Tuesday, February 28, 2012

UnitedHealthcare to Strengthen Service to Florida with Purchase of Preferred Care Partners and Medica HealthCare

UnitedHealthcare Combines Strong Local Focus with National Health Care Expertise, Resources

[MINNETONKA, Minn. and MIAMI] – Feb. 28, 2012 – Demonstrating the company’s continued commitment to serving health care consumers across Florida, UnitedHealthcare, a UnitedHealth Group (NYSE:UNH) company, has agreed to purchase Preferred Care Partners (Preferred Care) and Medica HealthCare Plans (Medica), senior-focused health plans with operations primarily in South and Central Florida. The acquisitions will be two separate transactions.

“Preferred Care and Medica each combine a strong record of providing quality, affordable health care coverage to Floridians with solid relationships with physicians and other health care providers,” said Gail Boudreaux, Chief Executive Officer of UnitedHealthcare. “Joining these strengths with UnitedHealthcare’s record of practical health innovation will bring greater health care access and value to Floridians and the health care community that serves them.”

Preferred Care, based in Miami, serves approximately 50,000 Medicare Advantage members in South Florida, Central Florida and the Tampa area. In addition, Preferred Care in 2011 began serving Medicaid beneficiaries through its CareFlorida plan, which has 5,000 members. Medica, based in Coral Cables, serves approximately 35,000 Medicare Advantage members and 7,200 Medicaid beneficiaries in Miami-Dade and Broward counties.

As part of the Preferred Care transaction, UnitedHealthcare will acquire Preferred Care’s six primary care centers in Miami-Dade and Broward counties. As part of the Medica transaction, UnitedHealthcare will acquire Medica’s two medical centers, located in Coral Gables and Hialeah. The transactions are subject to customary regulatory approvals and are expected to close later this year.

Preferred Care’s and Medica’s health plans and primary care centers will enhance UnitedHealthcare’s offerings in Florida, which include employer-sponsored health plans, individual plans, Medicare Advantage plans, Medicare Supplement plans, Part D prescription drug plans, Medicaid managed care plans, chronic disease management and care coordination programs. UnitedHealthcare Medicare Advantage members in Florida have access to a network statewide of more than 21,000 physicians and 161 hospitals.

UnitedHealth Group has invested significant resources in Florida and employs more than 5,000 Floridians. UnitedHealth Group actively supports Florida communities through initiatives such as UnitedHealthcare’s support to Step Up For Students, a nonprofit that administers the Florida Tax Credit Scholarship for low-income students, and the UnitedHealth Foundation’s support of the Diverse Scholars Initiative to promote future professional involvement in the health industry among students from multicultural backgrounds.

About UnitedHealthcare
UnitedHealthcare is dedicated to helping people nationwide live healthier lives by simplifying the health care experience, meeting consumer health and wellness needs, and sustaining trusted relationships with care providers. The company offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and contracts directly with more than 650,000 physicians and care professionals and 5,000 hospitals nationwide. UnitedHealthcare serves more than 38 million people and is one of the businesses of UnitedHealth Group (NYSE: UNH), a diversified Fortune 50 health and well-being company.

Wednesday, February 22, 2012

Quote of the Day

“Determining whether [a 50.4% increase in the retail prices for 98 specialty drugs from 2004 through December 2009] was a reasonable rate of price inflation or not needs to be established by the manufacturers, something they have not done a very good job at to date. The particularly high specialty price growth during this time shows the oft-mentioned arrogance of many biopharm companies who seemed out of touch with market trends and attitudes.”
— F. Randy Vogenberg, Ph.D., a principal with the Institute for Integrated Healthcare, told AIS’s Specialty Pharmacy News.

UnitedHealth sues DoD for losing $23B military contract

By Dina Overland

UnitedHealth Group (NYSE: UNH) is suing the U.S. Department of Defense after it lost a $23.5 billion Tricare South contract to rival insurer Humana (NYSE: HUM). In a lawsuit filed in the U.S. Court of Federal Claims, UnitedHealth wants the DoD to reinstate its contract with Tricare, which covers health benefits for 3 million active and retired military members and their families.

UnitedHealth won the contract to serve Tricare's south region in 2009, but lost the deal following a protest earlier this year by Humana, which previously held the contract. UnitedHealth then filed its own dispute, but the Government Accountability Office announced last week that it won't support UnitedHealth's claims, reports the Minneapolis Star-Tribune.
The lawsuit alleges that Humana offered steep discounts in its reimbursement fees that would pay doctors and hospitals rates below the Medicare system, which could force doctors to leave the military healthcare network, according to Reuters.

"The deficiencies in the contracting process are too significant for the Department of Defense to proceed with implementing this contract as it stands," said Lori McDougal, head of UnitedHealth's military health division, in a statement. "The Pentagon disregarded its own stated goals for this contract," McDougal added.

Humana has argued that it already proved its ability to get good discounts from Tricare network providers, National Underwriter notes.

Tuesday, February 21, 2012

MA Flavor of the Week Is Duals

By James Gutman - February 17, 2012

Each year, there seems to be one issue that dominates presentations and questions during Medicare Advantage plan sponsors' quarterly earnings calls. In 2012 so far, this issue clearly is new initiatives to manage care and costs of Medicare-Medicaid dual eligibles. The interest is understandable, of course, since there are 9 million duals and only about 10% of them are in any form of managed care. The only problem is that none of the new state dual-specific initiatives backed by the CMS coordinated care office and the agency's Center for Medicare and Medicaid Innovation even has been chosen yet, so company executives have a challenge in trying to say something specific enough to keep investors' interest.

Different companies have responded to that challenge in different ways. There has been a "remarkable" amount of emphasis on duals in recent months, observed, for instance, Universal American Corp. Chairman and CEO Richard Barasch during that firm's fourth-quarter earnings call Feb. 16. He added that "we know this area is large and important," and the company is poised to pursue it with either capitated or fee-for-service arrangements with providers. "We're excited about the opportunities" for duals and have been preparing for them for "quite some time," said WellCare Health Plans, Inc. CEO Alec Cunningham in his firm's Feb. 15 call. Amerigroup Corp.'s biggest opportunity may "lie ahead with duals" along with long-term care integration initiatives, Chairman and CEO James Carlson said Feb. 17 in that company's call.

