidding

  • Eliminate the One-Sided Rebasing Process for Establishing Benchmarks for Medicare Advantage Plans

  • Require Manufacturers to Pay a Minimum Rebate on Drugs Covered Under Medicare Part D

  • Establish an Abbreviated Approval Pathway for Follow-On Biologics

  • Financing and Paying for Services in Medicaid and State Children's Health Insurance Program:


  • Convert the Federal Share of Medicaid's Payments for Acute Care Services into an Allotment

  • Remove or Reduce the Floor on Federal Matching Rates for Medicaid Services

  • Equalize Federal Matching Rates for Administrative Functions in Medicaid at 50 Percent

  • Restrict the Allocation to Medicaid of Common Administrative Costs

  • Reduce the Taxes That States Are Allowed to Levy on Medicaid Providers

  • Modify the Amount of the Brand-Name Drug Rebate in the Medicaid Program

  • Apply the Fee-for-Service Medicaid Drug Rebate to Drugs Purchased for Medicaid Managed Care Enrollees

  • Apply the Medicaid Additional Rebate to New Formulations of Existing Drugs

  • Base Medicaid's Pharmacy Payment Formulas for Brand-Name Drugs on the Average Manufacturer Price

  • Encourage Therapeutic Substitution in Medicaid by Applying Federal Upper Payment Limits to Two Classes of Drugs

  • Eliminate Allotment Caps for the State Children's Health Insurance Program and Permit States to Expand Coverage up to 400 Percent of the Federal Poverty Level

  • Adjust Funding for the State Children's Health Insurance Program to Reflect Increases in Health Care Spending and Population Growth

  • Premiums and Cost Sharing in Federal Health Programs:


  • Replace Medicare's Current Cost-Sharing Requirements with a Unified Deductible, a Uniform Coinsurance Rate, and a Catastrophic Limit

  • Restrict Medigap Coverage of Medicare's Cost Sharing

  • Combine Changes to Medicare's Cost Sharing with Restrictions on Medigap Policies

  • Impose Cost Sharing for the First 20 Days of a Stay in a Skilled Nursing Facility Under Medicare

  • Require a Copayment for Home Health Episodes Covered by Medicare

  • Impose a Deductible and Coinsurance for Clinical Laboratory Services Covered by Medicare

  • Increase the Basic Premium for Medicare Part B to 35 Percent of the Program's Costs

  • Permanently Extend the Provision That Provides Cost-Sharing Assistance for Qualifying Individuals Under Medicaid

  • Eliminate the Doughnut Hole in Medicare's Drug Benefit Design

  • Institute a Premium for Higher-Income Enrollees Under Medicare's Drug Benefit Similar to That Used in Part B

  • Increase the Fraction of Beneficiaries Who Pay an Income-Related Premium for Part B of Medicare

  • Base Federal Retirees' Health Benefits on Length of Service

  • Adopt a Voucher Plan for the Federal Employees Health Benefits Program

  • Require Federal Employees Health Benefits Plans to Subsidize Premiums for Medicare Part B and Reduce Coverage of Medicare Cost Sharing by an Equivalent Amount

  • Increase Health Care Cost Sharing for Family Members of Active-Duty Military Personnel

  • Introduce Minimum Out-of-Pocket Requirements Under TRICARE For Life

  • Increase Medical Cost Sharing for Military Retirees Who Are Not Yet Eligible for Medicare

  • Require Copayments for Medical Care Provided by the VA to Enrollees Without a Service-Connected Disability

  • Long-Term Care:


  • Increase States' Flexibility to Offer Home- and Community-Based Services Through Medicaid State Plan Amendments

  • Make Home and Community-Based Services a Mandatory Benefit Under Medicaid

  • Increase the Federal Matching Rate for Home and Community-Based Services and Decrease the Federal Matching Rate for Nursing Home Services

  • Clarify Medicaid's Definition of Permissible Asset Transfers

  • Increase the "Look-Back" Period for Transfers of Assets in Medicaid

  • Implement Policies That Encourage the Use of Advance Directives

  • Require Deposits to Individual Accounts for Purchasing Long-Term Care Insurance

  • Health Behavior and Health Promotion:


  • Impose an Excise Tax on Sugar-Sweetened Beverages

  • Increase the Excise Tax on Cigarettes by One Dollar Per Pack

  • Increase All Taxes on Alcoholic Beverages to $16 Per Proof Gallon

  • Reduce Medicare Payment Rates for Primary Care Physicians Who Do Not Meet Benchmarks for Influenza Vaccination

  • Base Medicare's Coverage of Preventive Services on Evidence of Effectiveness

  • Closing the Gap Between Medicare's Spending and Receipts

  • Increase the Payroll Tax Rate for Medicare Hospital Insurance by 1 Percentage Point

  • Limit Growth in Medicare Per Capita Spending to Growth in Per Capita Gross Domestic Product Plus 1 Percentage Point

  • Design an Enforcement Mechanism for the Medicare Funding Warning

  • Set a Savings Target to Reduce Spending for Medicare by 1 Percent

  • Increase Funding for the Health Care Fraud and Abuse Control Program in Medicare and Medicaid

  • posted: December 16, 2008

    MedPAC%20Primers.jpgMedicare reimbursement policies are highly complex. Yes, that could be the litotes of the decade. Thankfully, the outstanding staff at the Medicare Payment Advisory Commission (MedPAC) produce and routinely update a series of basic primers on Medicare payment methodologies for hospitals, physicians, other providers, Medicare Advantage plans, and Part D prescription drug plans.


    MedPAC's primers are reader friendly and crafted for a general audience. Typically 2 to 4 pages in length, they summarize the basic elements of each given payment methodology, with some history, policy context, and a flow chart(s) diagramming how payments are generally calculated.


    Here are the latest primers on the basics of Medicare payment methods:


    Medicare Hospital Services:


  • Acute inpatient hospital services (inpatient PPS)

  • Critical access hospitals

  • Outpatient hospital services

  • Psychiatric hospital services

  • Medicare Outpatient Services:


  • Physician services

  • Geographic practice cost indexes for physician rates

  • Ambulatory surgical centers (ASCs)

  • Clinical laboratory services

  • Dialysis center services (ESRD facilities)

  • Outpatient therapy services

  • Durable medical equipment (DME)

  • Oxygen and oxygen equipment

  • Payment to physicians for professional liability insurance

  • Medicare Post-Acute and Related Services:


  • Skilled nursing facility services

  • Home health care services

  • Inpatient rehabilitation facilities

  • Long-term care hospitals

  • Hospice services

  • Medicare Health Plans and Prescription Drug Plans:


  • Medicare Advantage plans (HMOs, PPOs, PFFS plans)

  • Prescription drug plans (PDPs and MA-PDs)
  • posted: December 11, 2008

    Presidential%20Appointees.jpgA new Administration in the White House also means an array of new political appointees. The aptly named Plum Book, a quadrennial publication, identifies 7,000 senior-level policy making positions in the Executive and Legislative Branches. It includes all the well-know top positions - such as HHS Secretary, CMS Administrator, FDA Commissioner, and OMB Director - as well as their deputies, agency or division heads, and top aides. It also shows how positions are filled (such as by nomination and Senate confirmation, direct appointment, Schedule C, or through the Senior Executive Service), name of incumbents, and salary ranges.


    The Plum Book chapter on the Department of Health and Human Services (HHS) includes details on senior officials and supporting policy staff in:


  • Office of the Secretary

  • Centers for Medicare and Medicare Services (CMS)

  • Food and Drug Administration (FDA)

  • National Institutes of Health (NIH)

  • Centers for Disease Control and Prevention (CDC)

  • Office of Assistant Secretary for Planning and Evaluation (ASPE)

  • Agency for Health Research and Quality (AHRQ)

  • For the chapter on all the top HHS positions, click here (PDF).


    The Plum Book also gives details on appointees in other federal agencies, including the White House Office of Management and Budget (OMB), which plays a powerful role on health issues.


    To read or download a copy of the complete Plum Book, click here (PDF).

    posted: December 1, 2008

    Federal%20Budgeting.jpgThe budgetary impact of proposed health reform initiatives - whether through legislation, rules, or waivers - significantly affects the likelihood of success. The following provides a concise briefing on some key players and processes affecting cost estimates of federal health care initiatives.


    Congressional Budget Office (CBO):


    The Congressional Budget Office (CBO), a nonpartisan agency of Congress, provides Congressional committees with budgetary information and analyses. CBO's mandate is to provide Congress with objective and impartial analysis, with no policy recommendations.


    Specifically, CBO prepares fiscal estimates for pending legislation, forecasts federal revenues and expenditures, independently re-estimates the President's proposed budget, and conducts various analyses for Congress. Therefore, CBO determines the official cost/savings estimate or "score" used by Congress in considering proposed legislation or the President's proposed budget. For estimating the impact on revenues of legislation involving income, estate and gift, excise, and payroll taxes, the Congressional Budget Act directs CBO to use exclusively the revenue estimates of the Joint Committee on Taxation.


    CBO frequently calls on outside experts for advice on specific analytic matters, such as the outlook for health care spending, spending projections for Medicare and Medicaid, and the fiscal impact of major programmatic or regulatory changes. For its economic forecasts and assumptions, CBO draws on the advice of a distinguished panel of advisers that meets twice a year. CBO also has a panel of outside experts, mostly academics, to advise CBO on health care issues.


    All CBO estimates and analytic products are reviewed internally for technical competence, accuracy of data, and clarity of exposition. Draft studies are also reviewed by experts outside CBO, and the preface to each study cites the many contributors who helped shape the final product. Although outside experts and advisers provide considerable assistance, CBO is solely responsible for the accuracy of its estimates and analyses. Due to its nonpartisan status and mandate to provide objective analysis, CBO does not make explicit policy recommendations in any of its analyses.


    White House Office of Management and Budget (OMB):


    The Office of Management and Budget (OMB), part of the Executive Office of the President, is the focal point of policy and budget oversight in the Executive Branch. OMB's mandate is to ensure policymaking by cabinet departments and agencies is consistent with the policies and priorities of the President.


    In addition to making policy recommendations and preparing the President's proposed budget, OMB reviews and approves a wide range of policy and budget activities of federal agencies. This includes the authority to review and approve or disapprove proposed and final rules, waivers (e.g., Medicare or Medicaid demonstrations), legislation proposed by agencies, major "sub-regulatory" policy (e.g., program guidance, interpretations, and instructions by CMS), congressionally mandated reports, and Congressional testimony by Executive Branch officials.


    OMB provides the Administration's official estimate of the cost/savings of policies contained in regulations, waivers, and the President's proposed budget, and the Administration's position of the cost/savings of legislation under consideration in Congress. OMB also estimates the impact of federal regulations on businesses and state and local government. However, in estimating Medicare or Medicaid related costs and savings of legislation, rules, and waivers, OMB works closely with the Office of the Actuary (OACT) at the Centers for Medicare and Medicaid Services (CMS). While OMB may occasionally revise estimates provided by CMS/OACT and request refinements or recalculations, it most cases OMB adopts CMS/OACT estimates without major changes.


    PAYGO:


    PAYGO - short for "Pay as You Go" - refers to rules in the House and Senate requiring that legislative changes to mandatory programs or taxes do not increase the federal deficit. To comply with PAYGO, new mandatory spending programs, changes to existing mandatory programs (most notably, Medicaid, Medicare, SCHIP, and Social Security), and tax cuts must be offset by an equal amount of tax increases or cuts to mandatory programs. In determining the net effect of proposed changes to mandatory programs and taxes, Congress uses CBO's projections of baseline spending and fiscal effects of individual legislative provisions.


    PAYGO is a parliamentary rule, with some differences in the House and Senate. PAYGO may be overridden in the House if the House Rules Committee adopts a special order governing how a bill is considered on the floor. This allows the Majority to disregard PAYGO with support of the House leadership. The Senate may dispense with the PAYGO rule with a vote of at least 60 senators. While there are other rules applying to funding bills, PAYGO does not apply to discretionary programs funded through the annual appropriations process. In the Senate, PAYGO also does not apply to changes made through an annual budget resolution.


    The effect of PAYGO is to impose some modest degree of spending discipline on new legislation affecting Medicare or Medicaid. Since offsets are required, it means major legislative changes to Medicare and Medicaid are carried out through massive reconciliation bills.


    Budget Reconciliation and Budget Offsets:


    Because of PAYGO and the practical demands of political "horse trading," passage of major changes to Medicaid or Medicare typically requires offsetting changes elsewhere in the same programs. PAYGO makes stand-alone bills increasing net federal spending difficult to pass, even with White House support. Further, tactically it makes little sense to enact stand-alone legislation that reduces Medicare or Medicaid spending. Sponsors of savings initiatives lose the fiscal "credit" that could be used to offset higher spending elsewhere in mandatory programs.


    Therefore, budget reconciliation bills - which allow Congress to make a large number of simultaneous changes to mandatory programs and taxes to meet five-year spending targets set in the annual budget resolution process - are the primary vehicles for federal health care legislation. Enacting major changes through budget reconciliation bills has a variety of other practical benefits in the political process. For example, the massive bills make possible a large number of trades and compromises between key lawmakers, committees, and the two chambers. Budget reconciliation bills are also exempt from filibusters in the Senate.


    Given this, budget offsets are often critical to the ultimate success of provisions to increase Medicare or Medicaid spending. Therefore, it is often important to identify, develop, or otherwise support offsetting provisions - changes that would reduce mandatory health spending in some way. For example, proponents of a Medicaid funding increase could support legislation to permit new versions of expensive biologic drugs that are off patent (commonly called "biosimilars"). CBO projects biosimilars could reduce Medicare Part B spending by about $5-6 billion over five years. Through a reconciliation bill, the Medicare savings from biosimilars could be used to offset the desired higher spending elsewhere in Medicare (e.g., physician reimbursement), in Medicaid or SCHIP.


    Medicare-Medicaid Waivers:


    While budget offsets between mandatory programs are routine in legislation, similar offsets are not permitted in combined Medicare and Medicaid waivers. Under longstanding policy, Medicare and Medicaid waivers must be budget neutral to the federal government. OMB, with advice from the CMS Office of the Actuary, determines if a proposed waiver is likely to be budget neutral to the federal government. Combined Medicare-Medicaid waiver projects are permitted and increasingly used to test major reforms, especially for dual eligibles. However, proposals for combined Medicare-Medicaid waivers may not use projected federal savings in one program to offset projected higher spending in the other.


    For example, a waiver project could propose Medicaid care management to reduce hospital admissions by dual eligibles. The federal shared of the cost of Medicaid care management would be more than offset by lower federal Medicare hospital spending. However, OMB policy does not allow such cross-program offsets when determining whether budget neutrality is met. This policy, coupled with the widely different funding and programmatic characteristics of Medicare and Medicaid, make many innovative, cost-saving waiver-based initiatives impossible.


    Like the budget neutrality policy, the policy against cross-program offsets in waivers is longstanding OMB policy but not required by statute or rule. Therefore, a new Obama Administration could easily alter or abolish the limitation - dramatically increasing the ability of states and HHS to design and test major health reforms.

    posted: August 20, 2008

    Medicare%20Policy%20Making.jpgThe next President and Congress will face many fiscal and policy challenges from the $436 billion Medicare program. Following my earlier quick primers on Medicaid policy making and Medicare and Medicaid waivers, here is a similar briefing on the primary vehicles of Medicare policy making.


    As a federal health program operating nationwide, Medicare policies are made through:


    Federal Medicare Statutes:


    Title XVIII of the Social Security Act sets forth the bulk of federal Medicare laws. Given the political importance and visibility of Medicare, Medicare statutes are extremely specific, especially on provider reimbursement, benefits, cost sharing, managed care, and provider conditions of participation. Therefore, CMS' rulemaking discretion is often limited.


    In the House, the Ways and Means Committee has primary jurisdiction over Medicare but often shares jurisdiction on certain issues with the Energy and Commerce Committee. In the Senate, the Finance Committee has primary jurisdiction for Medicare. The Medicare Payment Advisory Commission (MedPAC) advises Congress on Medicare issues and often proposes major policy changes. Like with Medicaid, Medicare legislative changes are typically accomplished through budget reconciliation bills rather than separate stand-alone legislation.


    Federal Medicare Rules:


    Most federal Medicare rules are promulgated by CMS (42 CFR Part 400 through 429). CMS must follow the same rulemaking and clearance processes for federal Medicaid rules. Medicare rules are developed by the relevant operating center or office with CMS, such as the Center for Medicare Management (CMM) for fee-for-service Part A and Part B issues and the Center for Drug and Health Plan Choice (CDHPC) for Part D and Medicare Advantage issues. Legal advice comes from the HHS Office of General Counsel (OGC).


    Before publication in the Federal Register, all proposed and final rules require approval of the HHS Secretary and the White House Office of Management and Budget (OMB). OMB's Medicare rule reviews are conducted primarily by the Medicare Branch in OMB's Health Division.


    Federal Medicare Guidance:


    CMS uses numerous vehicles to convey Medicare guidance, including tens of thousands of pages of manuals, instructions, and program transmittals to contractors, providers, suppliers, health plans, and drug plans. Within the framework of the statutes and rules, considerable operational and technical policy is also set through the Medicare Advantage and Part D drug benefit applications, bids, and contracts.


    Unlike in Medicaid - where CMS is often criticized for setting substantive policy through sub-regulatory guidance - Medicare guidance is more a product of a layering effect of highly specific statutes and regulations. Therefore, the Medicare administrative guidance focuses on execution issues, operational details (e.g., coding), and clarifications within and across the four complex, sometime conflicting parts of Medicare.


    Under a new Executive Order, OMB now has the right to prior review and approval of CMS guidance, particularly any sub-regulatory guidance involving issues about $100 million, which is virtually anything in Medicare or Medicaid. To learn more, read my earlier post on expansion of OMB's review authority and implications for policy making by CMS and the FDA.

    posted: August 12, 2008

    Medicare%20Medicaid%20Demos.jpgFederal waivers are powerful tools to demonstrate Medicare or Medicaid reforms, including new payment methods, benefit packages, and delivery systems. The business and policy opportunities are considerable. Here's a quick primer.


    Demonstration Waivers:


    Historically, federal policymakers have understood the need to test new ideas in the complex Medicare and Medicaid programs. Research and demonstrations projects - whether initiated by states, health services researchers, providers, health plans, CMS, or Congress - often lead to models or reforms available or mandated nationwide.


    Therefore, federal law permits the Secretary of Health and Human Services to waive certain provisions of the Social Security Act and associated regulations as needed to conduct demonstration projects in Medicare, Medicaid, or both Medicare and Medicaid. Waivers are purely discretionary unless legislation mandates a specific project.


    Medicaid Waivers under Section 1115:


    Section 1115 of the Social Security Act is the principal waiver authority in Medicaid. The HHS Secretary may waive most federal requirements regarding Medicaid benefit packages, eligibility, cost sharing, managed care, and other care delivery. A Medicaid demonstration may be statewide or for only a portion of the state (select counties). (States may also request similar waivers of federal law to reform SCHIP.)


    Ostensively, Medicaid waiver projects are research-oriented and intended to test the merits of a new reform(s) not permitted under current law. However, in practice, many Medicaid "demonstrations" are or soon evolve into indefinite, alternative models of Medicaid. Although under no obligation to do so, the HHS Secretary may approve similar or even identical waivers for multiple states.


    Medicaid waivers must be requested by the state Medicaid agency, with the approval of the governor. Federal officials may encourage states to propose waivers and Congress occasionally enacts legislation calling for waivers to demonstrate specific reforms. However, the vast majority of Medicaid waiver-based projects are initiated and designed by state governments, often with the assistance of outside experts.


    Once approved, Medicaid demonstration projects are operated by the state Medicaid agency, with oversight by CMS. The state may contract with third parties, such as health plans or other contractors, but s. 1115 demonstrations remain part of Medicaid and therefore the state is also responsible for the demonstration project.


    Roughly speaking, between a quarter and a third of Medicaid spending operates under s. 1115 waivers instead of standard Medicaid statutes and rules.


    Medicare Waivers under Sections 402/222:


    Under Sections 402/222, the HHS Secretary may waive Medicare statutes and rules to demonstrate new approaches to provider reimbursement, including tests of alternative payment methodologies, demos of new delivery systems, and coverage of additional services to improve the overall efficiency of Medicare. (Sections 402/222 refer to section 402[a] of the Social Security Amendments of 1967, as amended by section 222[a] of the Social Security Amendments of 1972.)


    Medicare demonstrations may be national or limited to certain states, regions, populations, provider types, or even providers or plans designated in advance. They may also be limited in other ways, such as capped in number of participating beneficiaries or providers. Unlike Medicaid demonstrations, participation in Medicare demonstrations, whether by beneficiaries or providers, is rarely mandatory and then only if required by a Congressional mandate.


    Any organization or individual may propose a Medicare waiver project. This includes providers, health plans, state Medicaid agencies, and health services researchers. CMS maintains an open invitation for outside parties to propose Medicare demonstration projects and the necessary waivers. However, the bulk of Medicare waiver-based demo projects are congressionally mandated in legislation or initiated administratively by CMS. CMS-initiated Medicare demonstration projects are often developed at the behest of the HHS Secretary, the White House Office of Management and Budget (OMB), the Medicare Payment Advisory Commission (MedPAC), or the Office of the Inspector General.


    Unlike many Medicaid waiver-based projects, most Medicare waiver projects tend to be genuine demonstrations projects with a careful research design and evaluation methodology. Given this research emphasis, requests to replicate currently operating Medicare demonstrations are often denied unless a research value can be shown.


    Occasionally, ss. 402/222 authority is used to issue what CMS informally calls "operational waivers." These later waivers are often made to address emergencies or fix short-term operational problems (e.g., provider payments after a natural disaster, reimburse states for drug payments during Medicare Part D transition).


    Once approved, Medicare waiver projects are administered by CMS either directly, through contractors (e.g., Medicare administrative contractors, Medicare Advantage plans), or (rarely) through states. Except for operational waivers, CMS evaluates each demonstration projects. Major Medicare demonstrations, including congressionally mandated projects, are evaluated by independent health services researchers hired by CMS. CMS' budget for evaluations is small, with congressionally mandated demonstrations using most of the available funding. This, coupled with the administrative burden of designing, operating, and monitoring waivers, tends to limit the number of Medicare waivers CMS is able to consider.


    Combined Medicare-Medicaid Projects:


    States may propose demonstration projects involving the waiver of both Medicaid and Medicare statutes and rules. Combining the authority offered by s. 1115 (Medicaid) and ss. 402/222 (Medicare), the HHS Secretary is able to consider an array of Medicare-Medicaid demonstration ideas, most notably state-wide or regional initiatives changing care delivery, benefit packages, and service reimbursement for dual eligibles.


    Examples of combined Medicare-Medicaid waiver projects include:


  • Massachusetts Senior Care Options: Fully integrated managed care program, offered through Senior Care Organizations (SCOs), covering the full range of acute and long-term care benefits for dually eligible and Medicaid-only recipients age 65 and over.

  • Minnesota Senior Health Options (MSHO): Combines all Medicare and Medicaid covered health benefits and support systems into one health care package. Covers beneficiaries aged 65 older who are dual eligibles or who have Medicaid only. MSHO enrollees are assigned a care coordinator who helps them get their heath care and related support services.

  • Historically rarer than Medicaid-only and Medicare-only demonstrations, combined waiver-based projects are increasingly popular as states develop integrated care models for dual eligibles and managed long-term care models. A variety of other activities by policymakers and the marketplace have also dramatically increased interest in and practicality of combined waiver demonstrations. These include the advent and popularity of Medicare Advantage Special Needs Plans (MA-SNPs), advances in risk adjustment methodologies and quality measurement, sharing of best practices, and collaborations among influential states, foundations, thought leaders, think tanks, and CMS.


    Waiver Application Process:


    Applications for Medicare or Medicaid waivers must include project scope and objectives, the specific statutes and rules to be waived, spending and enrollment projections, research design, evaluation plan, and details on safeguards appropriate to the project (e.g., quality, access, appeal rights).


    Applications for s. 1115 Medicaid waivers are submitted to the HHS Secretary or CMS Administrator and reviewed by the CMS Center for Medicaid and State Operations (CMSO). Other CMS offices - such as the Office of Research, Development and Information (ORDI) - may provide technical advice to CMSO.


    Proposals for Medicare waiver projects are submitted to the HHS Secretary or CMS Administrator and reviewed by the Office of Research, Development and Information (ORDI) and the affected operating center: the Center for Medicare Management for projects related to fee-for-service Part A or Part B and the Center for Drug and Health Plan Choice for Medicare Advantage or Part D related projects.


    The Medicare and Medicaid Cost Estimates Group in the CMS Office of the Actuary (OACT) estimates the fiscal impact of proposed Medicaid and Medicare waivers.


    Proposals for combined Medicaid-Medicaid waivers are naturally reviewed by several units of CMS, with a center, a cross-agency team, or the Administrator's office taking responsibility for coordinating the review. The particulars vary and are highly situational.


    Waiver Approval Process:


    Waiver applications - particularly the details of s. 1115 Medicaid waivers and combined Medicare-Medicaid demonstrations - are subject to complex and often lengthy negotiations. Given the technical complexity and policy and fiscal implications of Medicaid or combined Medicare-Medicaid waiver requests, specialized consultants often support senior state staff during CMS negotiations. Senior federal and state officials often weigh in during negotiations. This may include active participation by the HHS Secretary, CMS Administrator, Governor, and State Medicaid Director.


    Every proposed Medicaid or Medicare waiver program must be budget neutral to the federal government. That is, Medicaid or Medicare under the requested waivers must be projected to cost the applicable federal program no more than expected spending without the waivers. By tradition, proposed Medicare-Medicaid demonstrations may not claim federal savings in one program to offset higher federal costs in the other.


    While not required by federal law, the last four Administrations have enforced the policy expectation that all waivers are determined to be budget neutral prior to approval. The budget neutrality requirement applies only during the review process. Unless the waiver includes a cap on the federal share of spending, there is no fiscal penalty if a demonstration is ultimately not budget neutral.


    There is no set methodology - economic or actuarial - for determining federal budget neutrality. Successful Medicaid waiver negotiations are highly dependent on a state's ability to demonstrate budget neutrality to the satisfaction of federal officials, particularly to CMS actuaries and White House budget staff. Modeling budget neutrality often requires a rigorous mix of creative policy work and analytically sound forecasting. Political priorities and imperatives - together with caution regarding setting new precedents - often informally influence waiver negotiations and assessments of budget neutrality.


    Authority to issue waivers under s. 1115 and ss. 402/222 rests with the HHS Secretary. However, all Medicaid and Medicare waivers, regardless of size and scope, require the prior review and approval of the White House Office of Management and Budget (OMB). OMB may require changes, additional terms and conditions, or reject the proposed waivers.


    Once approved, waivers include specific terms and conditions negotiated with CMS. These vary considerably, depending on the nature of the demonstration.


    Medicaid demonstrations are typically approved for an initial five-year period. Thereafter, they may be renewed ever three years indefinitely. Renewals must be budget neutral and receive OMB approval.


    Medicare waiver projects initiated by CMS are typically operated for three or five years, depending on how much time is needed to test the policy change. Congressionally mandated waivers vary in length, with most three to five years in length and some indefinite.

    posted: May 9, 2008

    RDHC.jpgSerious and costly performance problems riddle U.S. health care. Because of overuse, under use, and misuse of health care, researchers at the Juran Institute and elsewhere estimate that about 30 percent of health care costs are generated by poor quality. Therefore, poor quality medical care will cost about $720 billion in 2008 (30% of $2.4 trillion).


    Poor quality also reduces productivity. For every dollar of health care spending caused by poor quality, poor care costs an estimated 50 cents in lost productivity. When applied to the $822 billion in care provided through employer-sponsored insurance, this translates to an additional $123 billion in costs.


    A recent study by the Health Research Institute at PricewaterhouseCoopers estimates that wasteful health care spending costs $1.2 trillion annually. Analyzing findings from a wealth of published studies, the PwC researchers looked at the cost of waste from clinically inappropriate care and overt errors, individual behaviors leading to costly health problems, and antiquated operational processes that add costs without providing any value.


    Making matters worse, research on the care patients receive from physicians, hospitals, and other providers paints a frustrating, even scary picture. For example, studies conducted by the respected RAND Corporation show that Americans receive clinically inadequate or inappropriate care at shockingly high rates.


    Specifically, RAND's research shows that acute care for insured adults is appropriate only 53.5 percent of the time on average. In other words, about 46 percent of acute care is clinically incorrect. Similarly, about 43.9 percent of chronic care and 45.1 percent of preventive care is inappropriate according to accepted medical standards. Children receive 68 percent of recommended care for acute medical problems, 53 percent of recommended care for chronic medical conditions, and 41 percent of recommended preventive care.


    The bottom line is health care - whether for adults or children - is inappropriate or unnecessary about half the time. Basically, it's a coin flip.


    Root Causes of Poor Quality, High Costs:


    Ultimately, three immutable laws of economics explain the underlying causes of this poor performance:


    1. Price is what you pay but value is what you get:


    Taking a page from Warren Buffet's playbook, buyers of health benefits must focus on value, not price. Price is an important part of the equation but meaningless if you don't know the value of what you are receiving for that price. Unfortunately, in health care we obsess on unit prices. In no other marketplace or domain of life do Americans - corporations, consumers, federal and state policymakers, news media - pay so much attention to price and so little to value.


    2. You get what you pay for:


    Today, we pay for quantity, not quality. Poor performers are sustained and rewarded. The best performers are financially penalized and professionally demoralized. The consequences are all too obvious.


    3. You can't fix what you can't see:


    In sharp contrast to virtually every other industry, health care is highly opaque. American health care is full of decision makers - consumers, physicians, and other providers, health plans, public officials - who lack the information needed to make decisions.


    Five Steps to Higher Performance:


    The problems are daunting but solvable. To improve the quality and cost effectiveness of health care delivery, purchasers and payors must tightly focus on strategies to expect, measure, disclose, reward, and support results:


    1. Expect Results:


  • Set actionable performance expectations for health care providers, particularly physicians, clinics, hospitals, pharmacies, and long-term care providers.

  • Ensure that expectations are clear, decision relevant, and supported by evidence.

  • 2. Measure Results:


  • Rigorously measure clinical and economic performance compared to expectations.

  • Use consensus endorsed measures such as those adopted by the National Quality Forum.

  • However, don't let the perfect be the enemy of the good or analysis be the enemy of action.

  • 3. Disclose Results:


  • Publicly report the clinical and economic performance.

  • Ensure that reporting of performance is frequent and timely.

  • Use reader-friendly formats that support the differing decision making needs of consumers, providers, health plans, purchasers (employers, Medicare, Medicaid), and the media.

  • 4. Reward Results:


  • Directly align coverage, reimbursement, cost sharing, market share, contracting, utilization management, and other key policies with performance expectations.

  • Specifically, reward higher performance through monetary incentives (pay-for-performance or P4P), greater market share, public recognition, and regulatory flexibility.

  • Reward positive consumer behaviors through incentives like differential co-pays (e.g., low or zero co-pay to see the best physicians, very high co-pay to see poor quality docs).

  • 5. Support Results:


    Support the infrastructure and processes essential to results-driven health care. These include:


  • Evidence-based medicine and value-based benefit designs.

  • Patient-centered care, including stronger physician-patient communication, referrals, and genuine follow-up.

  • Chronic care management.

  • Modern health information technology, including electronic medical records, e-prescribing, and e-lab results.

  • Comparative effectiveness research.

  • Health services research to build our knowledge base on costs, quality, and access.

  • Education and training of physicians, patients, and family care givers.

  • posted: February 29, 2008

    MedPAC%20Policy%202008.jpgThe Medicare Payment Advisory Commission (MedPAC) - the influential independent Congressional agency charged with advising Congress on a wide range of Medicare policy issues - has released its Medicare payment policy recommendations for 2009. The 355-page report includes a weath of information for those tracking Medicare provider or health plan issues, particularly annual provider payment updates, reforms to Medicare Advantage, and quality incentives.


    In summary, here are MedPAC's recommendations to Congress:


    Hospital Inpatient and Outpatient Services:


  • Increase Medicare payment rates for the acute inpatient and outpatient prospective payment systems in 2009 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.

  • Reduce the indirect medical education adjustment in 2009 by 1 percentage point to 4.5 percent per 10 percent increment in the resident-to-bed ratio. The funds obtained by reducing the indirect medical education adjustment should be used to fund a quality incentive payment program.

  • Physician Services:


  • Update Medicare Part B payments for physician services in 2009 by the projected change in input prices less MedPAC's adjustment for productivity growth.

  • Enact legislation requiring the Centers for Medicare and Medicaid Services (CMS) to establish a process for measuring and reporting physician resource use on a confidential basis for a period of two years.

  • Outpatient Dialysis Services:


  • Update the Medicare composite rate in CY 2009 by the projected rate of increase in the end-stage renal disease market basket index less MedPAC's adjustment for productivity growth.

  • MedPAC reiterated its recommendation that the Congress implement a quality incentive program for physicians and facilities that treat dialysis patients.

  • Skilled Nursing Facility Services:


  • Eliminate the update to Medicare payment rates for skilled nursing facility services for FY 2009.

  • Establish a quality incentive payment policy for skilled nursing facilities in Medicare.

  • To improve quality measurement for skilled nursing facilities, the Secretary of Health and Human Services should (a) add the risk-adjusted rates of potentially avoidable re-hospitalizations and community discharge to its publicly reported post-acute care quality measures; (b) revise the pain, pressure ulcer, and delirium measures currently reported on CMS's Nursing Home Compare website; and (c) require skilled nursing facilities to conduct patient assessments at admission and discharge.

  • Home Health Services:


  • Eliminate the update to Medicare payment rates for home health care services for CY 2009.

  • Inpatient Rehabilitation Facility Services:


  • The update to payment rates for Medicare inpatient rehabilitation facility services should be eliminated for FY 2009.

  • Long-Term Care Hospital Services:


  • Update Medicare payment rates for long-term care hospitals for rate year 2009 by the projected rate of increase in the rehabilitation, psychiatric, and long-term care hospital market basket index less MedPAC's adjustment for productivity growth.

  • Medicare Advantage Special Needs Plans:


  • Establish additional, tailored performance measures for Medicare special needs plans (SNPs) and evaluate their performance on those measures within three years.

  • Furnish beneficiaries and their counselors with information on special needs plans that compares their benefits, other features, and performance with other Medicare Advantage plans and traditional fee-for-service Medicare.

  • Require chronic condition special needs plans to serve only beneficiaries with complex chronic conditions that influence many other aspects of health, have a high risk of hospitalization or other significant adverse health outcomes, and require specialized delivery systems.

  • Require dual-eligible special needs plans within three years to contract, either directly or indirectly, with states in their service areas to coordinate Medicaid benefits.

  • Require special needs plans to enroll at least 95% of their members from their target population.

  • Eliminate dual-eligible and institutionalized beneficiaries' ability to enroll in Medicare Advantage plans, except special needs plans with state contracts, outside of open enrollment. They should also continue to be able to disenroll and return to fee-for-service at any time during the year.

  • Extend the authority for Medicare special needs plans that meet the above conditions.

  • Part D Enrollment, Benefit Offerings, and Drug Plan Payments:


  • Make Medicare Part D claims data available regularly and in a timely manner to congressional support agencies (e.g., GAO, CBO) and selected executive branch agencies (e.g., OIG) for purposes of program evaluation, public health, and safety.

  • Medicare Savings Programs and Part D Low-Income Drug Subsidy:


  • Increase State Health Insurance Assistance Program funding for outreach to low-income Medicare beneficiaries.

  • Raise Medicare Savings Program income and asset criteria to conform to Part D low-income drug subsidy criteria.

  • Change program requirements so that Social Security Administration screens low-income drug subsidy applicants for federal Medicare Savings Program eligibility and enrolls them if they qualify.

  • To read the full MedPAC report, click here (large PDF file).

    posted: February 1, 2008

    Medicare%20Advantage%20Extra%20Benefits.jpgEnrollment in Medicare Advantage plans has jumped 63 percent since 2005. Over 22 percent of all Medicare beneficiaries - 8.8 million total - now receive their Medicare Part A and Part B benefits through a private health plan instead of the traditional fee-for-service system. About 88 percent of all Medicare Advantage plan enrollees also receive their Part D drug benefits from the same health plan (as part of a MA-PD).


    A new analysis confirms that Medicare Advantage plans provide significantly more health benefits and lower cost sharing than traditional fee-for-service (FFS). The value-added of health plan enrollment is greatest for Medicare beneficiaries enrolled in the genuinely managed care options, notably HMOs, PPOs, and Special Needs Plans (SNPs). The 20 percent of Medicare Advantage enrollees in relatively unmanaged Private Fee-for-Service (PFFS) plans receive extra benefits compared to the government-run traditional fee-for-service system. However, the HMO, PPO, and SNP options provide substantially more benefits and lower cost sharing than the PFFS model plans. The PFFS plans, which are controversial on Capitol Hill, typically operate only in rural areas.


    To sum up, in terms of extra benefits for Medicare beneficiaries, Medicare Advantage plans using the HMO, PPO, or SNP models are superior to both traditional fee-for-service and PFFS plans. The PFFS plans are superior to traditional fee-for-service, at least in terms of extra benefits and cost sharing.


    To read the issue brief - by Mark Merlis and sponsored by the Kaiser Family Foundation - click here (opens as a PDF).


    To learn more, please check out my other posts on Medicare and Medicare Advantage issues.

    posted: October 9, 2007

    Comparative%20Effectiveness%20Methods.jpgThe journal Medical Care has published series of outstanding articles on emerging methods and tools to compare the effectiveness of medical therapies, prescription drugs, and devices. The peer-reviewed articles are an outgrowth from a symposium on comparative effectiveness research sponsored by the Agency for Healthcare Research and Quality (AHRQ).


    Here are links to the individual articles in PDF format:


  • Emerging Methods in Comparative Effectiveness and Safety: Symposium Overview and Summary.

  • Medicare Part D Data: Major Changes on the Horizon.

  • Methodologic Challenges to Studying Patient Safety and Comparative Effectiveness.

  • Creating and Synthesizing Evidence With Decision Makers in Mind: Integrating Evidence From Clinical Trials and Other Study Designs.

  • Improving Depiction of Benefits and Harms: Analyses of Studies of Well-Known Therapeutics and Review of High-Impact Medical Journals.

  • Cluster Randomized Trials: Opportunities and Barriers Identified by Leaders of Eight Health Plans.

  • Design of Cluster-Randomized Trials of Quality Improvement Interventions Aimed at Medical Care Providers.

  • Designed Delays Versus Rigorous Pragmatic Trials: Lower Carat Gold Standards Can Produce Relevant Drug Evaluations.

  • Practice-Based Evidence Study Design for Comparative Effectiveness Research.

  • Studying Prescription Drug Use and Outcomes With Medicaid Claims Data: Strengths, Limitations, and Strategies.

  • Assessment of Adherence to and Persistence on Disease-Modifying Antirheumatic Drugs (DMARDs) in Patients With Rheumatoid Arthritis.

  • Out-of-Pocket Pharmacy Expenditures for Veterans Under Medicare Part D.

  • Developing Indicators of Inpatient Adverse Drug Events Through Nonlinear Analysis Using Administrative Data.

  • Real-Time Vaccine Safety Surveillance for the Early Detection of Adverse Events.

  • Evaluation and Overview of the National Electronic Injury Surveillance System-Cooperative Adverse Drug Event Surveillance Project (NEISS-CADES).

  • Using Inverse Probability-Weighted Estimators in Comparative Effectiveness Analyses With Observational Databases.

  • A Simulation-Based Evaluation of Methods to Estimate the Impact of an Adverse Event on Hospital Length of Stay.

  • Evaluating the Validity of an Instrumental Variable Study of Neuroleptics: Can Between-Physician Differences in Prescribing Patterns Be Used to Estimate Treatment Effects?

  • Heterogeneity and the Interpretation of Treatment Effect Estimates From Risk Adjustment and Instrumental Variable Methods: Surgery for Early-Stage Breast Cancer.

  • Increasing Levels of Restriction in Pharmacoepidemiologic Database Studies of Elderly and Comparison With Randomized Trial Results.

  • Use of Propensity Score Technique to Account for Exposure-Related Covariates: An Example and Lesson.

  • Using Propensity Scores Subclassification to Estimate Effects of Longitudinal Treatments: An Example Using a New Diabetes Medication.

  • Adjustments for Unmeasured Confounders in Pharmacoepidemiologic Database Studies Using External Information.

  • Comparison of Meta-Analytic Results of Indirect, Direct, and Combined Comparisons of Drugs for Chronic Insomnia in Adults: A Case Study.
  • posted: October 5, 2007

    Medicare%20Payment%20Policy%20Primers.jpgThe Medicare Payment Advisory Commission (MedPAC), the savvy nonpartisan shop that advises Congress on Medicare program issues, has updated its excellent series of primers. Extremely complex and changing constantly, Medicare payment policy will drive $479 billion in health spending in 2008. MedPAC's primers, typically four crisply-written pages, explain the basic steps and methodologies Medicare uses to reimburse fee-for-service providers, Medicare Advantage plans, and Medicare prescription drug plans.


    Here are MedPAC's updated primers on the basics of Medicare reimbursement policy (click on links to open in PDF format):


    Medicare Hospital Reimbursement:


  • Hospital acute inpatient services payment system (inpatient prospective payment system or IPPS)

  • Outpatient hospital services payment system (outpatient prospective payment system or OPPS)

  • Critical access hospital payments

  • Psychiatric hospital services payment system

  • Medicare Post-Acute Provider Reimbursement:


  • Skilled nursing facility services payment system

  • Inpatient rehabilitation facilities payment system

  • Long-term care hospitals payment system

  • Home health care services payment system

  • Medicare Physician Reimbursement:


  • Physician services payment

  • Medicare payment to physicians for professional liability insurance

  • Geographic practice cost indexes

  • Medicare Managed Care (Part C and Part D):


  • Medicare Advantage plan payment system

  • Medicare Part D payment system (PDPs and MA-PDs)

  • Other Medicare Reimbursement Policies:


  • Outpatient dialysis services payment system (ESRD facilities)

  • Durable medical equipment payment system (DME reimbursement)

  • Oxygen and oxygen equipment payment system

  • Ambulatory surgical centers payment system

  • Clinical laboratory services payment system

  • Outpatient therapy services reimbursement

  • Hospice services reimbursement

  • posted: July 20, 2007

    ASP%20for%20Biologics.jpgThe well-regarded industry trade journal Biotechnology Healthcare has an excellent article by Patrick Mullen on The Arrival of Average Sales Price. In it, Mr. Mullen interviews several top industry experts (yes, including me) on the rationale for and impact of Average Sales Price (ASP) and how health plans are following Medicare's lead:


    Health plans are beginning to adopt the average sales price method of paying oncologists and other specialists for office-administered drugs. ASP is more transparent and has a smaller markup than its much maligned predecessor, average wholesale price. The speed of ASP uptake will affect everyone who makes, sells, prescribes, and takes these medications.


    Average Sales Price and Drug Reimbursement:

    In 2005, as part of the Medicare Modernization Act (MMA), the way Medicare Part B reimbursed physicians and clinics for biologics and other physician-administered injectable drugs changed fundamentally. Medicare Part B, the nation's largest payor of injectable drugs, started using Average Sales Price (ASP) to base payments for most drug products covered by Part B fee-for-service.


    Using a new, tighter, and more accurate definition of ASP, drug manufacturers must report the Average Sales Price of each of their products. CMS, through its Part B claims processing contractors, reimburses physicians for covered drug products administered to Medicare benies at 106% of ASP, adjusted for volume.


    Wide Ranging Impact of ASP in Marketplace:


    Physician offices, particularly oncologists, have seen significant drops in Medicare revenue. While the impact on drug makers is mixed, overall the switch to ASP has tightened profit margins and required many manufacturers to revise projections.


    Also, like the move of Medicaid to a new and publicly reported version of Average Manufacturer Price (AMP), the ASP reforms are another way drug prices are becoming transparent and flatter or less variable. The transformative effect on business practices and strategy should not be underestimated.


    For Medicare Part B, the switch to ASP-based payment has saved billions of dollars and dramatically slowed the growth in Part B prescription drug spending. Beneficiaries have benefited as well, since they are paying the 20% Part B copay on lower prices. However, there is some evidence that some docs are switching drug therapies (which may or may not be clinically optimal for patients) or forcing patients to receive injections from other settings, such as outpatient hospitals. The behavioral effect on physician practices is still hard to discern beyond the realm of anecdote but is something worth monitoring closely, especially in light of low Medicare rates for professional fees.


    To Learn More About ASP:


    In addition to the article in Biotechnology Healthcare mentioned above, here are some MedPAC resources to understand ASP, Medicare spending on drugs and biologics, and Medicare reimbursement of physician services:


  • MedPAC Report on Impact of Changes in Medicare Payments for Part B Drugs.

  • MedPAC Data Book Chapter on Medicare Drug Spending and Utilization.

  • Primer on Medicare Part B physician payment.

  • posted: July 2, 2007

    Private%20Equity%20and%20Health%20Care.jpgThe Carlyle Group, a large private equity firm, announced today that it is buying Manor Care, a large operator of nursing homes and long-term care services, for $6 billion. This got the good folks at Marketplace Radio to ask why private equity firms seem to be so interested in buying up health care companies. And the resulting radio story broadcast today brought together an unusual cast of characters, including myself and Michael Moore. Yes, that Michael Moore.


    To listen to the radio interview, click here. To read the transcript online, click here.

    posted: June 25, 2007

    CMS%20Nomination%20Hearings.jpgKerry Weems, Secretary Mike Leavitt's deputy chief of staff and President Bush's nominee to head the Centers for Medicare and Medicaid Services (CMS), faces tough Senate confirmation hearings in July. A savvy, career HHS insider with a wealth of experience in the fiscal and organizational mechanics of federal health programs, Mr. Weems is a good choice for an administrator to steer CMS in the last 18 months of the Bush Administration. But he nonetheless faces several serious challenges during the confirmation process. A few examples:


    1. Efforts to Hold Confirmation Hostage to Policy Commitments:


    Senators, trade groups, and advocates of all flavors have long policy wish lists. As FDA Commissioner Andrew C. von Eschenbach, M.D. can attest, the confirmation process - in committee and on the Senate floor - is a unique opportunity for Democrats and even some Republicans to hold up confirmation until the nominee or Department concedes to certain policy demands. And the wish lists for the FDA are nothing compared to what many want from CMS.


    2. A Maze of Medicare and Medicaid Controversies:


    For better or worse, a wide range of delicate issues at CMS were left unexamined during Republican control of Congress. The Democrats now in charge of the Hill are eager to make political hay with health issues, reshape policy, and give their core constituencies a crack, albeit by proxy, at challenging CMS actions in a public forum.