Well, you get the idea. But there also were at least a couple of top executives willing to inject a dose of realism into the subject. "We will over time get our share [of duals], but the time frame is unpredictable," said ever-candid Coventry Health Care, Inc. Chairman and CEO Allen Wise in his firm's call Feb. 8. And Aetna Inc. Chairman and CEO Mark Bertolini noted in the firm's earnings call Feb. 1 that the California duals initiative "is not fully laid out, nor is the timing."

Is the duals program creating investor expectations that can't be met?
What is the right mix of enthusiasm and caution that MA — and managed Medicaid — plans should show to it? When the "flavor of the week" is this important, what's the best way to keep it on the menu?

Quote of the Day

“Manufacturers that I have spoken with estimate that 10% to 30% (or more) of patients that receive a prescription for a specialty drug do not start therapy because they cannot afford even the first prescription.”
— Bill Sullivan, principal consultant with Specialty Pharmacy Solutions LLC, told AIS’s Specialty Pharmacy News.

Today's Datapoint

1.1 million…Medicare enrollees signed up this year with Medicare Advantage plans that have a five-star rating, compared with just 115,000 one year ago when there were substantially fewer such plans, according to CMS.

Monday, February 20, 2012

Today's Datapoint

29% …was the jump in prices for top-selling brand-name drugs in the past three years, according to a Segal Co. analysis of NDC data from First Databank.

Friday, February 17, 2012

UnitedHealthcare Completes XLHealth Acquisition

MINNETONKA, Minn. – February 9, 2012 – UnitedHealthcare, a UnitedHealth Group (NYSE:UNH) company, has completed its acquisition of XLHealth Corporation, (XLHealth) a sponsor of Medicare Advantage health plans with a primary focus on Medicare recipients with special needs, such as those with chronic illness and those eligible for Medicaid (“dual eligibles”). By building on XLHealth’s model of care, UnitedHealthcare can better serve chronically ill and dual eligible Medicare beneficiaries nationwide.
UnitedHealthcare and XLHealth signed an acquisition agreement in November 2011.

XLHealth serves Medicare Advantage members under the Care Improvement Plus brand in Arkansas, Georgia, Maryland, Missouri, South Carolina and Texas. In 2012, it began offering its Care Improvement Plus Medicare Advantage plan in Illinois, Indiana, Iowa, New Mexico, New York and Wisconsin. Nearly 90 percent of XLHealth’s membership is enrolled in Medicare Advantage Special Needs Plans. Including XLHealth’s 117,000 Medicare beneficiaries, UnitedHealthcare Medicare & Retirement serves approximately 2.5 million Medicare Advantage plan members nationally.

“XLHealth’s model of care will enable UnitedHealthcare to better serve chronically ill and dual-eligible Medicare beneficiaries across the country,” said Tom Paul, CEO of UnitedHealthcare Medicare & Retirement.
“We look forward to working with UnitedHealthcare to enhance the service we offer to our current members and bringing our proven approach to care to even more chronically ill and underserved Medicare beneficiaries,” said Fred Dunlap, CEO of XLHealth.

The acquisition is expected to add approximately $2 billion to UnitedHealth Group’s 2012 revenues and $0.05 to net earnings per share, after integration expenses and investments to expand XLHealth’s scale and provide its services to chronically ill beneficiaries currently served by UnitedHealthcare Medicare & Retirement. Including XLHealth, UnitedHealth Group projects net earnings of $4.60 to $4.80 per share in 2012.
About UnitedHealthcare

UnitedHealthcare is dedicated to helping people nationwide live healthier lives by simplifying the health care experience, meeting consumer health and wellness needs, and sustaining trusted relationships with care providers. The company offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and contracts directly with more than 650,000 physicians and care professionals and 5,000 hospitals nationwide. UnitedHealthcare serves more than 38 million people and is one of the businesses of UnitedHealth Group (NYSE: UNH), a diversified Fortune 50 health and well-being company.

Forward-Looking Statements
This press release may contain statements, estimates, projections, guidance or outlook that constitute “forward-looking” statements as defined under U.S. federal securities laws. Generally the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “project,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. These statements may contain information about financial prospects, economic conditions and trends and involve risks and uncertainties. We caution that actual results could differ materially from those that management expects, depending on the outcome of certain factors.

Some factors that could cause results to differ materially from the forward-looking statements include: our ability to effectively estimate, price for and manage our medical costs, including the impact of any new coverage requirements; the potential impact that new laws or regulations, or changes in existing laws or regulations, or their enforcement or application could have on our results of operations, financial position and cash flows, including as a result of increases in medical, administrative, technology or other costs or decreases in enrollment resulting from federal, state, local and international regulations affecting the health care industry; the impact of any potential assessments for insolvent payers under state guaranty fund laws, including any that could arise out of the potential liquidation of Penn Treaty Network America Insurance Company; the ultimate impact of the Patient Protection and Affordable Care Act, which could materially and adversely affect our results of operations, financial position and cash flows through reduced revenues, increased costs, new taxes and expanded liability, or require changes to the ways in which we conduct business or put us at risk for loss of business; potential reductions in revenue received from Medicare and Medicaid programs; uncertainties regarding changes in Medicare, including potential changes in risk adjustment data validation audit and payment adjustment methodology; failure to comply with restrictions on patient privacy and data security regulations; regulatory and other risks and uncertainties associated with the pharmacy benefits management industry; competitive pressures, which could affect our ability to maintain or increase our market share; our ability to execute contracts on competitive terms with physicians, hospitals and other service professionals; our ability to attract, retain and provide support to a network of independent producers (i.e., brokers and agents) and consultants; events that may adversely affect our relationship with AARP; increases in costs and other liabilities associated with increased litigation, government investigations, audits or reviews; the potential impact of adverse economic conditions on our revenues (including decreases in enrollment resulting from increases in the unemployment rate and commercial attrition) and results of operations; the performance of our investment portfolio; possible impairment of the value of our intangible assets in connection with dispositions or if future results do not adequately support goodwill and intangible assets recorded for our existing businesses or the businesses that we acquire; increases in health care costs resulting from large-scale medical emergencies; failure to maintain effective and efficient information systems or if our technology products otherwise do not operate as intended; misappropriation of our proprietary technology; our ability to obtain sufficient funds from our regulated subsidiaries to fund our obligations, to maintain our quarterly dividend payment cycle or to continue repurchasing shares of our common stock; failure to complete or receive anticipated benefits of acquisitions and other strategic transactions; potential downgrades in our credit ratings; and failure to achieve targeted operating cost productivity improvements, including savings resulting from technology enhancement and administrative modernization.