    Regardless of the Administration or the party running the Executive Branch, Medicare and Medicaid are full of dirty little secrets, some real and some imagined, intertwined within a massive level of complexity prone to misconception and manipulation by political foes and those of varying motivations eager for a larger slice of an $800 billion+ pie. Many critics of CMS see the Weems nomination hearings and floor debate as a unique opportunity.


    3. Nomination of a Non-Wonk:


    While Kerry Weems has a lot going for him and CMS would likely benefit from leadership by a career insider, he is not a health policy wonk. That is, he is not a academic, researcher, health policy maker, or lobbyist (not that most lobbyists are mavens but they like playing them on TV). He's a budget and finance guy and a career one at that. Not a bad thing at all, but a potential problem in a town that grossly overvalues what MD's and PhD's typically know about health policy or finance and sees "budget guys" in health programs as somehow being on a first name basis with the devil.


    Some advocacy groups, who naturally have the ear of Dems in the Senate, are concerned that Mr. Weems lacks the requisite substantive expertise in Medicare or Medicaid policy (well, make that Medicare, since unfortunately few inside the Beltway understand or track Medicaid). When a Republican is in charge of the White House, Dems and advocates are much more comfortable with an academic running CMS. And when a Democrat is in charge, they virtually insist on it. In its 30-year history, CMS (formerly named HCFA) has had nearly as many administrators and acting administrators. Add to this extremely high turnover the fact that CMS is rather unique in having a tiny number of political appointees.


    There are notable exceptions. Gail Wilensky, Ph.D., one of the nation's most talented health policy experts, turned out to be an excellent administrator in the early 1990's. And there have been times where the agency was led by a budget guy, most notably Leonard Schaeffer, who ran HCFA is its early days. He came to HCFA from managing health budgets for the State of Illinois and later was the founding chairman and CEO of WellPoint.


    Kerry Weems will have his hands full next month. But he's a smart fellow, with a keen sense for detail, and HHS and CMS staffs are briefing him around the clock in preparation. He'll do well before the Senate if given a fair shake.

    posted: June 19, 2007

    Medicare%20PFFS%20Plans.jpgOf the 45 million Medicare beneficiaries, 19 percent are enrolled in a Medicare Advantage health plan. The other 81 percent choose to remain in traditional fee-for-service Medicare for Part A and Part B services. Governed under Part C of Medicare, Medicare Advantage health plans come in several flavors, most notably HMOs, PPOs, special needs plans (SNPs), and private fee-for-service plans.


    While only about 16% of Medicare Advantage enrollees and about 3 percent of all Medicare beneficiaries are in private fee-for-service plans, these PFFS plans are receiving considerable attention by Congress and Wall Street. To help you understand the unusual dynamics at play, here are some helpful resources:


    An Examination of Medicare Private Fee-for-Service Plans: This paper by Jonathan Blum, et al from Avalere Health, covers the history, features, trends, and policy and market implications of PFFS plans.


    The Medicare Advantage Program: Trends and Options: Congressional Budget Office (CBO) report, with CBO's projections for Medicare managed care enrollment.


    Private Fee-For-Service Plans in Medicare Advantage: Testimony by Mark E. Miller, Ph.D., executive director of the Medicare Payment Advisory Commission (MedPAC) on MedPAC's observations and recommendations.


    Private Fee-For-Service Plans In Medicare: Rapid Growth and Future Implications: In testimony before the House Ways and Means Committee, Patricia Neuman, Ph.D, a Kaiser Family Foundation vice president, offered a thoughtful overview of many of the key issues.


    The Impact of Reductions in Medicare Advantage Funding on Beneficiaries: This study, by Adam J. Atherly, Ph.D. and Kenneth E. Thorpe, Ph.D. of Emory University, shows financial savings Medicare Advantage enrollees receive and therefore the adverse impact on benies of proposed cuts to Medicare Advantage plans.


    Medicare Advantage Program Payment System: An excellent 4-page primer by MedPAC on how CMS sets Medicare Advantage plan payments.

    posted: March 28, 2007

    Effective%20Health%20Care%20Program.jpgNormally, $15 million a year doesn't buy you much in the federal government. A notable exception is the Effective Health Care Program at the Agency for Healthcare Research and Quality (AHRQ). Drug manufacturers, device makers, health plans, state Medicaid agencies, Wall Street analysts, physicians, and patient groups should all follow it closely.


    The Medicare Modernization Act of 2003 (MMA) authorized AHRQ to conduct and support research on outcomes, comparative clinical effectiveness, and appropriateness of pharmaceuticals, devices, and health care services. With a modest budget, a tiny but dedicated staff, and partnerships with top research institutions, AHRQ's Effective Health Care Program involves three approaches to research the comparative effectiveness of different medical treatments, drug therapies, and clinical practices:


    1. Review and Synthesize Knowledge: AHRQ's network of 12 Evidence-based Practice Centers systematically review published and unpublished scientific evidence on what is known. Given the huge volume of studies and journal articles produced every year, it is next to impossible for providers, payors, and other key decision makers to keep up and even harder for them to thoughtfully weigh the evidence. AHRQ and its research partners synthesize the science and build a meaningful evidence base.


    2. Promote and Generate New Knowledge: The DEcIDE Research Network studies new scientific evidence and analytic tools in an accelerated and practical format. DEcIDE stands for "Developing Evidence to Inform Decisions about Effectiveness." Comprised of 13 university research centers and think tanks, the DEcIDE network conducts accelerated practical studies about the comparative clinical effectiveness, safety, and appropriateness of specific health care services, drugs, and devices. In other words, what works best for patients.


    3. Compile Findings and Translate and Disseminate Knowledge to Decision Makers: AHRQ's John M. Eisenberg Clinical Decisions and Communications Science Center takes the research results and transform them into into a variety of useful, actionable formats for stakeholders (e.g., providers, payors, purchasers, patients, manufacturers). Specifically, these include (a) consumer guides (short summaries of health care research that can help with decisions about treatments), (b) clinician guides (brief evidence summaries to assist clinical decision making), (c) policymaker guides (short reports of research evidence for use in health care policy making), and (d) white papers on state-of-the-art concepts in health communication.


    The past couple years, the initiative has focused on ten priority health care conditions, selected because of their high impact on Medicare, Medicaid, SCHIP, and other federal health programs:


  • Arthritis and non-traumatic joint disorders

  • Cancer

  • Chronic obstructive pulmonary disease and asthma

  • Dementia including Alzheimer's disease

  • Depression and other mood disorders

  • Diabetes mellitus

  • Ischemic heart disease

  • Peptic ulcer disease and dyspepsia

  • Pneumonia

  • Stroke and hypertension

  • Later this year, AHRQ will entertain nominations for other priority conditions.


    Here's a sampling of the excellent work already generated. For a directory of these reports, with free access in PDF format, click here:


  • Medication Therapy Management Programs in Medicare Part D Prescription Drug Plans

  • Comparative Effectiveness of Second-Generation Antidepressants in the Pharmacologic Treatment of Adult Depression

  • Efficacy and Comparative Effectiveness of Off-Label Use of Atypical Antipsychotics

  • Comparative Effectiveness of Management Strategies for Renal Artery Stenosis

  • Comparative Effectiveness and Safety of Analgesics for Osteoarthritis

  • Comparative Effectiveness of Epoetin and Darbepoetin for Managing Anemia in Patients Undergoing Cancer Treatment

  • Effectiveness of Noninvasive Diagnostic Tests for Breast Abnormalities

  • Comparative Effectiveness of Management Strategies for Gastroesophageal Reflux Disease

  • The Effective Health Care Program has 40 other reports in the works, covering a wide range of topics. These include more comparative effectiveness reviews of specific drugs as well as tools to measure quality, reduce errors, and monitor therapies. To get notified when new research becomes available, sign up for AHRQ's email list.

    posted: March 22, 2007

    Enhancing%20Drug%20Safety.jpgThe Enhancing Drug Safety and Innovation Act of 2007 (reintroduced as Senate Bill 484), sponsored by Senator Mike Enzi (R-WY) and co-sponsored by Senator Ted Kennedy (D-MA), is worth watching as the new Congress contemplates pharmaceutical industry legislation.


    As proposed, The Enhancing Drug Safety and Innovation Act of 2007 has five components:


    1. Amends the Federal Food, Drug, and Cosmetic Act to require an application for approval for a new drug or biological product to include a proposed Risk Evaluation and Mitigation Strategy (REMS). Designed to be an integrated, flexible mechanism to acquire and adapt to new safety information about a drug, REMS would require (a) labeling for the drug for use by health care providers; (b) submission of reports for the drug; and (c) a statement as to whether the analysis and surveillance are sufficient to assess the serious risks of the drug. REMS is modeled after the risk management approach taken by the European Union.


    2. Establishes a Drug Safety Oversight Board.


    3. Requires the Secretary of Health and Human Services to establish the Reagan-Udall Institute for Applied Biomedical Research as a nonprofit corporation to advance the Critical Path Initiative to modernize medical product development, accelerate innovation, and enhance product safety. Requires the Institute to have a Board of Directors. Allows the Board to coordinate and collaborate with other entities to conduct research, education, and outreach and to modernize the sciences of developing, manufacturing, and evaluating the safety and effectiveness of diagnostics, devices, biologics, and drugs.


    4. Amends the Public Health Service Act to require the Secretary, acting through the Director of the National Institutes of Health (NIH), to establish and administer a clinical trial registry database and a clinical trial results database. Requires a responsible party for a clinical trial to submit clinical trial information to the NIH Director for inclusion in the databases.


    5. Requires each individual under consideration for a term on an FDA advisory committee providing advice or recommendations to the Secretary regarding FDA activities to disclose industry financial interests.


    To learn more, check out the Senate Committee on Health, Education, Labor, and Pensions' hearing on the bill.

    posted: March 5, 2007

    HHS%20and%20CMS%20Leadership.jpgMy sources in the Bush Administration tell me that the President will nominate Kerry Weems as the next administrator of the Centers for Medicare and Medicaid Services (CMS). Mr. Weems, a savvy finance expert with a long career at HHS, is well-liked by HHS Secretary Mike Leavitt, former Secretary Tommy Thompson, and the White House Office of Management and Budget (OMB). He served as HHS' budget director and is now deputy chief of staff.


    Nomination of Mr. Weems will be a departure from tradition. Historically, CMS administrators have been either academics or lobbyists. The academics often lack leadership and executive skills and the lobbyists often come across as too Machiavellian. Since the agency's creation in 1978, CMS (formerly called HCFA) has had about 30 administrators or acting administrators - about one per year. As a respected career insider, Mr. Weems is well positioned to deal with CMS' powerful, technocratic, hardworking but often demoralized bureaucracy.


    Leslie Norwalk, CMS acting administrator, is expected to resign sometime in April. Ms. Norwalk, a health industry lawyer, was counselor to the CMS administrator (Tom Scully) from 2001-2004 and became deputy administrator in 2004.


    Herb Kuhn will likely take over as acting administrator while Kerry Weems goes through the grueling Senate confirmation process. Mr. Kuhn, a highly respected hospital industry guru, has been director of CMS' Center for Medicare Management (CMM), which oversees Medicare Part A and Part B policy and Medicare's vast fee-for-service operations. Mr. Kuhn, has been serving as acting deputy administrator. He's a talented, well-liked fellow, and an excellent prospect for deputy administrator.


    As CMS goes through the musical chairs, speculation is growing that HHS Secretary Mike Leavitt plans to leave and rejoin the private sector this spring.

    posted: March 3, 2007

    Office%20of%20Management%20and%20Budget.jpgUnder a new Executive Order, President Bush has significantly expanded the authority of the White House Office of Management and Budget (OMB) over policymaking by the Centers for Medicare and Medicaid Services (CMS) and the Food and Drug Administration (FDA).


    Specifically, OMB now has the authority to review and approve a vast array of written guidance issued day-to-day by CMS and FDA. The expansion of OMB's oversight authority has far-reaching implications for Medicare and Medicaid policy and the regulation of the drug and device industries.


    In recent years, an increasing amount of agency policymaking has come in the form of "sub-regulatory guidance." That is, written guidance that does not go through the formal rulemaking process. In the case of CMS, this written guidance shows up, for example, as memorandums to health plans, letters to state officials, and manuals or other instructions. In its role administering the Federal Food, Drug, and Cosmetic Act (FDCA), the FDA has its own system of guidance documents.


    While the FDA approach to sub-regulatory guidance has its own critics and limitations, the FDA approach is better organized and managed than CMS' approach. FDA has been at it longer than CMS but also has (relatively speaking) a narrower, more explicit scope of work. The FDCA and all its amendments is no walk in the park, but Titles 18, 19, and 21 of the Social Security Act are exercises in pure legislative surrealism.


    President Bush's new Executive Order means that much of this written guidance is now subject to prior review and approval by OMB. While OMB has always been a key player, particularly in Medicare and Medicaid policy, the E.O. greatly increases OMB's influence and may result in a substantial power shift in many day-to-day issues affecting providers, health plans, drug manufacturers, states, and other stakeholders. (In the interest of full disclosure, my career includes service on OMB's Medicare and Medicaid team.)


    For those interested in more background, below is a quick overview of the rulemaking process and the increasing role of written guidance in lieu of rules.


    OMB%20Rule%20Review.jpgBackground on OMB Regulatory Review:


    Virtually all CMS and FDA proposed and final rules are subject to prior review and approval of the Office of Management and Budget (OMB), the powerful policy management arm of the White House. (It's important to note that OMB also reviews Medicare and Medicaid waivers, agency budget requests and legislative proposals, and written testimony to Congress.) OMB's regulatory oversight was created by Presidential Executive Order in the Reagan Administration and modified but retained by the Clinton Administration.


    The basic idea is to help ensure that agency rulemaking activities follow the sitting President's policy objectives to the extent possible under the laws passed by Congress. OMB oversight also allows for a more thoughtful and disciplined approach to regulations, to keep track of the impact of agency rules on individuals, businesses, and states and guard against such things as unnecessary or excessive regulations and conflicting rules across different federal agencies.


    In principle, the rulemaking process is designed to (1) inform the public of planned rules in detail; (2) give the public, including stakeholders and experts, an opportunity to comment, provide new information, and suggest alternatives; (3) ensure the rulemaking agency considers and responds to public comments before issuing final rules; (4) ensure that all federal rules can be found in a central publication (published in the Federal Register and formally codified in the Code of Federal Regulations); and (5) provide a comprehensive public record for use by the courts, Congress, and the news media in overseeing an agency's use of power and interpretation of statutes.


    Written Guidance Instead of Formal Rules:


    In other words, the formal rulemaking process provides for far more thoughtful, documented, and transparent policymaking than the so-called sub-regulatory guidance. However, developing proposed and final rules is a laborious process taking months and sometimes even years. And CMS faces the imperatives of implementing massive pieces of legislation, such as the Deficit Reduction Act (DRA) and the Medicare Modernization Act (MMA). Even if CMS always had the necessary staff, expertise, systems, and budget to implement the avalanche of Medicare and Medicaid legislation on time (it never does, unfortunately), there are just not enough hours in the day to promulgate all the necessary rules to meet statutory deadlines.


    Therefore, much of CMS policymaking is done through written guidance, letters, memos, and memos - and not regulations. While it's easy to understand the practical pressures, many legal observers seriously question CMS's compliance with the Administrative Procedures Act (APA). The APA, originally enacted in 1946, governs when and how agencies must go through the formal rulemaking process.


    Privately, several players have told me how CMS's informal approach to many Medicare and Medicaid policies would likely not stand up in federal court. However, trade groups, states, and other stakeholders don't want to anger the increasingly powerful agency - and, in many cases, written guidance today is better than waiting months or even years for a rule.


    Like its sister agency CMS, the FDA is increasingly using sub-regulatory guidance in lieu of formal rules. Given the demands facing the FDA, including a variety of reforms and pending legislative changes, this is expected to increase. To get a flavor, check out the list of guidance documents from the FDA's Center for Drug Evaluation and Research (CDRR). You'll see it includes various backgrounders mixed with policy statements and instructions.

    posted: January 14, 2007

    Medicare%20PPS%20Book%20Cover.jpg
    When asked about health care innovations, especially practices directed at controlling costs, most policymakers and wonks point to private sector solutions, such as the cost-constraining effects of HMOs in the 1990's or today's ideation of consumer-directed health plans. But is this conventional wisdom wrong? What about public sector health policies, most notably in Medicare or Medicaid?


    In a fascinating new book, two top thought leaders show how a powerful and complex Medicare payment formula led to fundamental changes across the health care system, facilitating a dramatic power shift from providers (hospitals and physicians) to buyers (Medicare, Medicaid, and employers).


    Influence of Medicare PPS on U.S. Health System:


    In Medicare Prospective Payment and the Shaping of U.S. Health Care, Rick Mayes, Ph.D. and Robert A. Berenson, M.D. describe how Medicare's transformation from retrospective, cost-based payment methods to prospective payment systems (PPS) "both initiated and repeatedly intensified the economic restructuring of the U.S. health care system." In addition to providing a thoughtful history of Medicare PPS from a research concept to the single most powerful financial driver in health care, Drs. Mayes and Berenson make the case that the public sector has been the major innovator.


    In building their case and exploring how PPS works in the real world, they interviewed 65 health financing experts, including several former CMS administrators. Bob Berenson and Rick Mayes do a nice job challenging conventional wisdom, which in health policy is always a good thing.


    Earlier in my career, I cut my teeth on PPS at the White House Office of Management and Budget, where my scope included Medicare Part A and hospital reimbursement policy. Therefore, for me, Medicare Prospective Payment and the Shaping of U.S. Health Care made for a particularly intriguing read. But you don't need to be a Medicare wonk to understand and benefit from this crisp, well-written book.


    Prospective Payment Systems in a Nutshell:


    Medicare%20PPS%20in%20Nutshell.jpgOld style cost-based or retrospective systems are inherently inflationary, reward inefficient providers, and reimburse largely for factors unrelated to the patient. In a nutshell, prospective payment is based on reimbursing health care providers for factors outside their control - notably the diagnosis and other relevant characteristics of the patient and outside, industry-wide factors like inflation and geographic variation in wage rates.


    Under a prospective payment system (PPS), a provider receives a fixed payment to cover an episode of care during a period of time. The payment formulas are highly complex, with many adjustments to address everything from outliers, teaching-related costs, and uncompensated care to more purely political issues. The idea is to set the bundled, prospective payment on what it costs an efficient provider to serve the patient. The efficient players make money; the inefficient lose money.


    Every year, rates are modified to reflect inflation or technical refinements. However, annual increases are often driven by federal budget constraints or attempts to moderate provider profit margins. Also, because PPS is about promoting economic efficiency, payments have little to do with quality of care or patient safety - hence, recent interest in adding elements of Pay for Performance (P4P) into the system.


    Medicare began using the PPS approach for inpatient hospital services in 1983-84. Through a series of Congressional changes, PPS-based approaches are now used in Medicare to pay outpatient hospital services, skilled nursing facilities, home health agencies, and hospice organizations. While each provider type has its own kind of prospective payment method, the concept is the same. Prospective payment is also used heavily by state Medicaid programs and employer-sponsored health plans.

    posted: January 10, 2007

    Drug%20Price%20Negotiations%20Continued.jpgWith sound, furry, and a fair quota of sound bites and photo opps, House Democrats are pushing for quick adoption of H.R. 4, the Medicare Prescription Drug Price Negotiation Act of 2007. The bill would require the Secretary of HHS to negotiate with pharmaceutical manufacturers on drug prices in Medicare Part D.


    As I explained in an earlier post, federal drug price negotiations would not generate savings above what are already achieved via the marketplace - unless Congress wants to severely limit the number of new and existing drugs available to seniors. However, the conclusion is counter intuitive to the uninitiated, especially given media hype and partisan palaver.


    Today, the Congressional Budget Office (CBO) told Rep. John Dingell, new Ways and Means Committee chairman, that federal drug price negotiations under H.R. 4 would save nothing. Here are the salient points of CBO's official estimate:


    CBO estimates that H.R. 4 would have a negligible effect on federal spending because we anticipate that the Secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by PDPs under current law. Since the legislation specifically directs the Secretary to negotiate only about the prices that could be charged to PDPs, and explicitly indicates that the Secretary would not have authority to negotiate about some other factors that may influence the prescription drug market, we assume that the negotiations would be limited solely to a discussion about the prices to be charged to PDPs. In that context, the Secretary's ability to influence the outcome of those negotiations would be limited. For example, without the authority to establish a formulary, we believe that the Secretary would not be able to encourage the use of particular drugs by Part D beneficiaries, and as a result would lack the leverage to obtain significant discounts in his negotiations with drug manufacturers.


    Instead, prices for covered Part D drugs would continue to be determined through negotiations between drug manufacturers and PDPs. Under current law, PDPs are allowed to establish formularies - subject to certain limits - and thus have some ability to direct demand to drugs produced by one manufacturer rather than another. The PDPs also bear substantial financial risk and therefore have strong incentives to negotiate price discounts in order to control their costs and offer coverage that attracts enrollees through features such as low premiums and cost-sharing requirements. Therefore, the PDPs have both the incentives and the tools to negotiate drug prices that the government, under the legislation, would not have. H.R. 4 would not alter that essential dynamic.


    To read CBO's letter to Chairman Dingell, click here (PDF). To learn more about the issue, please check out my earlier story.

    posted: December 30, 2006

    State%20False%20Claims%20Acts.jpgThe federal False Claims Act has been an effective tool in combating fraud and abuse in government programs, particularly Medicare. Several states have their own state versions of false claims legislation. The federal Deficit Reduction Act (DRA), enacted last February, gives states a powerful new financial incentive to enact state false claims acts modeled after the federal version and directed at fighting Medicaid fraud and abuse.


    Specifically, states with state false claims acts that meet certain federal standards are able to keep more of whatever is recovered from fraudulent Medicaid providers or suppliers. The incentive amounts to ten percentage points of any recovery. For example, if a state has a 50% federal Medicaid match, it would normally have to return to the feds 50% of anything recovered. However, if the state has a federally compliant false claims act, the state gets to keep 60% or a 10 percentage point jump in its share. For most states, this could easily result in millions of dollars kept in the state.


    OIG Review of State False Claims Acts:


    Under the DRA, the HHS Office of the Inspector General (OIG) is responsible for looking at state false claims laws (whether new, existing, or amended) to see if they meet the federal standard and therefore if the state gets the incentive. To read the OIG's review guidelines, click here.


    So far, at the request of state officials, the OIG has looked at existing statutes in ten states: California, Florida, Illinois, Indiana, Louisiana, Massachusetts, Michigan, Nevada, Tennessee, and Texas. According to the OIG, the state false claims statutes in Illinois, Massachusetts, and Tennessee meet the DRA requirements and therefore these states' Medicaid programs may keep more of any Medicaid recoveries. The other states will need to amend their statutes if they wish to qualify for financial incentive.


    Background on Federal False Claims Act:


    Since the nation's founding, federal law has permitted private citizens to sue on behalf of the government to combat fraud in public programs. If the fraud or false claim is proven in court, the citizen bringing the suit gets to keep a portion of the funds recovered as an incentive.


    Today, fraud fighters and whistleblowers use the federal False Claims Act, which was enacted in 1863 to stop fraud by military suppliers to the Union Army. Revised several times by Congress, the federal False Claims Act (FCA) has been increasingly used to bring lawsuits against health care providers and suppliers.


    Of course, federal prosecutors may also bring criminal charges but in criminal cases they must prove guilt beyond a reasonable doubt. Civil cases are much easier to win in the complex world of health care claims since the standard is a preponderance of the evidence.