This list of important factors is not intended to be exhaustive. A further list and description of some of these risks and uncertainties can be found in UnitedHealth Group's reports filed with the Securities and Exchange Commission from time to time, including the cautionary statements in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any or all forward-looking statements we make may turn out to be wrong. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake to update or revise any forward-looking statements.

Today's Datapoint

50.4% …was the increase in retail prices for 98 specialty drugs between December 2004 and December 2009, compared with the general inflation rate of 13.3% over the same period, according to a new report from AARP’s Public Policy Institute entitled Trends in Retail Prices of Specialty Prescription Drugs Widely Used by Medicare Beneficiaries 2005-2009.

Med Supp News

Aetna reports 9% increase in Medicare Supplement policies in-force
In the first quarter of reporting results since acquiring Genworth’s Medicare Supplement block of business, Aetna’s reported year-end 2011 Medicare Supplement policy in-force counts were 163,000, a 9% increase over the combined year-end 2010 Medicare Supplement policy in-force counts for Aetna and Genworth. The combined total of Aetna’s and Genworth’s 2011 Medicare Supplement annualized new sales was in the top 6 in the Medicare Supplement market.

Humana reports 53% increase in Medicare Supplement policies in-force
Humana reported year-end 2011 Medicare Supplement policy in-force counts of 59,600, a 53% increase over year-end 2010. Humana also reported 2011 Medicare Supplement premium of $104 million, up from $70 million for 2010. Humana’s 2011 Medicare Supplement annualized new sales were in the top 10 in the Medicare Supplement market.

Torchmark reports 5% increase in Medicare Supplement new sales
Torchmark reported 2011 Medicare Supplement annualized new sales of $37.5 million, a 5% increase over 2010. Torchmark’s Medicare Supplement annualized new sales have leveled off between $25 million and $45 million for the past seven years.

Universal American halts some marketing efforts

Universal American announced today it will no longer market the following products as of June 1, 2012:

• Medicare Supplement and Medicare Select
• Hospital Indemnity
• Cancer
• Senior Dental
• Senior Tribute (Whole Life)

This change impacts the products listed above being marketed by the following Universal American companies:

• American Pioneer
• American Progressive
• Constitution Life
• Marquette National

Reportedly, Universal American is focusing on continued growth in the Medicare Advantage market. Universal American used to be one of the largest companies in the Medicare Supplement market but its Medicare Supplement market share has decreased more than 50% since changing its focus over the past seven years to the Medicare Part D and Medicare Advantage markets.

Doctors ‘Disgruntled’ And Frustrated By Looming Medicare Cuts

February 16, 2012

A looming 27.4 percent cut in Medicare reimbursements likely won't happen. But next year, any cuts could be greater.

The good news for the nation's doctors — and the millions of Medicare patients they care for — is that assuming everything goes as planned, the 27.4 percent cut in reimbursements that would have taken effect March 1 won't.
The bad news? The fix included in the deal to extend the payroll tax holiday isn't permanent. It only extends to the end of the year. And then, if Congress doesn't act again, the cut it is expected to be will be in the neighborhood of 32 percent.

That's leaving doctors in a continuing state of uncertainty.

"Disgruntled is probably just too soft of a term for this," says Robert Wah, a reproductive endocrinologist at the National Institutes of Health and the Walter Reed Army Medical Center. He's also Chairman of the Board of Trustees of the American Medical Association. "It's really devastating to try to run an office in this environment."

Wah says doctors have been through this exercise before — waiting to see if Congress will stop a scheduled Medicare cut. Too many times.

"In 2010, Congress did this to us five times," he said. "There were five patches put in place, and a couple of times they actually waited until after the deadline," which meant payments were delayed.

Wah says many physicians are also small businesses. So the uncertainty of knowing how much — or in some cases whether they're going to be paid to see their Medicare patients, is more than just an inconvenience. "Because they have to continue to pay their rent and their insurance and their electric bill and the salaries of the people that work in their office," he says.

Until now, the public hasn't had a lot of sympathy for the plight of America's doctors and their Medicare woes. Despite their complaints, doctors still earn a lot more than the average American. And surveys showed that most doctors continued to treat Medicare patients.

This problem with how Medicare pays doctors is the result of a funding formula enacted in 1997 that's since gone awry. It affects many members of the military, too, because rates for the TRICARE health program are tied to those for Medicare.

But over time it has been gradually eroding what doctors earn to care for those patients. That's because while Congress mostly hasn't let the scheduled cuts take effect, it also hasn't given doctors a raise, either. The result, says Wah, is "there's now a 20 percent gap between... the cost of taking care of the folks in the Medicare and TRICARE system and the lack of increase in our fee schedule."

Now that's starting to have an impact on patients, says Paul Ginsburg, president of the Center for Studying Health System Change, a health research think tank. Ginsburg says most Medicare patients aren't having trouble getting care because they're not changing doctors. But with many doctors not taking new Medicare patients, there is starting to be an access problem.

"Someone who needs another doctor, either because they've moved, or their doctor is retired or they just don't like their doctor anymore; those are the people bearing the brunt of whatever access limitation we have," Ginsburg says.

But Ginsburg says he's also worried about something else — the increasing gap in pay between primary care doctors, like family practitioners, and internists and specialists. Particularly now, he says.
"We really are looking to primary care physicians to play a bigger role, to coordinate care, to manage chronic disease, and not just to do piece work," he says. But "at the same time we're envisioning a changed role...we're making primary care much less attractive."

Those changes to the health delivery system are the result of the 2010 health overhaul. And it did include some payment increases for primary care doctors in Medicare. But it didn't fix the overall doctor payment problem — largely because it cost too much.
And while there were a few hints that Congress might be getting ready to fix it using unspent funds from the wars in Iraq and Afghanistan, that didn't happen. Which is why Wah and his colleagues are getting increasingly frustrated.

"Our organizations are committed to helping Congress develop better ways to pay physicians and deliver care to patients," said a joint statement from the American Academy of Family Physicians, American College of Physicians, American College of Surgeone, and American Osteopathic Association. "(B)ut Congress must do its part and enact permanent repeal of the (current funding formula) —before 2012 comes to a close."

Thursday, February 16, 2012

Simple Tests May Flag Dementia, Stroke Risk

By Charles Bankhead, Staff Writer, MedPage Today
Published: February 15, 2012

Reviewed by Robert Jasmer, MD; Associate Clinical Professor of Medicine, University of California, San Francisco and Dorothy Caputo, MA, RN, BC-ADM, CDE, Nurse Planner

Action Points
• Note that this study was published as an abstract and presented at a conference. These data and conclusions should be considered to be preliminary until published in a peer-reviewed journal.
• Explain that walking speed and hand-grip strength during middle age correlated with cognitive function and stroke risk in older adults, suggesting simple tests might aid diagnosis of the two conditions.
• Note that grip strength did not influence stroke risk in the overall cohort, but a higher baseline grip strength was associated with a 42% reduction in stroke risk among individuals 65 and older.

NEW ORLEANS -- Walking speed and hand-grip strength during middle age correlated with cognitive function and stroke risk in older adults, suggesting simple tests might aid diagnosis of the two conditions, according to data from a large cohort study.

During 11 years of follow-up, slower walking speed at baseline was associated with a 50% rise in the hazard for dementia. Brain volume and performance on a variety of tests of cognitive function also were significantly lower in slower walkers.

Grip strength did not influence stroke risk in the overall cohort, but a higher baseline grip strength was associated with a 42% reduction in stroke risk among individuals 65 and older, as will be reported here in April at the American Academy of Neurology meeting.

"These are basic office tests [that] can provide insight into the risk of dementia and stroke and can be easily performed by a neurologist or general practitioner," Erica C. Camargo, MD, PhD, of Boston Medical Center, said in a statement.

"While frailty and lower physical performance in elderly people have been associated with an increased risk of dementia, we weren't sure until now how it impacted people of middle age," she added.
The findings came from an analysis of data from the Framingham Offspring Cohort, children of the original participants in the long-running study of the natural history of cardiovascular disease.

Camargo and colleagues analyzed data for 2,410 participants in the offspring cohort study, mean age 62, all of whom were stroke- and dementia-free at baseline. The initial workup included assessments of walking speed, grip strength, and cognitive function, as well as MRI scans of the brain.

The investigators statistically related age-standardized grip strength and walking speed with baseline cerebral volume estimated by MRI, with age- and education-standardized cognitive function and with stroke and dementia incidence.

During follow-up, 34 participants developed dementia, and 79 had strokes or transient ischemic attacks (TIAs). Slower walking speed had a significant correlation with:
• Increased stroke risk (HR 1.50, P=0.020)
• Lower total cerebral volume (P=0.007)
• Poorer performance on tests of various aspects of memory (visual reproduction, P=0.009; paired associate learning, P<0.001; executive function, P=0.004; visuo-perceptual function, P=0.002; and language, P=0.006)

Greater hand-grip strength was associated with a significant reduction in stroke risk (HR 0.58, P=0.013) in the subgroup of 784 participants who were older than 65 at baseline.

Increasing grip strength also was associated with:
• Total cerebral brain volume (P<0.001)
• Visual reproduction (P<0.001)
• Executive function (P=0.009)
• Visuo-perceptional function (P<0.001)
• Language (P=0.002)
• Better abstraction (P=0.009)

Acknowledging the need for more studies, Camargo and colleagues concluded that "walking speed and hand-grip strength might serve as clinical markers of the need for a more detailed assessment of brain function."

The study was supported by the National Heart, Lung, and Blood Institute, the National Institute of Neurological Disorders and Stroke, and the National Institute on Aging.

Camargo and co-investigators had no relevant disclosures.

From the American Heart Association:
• Science News from International Stroke Conference 2012
• Guidelines for the Primary Prevention of Stroke

Primary source: American Academy of Neurology

Source reference:
Camargo EC, et al "Walking speed, handgrip strength and risk of dementia and stroke: The Framingham Offspring Study" AAN 2012; Abstract.

HHS ensures consumers get better value for their health insurance dollar

Administration actions saved consumers up to $323 million

Health and Human Services Secretary Kathleen Sebelius announced today that consumers will soon begin receiving unprecedented information on the value of their health insurance coverage, and some will receive rebates from insurance companies that spend less than 80 percent of their premium dollars on health care.

The Affordable Care Act requires that insurance companies this year begin notifying customers how much of their premiums they have spent on medical care and quality improvement. Beginning in 2011, insurers were required to spend at least 80 percent of total premium dollars they collect on medical care and quality improvement. Insurance companies that do not meet the 80/20 standard (also known as the Medical Loss Ratio) are required to pay rebates to their customers this year.

These adjustment request determinations were made as a result of a transparent and data-driven process, and the documentation related to each state’s request has been publicly posted. In total, HHS determined that no adjustment was necessary in ten states, approved an altered adjustment in six states, and approved the request sought by one state. This includes a denied adjustment for Wisconsin, and an altered adjustment for North Carolina, both announced today.

Today's announcement is part of the Obama Administration’s effort to increase transparency in the health insurance marketplace. The notification will let consumers know if their insurer did not meet the 80/20 standard -- and that they or their employer will receive a rebate. HHS is also considering requiring insurers notify consumers if their insurer did meet the 80/20 standard. For the text of these proposed notifications, please visit: http://cciio.cms.gov/resources/other/index.html#mlr

For more information on the MLR provision in the Affordable Care Act, please visit: http://www.healthcare.gov/news/factsheets/2010/11/medical-loss-ratio.html

For documentation of state requests for MLR adjustments, including specific information on rebates saved by HHS’ MLR adjustment determinations, visit:

For more information on how the Affordable Care Act is creating a transparent market for health insurance, visit:

Click here to read the entire HHS Press release issued today http://www.hhs.gov/news/press/2012pres/02/20120216b.html

Click here to view the Federal Register notice: https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-03844.pdf

The President's Proposed 2013 Budget: Impact on Medicare

The views stated in this posting do not necessarily reflect my own:

This week, President Obama unveiled his Fiscal Year 2013 Budget.[1] Overall, the Center for Medicare Advocacy believes that the budget demonstrates a commitment to keeping the Medicare program strong and keeping the program's promise to older Americans and individuals with disabilities who rely on the program to provide quality, affordable health care. The Center is concerned, however, about certain proposals that would shift more costs to people with Medicare but achieve only relatively small savings for the program.

The Budget Preserves Medicare as a Community Program

The Administration "recognizes that Medicare is a sacred trust with America's seniors and supports policies that will strengthen the Medicare program and extend the life of the Medicare trust fund."[2] Fortunately, unlike some debt reduction proposals discussed over the last several months, this budget does not seek to alter Medicare's fundamental structure. Other proposals seek to turn Medicare into a confusing system of vouchers and coupons; an approach that would shift significant costs to families. The outcome of those proposals would be the decline or elimination of the traditional, community Medicare program in favor of private, commercial plans at higher cost to taxpayers.[3] The President's budget proposal also does not seek to raise the age of Medicare eligibility to 67, as has also been proposed by some policymakers.