    How the False Claims Act Works:


    How%20FCA%20Works.jpgUnder the False Claims Act, a person with knowledge of fraud against the U.S. government may file a civil suit on behalf of the government against the person or business that allegedly committed the fraud. These are referred to qui tam cases. "Qui tam" (pronounced "key tam" or "kwee tam" and Latin for "who as well") is used in short for longer Latin phrase meaning "he who (sues) for the king as well as for himself." (Okay, for Latin buffs, it's qui tam pro domino rege quam pro seipse. Now you know why everybody just says Qui Tam.)


    Qui tam lawsuits are first filed with the federal district court in secret, to give the U.S. Justice Department time to decide whether to intervene and take over prosecuting the case itself. DOJ takes on about a quarter of these cases. If DOJ decides not to take the case, the qui tam plaintiff or "relator" - who is often an internal whistleblower since they need to be the source of information in the case - may pursue the case on behalf of the federal government but at his or her own expense. However, unlike other civil actions where a person can represent themselves (unwise but possible), the relator must hire an attorney to represent them.


    The False Claims Act provides for treble damages. Therefore, if fraud is proven through the civil case, the defendant(s) are liable for three times the original cost of the fraud to the taxpayers - plus civil fines of $5,000 to $10,000 for each instance of fraud or false claim.


    The amount received by a successful qui tam plaintiff depends on whether the DOJ took the case. If the Justice Department takes the case, the qui tam plaintiff gets between 15% and 25% of the recovery. If the Justice Department declines to take the case and the relator pursues the civil suit on their own, the qui tam plaintiff receives 25% to 30% of the recovery.


    Given the size of some of these incentives, the Justice Department often balks and tries to get them reduced, arguing that the plaintiff lacked the direct knowledge required to qualify. Therefore, the payouts to successful whistleblowers often lead to legal battles long after the fraud is proven and defendants pay up.


    Earlier this month, the U.S. Supreme Court heard oral arguments in just such a case where the federal government was challenging the right of a successful qui tam plaintiff to collect a portion of recoveries. The ruling, expected by this summer, could have a major impact on future qui tam suits.


    Please check out my previous posts on Medicaid program integrity issues.

    posted: December 27, 2006

    Medicare%20Policy%20Primer.jpgMedicare is a study in contrasts. In its financing, the program is modeled as what health wonks call "social insurance," which in reality is a euphemism for a politically effective but fiscally troubling mix of social welfare, health insurance, and cross-generational income transfers. Limited in coverage, slow to add coverage of new technologies, and often high in cost sharing, Medicare often cost-shifts to state Medicaid programs. While relatively cheap for the government to administer, Medicare is astonishingly complex, placing providers, supplies, health plans, and patients under a mountain of red tape.


    In Medicare: A Policy Primer, Dr. Marilyn Moon - a respected researcher, former Medicare trustee, and one of the nation's leading Medicare policy gurus - "explains what Medicare is, how it works, and where is it headed." In this excellent introduction, Dr. Moon outlines the history of Medicare, taking readers from the program's origins in 1965 and the Great Society to today. The Medicare primer also walks readers through how the massive $370 billion program works in relation to the rest of the U.S. health care system and other federal programs.


    While Dr. Moon is an unrepentant fan of Medicare and takes a decidedly Liberal, pro-entitlement approach to health policy, she takes pains to provide a thoughtful, balanced discussion of Medicare's key strengths and failings. She also debunks some lingering myths and assesses several of the more popular Medicare reform options.


    Marilyn Moon, Ph.D. is currently vice president and director of the health program at the American Institutes for Research.


    Published by Urban Institute Press, Medicare: A Policy Primer is available on Amazon.com here or direct from Urban Institute Press.


    To learn more about Medicare, please check out my list of recommended Medicare books.

    posted: December 9, 2006

    Negotiating%20Drug%20Prices.jpgThere's a lot of truth in the old joke about the problem with Republicans and Democrats: Republicans need a heart and Democrats need a brain. As Democrats prepare to take control of Congress, they appear eager to prove the joke by pursuing legislation to require government "negotiations" on prescription drug prices in Medicare Part D.


    The idea has emotional appeal, so let's see if there is any evidence to support the idea. (If you come from the Bumper Sticker School of Health Policy, stop here. The facts will only confuse you and don't easily make for emotive talking points.)


    Non-Interference Requirement in MMA:


    Price%20Negotiations.jpgIn the Medicare Moderation Act, the massive 2003 legislation that created the Medicare Part D drug benefit among other Medicare reforms, Congress prohibited the Centers for Medicare and Medicaid Services (CMS) from interfering with drug pricing in the competitive market. Part D prescription drug plans - Medicare Advantage drug plans (MA-PDs) and prescription drug plans (PDPs) - would battle among themselves to cut the best deals with pharmaceutical manufacturers and pharmacies and openly compete for enrollees.


    The statute at controversy, found at section 1860D-11(i) of the Social Security Act, is short and sweet:


    (i) NONINTERFERENCE. In order to promote competition under this part and in carrying out this part, the Secretary:

    (1) may not interfere with the negotiations between drug manufacturers and pharmacies and PDP sponsors; and

    (2) may not require a particular formulary or institute a price structure for the reimbursement of covered part D drugs.


    Estimated Savings of Federal Drug Price Negotiations:


    Drug%20Savings%20Unlikely.jpgSupporters of federal staff negotiating drug prices argue that it would generate billions of dollars in savings for taxpayers and seniors. However, the Congressional Budget Office (CBO) - the highly respected, non-partisan fiscal advisor to both houses of Congress and the agency that officially scores the cost and savings of all legislative proposals - agrees with top health economists and Medicare experts that federal price negotiations will save precisely zip.


    Following passage of MMA, Senate leaders asked CBO to examine the effect of striking the 'noninterference' provision. CBO reported:


    We estimate that striking that provision would have a negligible effect on federal spending because CBO estimates that substantial savings will be obtained by the private plans and that the Secretary would not be able to negotiate prices that further reduce federal spending to a significant degree. Because they will be at substantial financial risk, private plans will have strong incentives to negotiate price discounts, both to control their own costs in providing the drug benefit and to attract enrollees with low premiums and cost-sharing requirements.


    CBO was then asked if the federal government could save anything if CMS centrally negotiated prices with makers of single-source drugs. (Single-source prescription drugs are brand-name drugs that have no generic equivalent on the market and are generally available from only one manufacturer.) Again, CBO concluded that savings are unlikely, unless of course federal officials are willing to play hardball and restrict patient access to therapeutically unique drugs until the manufacturers agree to government price demands:


    Most single-source drugs face competition from other drugs that are therapeutic alternatives. CBO believes that there is little, if any, potential savings from negotiations involving those single-source drugs. We expect that risk-bearing private plans will have strong incentives to negotiate price discounts for such drugs and that the Secretary would not be able to negotiate prices that further reduce federal spending to a significant degree.


    Nevertheless, there is potential for some savings if the Secretary were to have the authority to negotiate prices with manufacturers of single-source drugs that do not face competition from therapeutic alternatives. Private plans offering a prescription drug benefit to Medicare beneficiaries will have less leverage in negotiating discounts for drugs without therapeutic alternatives than they have in price negotiations for drugs that do face such competition. (In that regard, the Medicare plans will be no different than private health plans that offer prescription drug coverage to other populations.)


    Under current law, there already are significant pressures that limit the prices that manufacturers charge for drugs - whether those drugs face competition from therapeutic alternatives or not. Those pressures include the prospects that plans will not cover a drug (or will substantially limit the amount they pay for a drug) and that manufacturers will provoke a backlash (potentially including legislation) if they set prices too high. Moreover, the creation of the Medicare drug benefit has given federal officials greater opportunity and incentive than under prior law to bring pressure on manufacturers - for example, by influencing public opinion and policy makers--if the prices that manufacturers set for single-source drugs that are not subject to competition from therapeutic alternatives are perceived as being too high. Giving the Secretary an additional tool--the authority to negotiate prices with manufacturers of such drugs - would put greater pressure on those manufacturers and could produce some additional savings.


    Ample Evidence Against Federal Drug Price Negotiations:


    Not only would federal price negotiations save little or nothing compared to the increasingly competitive private marketplace, there are host of other arguments against the idea.


    In a fascinating new study - The Human Cost of Federal Price Negotiations: The Medicare Prescription Drug Benefit and Pharmaceutical Innovation - Benjamin Zycher, Ph.D., an economist and senior fellow at the Manhattan Institute's Center for Medical Progress, carefully "estimates the impact that federal negotiation of prescription drug prices would have on pharmaceutical research and development (R & D) investment through 2025."


    Dr. Zycher concludes that, while federal price negotiations could save some Medicare dollars, "the longer-term human costs of government price-negotiation...are likely to be large and adverse." Most notably, the data show government mandated negotiations would dramatically reduce the development of new, life-saving drugs (about a dozen annually), resulting in "...a loss of 5 million expected life-years annually, an adverse effect that can be valued conservatively at about $500 billion per year, an amount far in excess of total annual U.S. spending on pharmaceuticals."


    In Compromising Quality: The High Cost of Government Drug Purchasing, Edmund F. Haislmaier provides a crisp, devastating critique of the idea of federal drug price negotiations. He disects the core myths and outlines how it would only serve to threaten quality and access.


    Proponents of government price negotiations assume that Medicare has more bargaining leverage than the private sector. In Why the New Congress Should Not Fix Drug Prices, researcher Greg D'Angelo does a nice job dismantling this faulty assumption.


    Wait, It Gets Worse:


    VA%20Drug%20Formulary.jpgMany advocates of federal negotiations point to the VA's prescription drug program as an example of how to reduce drug prices. As I have explained to many audiences, comparing the VA approach to Medicare Part D is not even an apples to oranges comparison. It's more like comparing apples and poodles - and makes as much sense.


    A groundbreaking study, by Frank R. Lichtenberg, Ph.D. of the Columbia School of Business, should put such comparisons to rest. In Older Drugs, Shorter Lives? An Examination of the Health Effects of the Veterans Health Administration Formulary, Dr. Lichtenberg shows the VH approach is not about prices or genuine negotiations. With the VA's tight budget, it is all about restricting veterans' access to new (and many old) medications to save dollars and hit budget targets.


    The VA's highly restrictive national formulary excludes 62% of drugs approved by the FDA during the 1990's and 81% of new medications approved since 2000. Even worse, the drug benefit designed for our nation's veterans does not pay for a staggering 78% of new, high-priority prescription drugs approved by the FDA on an expedited basis since 1997 because of their life-saving impact. By comparison, commercial health plans, Medicare Part D drug plans, and state Medicaid programs cover the vast majority of new drugs and move quick to add coverage for most drugs given fast-track by the FDA.


    Dr. Lichtenberg's 2005 study shows that the VA's prescription drug system - seen by many as the "model" for Medicare Part D - reduced the life span and survival rates of vets since its 1997 introduction. Note to Congress: Death is always cheaper than life but rarely preferable.


    Recap:


    Dangers%20of%20Price%20Controls.jpgSo, let's recap. Even putting aside the dangers of a massive increase in government power, fact it would dramatically reduce consumer and physician decision making, fact it would shift costs to other payors, and fact it would inevitably lead to economically disastrous price controls, the federal government negotiating drug prices will likely save little or nothing - unless Congress wants to severely restrict patient access to new and existing medications, thereby shortening lives, reducing quality of life, and increasing costs well beyond any savings. And that's if it's even feasible for CMS to do it. Trust me, it's not.

    posted: October 17, 2006

    Early%20Look%20at%20FY%202008%20Budget.jpgCongress may be in recess but the Bush Administration is already busy developing the President's budget for FY 2008. With federal tax receipts coming in at a rate much higher than expected, some in the Administration see a window of opportunity to propose a budget that would eliminate the federal deficit in three or four years. However, even with rosy figures for economic growth, a balanced budget would require dramatic reductions in current levels of Medicaid and Medicare spending.


    Sources tell me that the Bush Administration is looking - albeit carefully - at proposing a series of Medicaid and Medicare budget cuts as part of the President's FY 2007 budget submission to Congress this February. The bulk of the specific details will be ironed out late this fall but we do know that Administration budget writers have not given up on their eagerness to reduce significantly federal outlays for health programs.


    But it's still very early. At this point, the budgeteers are running scenarios and crafting options for internal briefings later this fall. With Medicaid spending growth at its slowest pace in a decade and Medicare spending seen by many as a much bigger fiscal problem, the White House may ultimately decide to focus on Medicare reforms.


    Of course, with a few exceptions, any proposals in the President's budget will require Congressional approval. And right now, Capitol Hill has no stomach for major cuts to either Medicaid or Medicare. If Democrats take control of the House, which looks increasingly likely according to the latest polling figures, you can expect a genuine battle royale, as the two parties position for the 2008 presidential election.

    posted: August 6, 2006

    More%20on%20Integrated%20Plans.jpgMedicare Advantage Special Needs Plans (MA-SNPs) are a fast growing innovation in the marketplace. A new Medicare managed care option created under the Medicare Modernization Act (MMA), MA-SNPs are able to tailor plan designs and delivery to serve the needs of dual eligibles, beneficiaries in nursing homes or at risk of institutionalization, and beneficiaries with chronic, severe conditions.


    For CY 2006, there are 276 federally approved MA-SNPs with an enrollment of over 500,000. More insurers are jumping in to offer Special Needs Plans in 2007 and others are moving to market the new plans to millions of high-cost, high-need Medicare beneficiaries. Given this competition and the many advantages of MA-SNPs for dual eligibles and other chronically ill beneficiaries, MA-SNP should exceed one million in 2007 and two million in 2008.


    As I reported earlier, states and CMS are working to dovetail Medicare's requirements for MA-SNPs and state and federal requirements for Medicaid managed care organizations (MMCOs). The objective is to provide states with an exciting new voluntary option to integrate health care for the nation's 6.3 million dual eligibles.


    In close collaboration with the National Association of State Medicaid Directors (NASMD), CMS has released a new guide for states on integrating Medicaid and Medicare services and a series of how-to guides on integrating enrollment, marketing, and quality assurance.


    To learn more about MA-SNPs or integrated Medicare-Medicaid health plans, check out my earlier posts or contact me for more resources.

    posted: July 13, 2006

    Medicaid%20Budget%20Projections.jpgThe White House Office of Management and Budget (OMB) released new Medicaid spending projections, showing a significantly lower rate of growth. Nationally, while federal Medicare costs continue to rise dramatically and far faster than medical inflation, Medicaid spending growth has moderated considerably.


    Twice each year, OMB releases its latest projections of federal revenues and expenditures. Projections are announced in February as part of the President's proposed budget and updated in July as part of what's called the Mid-Session Review. Falling in the middle of each year's Congressional session, the Mid-Session Review gives Capitol Hill the Administration's latest fiscal projections.


    For Medicaid, OMB works with CMS budget staff and actuaries to update estimates of federal Medicaid spending in the current fiscal year and for the next five years. They rely heavily on spending estimates and enrollment reports prepared by state Medicaid agencies.


    From FY 2002 through FY 2005, the federal share of Medicaid grew at an average annual pace of 7.2 percent. Federal Medicaid spending is now expected to grow by a modest 1.8 percent this year (FY 2006) and by 4.6 percent in FY 2007.


    Compared to earlier estimates, aggregate federal spending on Medicaid is now expected to be 8 percent lower. Specifically, the new projections of federal Medicaid spending for FY 2007 through FY 2016 are $53.3 billion lower than the projections contained in the President's 2007 Budget.


    Naturally, Medicaid spending growth varies widely from state to state. However, 16 states now expect to spend less on Medicaid this year than last year. States with flat or negative Medicaid spending growth this year include Georgia, Maryland, Michigan, New Hampshire, Nevada, South Carolina, South Dakota, Texas, and Wisconsin. Medicaid spending in large states - most notably Florida and California - continues to grow but at a much lower pace.


    While some of this slowed growth in the federal share of Medicaid is an artifact of the shift of prescription drug benefits for dual eligibles from Medicaid to Medicare Part D, slower spending growth is a byproduct of a variety of factors. These include improved economic conditions, cost containment initiatives, new waiver-based programs, greater use of private health plans, increased use of generic drugs, and the steady shift away from nursing homes to home and community-based programs.


    As we reported earlier, CMS is considering new rules to restrict state use of provider taxes and cut back on Medicaid payments to publicly owned providers and facilities. The new OMB figures give states, provider groups, and advocates new ammunition to oppose this and other Bush Administration efforts to cut federal Medicaid spending. It also highlights the effectiveness of state-based initiatives to reform Medicaid - that is, reforms that are initiated by states themselves but with federal support and cooperation.


    While OMB's new Medicaid projections are good news for states and the feds, the new Medicare projections show faster spending growth in Medicare Part A and Part B. The five-year cost estimate for Medicare Part A (inpatient hospital and post-acute care) is $17 billion higher. The five-year cost estimate for Medicare Part B (physician and other outpatient services) is $30 billion higher. The jump in Medicare Part A and Part B growth rates are largely attributable to rapid increases in per capita use of services.


    However, because of stiff price competition among drug plans and a slower than expected sign-up rate, the five-year cost estimate for Medicare Part D is $34 billion lower than the projections last February. For FY 2006 through FY 2016, the projected cost of the new Medicare drug benefit is $76 billion lower.


    Medicare's high growth rate increases pressure on Congress and the White House to reform Part A and Part B. In addition to putting greater pressure on the federal budget, higher Medicare costs also mean big, politically tough jumps in beneficiary cost sharing (e.g., the 11% increase in Part B premiums for 2007). And of course, state Medicaid programs are on the hook to pay for Medicare cost sharing for dual eligibles and other low-income Medicare beneficiaries. Bottom line: because so much of state Medicaid budgets are now driven by the health care costs of dual eligibles, higher Medicare costs and utilization can increase state Medicaid costs.


    For better or worse, a byproduct of Medicare's problems may be to divert attention from Medicaid inside the Beltway. However, federal money is fungible (especially in the hunt for budget savings) and states continue to press for greater flexibility. For many on Capitol Hill and in the Bush Administration, fiscal frustrations with Medicare are part of larger frustrations with federal entitlements. So even with slow growth in the near-term, Medicaid remains in the spotlight.

    posted: July 5, 2006

    Patient%20Centered%20Care.jpgPatient-centered care - one of the new buzz phrases in health care - is all about aligning the delivery of medical care with the needs and preferences of patients. Research shows that the practices and tools of patient-centered care result in:


  • Superior clinical outcomes

  • Higher consumer satisfaction

  • Improved access to needed care

  • Reduction of inappropriate use

  • Lower healthcare costs

  • Unfortunately, despite overwhelming support of the medical community and patient advocates, only 22 percent of physicians practice patient-centered care.


    Patient-Centered Care Defined:


    Patient-centered care is one of the six essential components of high quality medical care, according to the Institute of Medicine (IOM), the respected healthcare arm of the National Academy of Sciences. The IOM defines patient-centered care as:


    Health care that establishes a partnership among practitioners, patients, and their families (when appropriate) to ensure that decisions respect patients' wants, needs, and preferences and that patients have the education and support they need to make decisions and participate in their own care.


    Key Components of Patent-Centered Care:


    At its core, patient-centered care is all about improved patient-provider communication, where patients and providers collaborate for the benefit of the patient. Ideally, patient-centered care delivery involves an array of tools and practices, including:


  • Strong continuity of care, including close communication between primary care physicians and specialists, careful "hand-off" of patients among providers, and thorough post-hospital, post-surgical support and follow-up.

  • Effective use of modern health information technology, including (a) electronic medical records, (b) electronic prescribing, (c) e-lab results, (d) online scheduling, (e) email communications, and (f) automated patient reminders.

  • Clinic management and procedures to ensure (a) effective medication therapy management, (b) timely appointments, (c) access to after-hours services, and (d) fast, easy patient access to medical records.

  • Tools and information to facilitate patient decision making, including (a) reliable, actionable information on provider performance (i.e., transparency of quality, cost, safety) and (b) information and self-management tools to help patients manage their own conditions.

  • To learn more, check out these resources:


    The Commonwealth Fund's excellent initiatives on patient-centered care.


    Report from the Economic and Social Research Institute on the key components of patient-centered care that are unique to underserved populations.


    Tools from the HHS Agency for Healthcare Research and Quality (AHRQ).

    posted: June 3, 2006

    OTC%20Drugs%20in%20Medicare%20Part%20D.jpgMedicare drug plans will dramatically increase coverage of over-the-counter (OTC) drugs in 2007 based on new guidance from the Centers for Medicare and Medicaid Services (CMS).


    In creating Medicare Part D, the Medicare Modernization Act (MMA) excluded OTCs from coverage. Taxpayer dollars could not be used to pay for OTC products even when clinically appropriate and cost effective. This was in sharp contrast to pharmacy benefit designs common in commercial coverage and Medicaid, where employers, states, health plans, and PBMs try to take advantage of new, inexpensive OTC alternatives to popular prescription drugs.


    For 2006, CMS allowed Medicare prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PDs) to cover OTCs under narrow circumstances. For example, OTC coverage was limited to federally approved step therapy programs, with no prior authorization for the OTC. To pay for OTC products, drug plans must use administrative dollars and not federal benefit dollars.


    For 2007, CMS is loosening restrictions on PDP and MA-PD coverage of safe, effective over-the-counter drugs that are less expensive than prescription alternatives in the plan's formulary. Medicare drug plans must still use administrative dollars because of the statutory limit. However, OTC products may be covered outside of a step therapy program. To ensure Part D enrollees have continued access to prescription versions, drug plans that decide to cover OTCs outside a federally-approval step therapy protocol may not use prior authorization or other tools to require OTC use before a formulary legend drug is covered. Plans must also educate enrollees on differences between the prescription and non-prescription available for a given need.


    Compared to their prescription alternatives, OTCs often represent savings of 60-70 percent or more. Seniors tend to be heavy users of proton pump inhibitors (PPI), non-steroidal anti-inflammatory drugs (NSAIDs), and antihistamines - categories with low-cost OTC alternatives likely appropriate for many patients. Therefore, next year many Medicare drug plans will likely offer free OTCs to drive utilization, reduce costs, ease the doughnut hole, and improve enrollee satisfaction and retention.


    In addition to reducing costs for drug plans and many beneficiaries, wider access to OTCs in Part D may also reduce state Medicaid spending. Under MMA, 6 million dual eligibles were moved from Medicaid to Medicare for purposes of most drug coverage. However, Medicaid drug coverage is broader than Medicare Part D in many states. To save dollars, most states cover some OTCs. If a state Medicaid program covers an OTC for one group of Medicaid recipients, federal law requires the state to cover the OTC for all, including dual eligibles. The continued overlap of Medicare and Medicaid drug coverage for duals creates opportunities for confusion, cost shifting, even gaming. But the new OTC coverage options in Part D should allow states to save some Medicaid pharmacy dollars - provided CMS is proactive in working cooperatively with states, drug plans, and pharmacies on the issue.


    While drug plans and beneficiaries will win - and states may win - from the new OTC coverage guidance, pharmacies will lose because of lower product and dispensing fee revenue. Some pharmaceutical manufacturers will also lose, notably those prescription drug makers facing competing OTCs in hot categories like proton pump inhibitors.

    posted: May 20, 2006

    Redefining Health Care.jpgThe world's leading guru of competitive strategy, Michael Porter, Ph.D., has turned his sights on explaining the fundamental cause of high costs, poor quality, consumer dissatisfaction, uneven access, and skyrocketing premiums in American health care.


    In Redefining Health Care, Porter and innovation expert Elizabeth Teisberg, Ph.D. provide a thoughtful, groundbreaking framework to use competition to drive dramatic increases in quality and efficiency.