The Center applauds efforts to increase revenue for the program, such as the proposal to align Medicare drug payment policies with Medicaid policies for low-income beneficiaries. This alignment would return to requiring drug manufacturers to pay the difference between rebate levels already provided to Medicare Part D plans and the Medicaid rebate levels.[4]

Through devices similar to those included in the Affordable Care Act (ACA), the President's proposed budget seeks to save $302.8 billion from the Medicare program over 10 years.[5] The Center has long supported advancing the goals of the ACA to achieve further savings from the Medicare program, including: "better aligning payments with the costs of care; cutting waste, fraud, and abuse; increasing the availability of generic drugs and biologics; and improving providers' payment incentives to provide high quality care."[6] As discussed below, however, there are concerns that some of the proposed savings to Medicare would result in further shifting of costs to certain people who rely on Medicare.

Proposals of Concern

Of the $302.8 billion in Medicare savings, the President's budget seeks to achieve $30 billion in savings from proposed "structural changes." The proposed structural changes include "reducing Federal subsidies for high-income beneficiaries and creating financial incentives for newly eligible beneficiaries to seek high-value health care services."[7]
As outlined below, the proposed structural changes are identical to some of the proposals that were contained in the President's September 2011 Plan for Economic Growth and Deficit Reduction, which was the Administration's recommendations to Congress's Joint Select Committee on Deficit Reduction (otherwise known as the "Super Committee").[8] Although the Super Committee process failed to produce an agreement that may have implemented these or other proposals impacting Medicare, many of the troublesome ideas that would negatively impact Medicare that were raised at the time have nonetheless been raised again.

The Center took issue with these proposals last year, and we do so now. As the current proposals are largely the same as those proposed during the Super Committee process, our objections remain largely the same.[9]
• Implementing a Co-Payment for Home-Health Care. Starting in 2017, this proposal would create a home health co-payment of $100 per 60-day home health episode, applicable for episodes with five or more visits not preceded by a hospital or other inpatient post-acute care stay. Imposing such co-pays would have a staggering impact on individuals with long-term and chronic conditions, who would essentially incur $600 in new out-of-pocket costs annually. Additionally, it could lead to higher hospitalizations (and thus higher costs) as a result of beneficiaries forgoing needed care when they cannot afford the co-payments. Moreover, eliminating the co-pay requirement from situations where there has been a hospital or nursing home stay creates a perverse incentive toward hospitalization or nursing home care.
• Increasing the Part B Deductible for New Beneficiaries. The President's plan would increase the Part B deductible only for new beneficiaries by $25 dollars in 2017, 2019 and 2021 (for a total $75 increase). This proposal would have a significant impact on Medicare beneficiaries, nearly half of whom have annual incomes below $22,000.[10] Only about 14% of Medicare beneficiaries – those with incomes of about $11,000 or less - get financial help to pay their Medicare cost-sharing. The proposal shifts costs to beneficiaries and could result in increased costs when needed care is postponed until an illness is more complicated and more costly to treat. Further, this proposal draws an arbitrary line between current beneficiaries and near retirees who would be unaffected and those who will join Medicare in the future and will permanently pay more.
• Expanding Means-Testing of Medicare Part B and D Premiums. Medicare is already a means-tested program, with higher-income beneficiaries paying more for Part B and Part D premiums. The current requirements affect only about 5% of beneficiaries – those with incomes at or above $85,000 a year. The President's proposal would not only raise the income-related premium by 15%, it would also freeze the income level for higher payments at $85,000, not adjusting for inflation, cost of living, or any other such factors, until 25% of beneficiaries were paying the higher premiums. According to the Kaiser Family Foundation, if this proposal was implemented today, "rather than reached gradually by holding income thresholds constant over time," Medicare beneficiaries with incomes at or above $47,000 for individuals and $94,000 for couples would be paying higher premiums this year.[11] In the future, Medicare beneficiaries in the top 25% who are far from wealthy would find themselves paying disproportionately for their healthcare costs.[12] Not only would this proposal shift more costs to people who have incomes well below the highest levels, it might lead to more people choosing not to participate in Medicare. Fewer participants in parts B and D would result in increased costs for the remaining participants.
• Increasing the Cost of Certain Medigap Policies. In another effort to discourage people from using health care, the Plan proposes a surcharge on Part B premiums for people who purchase Medigap policies with low cost-sharing. This surcharge would be equivalent to about 15% of the average Medigap premium (or roughly 30% of the Part B premium). Eliminating or discouraging first-dollar coverage in Medigap only shifts those costs to beneficiaries, who may go without needed medical care prescribed by their doctors. In fact, since Medigap policies only cover care that Medicare deems "medically necessary," such changes should not be needed to deter unnecessary utilization and would instead inhibit use of necessary care.[13] This proposal would penalize future beneficiaries who rationally seek to fill in Medicare's gaps in coverage for care they need.

Other Options Are Available to Save Money

As noted during the recent Super Committee process and the ongoing debt and deficit reduction debate, other steps could be taken to lower costs and save money. Such steps would neither reduce care, nor increase cost-sharing, for current or future beneficiaries. In addition to the drug rebate for low-income enrollees included in the President's budget, the Center has written about other ways to improve care while saving money for Medicare. Other options include requiring the Secretary of Health and Human Services to negotiate drug prices with pharmaceutical companies and allowing traditional Medicare to offer a prescription drug option, rather than relying solely on private, commercial plans to do so.[14]


The President has demonstrated a commitment to preserve and strengthen the Medicare program, including preventing this public benefit from being turned into a private voucher program. The Administration's FY 2013 Budget contains proposals that further improve the program and keep it healthy for current and future enrollees. However, the provisions outlined above would increase out-of-pocket costs for certain beneficiaries, and would not achieve the stated goal of creating incentives for beneficiaries to seek high-value services.

Congressional Leaders Reach Deal On 10-Month 'Doc Fix'

Feb 16, 2012

KHN's Mary Agnes Carey talks with Jackie Judd about the agreement Senate and House negotiators reached today on the "doc fix," which avoids a cut in Medicare physician payment rates for the rest of the year.

JACKIE JUDD: Good Day, this is Health on the Hill. I’m Jackie Judd. Breaking news from Capitol Hill where Senate and House negotiators have reached agreement on the "doc fix," so that physicians treating Medicare patients will not have payments slashed by 27 percent later this month. Covering the story is Mary Agnes Carey of Kaiser Health News. Mary Agnes, what are the details?

MARY AGNES CAREY: As you mentioned, the big news here is that the physicians will not see a payment cut starting March 1st. They were scheduled to get a 27 percent payment cut. That payment cut will not happen for the rest of the year. But they also did not get a payment increase, which is what the House-passed bill would have done. Many physicians who take Medicare patients would have liked to have seen that.

They also made some changes in a package of things called Medicare extenders – policy provisions. But concerning health care, this is certainly the biggest news of the day.

JACKIE JUDD: And what does it cost to restore those payments, or to maintain them at the current level?

MARY AGNES CAREY: About $20 billion for a 10-month fix, which has been the problem all along here, is how expensive these fixes can be whether they’re short-term or longer-term.

JACKIE JUDD: And where did they find the $20 billion?

MARY AGNES CAREY: Well, some of it actually comes from the health law. Five billion dollars comes from the health law’s prevention fund, and this would be over the next 10 years. $2.5 billion comes from additional Medicaid money for Louisiana that was contained in the health law. And there’s also an extension of a phasing-down of Medicaid payments to hospitals that take a lot of lower-income folks. Those reductions would be extended for another year.

MARY ANGES CAREY: … Medicaid payment to hospitals that take a lot of low-income folks. Those reductions would be extended for another year.

JACKIE JUDD: Pockets of opposition to any of this? Where the savings were found?

MARY ANGES CAREY: Some Democrats will tell you that they’re not crazy about the idea of money, for example, coming out of the prevention fund, or being taken out of the additional Medicaid funding to help hospitals with these low-income individuals. But they also didn’t want to see Medicare physicians get their payments cut. They’re unhappy about that.

You’ve got some conservative Democrats that are not happy about the overall package in which this Medicare physician payment fix is included. That larger package includes a continuation of the payroll tax holiday which is not funded by any payment offsets. That’s got some Republican conservatives, especially in the House, upset about it.

JACKIE JUDD: With the doc fix it’s a 10-month Band-Aid. Did they try to go longer to make even a permanent fix? Why was this the best they could do, when they know it’s going to come back?

MARY ANGES CAREY: Conferees a few weeks ago were talking about “wouldn’t it be great if we could get rid of the SGR once and for all.” And there had been some support from some Republicans and some Democrats to use the war savings – the drawdown from the military efforts in Iraq and Afghanistan - to fund that repeal, which is well over $300 billion over the next decade. But conservatives in the House, Speaker John Boehner, the Republican speaker of the House, said, basically, they wouldn’t get behind that. They thought that was not solid money, not a solid pay-for.

So once that went away, members had to look at what could they do in the most immediate sense to stop the payment [cuts], to get it at least to the end of the year. But by taking this to December, it means we get to revisit it again right around Christmas.

JACKIE JUDD: And when will the votes be taken in the full House and the Senate?

MARY ANGES CAREY: The timing is unclear. They’re hoping to be able to take the vote in the House possibly tomorrow, with Senate action to follow on Saturday. But right now that is quite fluid, and we’re waiting see what they determine.

JACKIE JUDD: Mary Agnes Carey of Kaiser Health News, thank you.


Hospitals, Labs Lose In Medicare SGR Agreement

Feb 16, 2012

News outlets report that the legislation would include delaying the cut in Medicare payments to physicians.

CNN: Congress Reaches Final Payroll Tax Cut Deal
Congressional negotiators have resolved all differences on a deal to extend the payroll tax cut and unemployment benefits while avoiding a fee cut for Medicare doctors for the rest of the year (Barret, Cohen and Silverleib, 2/16).

Bloomberg: Payroll Tax Cut Agreement Includes Unemployment, Health Changes
Hospitals will bear much of the cost of the bill. They will lose about $11 billion in government payments for bad debt, incurred when Medicare patients don’t make co-payments and pay deductibles, and for charity care. Clinical laboratories ... will take a 2 percent Medicare payment cut in 2013, according to the congressional documents (Rubin, 2/16).

The Associated Press: Top Bargainers Announce Payroll Tax Cut Deal
The $20 billion price tag for preventing the cut in doctors' Medicare reimbursements would be covered partly by trimming a fund Obama's health care overhaul created to help prevent obesity and smoking. There would also be reductions in Medicaid payments to hospitals that treat high numbers of uninsured patients (Fram, 2/16).

The Washington Post: Congressional Leaders Back Deal On $150B Economic Package
In addition to the pension issue, [Sen. Max] Baucus and [Rep. Dave] Camp agreed to cut $5 billion from a fund created under the health-care law to help primary-care physicians prevent illness — a fund that the president singled out for a similar cut in the budget for fiscal 2013 that he announced Monday (Kane and Pershing, 2/16).

Politico Pro: Health Cuts Survive In Final SGR/Payroll Deal
$6.9 billion will come from federal “bad debt” payments to hospitals and nursing homes. ... The agreement ends a higher level of reimbursement Medicare makes to some rural hospitals to adjust for high labor costs, cutting off those payments on March 31. But it extends a hospital “hold harmless” provision until the end of the year (Dobias and Haberkorn, 2/16).

Politico Pro: Clinical Labs Stunned By Cuts In SGR Deal
The 2 percent cut to the lab fee schedule in 2013 would pile on top of already deep cuts delivered by health reform — totaling about 19 percent over 10 years. ... While robust profits at some of the largest publicly traded companies, such as Qwest and Labcorp, may make it seem like there’s room for trimming payments, the same is not true of the smaller companies that often service smaller or rural market (Norman, 2/16).

National Journal: Congressional Negotiators Reach Payroll Deal
The deal, such as it is, seems like less of a triumph for Congress than the mere prevention of disaster. ... it's worth remembering that this patch comes after the previous two-month patch--which came about after another standoff. A lasting accord this is not (Snell and Cooper, 2/16).

KHN summarized news coverage earlier today: Congressional Negotiators Announce 'Doc Fix,' Payroll Tax Cut Deal

This is part of Kaiser Health News' Daily Report - a summary of health policy coverage from more than 300 news organizations. The full summary of the day's news can be found here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.

Hospitals, Labs Lose In Medicare SGR Agreement

Feb 16, 2012

News outlets report that the legislation would include delaying the cut in Medicare payments to physicians.

CNN: Congress Reaches Final Payroll Tax Cut Deal
Congressional negotiators have resolved all differences on a deal to extend the payroll tax cut and unemployment benefits while avoiding a fee cut for Medicare doctors for the rest of the year (Barret, Cohen and Silverleib, 2/16).