    Unlike many wonks who foolishly believe that health care is not a market, Drs. Porter and Teisberg see competition " of a sort " in operation. They show us that the current competitive environment in health care is designed to "shift costs, accumulate bargaining power, and restrict services." That is, what we have now is dysfunctional, zero-sum competition serving to limit, even reduce value for patients. And they see all this taking place "...at the wrong level-among health plans, networks, and hospitals " rather than where it matters most, in the diagnosis, treatment, and prevention of specific health conditions."


    Focusing on how to move American health care to positive-sum competition based on economic and clinical value for patients, Redefining Health Care provides a series of specific recommendations for the key players " including physicians, hospitals, health plans, employers, Medicare, and Medicaid.

    posted: April 5, 2006

    Part%20D%20Risk%20Mitigation.jpgBeing a Medicare prescription drug plan can be a profitable business. For the smart players, it will be highly profitable over time and indispensable to market position. But Medicare Part D can also be financially risky and volatile - particularly given:


  • Complexities of the Medicare population
  • Inherent uncertainties of a radically new and complex government program
  • Vagaries of drug pricing and utilization management
  • Stiff competition among plans
  • Multitude of benefit designs
  • High start-up costs
  • Inexperience of some of the players
  • Unpredictable enrollment (aggregate and mix)


    That's why Medicare Part D includes three separate mechanisms to mitigate the financial risks of Medicare drug plans. The mechanisms created under the Medicare Modernization Act (MMA) - risk corridors, risk adjustment, and federal reinsurance - apply to both the stand-alone Prescription Drug Plans (PDPs) and the Medicare Advantage prescription drug plans (MA-PDs).


    Each of the three methods mitigates different kinds of risk. While they help stabilize the drug plan market and facilitate market entry, they also benefit Part D enrollees in important, sometimes subtle ways.


    Risk Corridors for Profit and Loss:


    Using a system of risk corridors that compares actual incurred drug benefit costs to estimated costs submitted in bids, Medicare limits the profits and losses of Part D drug plans.


    Specifically, if a Medicare drug plan's actual benefit costs exceed expected (bid) levels by a sufficient degree, the plan will receive an additional federal payment to cover a portion of the loss. However, if a drug plan's actual spending falls sufficiently below projections, the plan must share some of the profit with the feds. Risk corridors apply to actual and expected drug benefits costs but exclude plan administrative costs and federal reinsurance payments.


    Risk corridors partially protect prescription drug plans from dramatic changes in drug spending, including the unexpected cost of new medications. Estimating per capita drug costs is also tough, particularly for a brand new benefit of unprecedented size and complexity. Therefore, the corridor mechanism also helps protect drug plans from this uncertainty.


    Here's how it works. After each contract year, CMS will would compare each drug plan's expected and actual benefit costs. The thresholds (when the mechanism kicks in) and the proportions of profit and loss shared vary.


    For 2006 and 2007, Medicare drug plans will bear all gains and losses that fall within 2.5 percent of their expected costs. If costs differ from expectations by more than 2.5 percent but less than 5 percent, the risk corridor payment will cover 75 percent of the amount in that range. If actual and expected costs differ by more than 5 percent, the risk corridor payment will cover 75 percent of the amount between 2.5 percent and 5 percent and 80 percent of the amount in excess of 5 percent. If a sufficient number of plans serving a substantial majority of enrollees receive risk corridor payments for a given year, the feds will cover 90 percent of costs falling within the corridor (instead of 75 percent).


    For 2008 through 2011, the risk corridor thresholds will double. The assumption is that by then the private drug plans will have sufficient experience in bidding and projecting costs. Specifically, the 2.5 percent factor goes to 5 percent and 5 percent is replaced by 10 percent. Within these new, wider corridors, the federal share covered by the risk corridors drops from 75 percent to 50 percent. For cost deviations exceeding 10 percent, the federal share will remain at 80 percent.


    For contract years 2012 and beyond, CMS has the authority to further increase the risk corridor thresholds provided they are structured symmetrically.


    Risk Adjustment:


    Risk adjustment is designed to adjust a drug plan's monthly premium from the government to account for differences in beneficiaries' expected drug spending. The adjustment methodology is based on a few readily available factors - notably age, sex, and health status. While not perfect predictors by any means, these factors are reasonably effective in grouping large numbers of beneficiaries in terms of likely relative differences in expected drug spending.


    Using the risk adjustment factor applied prospectively to the federal share of the plan's monthly premium, CMS pays Medicare drug plans more for sicker beneficiaries who are expected to incur higher drug costs and less for healthier enrollees who are expected to have lower drug spending. (For most Part D enrollees, taxpayers subsidize 75 percent of drug plan premiums, with enrollees paying the other 25 percent. For dual eligibles, federal and state taxpayers pay 100 percent of the premium. For benies who qualify for the low-income subsidy, the federal share of the premium varies from 75-100 percent based on a sliding scale.)


    Like risk adjustment systems used elsewhere in Medicare and Medicaid, the Part D risk adjustment mechanism is intended to vary the federal share of premiums based on factors that are beyond the control of the drug plan. That is, given the widely varying prescription drug needs of the Medicare population, it helps mitigate the risk of adverse selection.


    Risk adjustment will also help protect beneficiaries with high drug needs by increasing federal subsidies. And low cost, healthier enrollees are protected from paying higher premiums if they happen to select a drug plan with a disproportionate number of sicker members.


    Federal Reinsurance:


    Federal reinsurance payments to Medicare drug plans will kick in when an enrollee's actual drug spending reaches Part D's annual catastrophic threshold (commonly called the "doughnut hole"). For Part D beneficiaries who are not dual eligibles or receiving the low-income subsidy, Federal taxpayers will cover 95 percent of any drug costs above the doughnut hole ($5,100 in 2006). (Dual eligibles and benies qualifying for low-income subsidy pay only nominal co-payments [$2-$5]. As a result, federal reinsurance is effectively 100 percent.)


    Paid to the drug plans on a retrospective basis, federal reinsurance payments will serve to limit the risk that plans face in serving the highest-cost beneficiaries. Because a plan's costs of providing drug coverage above the catastrophic threshold will likely correlate with fluctuations of average drug prices and utilization patterns, reinsurance payments should also provide plans with some protection against uncertainty about future drug costs. However, because reinsurance is retrospective by nature, the mechanism will not address the financial risks involved in providing the front-end portion of the benefit.

  • posted: March 20, 2006

    Transparency%20of%20Medical%20Prices.jpgIt is an immutable truth of economics. Transparency is an essential ingredient for a market to function with any semblance of efficiency or effectiveness. Lack of transparency - what economists call asynchronous information - leads to rapid inflation, gross inefficiency, gaming and abuse, ignorant consumers, poor quality, rampant error rates, and misaligned resources. In other words, you get America's $1.9 trillion health care system.


    After years of behind the scenes work by top health care thought leaders, the White House and key Congressional leaders are jumping on board and calling for reforms to ensure transparency (read public reporting) of health care provider prices. While prices are only part of the information needs of patients, purchasers, and payors, nationwide transparency of medical prices is essential. Health Savings Accounts and other consumer-driven health reforms such as Medicaid Health Opportunity Accounts are largely pointless in a health care system otherwise rooted in incomplete, inaccurate, and inaccessible information.


    As leaders contemplate specific measures to promote transparency of prices, they should also consider sending every Medicaid and Medicare beneficiary a quarterly report on the cost of their care. (I am not talking about Explanation of Benefits [EOB] notices. EOBs don't give a picture of their overall costs or utilization and offer no comparative, trend, or historical information.)


    Using simple, colorful charts and tables and an emphasis on decision relevant information, a well-designed report would show them what care they received, what providers charged, what public programs paid, how much they paid in cost sharing, and how their medical costs compare to their peers (age group, sex, health status, and geography).


    For Medicare beneficiaries, the reports could help bust a core myth of Medicare financing by showing what Medicare has paid for their care compared to what as an individual they paid in Medicare taxes and cost-sharing to date. In Medicaid, the reports would be invaluable to state efforts to move toward consumer-directed models where chronically ill or disabled patients and their families take active control of their medical lives. It would also help low-income families better understand the health care system. For dual eligibles - the 6.3 million Americans with annual health costs of a quarter trillion dollars - these personalized reports would be truly eye opening for patients and their families.


    Over time, the reports could help Medicaid and Medicare beneficiaries see how their providers, health plans, and drug plans compare on measures of quality, errors, and cost effectiveness. And they could include simple health reminders.


    Of course, not every benie would read the reports much less change their behavior based on the information. But the vary act of creating the reports would require Medicare and Medicaid to modernize information systems, turn transaction data into genuine decision-relevant information, and begin thinking of program beneficiaries as consumers in need of more than monstrously dull doorstops masquerading as handbooks.


    Americans, including Medicaid and Medicare beneficiaries, are not stupid. But when it comes to health care costs, they are too often ignorant or oblivious. That must stop. Yes, there is a learning curve and some people prefer the bliss of ignorance to the dilemmas of judgment. Nonetheless, as consumers, as Americans, as human beings we are entitled to the information we need to make decisions. Keeping Medicare and Medicaid beneficiaries and their families in the dark is as costly as it is insulting.

    posted: March 16, 2006

    Competitive%20Acquisition%20Program.jpgComing on the heels of Medicare Part D and the new Part B drug-pricing schema based on Average Sales Price (ASP), the new Competitive Acquisition Program (CAP) for Medicare Part B drugs and biologics represents yet another major change to the pharmaceutical supply chain. While it is too early to reliably predict the impact or even viability of CAP, it's critical for players to understand the initiative. Ultimately, CAP may have a dramatic impact on drug manufacturers, distributors, physicians, and beneficiaries.


    Road to Average Sales Price (ASP):


    While Medicare Part B drug coverage is complex, generally speaking Part B drug coverage is limited to physician-administered drugs and therefore primarily injectibles. Prior to the Medicare Modernization Act of 2003, Medicare reimbursed physician offices for Part B drugs based on percentages of Average Wholesale Price (AWP). Physicians would buy what they need, administer drugs to patients as necessary, charge beneficiaries for their deductible and 20% Part B co-payment, and bill Medicare for the drug and the office visit.


    This approach was widely criticized by MedPAC, GAO, and the OIG as well as outside experts. Under the AWP-based system, Medicare drug payments were far higher than other payors. It also meant higher patient co-payments. However, in fairness to physicians, in many ways the higher drug reimbursement helped make up for Medicare's below-market office visit rates.


    Under MMA, Congress changed that way Medicare reimburses physicians for drugs and biologics covered under Medicare Part B. Since January 2005, Medicare reimburses physicians using a new formula based on Average Sales Price (ASP). For most Part B drugs, physician offices are now paid 106% of ASP.


    In brief, ASP is what a pharma or biotechnology company makes on a given product, net of rebates and other price concessions. The Centers for Medicare and Medicaid Services (CMS) calculates ASP using net sales data provided by drug makers. Medicare adds 6% to help cover physicians' costs of buying, storing, and billing. The new ASP-based payment system results in substantial savings to Medicare but of course also lower revenues for physicians.


    Basics of the Competitive Acquisition Program (CAP):


    Starting in July 2006, physicians will have an alternative to buying and billing for Part B drugs and ASP-based payment. The upcoming Competitive Acquisition Program (CAP) will give physicians the option of obtaining most Part B drugs needed by Medicare patients from vendors selected by CMS. Medicare physicians may elect to participate in CAP on an annual basis.


    The CMS-approved vendors, selected through competitive bidding, will negotiate with manufacturers, buy and distribute supplies to physicians, bill beneficiaries for any applicable deductible and coinsurance, and bill Medicare's designated national carrier for drug costs. The carrier will pay the CAP vendor after verifying that the physician administered the drug. To do this, the carrier will match the CAP vendor's claim for the drug with the corresponding physician claim for drug administration. Following this verification, the CAP vendor will bill the beneficiary (or the beneficiary's Medigap policy or other third party insurance) for applicable cost sharing.


    For the Part B drug categories they have selected, physicians opting for CAP will receive all of those drugs (used for Medicare patients) from the approved CAP vendor. Physician offices participating in CAP will continue to bill Medicare as usual for the drug administration fee and other office fees.


    Under certain conditions, a participating CAP physician may provide a drug to a Medicare beneficiary from his or her own stock and obtain the replacement drug from the CAP vendor. There is also an exception for "furnish as written" situations when the physician specifies that a certain brand of a drug is medically necessary and that drug is not available from the CAP vendor. In those cases, the participating CAP physician may buy the drug, administer it to the beneficiary, and bill Medicare using the ASP system.


    CAP Bidding and Contracting:


    Every three years, CMS will solicit bids from qualifying vendors - primarily major distributors and specialty pharmacy shops. MMA gives CMS the authority to select drugs or categories of drugs that will be included in the program. Drugs may be excluded from the CAP if competition will not result in significant savings compared to the ASP system or when necessary to avoid disruption in access to a drug.


    In April, CMS is expected to announce the CAP vendors for the program's July 1, 2006 start.


    Market Implications of CAP:


    In an upcoming story, I will comment on the implications of CAP for drug manufacturers, drug distributors, and physicians.

    posted: March 3, 2006

    OIG%20and%20Drug%20Benefits.jpgThe HHS Office of the Inspector (OIG) is studying a long list of issues related to Medicare Part B physician-administered drugs, the new Medicare Part D outpatient prescription drug benefit, and state Medicaid pharmacy benefits. In addition to its investigative and audit function, the talented staff at the HHS OIG also conduct analyses and evaluations, typically resulting in public reports. Below are the drug benefit-related topics that the OIG selected for close examination this year. Some were mandated by Congress, others requested by CMS or OMB. Think of it as a useful sentinel of upcoming hot issues and controversies.


    Medicare Part B Physician-Administered Drugs:

  • Drug Manufacturers' Methodologies for Computing Average Sales Price (ASP)
  • CMS' System for Collecting and Maintaining Average Sales Price Data from Drug Manufacturers
  • Effectiveness of Average Sales Price Cost Controls
  • Medicare Payments for Oral Anti-Emetic Medications
  • Monitoring of Market Prices for Part B Drugs
  • CMS' Ability to Prevent Duplicate Payments for Part B Drugs under the Competitive Acquisition Program (CAP)
  • Medicare Reimbursement for End Stage Renal Disease (ESRD) Drugs
  • Adequacy of Reimbursement Rate for Drugs under the Average Sales Price (ASP), with Focus on Hematology and Oncology Practices

  • Medicare Part D Prescription Drug Benefit:

  • CMS Program Integrity Safeguards for Medicare Drug Plan Applicants
  • Beneficiary Awareness of the Medicare Part D Low-Income Subsidy
  • Tracking Beneficiaries True Out-of-Pocket (TrOOP) Costs for Part D Prescription Drug Coverage
  • Prescription Drug Plan Marketing Materials
  • Auto-Enrollment of Dual Eligibles into Medicare Part D Plans
  • Medicare Prescription Drug Benefit Pharmacy Access in Rural Areas
  • Monitoring Fluctuation in Drug Prices under Stand-Alone Prescription Drug Plans (PDPs) and Medicare Advantage Prescription Drug Plans (MA-PDs)
  • Coordination and Oversight of Medicare Part B and Part D to Avoid Duplicate Payments for Drugs
  • Enrollee Access to Negotiated Prices for Covered Part D Prescription Drugs
  • Prescription Drug Plans' Use of Formularies and Compliance with Federal Requirements Regarding P&T Committees, Breath and Depth of Formularies, and Beneficiary Appeal Rights
  • Coordination Between State Pharmaceutical Assistance Programs (SPAPs) and Medicare Part D
  • Implementation of Required Programs to Deter Fraud, Waste, and Abuse
  • CMS Capacity to Administer Employer Drug Subsidies
  • Adequacy of Medicare Part D Drug Benefit Payment System, Fiscal Controls, and CMS Procedures
  • Calculation of State Clawback Payments to Medicare
  • Medicare Part D Risk-Sharing Payments and Recoveries, Particularly the Adequacy of CMS Systems and Controls

  • State Medicaid Prescription Drug Benefits:

  • Average Manufacturer Price and Average Wholesale Price
  • Adequacy of Drug Manufacturers' Methodologies for Computing Average Manufacturer Price and Best Price
  • Potential Savings from Indexing the Generic Drug Rebate
  • Drug Rebate Impact from Drugs Incorrectly Classified as Generic
  • Prescribing Patterns for Oxycontin, Hydrocodone, Xanax, Diazepam, and Soma
  • Effect of Nominal Pricing on Medicaid Drug Rebates
  • Medicaid Reimbursement of Drugs for Long Term Care Pharmacies
  • Effect of Authorized Generic Drugs on Medicaid Drug Rebates
  • Medicaid Payments for HIV Drugs and Possible Inappropriate Pharmacy Practices
  • State Collection of Rebates for Drugs with Zero Dollar Unit Rebate Amounts
  • Dispute Resolution in the Medicaid Prescription Drug Rebate Program
  • Medicaid Generic Drug Utilization Among States
  • States Compliance with Federal Upper Limit Requirements for Certain Generic Drugs
  • Medicaid Drug Pricing in State Maximum Allowable Cost (MAC) Programs

  • Naturally, the list is subject to change and should not be considered as the only topics under review. The OIG changes its work plan to accommodate new problems and changing conditions. Therefore, the topics will fluctuate. For more information, including past studies and reports, visit the OIG site.

    posted: March 2, 2006

    Medicare%20Advantage%20SNP%20Market.jpgMedicare Advantage Special Needs Plans (MA-SNPs) are an important new innovation in the healthcare marketplace. Ultimately, as I reported last fall in the Piper Report, MA-SNPs may evolve to serve an untapped $250 billion market. Here's a quick briefing on Special Needs Plans and how they become integrated Medicaid / Medicare health plans:


    Brief History of Medicare Managed Care:


    Since 1970's, Medicare has included an HMO option as alternative to receiving all Medicare Part A and Part B services from traditional fee-for-service Medicare. The Balanced Budget Act of 1997 (BBA) renamed Medicare managed care to "Medicare+Choice" and added a new range of options for Medicare beneficiaries: preferred provider organizations (PPOs), provider-sponsored organizations (PSOs), private fee-for-service (PFFS) plans, and Medical savings accounts (MSAs) linked with high deductible insurance plans.


    Medicare Modernization Act of 2003:


    In addition to creating the new Medicare Part D prescription drug benefit, the Medicare Modernization Act of 2003 (MMA) renamed Medicare+Choice to "Medicare Advantage" (MA) and created new MA plan options for beneficiaries - regional preferred provider organizations (PPOs) and "Special Needs Plans" for dual eligibles, the institutionalized, or those with severe and disabling conditions. MMA also created new incentives for health plan participation in the over $300 billion Medicare market, most notably risk adjustment to Medicare Advantage plan premiums and increased Medicare Advantage plan premiums.


    Basics of Medicare Advantage:


    The Medicare Advantage program is governed under Medicare Part C, which refers to Part C of Title XVIII of the federal Social Security Act. Medicare Advantage (MA) plans provide all Medicare-covered benefits under Part A and Part B and serve as an alternative to traditional Medicare fee-for-service. Most kinds of MA plans (including all the most popular ones) must also offer a voluntary drug benefit under Part D.


    This way, beneficiaries may get all Medicare-covered benefits (Part A, Part B, and Part D) through one health plan. If a benie wants to sign up for Part D but stay in unmanaged fee-for-service for Part A and B services, they must enroll in a stand-alone prescription drug plan (PDP) to receive Medicare drug coverage. (Part D thankfully does not have a government-run fee-for-service option.)


    Part D is major draw for new Medicare Advantage enrollment. Compared to the alternative (fee-for-service for Part A and Part B benefits and a stand-alone prescription drug plan for Part D benefit), Medicare Advantage plans are able to offer lower cost sharing, more benefits, fewer hassles, and higher performing mix of providers. However, because they have higher expectations regarding provider quality and cost-effectiveness, Medicare Advantage plans (particularly HMO-based plans) tend to offer a narrower choice of providers than Medicare fee-for-service.


    Medicare Advantage Enrollment:


    More private insurers are participating in Medicare than ever - 459 approved Medicare Advantage plans, up from 247 in 2005. Currently, over 14% of beneficiaries (6+ million) are enrolled in Medicare Advantage plans - up from 12% (4.9 million) in 2005. Plan enrollment varies widely state to state, with the highest penetration (20% to 30%+) in AZ, CA, CO, OR, PA, and RI.


    Long-range projections of Medicare Advantage enrollment vary widely. The White House Office of Management and Budget (OMB) believes that by 2013 30% of Medicare beneficiaries will be enrolled in Medicare Advantage plans. The Congressional Budget Office (CBO) projects that 16% of beneficiaries will be in a Medicare Advantage plan by 2013. At the current path, MA plan enrollment should exceed 16% in 2006.


    Medicare Advantage Premiums:


    Medicare uses a complex system to calculate plan premiums, blending administrative pricing with competitive bidding, market benchmarking, and risk adjustment. There are separate bidding and rate-setting processes for Parts A/B and Part D.


    For example, for the Part A and Part B portion of Medicare Advantage plan payments, Medicare uses a benchmarking process to compare bids and leverage competition to maximize value for beneficiaries and taxpayers. If a plan's bid is above benchmark, enrollees in that plan pay the difference. If lower, 75% of difference goes to enrollees as extra benefits or lower cost sharing (or a reserve fund) and 25% goes to Medicare.


    Basics of Special Needs Plans:


    Prior to MMA, Medicare health plans were required to market generally to the Medicare population in their geographic service area and could not limit enrollment to specific population. Under the new Special Needs Plan option, insurers may propose a Medicare Advantage plan that is restricted to a special needs population either exclusively or disproportionately.


    The ability to separately market and enroll special needs populations - coupled with Part D and risk adjustment - has created significant interest in this market. It's important to note that authority for Medicare Advantage Special Needs Plans (MA-SNPs) expires in December 2008. Therefore, Congressional action required to continue after 2008.


    Target Populations for Special Needs Plans:


    Under MMA, there are three target populations for Medicare Advantage Special Needs Plans:


    1. Institutionalized Beneficiaries (~3.5 million): Medicare beneficiaries who reside or are expected to reside for 90 days or longer in a long-term care facility. Also includes Medicare beneficiaries who live in the community but who require an equivalent level of care to those residing in a long-term care facility.


    2. Dually Eligible beneficiaries (~7.5 million): Medicare beneficiaries who are also in Medicaid for full Medicaid benefits (~6.2 million) and low-income Medicare beneficiaries who receive subsidies from their state Medicaid program for their Medicare cost sharing (~1.3 million in QMB, SLIM, or QI programs).


    3. Medicare Beneficiaries with Chronic, Severe Conditions (~millions more): The feds are particularly interested in MA-SNPs designed to serve Medicare beneficiaries with cardiovascular disease, diabetes, congestive heart failure, osteoarthritis, mental disorders, end-stage renal disease (ESRD), and/or HIV/AIDS. However, there is no preset definition for this target group. CMS evaluates MA-SNP proposals on case-by-case basis. CMS focuses on appropriateness of the target population, clinical programs and special expertise of the MA-SNP, and how the MA-SNP will cover full target population it specifies without discriminating against "sicker" members.


    Basics of Dual Eligibles:


    Health care spending for dual eligibles now hovers at a massive quarter trillion dollars - about 60% provided by Medicaid and 40% from Medicare. While dual eligibles drive over a quarter of all Medicare costs, dual eligibles drive over 40% of state Medicaid budgets. (For variety of reasons, including different definitions of duals and accounting for Part D costs, estimates vary. For example, when talking about "dual eligibles" some wonks are referring to the 6.2 million full-benefit duals. Other times the term refers to both the full-benefit folks plus the 1.3 million Medicare-only beneficiaries with partial Medicaid subsidy.)