Bloomberg: Payroll Tax Cut Agreement Includes Unemployment, Health Changes
Hospitals will bear much of the cost of the bill. They will lose about $11 billion in government payments for bad debt, incurred when Medicare patients don’t make co-payments and pay deductibles, and for charity care. Clinical laboratories ... will take a 2 percent Medicare payment cut in 2013, according to the congressional documents (Rubin, 2/16).

The Associated Press: Top Bargainers Announce Payroll Tax Cut Deal
The $20 billion price tag for preventing the cut in doctors' Medicare reimbursements would be covered partly by trimming a fund Obama's health care overhaul created to help prevent obesity and smoking. There would also be reductions in Medicaid payments to hospitals that treat high numbers of uninsured patients (Fram, 2/16).

The Washington Post: Congressional Leaders Back Deal On $150B Economic Package
In addition to the pension issue, [Sen. Max] Baucus and [Rep. Dave] Camp agreed to cut $5 billion from a fund created under the health-care law to help primary-care physicians prevent illness — a fund that the president singled out for a similar cut in the budget for fiscal 2013 that he announced Monday (Kane and Pershing, 2/16).

Politico Pro: Health Cuts Survive In Final SGR/Payroll Deal
$6.9 billion will come from federal “bad debt” payments to hospitals and nursing homes. ... The agreement ends a higher level of reimbursement Medicare makes to some rural hospitals to adjust for high labor costs, cutting off those payments on March 31. But it extends a hospital “hold harmless” provision until the end of the year (Dobias and Haberkorn, 2/16).

Politico Pro: Clinical Labs Stunned By Cuts In SGR Deal
The 2 percent cut to the lab fee schedule in 2013 would pile on top of already deep cuts delivered by health reform — totaling about 19 percent over 10 years. ... While robust profits at some of the largest publicly traded companies, such as Qwest and Labcorp, may make it seem like there’s room for trimming payments, the same is not true of the smaller companies that often service smaller or rural market (Norman, 2/16).

National Journal: Congressional Negotiators Reach Payroll Deal
The deal, such as it is, seems like less of a triumph for Congress than the mere prevention of disaster. ... it's worth remembering that this patch comes after the previous two-month patch--which came about after another standoff. A lasting accord this is not (Snell and Cooper, 2/16).

KHN summarized news coverage earlier today: Congressional Negotiators Announce 'Doc Fix,' Payroll Tax Cut Deal

This is part of Kaiser Health News' Daily Report - a summary of health policy coverage from more than 300 news organizations. The full summary of the day's news can be found here and you can sign up for e-mail subscriptions to the Daily Report here. In addition, our staff of reporters and correspondents file original stories each day, which you can find on our home page.

Agreement Reached to Prevent Medicare Doctor Payment Cuts

Lawmakers have reached an agreement that will prevent a pending 27.4 percent cut to Medicare physician payments, which would otherwise take effect on March 1. As part of the agreement, current Medicare physician payment rates will remain intact through the end of 2012. At that time, Congress will need to take further action to prevent Medicare physician reimbursement rate reductions from taking effect on January 1, 2013. In order to offset the cost of the cut through the end of this year, Congress enacted reforms that reduce the amount of “bad debt” payments Medicare makes to help hospitals and doctors cover unpaid bills from patients. The final agreement also cuts the Prevention Fund, an important component of the Affordable Care Act (ACA) that provides increased funding to make investments in preventive care.

In addition, the final agreement includes extensions of several important Medicare programs, including the Qualified Individual (QI) benefit and the Medicare therapy caps exceptions process. QI is a federal block grant that is provided to states to help individuals with limited incomes pay their monthly Medicare Part B premiums. The Medicare therapy caps exceptions process allows individuals to receive speech, physical and occupational therapy beyond standard Medicare limits, when such services are medically necessary. However, the agreement includes slight modifications to the existing exceptions process that will require more stringent reviews of exceptions requests.

According to reports, a vote on the agreement can take place as early as Friday. The bill also contains provisions that would extend both a temporary Social Security payroll tax cut and unemployment insurance benefits due to expire at the end of the month.

President Obama Releases Fiscal Year 2013 Budget, Including Changes to Medicare

This week, President Obama released the administration's proposed budget for fiscal year 2013. The budget contains few surprises pertaining to Medicare and Medicaid, as it incorporates the president’s deficit reduction plan released in September of last year. The majority of savings from Medicare will come as a result of changes in provider payments, strengthening of programs that combat fraud, waste and abuse in Medicare, and reforms that lower the cost of prescription drugs for both the Medicare program and beneficiaries. Under one provision modeled after Medicaid policies, drug manufacturers would pay rebates to the Medicare program for drugs provided to Medicare beneficiaries who qualify for the Part D Low-Income Subsidy (LIS) benefit, also known as Extra Help. This proposal, which revives a policy that was in place before the Medicare prescription drug benefit was enacted, would save an estimated $155 billion over ten years. The budget also includes provisions that would allow generic drugs, which are less costly for consumers, to enter the market more quickly. This proposal would save an estimated $8.6 billion.

However, the budget also contains problematic provisions that would save the federal government money only by shifting costs to Medicare beneficiaries. Such provisions include a premium surcharge on those Medicare supplemental policies, also known as Medigaps, that provide the most comprehensive coverage of Medicare out-of-pocket costs. In addition, the proposed budget increases Medicare Part B deductibles and creates new co-payments for Medicare home health services that are currently available with no cost-sharing. Lastly, the budget would further means-test Medicare Part B and Part D premiums, and require over time that one-in-four Medicare beneficiaries pay an increased, income-related premium. Such proposals do not address growing costs in the health care sector overall, the root cause of increasing costs in Medicare—a health insurance program that grows at a slower rate per capita than private insurance.

Tuesday, February 14, 2012

Candidates Court Seniors On Medicare

KHN Staff Writer
FEB 14, 2012

When GOP presidential hopeful Mitt Romney told conservative activists on Friday that he wants to "save" Medicare by turning it into a program that would give seniors a defined sum – and no more -- to shop for the health plan of their choice, he teed up an issue that has the potential to sway millions of voters, especially seniors, in November.

Three days later, President Barack Obama repeated his own pledge to preserve the program, proposing as part of his 2013 budget plan to reduce spending growth by about $300 billion over 10 years, but keep intact its guaranteed, specified benefits. “What I will not support are efforts to turn Medicare into a voucher,” the president wrote in his budget.