    Dual eligibles are a vulnerable, high cost population in desperate need of coordinated care. About 2/3 live in community and 1/3 reside in long-term care facilities. They commonly have multiple morbidities (5-8) and some 45% have severe mental illness. Compared to the overall Medicare population, they are lower income, older, disproportionately female, disproportionately minority, and less educated. They are often live highly isolated lives, with little or no support system.


    MA-SNP Market for 2006:


    Since passage of MMA, the number of approved Medicare Advantage Special Needs Plans (MA-SNPs) has steadily increased, from 11 in 2004 to 276 in 2006. Of the 276 MA-SNPs approved for CY 2006, 226 are designed for dual eligibles, 37 for beneficiaries with institutional level of care, and 13 for specific chronic conditions (e.g., ESRD). One or more MA-SNPs now operating in most states: AL, AZ, AK, CA, CO, CT, FL, GA, HI, IA, ID, IL, IN, KS, KY,LA, ME, MD, DE, MA, RI, MI, MN, MO, MS, NE, NE, NV, PA,NJ, NM, NY, NC, OH, OK, OR, PR, SD, TN, TX, UT, WA, WI.


    Integrating Medicaid and Medicare via MA-SNPs:


    Historically, integration of health care for dual eligibles has been a major challenge. Medicaid and Medicare vary radically in financing, coverage policies, delivery systems, beneficiary rights, and day-to-day administration. For dual eligibles, this results in misaligned benefit structures, little or no care coordination, lower quality, over and under utilization, huge opportunities for cost-shifting, and seemingly endless conflicts between the feds and states. The human and economics costs are extraordinary.


    While created to serve the Medicare side of the market, Medicare Advantage Special Needs Plans create new opportunities to integrate Medicaid and Medicare coverage for dual eligibles. Last fall, I laid out the rationale here in the Piper Report (click to read that story). The idea is picking up steam, generating considerable interest from states and health plans.


    Basics of Integrated Medicaid-Medicare Health Plan:


    In brief, here's how it could work. A health plan contracts with both Medicare (with CMS as a MA-SNP) and the state Medicaid program. For its dual eligible enrollees, the plan is then responsible for all Medicare and Medicaid benefits. The integrated Medicare-Medicaid plan would also be responsible for coordinating benefits with other payors like VA.


    The combined Medicaid / MA-SNP would receive fully capitated, risk adjusted premiums for (1) Medicare Part A and Part B (MA plan bidding and benchmarking), (2) Medicare Part D drug benefit (MA-PD bidding and benchmarking), (3) Medicaid benefits (actuarially determined, with bid or proposal process determined by the state), and (4) state Medicaid payment for Medicare cost sharing. The state Medicaid program could create incentives to encourage dual eligibles to enroll in integrated plans. For example, the state could limit coverage of popular home- and community-based long-term care services to duals enrolled in integrated plans.


    With some grant support from The Robert Wood Johnson Foundation, five states are developing concept: Florida, Minnesota, New Mexico, New York, and Washington. To make integrated Medicaid / Medicare plans practicable, they are working to standardize and simplify: (1) plan rate setting and risk-adjustment; (2) performance standards, measurement, and reporting; (3) grievance and appeal procedures; (4) marketing guidelines; and (5) state contracting processes with MA-SNPs.

    posted: February 3, 2006

    Navigating%20Medicare%20Drug%20Coverage.jpgFor outpatient prescription drugs, Medicare has two distinct programs with a maze of complex policies. Physicians, Medicare patients, retail pharmacies, Medicare drug plans, Medicare Advantage health plans, nursing homes, and long-term care pharmacies are all struggling with how to navigate Medicare drug coverage under Part B and Part D. To help you, here's an overview:


    Basics of Medicare Part B Drug Coverage:


    Drug coverage applies under Part B under this basic situations:


    1. Drugs billed by physicians and provided incident to physician service for that patient (e.g., chemotherapy drugs).


    2. Drugs billed by pharmacy suppliers and administered through durable medical equipment (DME) benefit (e.g., respiratory drugs given via nebulizer).


    3. Some drugs billed by pharmacy suppliers and self-administered by the patient (e.g., immunosuppressive drugs, some oral anti-cancer drugs).


    4. Separately billable drugs provided in hospital outpatient departments. Increasingly, Medicare is bundling drug costs within outpatient hospital payment rates.


    5. Separately billable End Stage Renal Disease (ESRD) drugs (e.g., erythropoietin). Increasingly, Medicare is bundling ESRD drug costs within ESRD facility payment rates.


    Medicare Part B Drug Coverage in Physician Offices:


    For Medicare Part B drug coverage in a physician's office, here are the basics:


    1. Must be furnished "incident to" a physician service. Normally, this means the drug is physician prescribed and dispensed or physician prescribed and administered during a patient office visit.


    2. As a result, Medicare Part B drug coverage is usually limited to drugs or biologicals administered by injection or infusion.


    3. If the injection is generally self-administered it is not covered under Part B (e.g., Imitrex). That is, in most cases Part B coverage of a specific drug stops if more than half of Medicare beneficiaries on the drug self-administer it.


    4. Medicare uses mix of local and national coverage decisions. Therefore, in absence of a national coverage decision by CMS, local coverage decisions are made my individual Medicare contractors (Part B claims processors, commonly called "carriers"). Therefore, regional differences can and do occur. That is, a specific drug could be covered in one state and not another.


    Formulary Basics in Medicare Part D Drug Benefit:


    1. While Medicare drug plan formularies are subject to CMS review during the annual bidding process, the Medicare Modernization Act (MMA) gives Medicare prescription drug plans (PDPs and MA-PDs) wide latitude.


    2. There is no national drug formulary or mandated formulary. Most Medicare drug plans use commercial-like drug formularies.


    3. Regarding therapeutic classes or categories used to structure a formulary, Medicare drug plans may use USP model guidelines or use their own structure. The USP model is not a formulary and not mandated.


    4. Medicare drug plans must use P&T committees for formulary decisions.


    5. For most drug classes, PDPs and MA-PDs must cover at least two drugs. CMS reviews each formulary to make sure Part D plans are not cherry picking or otherwise discriminating against certain kinds of patients.


    6. Plans must cover "all or substantially all" of the drugs in six classes: Antidepressant, Antipsychotic, Anticonvulsant, Anticancer, Immunosuppressant, and HIV / AIDS.


    7. Step therapy, prior authorization and cost tiers are allowed. Many Medicare drug plans are using four tiers in their benefit designs.


    Coverage of Non-Formulary Drugs Under Medicare Part D:


    1. The Medicare Modernization Act (MMA) requires Medicare drugs plans to ultimately cover any drug (not otherwise excluded under Part D) if "medically necessary" and "medically accepted", regardless of formularies.


    2. Drug plans are not required to list off-label on formularies, but physicians may still prescribe off-label drugs for medically accepted indications. Physicians must justify off-label use and the indication must be listed one of four compendiums accepted by CMS (e.g., DRUGDEX, USP).


    3. To justify off-label coverage for a medically necessary, medically accepted drug, the physician must determine that all drugs on plan's formulary for the treatment of the same condition (a) would not be as effective and/or (b) have adverse effects for patient. The same applies to justify an exception from a higher tier co-payment.


    4. A multi-step appeal process is available to beneficiary to seek coverage of a non-formulary drug or an exception from a tier. Steps include drug plan review, independent review, administrative law judge, HHS department appeals board, and the federal courts. The exceptions and appeals process may be initiated by the beneficiary, their physician, or another person designated by the patient.


    Prescription Drugs Excluded from Medicare Part D:


    1. The following kinds of drugs are not covered under Part D:


    - Weight-related, fertility, cosmetic, symptomatic relief cough or colds, vitamins (except prenatal), barbiturates, and benzodiazepines.


    - Over-the-counter (OTC) drugs, unless through a CMS-approved step therapy program and then only if free using the drug plan's non-benefit dollars. Few Medicare plans are covering OTCs this year.


    - Drugs covered by Medicare Part A or Part B for that individual in that instance.


    2. For dual eligibles, Medicaid may cover drugs not covered by Part D. State Medicaid programs must cover if drug is covered for non-dual Medicaid population (e.g., OTCs). This means dual eligibles will obtain drugs through multiple programs.


    Naturally, this is a high-level overview and is neither comprehensive or an official statement of federal policy. For more details, click here to read CMS' draft guidance explaining differences between Part B and Part D drug coverage. There are many nuances, twists and turns. So please be careful and closely monitor guidance from CMS and OIG.

    posted: January 15, 2006

    Pharma%20Industry%20Can%20Help%20States.jpgWhile the feds work to fix a series of technical problems plaguing the new Medicare Part D drug benefit, governors are stepping in to help ensure dual eligibles and other vulnerable beneficiaries have access to prescription drugs. As a result, states are incurring millions of dollars of costs. They shouldn't have to - by federal law, drug coverage for these patients is now the sole responsibility of CMS and the prescription drug plans. However, governors of both parties are doing the right and necessary thing. Of course, Congress should be the one doing this. But Congress is too distracted to act quickly and the Bush Administration has been adamant in opposing changes to Part D until well after implementation.


    The crisis creates a great opportunity for the pharmaceutical industry to step in and help make Part D work. As I've pointed out before, drug makers have a lot riding on the success of Part D. No, it's not that they will make more money. In fact, it's more likely that most brand manufacturers will see lower margins under Medicare. It's because failure of Part D - whether real or imagined - will undoubtedly lead to more government regulation of the industry and a new push for price controls. And the much-maligned industry needs all the good will it can get.


    Pharma manufacturers should act immediately to offer to make states whole for the cost of temporary drug coverage for dual eligibles. Specifically, drug makers should work with the National Governors Association (NGA), National Association of State Medicaid Directors (NASMD), and the HHS Office of the Inspector General (HHS) to create a private trust fund that reimburses states for all of their costs associated will filling the gaps while CMS and the drug plans get things fixed. The trust fund can be set up through a non-profit and be totally neutral as to the drug products being reimbursed. The point is to step in, help make it work, create good will, and avoid further pain and frustration.

    posted: January 14, 2006

    Medicare%20Part%20D%20Problems.jpgRube Goldberg believed there were two ways to do things - the simple way and the hard way. And that, for some inexplicable reason, many people preferred doing things the hard way. His famous cartoons illustrated the tendency of human beings to exert maximum effort to achieve minimal results.


    Notwithstanding the best of intentions, an influx of a mountain of taxpayer cash, the savings available to many low-income seniors, and the hard work of unfairly maligned federal staff, the Medicare drug benefit has become a Rube Goldberg cartoon.


    Since passage of the Medicare Modernization Act (MMA) in December 2003, I have been warning about predicable surprises and inevitable consequences. The good news is I am batting 1000 on predictions. The bad news is I am batting 1000 on predictions. If it were not for the fact real people are affected, I'd be happy to sit back and gloat about my prescience. Or perhaps hire a skywriter to paint "I Told You So" high above Security Boulevard.


    But truth is, this was easy to see and I was far from alone. While there are many flaws in the design of MMA and lost opportunities in the implementation, the most troubling problems revolve around the chaos and risks of transferring over six million vulnerable dual eligibles from Medicaid drug coverage to Medicare Part D. Virtually all of the other problems of Part D implementation can be ironed out with some more time, experience, and legislative tinkering.

    posted: January 6, 2006

    The%20Immutable%20Laws%20of%20Health%20Care%20-%20Kip%20Piper.jpg

    1. You get what you pay for.


    2. Price is what you pay but value is what you get.


    3. You can't fix what you can't see.


    4. Incentives matter, whether you intend them to or not.


    5. No matter what they say, it's always about money and autonomy.


    6. There are no essential providers, only essential services.


    7. More is rarely better and often worse.


    8. Health care providers are not your children. You are under no obligation to treat them the same for different performance.


    9. If you pay them, they will come. If you don't pay them, they'll come anyway and it will cost you.


    10. Never let a health plan or provider do what you would do if you were they.


    11. Uninformed choice is not choice.


    12. It's all in the execution and in the communication of the execution.


    13. Health care is a game of chess. The player who thinks the most moves ahead wins.


    14. Health care policy making is like puppetry. If you can see the strings it doesn't work.


    15. In health politics, complexity and chaos can be your friends or you enemies. Your choice.


    16. Death is always cheaper than life but rarely preferable.


    17. Until they award a Nobel Prize for health policy, style rules substance and perception rules reality.


    18. Health care policy is an art - but more sculpture than painting. What you leave out is more important than what you put in.


    19. Get paid for what is in your control but only pay for what is outside theirs.


    20. Results matter. Period.

    posted: December 10, 2005

    Losers in Medicare Drug Benefit.jpgAs promised, here's my list of likely losers under the new Medicare prescription drug benefit:


    ● Dual Eligibles: These 6.5 million highly vulnerable beneficiaries will lose their Medicaid drug benefit and be enrolled in the less generous, slightly more expensive, far more complex Medicare drug benefit. They also face the likelihood of a dangerous transition in drug therapy. If there is a silver lining here, it's the prospect of Medicare Advantage Special Needs Plans (MA-SNPs). That is, the hope that over time dual Medicare-Medicaid beneficiaries will sign up to get all their Medicare benefits from health plans tailored to their needs. Even better states work with MA-SNPs to bundle all Medicaid services with Medicare Part A, Part B, and Part D. See my earlier post on this idea and other stories on dual eligible issues.


    ● Retirees with Employer-Sponsored Drug Coverage: The trend has certainly been toward employers reducing retiree health coverage. With $100 billion in new taxpayer-financed incentives and an array of options to cost shift, Medicare Part D ensures that millions of retirees will move - slowly but inevitably - from relatively generous employer-sponsored drug coverage to more limited, more costly taxpayer-subsidized coverage. Employers are in a bind, to be sure, so don't blame them for taking advantage of this gift horse. It's anyone's guess whether Part D and the $100 billion in subsidies for employers will serve to slow or hasten the death of employer-sponsored drug coverage for retirees.


    ● States: Because of the now notorious "clawback" and variety of other factors, including a likely strong woodwork effect, loss of supplemental rebates, and unfunded mandates, drug benefits for dual eligibles will cost cash-stripped state governments more under federal management. Under Part D and the resulting fragmentation of benefits across multiple, uncoordinated programs, state Medicaid programs also lose critically important data and face greater challenges to managing the health costs of the most expensive, most vulnerable Medicaid beneficiaries. Since it's highly likely that many dual eligibles will have problems getting their prescriptions in the early months of Part D, states may be forced to step in and use their own money to cover drugs as the bugs are worked out.


    ● Community Pharmacies: The shift of dual eligibles to Medicare for their prescription drugs also means a large chunk of retail pharmacy business is moving from Medicaid (which, in most states, is the highest payor of pharmacy services) to private drug plans (which are the lowest payors). Specifically, state Medicaid programs commonly pay much higher dispensing fees and pay a higher rate for a pharmacy's drug acquisition costs. Commercial insurers, including those offering Medicare drug plans, are just the opposite. States do get better deals from drug manufacturers because of rebates and the Medicaid "best price" law, but those dollars are on the backend and pharmacies don't benefit. The large drug store chains have some flexibility to juggle the business impact of Part D. However, many small independent pharmacies face significant financial losses.


    ● Big Pharma: Some, perhaps most, pharmaceutical manufacturers will see a temporary boost in their top lines. Yet, most will experience a significant and likely steady, long-lasting hit to the bottom line. Yes, some drug makers will benefit from the pent-up demand released by the Medicare drug benefit. But the potential for increased sales in the short term is nothing compared to pricing pressures generated by the confluence of market dynamics, including drug plan competition, price transparency, and price sensitivity of at-risk drug plans. Add to this the likelihood of a massive increase in government oversight, substantially higher compliance risks, and challenges of shifting from a sales-based to research-based strategy. Some drug makers will win but it will depend on how quickly and deftly they can adapt to a brave new world of Part D.


    Please check out my previous post on the Medicare drug benefit, including post on the likely winners in the business of Part D.

    posted: November 20, 2005

    Marketing to Diverse Medicare Population.jpgThe new Medicare prescription drug benefit presents major marketing challenges for both the competing drug plans and officials at CMS and SSA. While the feds must conduct a massive outreach campaign to educate 43 million Medicare beneficiaries about the complex program, the drug plan sponsors must market their plan designs, which vary widely in delivery, cost sharing, and formularies.


    With over 2,000 drug plan options across the country and each beneficiary having to select among 40-50+ plan designs in their own regions, the marketing challenges are extraordinary. Add to this the intricate, anti-intuitive program design set up by Congress in the Medicare Modernization Act and how Part D handles the dual eligibles, low-income seniors, retirees with employer sponsored drug coverage, veterans, and others all differently - and, well, you have the makings of quite a mess.


    Yet, the challenges don't end there. The Medicare population is not homogeneous, media stereotypes notwithstanding. Beneficiaries vary widely by income, assets, age, disability status, setting, ethnicity, and existing drug coverage. Almost 70 percent already have prescription drug coverage without Part D. Those without drug coverage are a diverse mix of rich and poor, healthy and sick, active and isolated, urban and rural. As a group, American seniors are one of the wealthiest cohorts in world history but among them, there are many low-income seniors struggling every day.


    In terms of race and ethnicity, African Americans and Latinos make up 15 percent of Medicare's beneficiaries ages 65 and older and 27 percent of Medicare's under-65 disabled beneficiaries. However, while less than a third of white beneficiaries are sufficiently low in income to qualify for federal drug subsidies, over 60 percent of African Americans and Latinos on Medicare may qualify for the low-income subsidy. While a sizable majority of all Medicare beneficiaries have access to drug coverage without Part D, African American and Latino beneficiaries are more likely to have no drug coverage now. In addition, the vulnerable dual eligible population, with its 6.5 million souls, is disproportionately African American or Latino beneficiaries.


    Traditional, television-centric marketing tactics are necessary but not sufficient to reach Medicare's diverse population and offer the benefits of Part D, particularly the substantial savings available through the low-income subsidy. To differentiate themselves in a crowded market and maximize both enrollment and retention, Medicare prescription drug plans need to adopt a more sophisticated, multi-facetted array of marketing tactics and mediums. Among them, viral or word-of-mouth marketing is essential. In addition to being extremely effective in situations like this, the costs and risks are low.

    posted: November 6, 2005

    NIH Research Must Be Actionable.jpgAfter an avalanche of federal money the past ten years, the National Institutes of Health (NIH) is under pressure to show results. This is no small feat given the enormous scientific challenges of cancer, heart disease, HIV, and other killers and disablers. And even though NIH's budget more than doubled in recent years, less than five percent of government health spending goes to research into causes, treatments, and cures.


    In areas where NIH and the private research community is successful, we face another challenge - getting the results or evidence into practice. According to the Institute of Medicine, it takes an average of 17 years before a proven best practice is in wide spread use for the benefit of patients. In other words, patient care in 2005 is more often based on the best science as of 1988.


    Our nation's investment in health services research - which covers how to get evidence to practice and improve access, quality, and cost effectiveness of our $1.8 trillion health system - is worse. It hovers around one percent of what we spend on NIH. Medicare and Medicaid waste more in a single day than what we spend in a year on trying to improve program performance for patients and taxpayers.


    As the NIH works to demonstrate results for the taxpayers, we all need to recognize the symbiotic relationship between (a) basic and clinical research that creates new evidence and (b) health services research that shows us how to bring the evidence to the physician and patient. Right now our research system is like a auto manufacturer who spends all its money on engineering and testing new vehicles and virtually nothing on design, quality control, financing, cost management, distribution, training, sales, or marketing.


    Of course, the researchers must deliver. To do this, NIH and ARHQ in particular should support more actionable research. To be actionable, research must be:


    1. Timely: Better to have a good answer today than a perfect answer in a few years. All too often we allow analysis to be the enemy of action.


    2. Decision Relevant: Enough of preaching to the choir and hunting for tenure. Researchers must connect with real-world decision makers and answer their questions. Other than the Nobel Prize, virtually all other forms of recognition for research have little or nothing to do with work that is actionable.


    3. Translated: It's all about reaching decision makers and unfortunately most researchers are horrible communicators. What do you think, what do you know, what can you prove, what do you suspect? Say it in the context of decision makers and their challenges.


    4. Disseminated: Peer reviewed journals are great. I enjoy reading many of them. But most decision makers do not. You're lucky if they read the abstract. Disseminate findings in new ways to reach decision makers. Multiple mediums must be used and, if necessary, created.


    NIH's new Institutional Clinical and Translational Science Awards program is a great start in the right direction.

    posted: October 29, 2005

    Reality Check for Big Pharma and Medicare Part D.jpgIn retrospect, will the pharmaceutical industry's support of the Medicare drug benefit be revealed as a modern-day Faustian bargain?


    Conventional wisdom, particularly inside the Beltway, says that the Bush Administration is in the pocket of pharmaceutical manufacturers. Indeed, this knee-jerk assumption is a virtual article of faith among health policy wonks, the media, and others on the Left. They immediately point to the Medicare prescription drug benefit as their "evidence."


    But is this accurate? Will the Medicare drug benefit ultimately help or hurt the pharmaceutical industry? Or is Medicare Part D merely a lesser of two evils for the manufacturers?


    Not if you look at how the Medicare drug benefit is playing out. Every day, as we get closer to launch of the massive new $800 billion program, pharma companies face significant new challenges.


    In January 2006, Medicare as a purchaser will jump from about 2 percent of the prescription drug market to over 25 percent. By 2008, the government - Medicare and Medicaid combined - will buy over half of all prescription drugs. If you take into account beneficiary cost-sharing and federal drug benefit subsidies to employers, the government will drive about three-quarters of the drug supply chain by 2008.


    If the history of Medicare teaches us anything, Congress will not be able to resist the temptation to regulate, micromanage, and administer prices. Unfortunately, the pharma industry faces an inevitable increase in government regulation.


    History also tells us that Medicare will cost shift to commercial buyers of prescription drugs, including employers, hospitals, and the uninsured. Again, bad but likely inevitable.


    Notwithstanding the downsides of regulation and bureaucracy, some pharma players will win in this new environment, particularly in the early years. This includes generic drug makers as at-risk Medicare drug plans drive seniors from brand drugs to low-cost generics.


    Other winners will likely include manufacturers specializing in drugs for diabetes, heart failure, hypertension, and high cholesterol - areas where Medicare Part D will unleash pent-up demand. And drug makers with robust pipelines will win, provided it is a pipeline of vale-added products and not more "me-too" drugs.


    Ultimately, to win the new world of government-driven drug benefits, pharma manufacturers will need to understand the market is changing. The old rules, strategies, and tools are no longer enough.

    posted: October 22, 2005

    Medicare Prescription Drug Data Sharing.jpgSophisticated health care purchasers and health plans know the value of prescription drug data. When analyzed with paid claims data from physicians and hospitals, data from pharmacy claims can be used to identify, understand, and track a wide range of issues.


    Starting January 2006, when the 6.5 million dual eligibles move from Medicaid to Medicare for their prescription drug benefits, state Medicaid agencies will no longer have access to data on drug use by these extremely expensive, at-risk beneficiaries - patients who drive over 40 percent of Medicaid costs. As a result, Medicaid managers will lose an invaluable source of information, severely handicapping the ability of states to monitor quality, access, and costs and catch waste, fraud, and abuse.


    The Centers for Medicare and Medicaid Services (CMS) lacks the legal authority to require Medicare prescription drug plans (PDPs and MA-PDs) share data with Medicaid. However, nothing precludes voluntary Rx data sharing between Medicare drug plans and states.


    Voluntary data sharing would be an easy, inexpensive way for Medicare drug plans to gain goodwill among states and advocates, generate positive publicity, and differentiate themselves from the mass of competitor plans. In addition, because dual eligibles may switch plans any time and multiple times each year, two-way data exchanges with states would aide drug therapy transitions, utilization review, and medication therapy management. Stand-alone PDPs, which are at risk only for drug costs and therefore will not have access to any non-drug data, could greatly benefit from data from state Medicaid programs (e.g., diagnoses, prescription history, providers seen)


    To help make this happen:


    - A major pharmaceutical manufacturer should offer to fund a national initiative to show the business and clinical case for information exchange, develop data sharing agreements, iron out any technical obstacles (e.g., data safeguards), and cover the modest start-up costs (e.g., systems changes). In addition to generating goodwill, this would help minimize disruption in drug therapy, quality problems, and errors - and reduce lost revenue and bad publicity that will inevitably result if duals have problems accessing vital medications.


    - In their standards for a Medicare drug plan to be designated as a preferred plan for low-income beneficiaries, State Pharmaceutical Assistance Programs (SPAPs) should require that preferred drug plans to exchange duals' Rx data with states.

    posted: September 24, 2005

    Medicare Advantage Special Needs Plans.jpgMedicare Advantage is the new name for voluntary managed care options in Medicare (also know as Medicare Part C and formerly "Medicare+Choice"). Medicare Advantage plans are now available in nearly every area of the country. Beneficiaries who select a MA plan elect to receive all Medicare benefits through the health plan (HMO or PPO). This includes all Part A and Part B services, plus the new Part D drug benefit as an optional add-on.


    The Medicare Modernization Act (MMA) created a Medicare Advantage option called "specialized MA plans for special needs individuals" ("special needs plans" or "SNPs"). These Medicare health plans limit their enrollment to special needs beneficiaries (or disproportionate percentage of special needs beneficiaries). The idea is to encourage greater access to Medicare Advantage plans for special needs individuals and allow plans to tailor programs to meet unique needs. MMA also created risk adjustment, removing a major disincentive to serve high-cost populations. Two groups of special needs individuals are specified in MMA: (1) beneficiaries who are institutionalized and (2) dual eligibles. CMS may also establish other "special needs" groups among beneficiaries with severe or disabling chronic conditions. Like other Medicare Advantage plans, special needs plans have the ability to lower beneficiary cost sharing and cover services not available to beneficiaries in fee-for-service Medicare.


    This creates a new opportunity for state Medicaid programs to extend the benefits of managed care to dual eligibles, who nationwide account for over 40 percent of Medicaid costs. Because of a labyrinth of conflicts between federal Medicare and Medicaid laws, it has been very hard for states to implement large-scale programs to improve care delivery for their highest cost, most vulnerable beneficiaries. The result has been high costs, extraordinary inefficiency, frustration for patients and their families, and higher risk for poor quality.


    Working with CMS and Medicare Advantage special needs plans (MA-SNPs) operating in the state, a state Medicaid agency could offer to capitate all Medicaid services to any MA-SNP with dual eligible enrollees. The MA-SNP would then be responsible for all Medicare and Medicaid benefits, including all long-term care and prescription drug benefits. To ensure appropriate payment and oversight, the state would risk adjust the Medicaid side of the capitation and MA-SNPs would have one set of quality standards and grievance procedures (presumably based on the more stringent Medicaid protections). Enrollment would remain voluntary like it is for other Medicare beneficiaries, but states could create powerful incentives for duals to enroll in MA-SNPs. For example, the state could limit coverage of home- and community-based services (HCBS) to MA-SNP enrollees when two or more MA-SNPs are available.


    Beneficiaries would benefit from higher quality, better access (in real terms), modern care coordination, less paperwork, closer oversight of their rights, and likely more services. States would win from a range of benefit and administrative savings, plus more predictable spending.


    For a fact sheet on Medicare Advantage, click here. To learn about plans, enrollment, and other key issues, click here.

    posted: September 19, 2005

    The Business of Healthcare Innovation.jpgThe market dynamics, business models, and corporate strategies of pharma, biotech, genomics, medical device development, and health care information technology are converging. And you better get ready.


    Written by business gurus at the Wharton School and health industry executives, The Business of Healthcare Innovation provides an invaluable analysis of key business trends in the manufacturing side of health care. Editor Lawton R. Burns, Ph.D. and contributors focus on the producer side of health care and demonstrate how manufacturers serve as the principal drivers of health care innovation.


    Specifically, The Business of Healthcare Innovation:


    · Provides an insightful, detailed overview of the most influential players - namely, the pharmaceutical, biotechnology, genomics/proteomics, medical device, and information technology sectors.


    · Describes and assesses the market structures, business models, and corporate strategies of each of these six sectors.


    · Shows how the six sectors are converging, drawing increasingly on the trends, tools, and solutions of each other.


    A compelling, business-savvy look at the manufacturing side of health care, The Business of Healthcare Innovation is highly recommended for executives, policy makers, investors, and consultants to business and government decision makers.

    posted: September 17, 2005

    Physician Drug Prescription.jpgOnce the Food and Drug Administration (FDA) approves a new prescription drug for one medical indication, physicians are free to prescribe it for virtually any condition. While there are downsides of prescribing drugs "off-label," it allows patients and payors to benefit as physicians test drugs under real-world conditions and identify new applications.


    Because formal clinical trials and the FDA review process can take years, valuable new uses of a drug may be validated by studies in peer-reviewed medical journals years before the new indication becomes officially approved. And because of research and regulatory costs, drug makers cannot justify pursuing FDA approval for new indications, even when a new indication is highly cost-effective for purchasers, plans, and patients. Indeed, some diagnoses have no "on-label" drugs and are treated entirely on an off-label basis.


    With the new Medicare drug benefit (Medicare Part D), the federal government will become the world's largest buyer of prescription drugs. In Part D, a prescription drug is coverable by a Medicare drug plan (PDP or MA-PD) only if it is prescribed for a medically accepted indication as defined under federal Medicaid law. This includes uses that are approved by the FDA or supported by a citation in one of four drug compendia:


    · American Medical Association Drug Evaluations
    · American Hospital Formulary Service Drug Information
    · DRUGDEX Information System
    · United States Pharmacopeia Drug Information


    Because of this restriction in the Medicare Modernization Act, indications that are supported in peer-reviewed medical literature but not yet approved by the FDA or accepted in one of the compendia are not "medically accepted" by Medicare. In such cases, the Medicare drug plans may not pay for the drug.


    While this helps Medicare drug plans manage their financial exposure and allows them to crack down on inappropriate drug therapy, it also means that it'll be harder for physicians to identify valuable new uses of medications. As we loose this critically important path to expanding our evidence base, patients and the economy will suffer.


    This is yet another reason why we need a comprehensive approach to post-market surveillance and assessment of prescription drugs, continuous improvement of the evidence base of what works, and more effective ways to bring that evidence to day-to-day clinical practice.

    posted: September 16, 2005

    Retiree Drug Subsidy.jpgUnder the Medicare Modernization Act, employers will receive about $124 billion in tax-free subsidies to encourage them to continue prescription drug coverage for retirees. Because of a long history of taxpayer-funded health benefits "crowding out" employer-sponsored coverage, Congress wanted to reduce the incentive for employers to drop retirees into the new Medicare drug benefit (Medicare Part D).


    The subsidy works out to roughly 28 percent of what Medicare would pay under the Part D benefit and is available as long as the employer can show that their retiree drug coverage is actuarially equivalent or better than the federal program. Per retiree, it'll work out to $668 on average in 2006. According to a survey of large employers by Mercer Human Resource Consulting, about 60 percent of employers plan to take the subsidy.


    While the subsidy payments are exempt from federal taxation, nothing stops a state from considering it as taxable income. Looks like some states are noodling about it. Nationwide, it could generate several billion dollars in new state tax revenue over the next ten years. And it might serve as modest form of policy revenge for the $100 billion clawback. However, it may encourage employers to cost shift retiree drug costs to federal taxpayers and retirees themselves...at least faster than they would otherwise.

    posted: August 19, 2005

    Medicare Clawback Headed for US Supreme Court.jpgIt looks increasingly likely that several states will challenge the constitutionality of a key element of Congress' financing of the new Medicare prescription drug benefit (also known as Medicare Part D).


    To help fund the massive new Medicare drug benefit, Congress mandated that state governments send monthly checks to the federal treasury. The so-called "clawback" - amounting about $100 billion over the next ten years - is intended to cover a big chunk of the drug costs of dual eligibles.


    In addition to being an unprecedented exercise of federal power that many experts believe is unconstitutional on its face, the clawback raises a mix of troubling policy issues. For example, it means state governments must pay for costs of federal beneficiaries in a federally created and operated entitlement. States are already grumbling that, because of a long history of federal cost shifting to state taxpayers, over 40 percent of state Medicaid spending this year will go to cover the health care costs of federal Medicare beneficiaries.


    The clawback also comes at a time when Congress plans to cut $10 billion from federal Medicaid spending. And states are facing new costs created by the Medicare Modernization Act.


    As a matter of law, states cannot let the clawback go unchallenged. Regardless of the many positive aspects of the new Medicare drug benefit, the clawback simply raises too many fundamental issues to be left unexamined by the Supreme Court.

    posted: August 6, 2005

    Medicare Part D Low Income Subsidy.jpgIt's still early in the nationwide push to get millions of low-income Medicare beneficiaries to sign up for the subsidy that could cover the bulk of their prescription drug expenses. But, as many of us expected, applications are coming in at a trickle.


    The low-income subsidy is one of the most positive aspects of the new Medicare prescription drug benefit (aka, Medicare Part D). Of the 43 million Medicare beneficiaries, up to seven million may be eligible for the generous, taxpayer-financed subsidies of most of their drug costs. However, they must apply for the subsidy, navigate the application form, meet the income and asset tests set by Congress, and later sign up for the drug benefit and pick a drug plan.


    Experience from other subsidy programs tells us that it's tough to get low-income seniors to apply for benefits. They are hard to reach and risk adverse. They don't like the idea of signing up for what is seen as a welfare benefit. In addition, they are often struggling with multiple health issues and low health literacy. Ultimately, you can lead people to a subsidy but you can't make them take it.


    The Medicare savings programs are a good case in point. For low-income Medicare beneficiaries who do not otherwise qualify for full Medicaid benefits, the feds mandate that state Medicaid programs pay some or all of the individual's Medicare cost sharing. But, after years of outreach efforts, perhaps only 30 percent of eligible beneficiaries are enrolled.


    Inside the Beltway, a host of players is worried that signup for the low-income subsidy will be painfully slow. Even putting aside the primary objective of ensuring access to needed medications, response to the low-income subsidy will drive perceptions of whether Part D is a success or failure.


    Like virtually every aspect of Medicare Part D, it will take time, effort, money, creativity, partnerships, luck, and patience to make the low-income subsidy a success. However, whether we like it or not, this is a public program, operating in a media and politically driven fish bowl - and expectation are foolishly unrealistic. We need to show patience, but ultimately perceptions will rule reality. And if, come January 2006, only a small portion of eligible beneficiaries sign up for the subsidy, expect a lively blame game.


    To read other stories on the Medicare drug benefit, click here.

    posted: August 4, 2005

    Physician Administered Drugs in Medicare Part B.jpgIn response to criticism from major drug distributors and lackluster response to a request for bids, the Centers for Medicare and Medicaid Services (CMS) is delaying implementation of the Competitive Acquisition Program (CAP) for physician-administered drugs paid under Medicare Part B. Originally scheduled to launch January 2006, CAP will now start July 2006 " provided CMS modifies the proposed requirements to make the program workable and sufficiently profitable for distributors.


    Part of the series of reforms enacted by Congress in the Medicare Modernization Act (MMA) of 2003, the Competitive Acquisition Program is designed to help Medicare leverage its market share to reduce prices for injectable drugs and save money for taxpayers and beneficiaries. However, both CMS and the major drug distributors face huge, albeit different learning curves.


    The feds are learning the complex, less than transparent ways and means of the pharmaceutical supply chain ' all while also trying to implement the massive new Medicare Part D outpatient drug benefit. Moreover, given the politics of Medicare, historically it has been tough for CMS to introduce competition to the program.


    Meanwhile, the prospective players in CAP ' likely including the four big drug distributors ' are learning about their own complex new world ' the often-inscrutable, always Byzantine domain of Medicare, CMS, federal rulemaking, and government procurements.


    And physicians ' who will need to decide whether to participate in CAP and select among wholesalers under contract with CMS ' are none too happy these days. Earlier, MMA reduced what Medicare reimburses docs for Part B drugs. While the new pricing is defensible and more in line with the market, it reduced physician office revenues, particularly for oncologists. In addition, unless Congress acts this fall, physicians face unsupportable fee cuts of 5 percent a year for several years.


    The Part B Competitive Acquisition Program is a major change to Medicare and the multi-billion dollar market for physician-administered, injectable drugs. It'll be interesting to watch if Medicare can make it work.

    posted: June 28, 2005

    Medicare Drug Benefit Clawback.jpgFor cash-strapped state governments, the "clawback" is the most controversial and costly provisions of the Medicare Modernization Act (MMA) and the new Medicare prescription drug benefit.


    Now, as state begin new fiscal years and grapple with the latest Medicaid spending projections, some state leaders are balking at paying the federal treasury $124 billion over the next ten years to cover the drug costs of a federal benefit. Most state fiscal gurus also predict MMA will impose other costs on state taxpayers. California, for example, projects that Medicare Part D will cost the state $215 million more next year. And many legal experts believe the clawback is simply unconstitutional.


    The feds maintain that MMA will save states money but to achieve any savings states must drop drug coverage for their retirees - this is only possible for states that make direct contributions to fund Rx coverage and if the state decides to renege on union contracts. This scenario is not available or practical for many, perhaps most, states.


    Is Medicare facing a modern-day version of the Boston Tea Party? Leaders in Texas and New Hampshire reportedly intend to not pay the clawback. And the National Governors' Association's national Medicaid reform proposal calls on Congress to modify MMA, saying that "The clawback provisions should not be a further financial burden on states..."


    The fireworks have just begun.

    posted: May 30, 2005

    Winners and Losers in Medicare Drug Benefit.jpgThe Medicare prescription drug benefit (aka, Medicare Part D) is biggest thing to hit American health care in decades. The massive, costly, and extraordinarily complex new program will likely realign the entire pharmaceutical supply chain and create a raft of new winners and losers in the marketplace. Looking into my crystal ball, here are some likely winners:


    ● Low-Income Medicare Beneficiaries Without Prescription Drug Coverage: Over two-thirds of the 41 million Medicare beneficiaries already have prescription drug coverage and many of those without drug coverage are wealthy or healthy enough to not worry. However, several million beneficiaries will benefit from the heavy subsidies offered for low-income, low-asset enrollees in Part D. Countless thousands will live longer, healthy, happier lives as a result. In addition, the process of enrolling in the Part D low-income sudsidy will likely increase the number of beneficiaries taking advantage of the Medicare savings programs. This is where state Medicaid programs pick up some or all of Medicare cost sharing.


    ● Employers Offering Retiree Drug Coverage: With nearly $100 billion in new taxpayer subsidies and a range of new options to cost shift retiree drug coverage to taxpayers, public and private employers are big winners over the long run.


    ● Generic Drug Manufacturers: Under Medicare Part D, drug benefits will be delivered by private drug plans at risk for drug spending. Most Part D enrollees will be served by a totally new creature in the marketplace - stand-alone prescription drug plans (PDPs) at risk only for unit cost and utilization. Using their relatively wide discretion in setting formularies and benefit designs, drug plans will work hard to drive patients to low-cost generic versions of medications.


    ● Beneficiaries in Medicare Advantage Health Plans: The new Medicare Advantage health plans are a boon to beneficiaries. Compared to the often dysfunctional and perpetually outdated Medicare fee-for-service system, Medicare Advantage (aka, Medicare Part C) offers seniors a range of voluntary HMO and PPO plans, lower cost sharing, higher quality, less paperwork, and often more benefits.


    ● Large, National Insurers: To successfully compete as a Medicare drug plan and establish a strong beachhead, players need deep pockets to manage risk, a sophisticated and scalable infrastructure, Medicare-savvy marketing, a stomach for the government contracting, and a recognized, positive brand. While many players are seriously overconfident and dangerously naive about the Part D business (sorry, guys), large national players have a shot at winning early on. If they play it smart, the large insurers can leverage the new market opportunities of both Medicare Part D and Medicare Part C. Of course, the federal government is not the most reliable purchaser and Congressional action can change winners to losers darn quick.


    ● Administrative Services Contractors: To survive and ultimately succeed in the Medicare drug benefit business, players will need a range of new or expanded capacities, including call centers, claims processing, drug utilization review systems, decision support tools, and medication therapy management (MTM) programs.


    ● Consultants, Actuaries, and Lobbyists: Last but not least, demand for consultants and actuaries is already through the roof. Right now, the biggest demand is for specialists who help drug plans prepare bids to Medicare. Later this fall, demand will grow for experts in marketing to and managing the complex Medicare population, including dual eligibles - who will ultimately make or break many drug plans in 2006 and 2007. Moreover, the business of pharma industry consultants, Medicare/Medicaid gurus, and public affairs specialists will undoubtedly rise dramatically as drug manufacturers begin to realize that strategically and tactically Part D is a whole new ballgame.


    What about the losers, you ask? There are plenty. Stay tuned for my list of the likely losers under the brave new world of Medicare Part D.

    posted: May 15, 2005

    Business Partners in Medicare Drug Benefit.jpgThe new Medicare prescription drug benefit requires a new, complex mix of specialized services. The smart players recognize the old rules and strategies no longer apply. They are looking outside their organizations for the skills, infrastructure, and Medicare-specific savvy needed to succeed in Part D.


    Here’s an example of smart partnering in Part D: The newly announced strategic alliance between CIGNA HealthCare and NationsHealth.


    CIGNA HealthCare (NYSE: CI), with about $20 billion in revenues and some 9 million members, has applied to become a national Medicare prescription drug plan provider. To Part D, CIGNA brings size, a well-developed pharmacy benefit portfolio, and an array of clinical management tools.


    However, to succeed Medicare prescription drug plans (PDPs) need a lot more. Enter NationsHealth (NASDQ: NHRX, NHRXW, NXRXU). This nimble, fast-growing player demonstrated its chops by successfully enrolling and servicing over two million seniors in Medicare drug discount cards. No small feat. Sharad Mansukani, MD, NationsHealth's new chief strategic officer and a business-savvy authority on Part D, was most recently a senior advisor to Medicare Administrator Mark B. McClellan, MD, PhD.


    By teaming with NationsHealth, the folks at CIGNA are showing the market they understand the critical importance of having a enrollment and customer service infrastructure that is flexible, scalable, AND Medicare savvy.


    We'll see a wide range of new partnerships forming to address the massive market opportunities - and risks - created by Part D. Some smart, some perhaps downright foolish. While its early in the game, the CIGNA - NationsHealth partnership is one to watch as a possible model.

    posted: May 6, 2005

    In Case of Emergency, Push Button.jpgQuality of care in the federal Medicare program remains poor. New evidence shows a wide range of serious, often worsening problems in the physician and hospital care received by America’s 41 million Medicare beneficiaries.

    The bad news includes (1) increases in preventable medical mistakes; (2) inadequate screening and treatment of colorectal cancer, hypertension, depression, high cholesterol, and urinary incontinence; and (3) wide, unjustified geographic and racial disparities in quality of care received.

    There is some good news, including more preventive services and modest improvements in inpatient care of heart attacks and outpatient care of diabetes.

    Medicare, of course, does not operate in a vacuum. Medicare beneficiaries suffer from the consequences of poor quality, inefficiency, and outdated systems just like the rest of us. The costs – in lost lives, suffering, and wasted dollars – are staggering. And while progress is slow, Medicare has begin several initiatives to improve care.

    posted: May 1, 2005

    Elderly Woman in Wheelchair in a Sunny Room.jpgThe new Medicare prescription drug benefit presents many challenges to the nation's seven million dual Medicare-Medicaid eligibles. On January 1, 2006 they must move from broader, more flexible Medicaid drug coverage to the narrower, extraordinarily complex Medicare drug benefit. Among those in jepordy are about a half million frail seniors and severely disabled persons served by state home- and community-based waiver programs.


    State Medicaid programs offer a range of home- and community-based services to help frail seniors and severely disabled individuals avoid costly institutionalization. Of course, adequate drug coverage is essential to this effort. Most individuals enrolled in these programs are dual eligibles and thus face dramatic changes in their drug benefits.


    An excellent new report discusses the impact of Medicare Part D on this subset of dual eligibles. The author, Chuck Milligan, JD, MPH, is a highly respected Medicaid and long-term care guru. Formerly vice president at The Lewin Group and New Mexico Medicaid director, he's executive director of the Center for Health Program Development and Management at the University of Maryland, Baltimore County (UMBC). Chuck offers several thoughtful recommendations:


    ● Allow states to dispense 90-day prescriptions in December 2005 with full federal matching funds.

    ● Allow Medicaid to share drug information with the Medicare prescription drug plan as soon as auto-enrollment is finalized.

    ● Require Medicare prescription drug plans to honor a beneficiary?s existing pharmacy regimen until an in-network physician develops a new care plan.

    ● Require Medicare prescription drug plans to offer dual eligibles open formularies or Medicaid-equivalent formularies during the first six months to a year.

    ● Allow states to pick up the cost of noncovered drugs with full federal matching funds and be eligible for a credit to the state ?clawback.?

    ● Lengthen the period for auto-enrollment.


    Please also check out the Piper Report's recent story on the risks of Part D to nursing home residents.

    posted: May 1, 2005

    HIV - Illustration of Virus.jpgMany Americans living with HIV/AIDS receive critically important prescription drug coverage from state Medicaid programs. For these beneficiaries, Medicaid typically offers broad formularies, low cost sharing, and access to a large network of pharmacies.


    However, about 50,000 to 60,000 persons with HIV/AIDS will be losing Medicaid drug coverage on January 1, 2006. These dual eligibles will required to enroll in the new Medicare prescription drug benefit (Medicare Part D). In Medicare D, these beneficiaries face more restrictive drug formularies, narrower pharmacy networks, the possibility of higher cost sharing, and private drug plans inexperienced the needs of large numbers of persons with life-threatening chronic conditions.


    State AIDS Drug Assistance Programs (ADAPs) are another critically important lifeline for persons living with HIV and AIDS. ADAPs provide HIV/AIDS-related prescription drugs to about 30 percent of Americans with HIV/AIDS who are receiving care. Operating in every state with a mix of $1.2 billion in federal and state funding, each ADAP has different eligibility criteria. Drug formularies, also set by the states, vary widely.


    The National ADAP Monitoring Project, an initiative of the Kaiser Family Foundation and the National Alliance of State and Territorial AIDS Directors, provides a wealth of useful information, including:


    Fact sheet on ADAPs. Many other fact sheets on HIV/AIDS policy issues are also available.


    Comprehensive annual report with the latest on state ADAPs. An executive summary is also available.


    ● Details on state HIV/AIDS drug formularies.


    State-level data on HIV/AIDS, spending, and programs.

    posted: April 2, 2005

    Prescription Pick Up Counter.jpgMedicare observers expect heavy competition for drug plan contracts with the Centers for Medicare & Medicaid Services (CMS). It now appears CMS will receive several hundred applications, including applications from major insurers offering drug benefit packages in every state.


    Since adoption of the Medicare Modernization Act (MMA), most observers - most notably CMS itself - feared inadequate competition for 2006 contracts. Only a few wonks, including your humble editor, believed the Medicare business, while complex and unprecedented, is too strategic and lucrative for insurers to ignore.


    Prospective drug plan sponsors skillfully played up CMS? fear and perceived inexperience, consistently warning against policies that might restrict the discretion of drug plans. In addition, CMS has a long tradition of taking a ?light touch? to health plan contracting under Medicare+Choice (now called Medicare Advantage).


    The result is Medicare?s drug plan rules, guidelines, and application procedures are highly deferential to drug plan bidders. Add to this (a) the captive market of nearly seven million dual eligibles, (b) the financial safety valves of risk corridors and risk adjustment, and (c) strategic imperatives of a quickly changing pharmaceutical supply chain ? and you have market opportunities that are hard, if not foolish, to refuse.


    This, of course, merely indicates there will be heavy competition. However, do not confuse this with smooth implementation, profitable operation, or a successful drug benefit. Stay tuned for ongoing commentary on the predictable surprises of the Medicare prescription drug benefit.

    posted: March 17, 2005

    Chrome Plated Chain Links.jpgThe supply chain for prescription drugs is as complex as it is important. It represents a fascinating, continuously evolving maze of players, relationships, and processes from manufacturers all the way to individual patients.


    With Medicare's new approach to Part B drug reimbursement, the upcoming Medicare Part D drug benefit, increasing transparency of prices, and new demands from increasingly savvy employers and Medicaid agencies, the pharmaceutical supply chain faces dramatic change. For example:


    - Despite the naive views of some Wall Street analysts, many pharmacy benefit management companies (PBMs) will encounter new challengers and the increasing commodization of core functions. To get a sense of the new world, look to the partnering of UnitedHealth Group’s Ovations subsidiary and Walgreens Health Initiatives in the Medicare drug benefit.


    - Wholesale distributors, already a heavily consolidated part of the supply chain, must balance what amounts to two very different business models. That is, maintain their position in the low-margin logistical enterprise of distribution, while positioning an array of new value-added clinical and IT-driven services.


    To better understand the pharmaceutical supply chain, including the key players and financial relationships, check out a new report by the Health Strategies Consultancy for the Kaiser Family Foundation. Dan Mendelson and his colleagues provide a clear framework for understanding the quarter trillion dollar supply chain. To read the report, click here (PDF).

    posted: March 7, 2005

    Prescription Pills on Pharmacy Counter.jpgNew evidence on the high incidence of preventable, often deadly drug errors in nursing homes raises serious implications for the new Medicare prescription drug benefit.


    Each month, one in ten nursing home residents suffer a medication-related injury, according to a new study in the American Journal of Medicine. The lead author, Jerry H. Gurwitz, MD from the University of Massachusetts Medical School, is a top expert on the safe use of drugs by seniors.


    Extrapolating to the 1.6 million nursing home residents, the study suggests a staggering 1.9 million medication errors each year - including over 86,000 fatal or life-threatening mistakes. These scary new figures, still considered conservative, indicate the problem is five times worse than previously believed. To read the study, click here (PDF).


    Under the new Medicare prescription drug benefit, most nursing home residents face dramatic changes to their drug benefits starting January 1, 2006. While some aspects of the Medicare drug benefit may ultimately help improve care, the highly complex Medicare program will likely exacerbate the problem of medication errors.


    Some key factors to consider:


    1. More restrictive formularies: The drug formularies offered by the Medicare drug plans will be far more restrictive than state Medicaid formularies. For many nursing home residents, this will mean changes to drug therapy regimens.


    2. More complex drug management: It's unlikely that all of a facility's residents will be enrolled in the same drug plan. Therefore, nursing homes face the challenge of navigating multiple formularies and benefit procedures. In addition, the Medicare drug plans will likely force significant changes to nursing home?s long-established relationships with the specialty pharmacies that know and serve this market.


    3. Misaligned financial incentives: Most Medicare beneficiaries in nursing homes will be enrolled in brand-new kind of creature, i.e., stand-alone drug plans that are at financial risk only for the drugs. This is in sharp contrast to health plans (HMOs, PPOs) which are at risk for all care and therefore have a built-in incentive to maintain a safe, therapeutically sound drug benefit to guard against hospitalizations and other more costly events. Because of the serious misalignment of incentives and the potential for cost-shifting and other gaming, no employer or Medicaid program would ever consider a similar at-risk carve out of drug benefits.

    posted: February 18, 2005

    Drugs from Rx Bottle.jpgWhen the Medicare prescription drug benefit begins on January 1, 2006, about seven million beneficiaries face more restricted drug formularies. Currently, these "dual eligible" individuals receive their drug benefit through state Medicaid programs, which offer more liberal formularies than what will be expected of the new Medicare drug plans.


    In addition, most of these high-risk patients will be enrolled in stand-alone prescription drug plans (PDPs) at risk for drug costs only. Unlike health plans, which are at risk for the full spectrum of care, PDPs will have no financial incentive to use drugs to avoid costlier hospitalizations.


    A new report sponsored by the American Society of Consultant Pharmacists (ASCP) describes a variety of health risks to seniors and disabled persons (particularly those in nursing homes) posed by drugs excluded under the Medicare drug benefit.


    The author, Dr. Richard G. Stefanacci, executive director of the Health Policy Institute at the University of Sciences in Philadelphia, concludes:

    While the magnitude of the change from the current Medicaid coverage of many medications for dually eligible residents is enormous, the real costs may not be realized for some time. These will come in the form of costly medication substitutions, potentially avoidable emergency room visits and admissions and, even worse, untimely deaths.
    posted: February 7, 2005

    Handcuffed to Money.jpgSome legal gurus are questioning the constitutionality of a key provision of the Medicare prescription drug benefit: the so-called "clawback" provision that requires states to send the federal government cash to help cover the cost of drugs for dual eligibles. The mandatory payments are enormous - $6 billion in 2006 and over $48 billion (likely much more) during the first five years. And controversial idea of making states pay for a federal program benefit has generated strong criticism from governors and state Medicaid directors.


    Recent decisions by the U.S. Supreme Court and appeals courts have placed new restrictions on the ability of Congress to use its spending power to "encourage" state action. The clawback - and the consequences of late payment - would appear to cross the line. When Congress attaches conditions to federal funding, the Supremes say "the financial inducement offered by Congress might be so coercive as to pass the point at which pressure turns into compulsion."


    No doubt some states will go to court to challenge the clawback. It may be hard for the feds to argue in court that states, by signing up for the federal-state Medicaid partnership, somehow waived their sovereignty and agreed to remit state cash to the Centers for Medicare and Medicaid Services to pay for a federal program.


    For more on this, check out an excellent article by James N. Gardner, JD, in the January 2005 issue of State News, published by the Council of State Governments. Mr. Gardner, a former Oregon state senator, also served as a law clerk to Justice Potter Stewart.

    posted: January 28, 2005

    Doctor Assessing Young Boy.jpgAdjusted for cost-of-living differences, rural physicians have 13 percent more purchasing power than urban physicians. And while there are fewer physicians per capita in rural areas, the overall urban-rural disparity is likely due to an over supply of physicians (particularly specialists) in urban areas.


    So says a new study by the Center for Studying Health System Change, a respected nonpartisan policy research shop funded primarily by The Robert Wood Johnson Foundation. Their findings dispel the widely held myth that low pay is an obstacle to recruiting docs to serve rural areas. The authors acknowledge that this higher purchasing power may be "needed to compensate physicians for other disadvantages of rural practice, including less control over work hours, professional isolation and a lack of amenities associated with urban areas."


    Some implications to consider:


    ● Future Medicare and Medicaid rate increases for rural docs should target those specific areas with inadequate patient access.


    ● Policy makers should invest in innovative ways to reduce the professional isolation and inflexibility of rural medical practice.


    To read the full report, click here (PDF).

    posted: January 19, 2005

    Four Pills Around Cross.jpgThe Centers for Medicare & Medicaid Services (CMS) today released the final rule governing the new Medicare prescription drug benefit.


    To help folks understand the 1,162-page final rule, CMS created a variety of fact sheets, timelines, and other background materials to help stakeholders understand the extraordinarily complex drug benefit:


    Overview of the new rule, with helpful descriptions of key aspects of the drug benefit.


    Summary of how the final rule differs from the proposed rule, as well as a handy table showing the key changes.


    ● Basic timelines for states, drug plans, and employers.

    posted: December 24, 2004

    Senior Holding Prescription Bottles.jpgCongress could improve the newly created Medicare prescription drug benefit by applying the lessons of welfare reform, according to an excellent new article by Paul Barringer.


    In American Outlook, the Hudson Institute's quarterly journal, Mr. Barringer lays out what made welfare reform successful:


    Pay for performance: bonuses for performing well across a spectrum of quality measures.

    ● Encouraging partnerships with local organizations and key players.

    ● Administrative flexibility.

    ● Block grant approach to finances.

    ● Emphasizing evidence-based practices.


    In a great example of out-of-the-box thinking, Paul Barringer makes a thoughtful, persuasive case for applying these same reforms to make the Medicare drug program more beneficial for seniors and taxpayers.

    posted: December 12, 2004

    Pay Here Sign.jpgThe pay-for-performance (P4P) movement continues to grow:


    1. The Medicare Payment Assessment Commission (MedPAC) is calling on Congress to incorporate quality incentives in Medicare payments to hospitals, physicians, and home health agencies. In 2003, MedPAC released similar P4P recommendations for Medicare managed care plans and dialysis facilities. MedPAC says the Centers for Medicare & Medicaid Services (CMS) should earmark between 1% and 2% of Medicare payments to pay bonuses to providers that meet specific quality measures. The quality incentives would into account the severity of patients' illnesses.


    2. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) released principles for constructing pay-for-performance programs to align provider reimbursement with quality of care.


    3. The American Medical Association released a new report to get physicians ready for pay-for-performance. The report says pay-for-performance is a "tsunami building offshore in a sea of stakeholder unrest, threatening those who are not prepared."

    posted: December 10, 2004

    Elated Senior Businessman.jpgUnder the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Congress increased payments to Medicare Advantage plans. The objective is to increase participation by health plans and thereby create more choices for Medicare beneficiaries.


    While many pundits have criticized the payment increases as a “give away” to the health plan industry, those same critics fail to mention that Medicare Advantage plans must use the increased funding to reduce beneficiary cost sharing, enhance benefits, or improve access.


    According to a new study from Mathematica Policy Research:


    • About half of March 2004 MMA increase was used by Medicare Advantage plans to reduce beneficiary premiums and other cost sharing or to enhance benefits.


    • Most of those benefit changes were used to reduce plan premiums, which dropped an average of $9 per month. The rest was used to improve physician and hospital reimbursement.


    • Average out-of-pocket costs declined to the 2003 level.


    • Among those plans that offer prescription drug coverage, a higher proportion now cover brand name drugs instead of only generics.


    • Coinsurance for physician services was reduced slightly and the proportion of plans with any cost-sharing for hospital services remained about the same.


    • Coverage of dental, vision, or hearing services (which are not covered through fee-for-service Medicare) increased some.


    Authored by Lori Achman, MPP and Marsha Gold, Sc.D. at Mathematica, the study was sponsored by The Commonwealth Fund as part of a larger project to understand benefits and premiums in Medicare managed care.


    To download the complete study (PDF), click here.

    posted: December 10, 2004

    Financial Risk - Dice - 2.jpgPrescription drug utilization varies dramatically among individuals. To make sure Medicare payments to Prescription Drug Plans (PDPs) reflect the health status of enrollees, the Centers for Medicare & Medicaid Services (CMS) is developing a risk adjustment methodology. Risk adjustment is a statistical process used to identify and adjust for variation in patient costs that stem from differences in key risk factors - each a demographic or diagnostic characteristic of the patient.


    The CMS methodology, which is mandated by the Medicare Modernization Act (MMA), will use various inputs ? age, sex, disability status, and diagnoses ? to create a reasonable estimate of a PDP?s cost liability. Risk adjustment will result in more fair and accurate drug plan payments and help ensure access for the most vulnerable beneficiaries.


    For PowerPoint slides on CMS? planned approach, click here.

    posted: December 3, 2004

    Pills Spilled.jpgUnder the new Medicare prescription drug benefit, drug plans will have a fair amount of discretion in setting formularies. The idea is to encourage competition among drug plans and offer Medicare beneficiaries choice. The Centers for Medicare & Medicaid Services (CMS) will review the benefit designs of drug plan bidders to ensure the beneficiaries have appropriate access to needed drugs.


    CMS has released draft guidelines for reviewing prescription drug plan formularies. CMS' strategy for drug benefit review is designed to promote "appropriate operation of beneficiary protections and formulary oversight that includes access to all Part D covered drugs, while providing flexibility in plan design as expected under the Medicare Modernization Act (MMA)." Public comments are due by Thursday, December 30, 2004.


    CMS also released a helpful fact sheet that summarizes the formulary review process.

    posted: November 23, 2004

    Cash in Prescription Bottle.jpgA 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

    posted: November 4, 2004

    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."

    posted: November 2, 2004

    Calculating.jpgUnder 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.

    posted: October 29, 2004

    A Bright Idea.jpgMedicaid health plans are the Ginger Rogers of managed care. They have to do everything commercial and Medicare health plans do but have to do it backwards and in high heels. Despite dealing with more complex requirements and the toughest, most vulnerable patient populations, Medicaid health plans often provide higher quality and better access to care than their commercial counterparts.


    To reward the highest performing health plans, state Medicaid agencies are increasingly using a new tool - performance-based auto-assignment. Auto-assignment is when new Medicaid beneficiaries are automatically assigned to a health plan when they don't voluntarily select a plan within the required time frame. While a state may simply assign new patients randomly among available plans, it may also use auto-assignment to incentivize the best health plans with increased enrollment. The better the perform, the greater the plan's proportion of auto-assigned enrollees.


    Michael Bailit, CEO of Bailit Health Purchasing LLC and a leading expert on Medicaid and employer managed care, says for auto-assignment to work as an incentive additional assignment volume must be desired by the health plans. States must also:

    - Establish clear goals at the outset and involve stakeholders early in the process.
    - Focus on data that is reliable and measures that can be audited.
    - Revisit measures on a regular basis and view the algorithm as something that is modifiable.
    - View auto-assignment as an incentive strategy that can be use in complimentary fashion with other incentive strategies.


    With the help of Bailit Health Purchasing, California Medicaid (MediCal) is developing a performance-based auto-assignment program. Starting in 2005, MediCal will use the approach to reward health plans with superior performance (relative to other health plans in the county), create a quality improvement incentive for all plans, and support the preservation of the safety net. Medicaid programs in Michigan and New York state already have experience using auto-assignment to drive quality improvement.


    When the new Medicare prescription drug benefit begins in January 2006, 7 million dual eligibles (persons enrolled in both Medicare and Medicaid) will receive their drug benefits through prescription drug plans (PDPs). If they don't select a PDP, Medicare will auto-assign them into a plan. Given the positive experience of state Medicaid programs, Medicare may wish to consider using performance-based auto-assignment to help drive drug plan quality.

    posted: October 15, 2004

    Cost of Drugs.jpgTo help organizations planning to submit bids to serve beneficiaries under the new Medicare prescription drug benefit, the Centers for Medicare & Medicaid Services (CMS) has posted a wealth of valuable new information on it's website.


    Designed to help potential drug plan bidders better understand and estimate the Medicare population's use of prescription drugs, the new data sets include:


    - Drug utilization by seniors enrolled in the Federal Employee Health Benefit national Blue Cross Blue Shield plan: annual per capita utilization by state, broken down by spending, prescriptions filled, and supply days, and separately reported for total sales, retail sales and mail order. In Zip file.


    - Distributions of prescription drug expenses based on the Medicare Current Beneficiary Survey (MBCS).


    - Demographic characteristics such as age and sex, insurance characteristics (including existence of prescription drug coverage), summary Medicare Part A and Part B use and expenditures, and annual prescription drug expenditure (by various payer categories, including consumer payments).


    Earlier, CMS released detailed information on Medicaid drug spending and use, including data on seven million dual Medicare-Medicaid eligibles.

    posted: October 9, 2004

    Cash in Rx Bottle.jpgState Medicaid programs are the nation's largest buyers of prescription drugs, serving over 50 million Americans, including the most vulnerable and costly patients. However, Medicaid drug benefits are complex and vary from state to state and among the diverse populations served.


    We now have an wealth of new information on Medicaid drug spending and utilization, thanks to excellent work by Mathematica Policy Research under a project for the federal Centers for Medicare and Medicaid Services (CMS).


    For the first time, CMS is able to provide state-by-state and national data on the use of and reimbursement for prescription drugs in Medicaid. Available free on CMS' website in both PDF and Excel spreadsheet formats, the data breakdown use and costs by:


    - Beneficiary demographic characteristics (age, sex, and race).

    - Basis of eligibility (children, adults, disabled, and aged).

    - Medicare-Medicaid dual eligible status.


    There are detailed tables for all Medicaid beneficiaries combined, plus separate tables for dual eligibles and for full-year residents of nursing facilities. The tables show prescription drug use and spending by:


    - Brand status (patented brand name, off-patent brand name, and generic).

    - Therapeutic category (cardiovascular agents, central nervous system drugs, etc.).

    - Drug group (anti-psychotics, anti-depressants, ulcer drugs, etc.).


    Starting in 2006, seven million dual eligibles will receive their drug benefits under the new Medicare Part D program. Prospective Medicare drug plans will find this new information incredibly helpful in understanding the drug needs of this unique population.


    Congratulations to Jim Verdier and colleagues at Mathematica for this outstanding work. And thanks to CMS' outstanding, foresighted research office for making this happen.

    posted: September 25, 2004

    Exec with Puzzle.jpgUnder the Medicare Modernization Act (MMA), the new Medicare prescription drug benefit (aka, Medicare Part D) includes a retiree subsidy to encourage the continuation of employer-sponsored drug plans for retired Americans.


    Here are some excellent resources to help employers understand the Medicare retiree subsidy:


    - White Paper on Retiree Drug Coverage Under Medicare. From Centers for Medicare and Medicaid Services (CMS). CMS also provides a brief summary of the purpose of the retiree subsidy.


    - Covington & Burling provides an excellent, reader-friendly summary of the retiree subsidy and the relevant provisions of the CMS proposed rule (PDF).


    - Hewitt Associates has an detailed overview and analysis of the retiree drug subsidy (PDF).


    - Aon Consulting Worldwide offers a brief summary of the issues for employers (PDF).


    - Last year, the American Academy of Actuaries and the Society of Actuaries held an excellent briefing for Congressional staff on how to determine the actuarial equivalence of Medicare prescription drug plans (PDF).


    - For folks needing background on the bigger picture, the National Business Coalition on Health (NBCH) provides an excellent guide for employers on managing prescription drug benefits (PDF) and an informative white paper on trends in pharmaceutical benefits (PDF).

    posted: July 11, 2004

    Three Docs.jpgPreventable medication mistakes in hospitals is a leading causing of death. Top patient safety experts and The Leapfrog Group have called upon hospitals to replace risky, paper-based prescriptions with computerized physician order entry (CPOE) systems.


    If installed in every major hospital, CPOE systems would save tens of thousands of lives each year. However, few hospitals have CPOE systems and few plan to get them any time soon. In addition to costing $3-10 million per facility, hospital execs often face stiff resistance from docs unwilling to learn, replace their Rx pads with Palm Pilots, and work as teams. Even worse, because facilities are paid for quantity and not quality, improved patient safety often lowers a hospital's revenue (fewer errors = fewer patient days = lower revenue).


    Harvard Medical School researchers Eric G. Poon, David Blumenthal, and colleagues recently interviewed senior managers in 26 hospitals to identify ways to overcome barriers to adopting and implementing CPOE. Their thoughtful, on-target recommendations appear in the latest issue of Health Affairs.


    Solutions, not unexpectedly, include financial incentives to hospitals, stronger hospital and physician leadership, greater public attention to patient safety, establishing more uniform data standards, and modernizing hospital IT infrastructures.


    For further reading on savings lives through improved technology, check out my reading lists on:

    - Health care quality.

    - Medical errors.

    - Health care information technology.

    - Electronic medical records.

    posted: June 26, 2004

    Pharmacist with Mouse.jpgThe new Medicare prescription drug benefit, enacted in the Medicare Modernization Act of 2003 and set to begin in January 2006, is the most significant and complex expansion of benefits since the creation of Medicare and Medicaid in 1965.


    For an insightful portrait of the forty years of ideological conflict leading to the Medicare drug benefit, check out "A Political History of Medicare and Prescription Drug Coverage," an article in the June issue of The Milbank Quarterly, by Thomas R. Oliver and colleagues.

    posted: May 22, 2004

    Canadian Flag.jpg The Congressional Budget Office (CBO) estimates that re-importing prescription drugs from Canada will save virtually nothing.


    Many will find this counter intuitive, especially in light of all the misinformation and political rhetoric - and the uneven reporting on the issue. As with so many of the "Taste Great vs. Less Filling" debates in health policy, perceptions are overly simplistic and out of touch with economic reality.


    CBO - an independent, skilled, and studiously nonpartisan arm of Congress - examined the real-world economic dynamics. Read the CBO report here (PDF). It's a quick, eye-opening read.

    posted: May 22, 2004

    Cash in Rx Bottle.jpg The new Medicare drug discount cards will save seniors a whopping $6.4 billion, according to a study commissioned by The Business Roundtable.

    Consider This
    In ancient China, physicians were paid only when their patients were kept well and often not paid if the patient got sick. If a patient died, a special lantern was hung outside the doctor's house. Upon each death, another lantern was added. This is the first known use of the two most powerful drivers for health care performance - incentives and transparency.
    Our Staff
    Kevin 'Kip' Piper
    Kip Piper
    Editor

    Watson the Dog
    Watson Piper
    Managing Editor

    Healthcare Consultant
    President of Health Results Group LLC. Senior counselor with Fleishman-Hillard, the top public relations and communications consultancy. Senior consultant with Sellers Dorsey, influential Medicaid and health reform consultancy. Senior counselor, TogoRun, leading advisors in health care public affairs.

    Expertise
    Leading authority on Medicare, Medicaid, and health reform. Specialist in pharmaceutical, biotechnology, medical device, and health plan industry issues. Policy, finance, coverage, reimbursement, health and drug benefits, marketing, business development, innovation, and public affairs.

    Strategic Advisor
    Advised Fortune 100 companies, pharma and biotech firms, medical device firms, top federal officials, governors, members of Congress, foundations, and foreign leaders. Skilled, creative business and policy strategist and problem solver.

    Speaker
    Popular speaker at health industry conferences. Topics include Medicare, pharma business issues, Medicaid reform, coverage and reimbursement, and health innovation. Keynotes, seminars, and briefings.

    Thought Leader
    Testified before Congressional committees, negotiated major legislation, led groundbreaking programs, and designed and implemented numerous health innovations.

    Blogger
    Editor of the Piper Report, a leading health care blog with thousands of regular readers. Medicare, Medicaid, pharma, biotech, and more. News, advice, solutions, and resources.

    Writer
    Upcoming books include Medicare and Medicaid from A to Z and MediStrategy: Medicare and Medicaid Business Strategies.

    Editor
    Business and policy editor of American Health & Drug Benefits, peer reviewed journal for decision makers in health plans, drug plans, PBMs, CMS, states, and large employers, with circulation of 30,000.

    Learn More
    To learn more, please visit Kip at www.kippiper.com.
    linked-in.gif
    Syndicate Piper Report