Medicare is likely to play a key role in the 2012 elections—from the presidential race to contests for Congress. While young and middle-age voters are more focused on the economy, “seniors are single-issue voters when it comes to Social Security and Medicare,” said Democratic pollster Anna Greenberg, senior vice president of Greenberg Quinlan Rosner. “They are such an important constituency in elections because they are very reliable voters.”

That’s why every one of the top vote-getters among the GOP presidential contenders, as well as Obama, have cast themselves as protectors of the popular insurance program that provides health care for 48 million elderly and disabled Americans. But in the face of dire warnings about the program’s long-term sustainability, every one of them has also embraced ways to lower costs that have proven radioactive in previous elections.
Republicans won control of the House in 2010 in large part after hammering the president and his party for a health care law that they said cut $500 billion from Medicare over 10 years. That year, the GOP received the largest share of votes from people over the age of 60 in any election since the 1980s, according to Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health.

But those votes could be up for grabs after nearly every House Republican, led by Budget Chairman Paul Ryan of Wisconsin, voted for a plan last year that built on the health care law’s $500 billion in spending reductions and went much further. The plan, which was not taken up by the Senate, would have eventually abolished traditional fee-for-service Medicare for those currently 55 and younger, and replaced it with a premium support system that would limit federal spending. Currently, Medicare pays whatever it takes to provide beneficiaries with a defined set of benefits.

Romney’s Balancing Act

Democrats ran against the Ryan plan in a special congressional election in a conservative upstate New York district last spring, and scored an upset victory, citing government reports that, under his plan, seniors would pay dramatically more for health care.

Now, with Romney, Rick Santorum and Newt Gingrich embracing many of Ryan’s ideas, Democrats are hoping to use that as a cudgel once again in November. “Democrats will try very hard to link Romney with Ryan and whatever is negative about it,” said Blendon.

So far, Romney has had a tough balancing act, trying to avoid positions that would alienate swing voters in November while attempting to align himself in this tough primary season with Republican conservatives who embraced Ryan’s plan.

“Ryan is a hero to conservative Republicans,” said Republican pollster Whit Ayres. “They see him as a brave guy who took on a program that is going bankrupt.”

Speaking in South Carolina last month, Romney reiterated support for Ryan’s ideas about how to reduce Medicare spending, calling them “absolutely right on. Give people choice. Let competition exist in our Medicare program.”

In November, Romney unveiled his own premium support plan that like Ryan’s would provide a set amount to people to purchase private coverage. His plan would allow beneficiaries to use that money to opt for the traditional fee-for-service program, which Ryan’s did not. In December, the candidate embraced a similar proposal by Ryan and Sen. Ron Wyden, D- Ore.

Beneficiaries would be on the hook for paying the difference if they sought more expensive plans; however, Romney said that all health plans would have to offer coverage at least comparable to what the program provides today.

Supporting the Ryan-Wyden compromise has removed the “bull’s eye” target from Romney’s back that “Democrats had planned to use,” since he would preserve traditional fee-for-service Medicare for those who want it, said Gail Wilensky, a campaign adviser to 2008 GOP presidential nominee John McCain, and head of the Medicare program in the George H.W. Bush administration.

Greenberg, however, doesn’t think so. She predicts Democrats will attack Romney in the general election for his statement last year that he would vote for the original Ryan plan. “It doesn’t matter that he now supports Ryan-Wyden,” she said.

Santorum, Gingrich Endorse Ryan’s Ideas

Santorum has also been a vocal advocate of Ryan’s ideas, and has made no effort to soften the House budget plan to appeal to a broader spectrum of voters, for instance, by keeping traditional Medicare as an option. “It is a plan that says innovation with insurance companies and consumers drive down costs, instead of having this government-run Medicare system. ... You have Medicare driving the entire health care system in this country and it’s crushing it,” he said last month in Iowa.
But while Santorum praised the House Republican plan, Gingrich initially called it radical. "That is too big a jump. I think what you want to have is a system where people voluntarily migrate to better outcomes, better solutions, better options," he said on NBC’s Meet the Press last May.

Gingrich later commended Ryan for partnering with Wyden to keep Medicare’s fee-for-service as an option going forward.

President Obama, meanwhile, has spent the last two years trying to counter the Republican narrative that the health law cuts Medicare coverage. He asserts the law slows the rate of spending increases, largely at the expense of medical providers and gives seniors new benefits, such as free preventive services and lower prescription costs.

The president says he wants to preserve Medicare’s current guarantee to cover set benefits, but curb costs through greater efficiencies, such as strengthening incentives for doctors, hospitals and other health care providers to give high-quality care, and cutting expenditures for those who get care through the Medicare Advantage program. One quarter of Medicare recipients are enrolled in these mostly private managed care plans, and the government spends on average 7 percent more per beneficiary in those plans.

In his budget proposal, the president sought additional savings by increasing premiums for higher-income beneficiaries, raising the price for some home health care services and increasing efforts to reduce fraud and waste. In addition, people who buy the most generous policies to supplement Medicare coverage, called Medigap, would pay a surcharge because such policies have been found to increase use of health care.
The tug-of-war for the senior vote will only intensify as the general election draws closer. Senior voters turn out in much larger numbers than younger Americans. Thirty-four percent of voters in the 2010 congressional election were age 60 or older, even though this age group accounts for only 24 percent of the adult population, Blendon wrote in a July article in the New England Journal of Medicine.

"The views of older voters are particularly important," he added, "because this large voting bloc swings in its loyalty between the political parties, turns out to vote at a higher rate than members of other age groups, and cares about health care and Medicare as voting issues."

Kaiser Health News reporter Jessica Marcy contributed to this report.

New Tools to Fight Fraud, Strengthen Federal Health Programs, and Protect Taxpayer Dollars

The Affordable Care Act takes historic steps toward combating health care fraud, waste and abuse by providing critical new tools to crack down on entities and individuals attempting to defraud Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and private insurance plans.

The Centers for Medicare & Medicaid Services (CMS) is using state-of-the-art technology review claims before they are paid to track fraud trends and flag suspect activity. New power to fight fraud, granted in the health reform law, will also help achieve the 2012 goal of cutting the rate of improper payment claims in the traditional Medicare program by half.

Summary of Fraud Prevention Accomplishments under the Affordable Care Act
Tough New Rules and Sentences for Criminals: The Affordable Care Act increases the federal sentencing guidelines for health care fraud offenses by 20-50 percent for crimes that involve more than $1 million in losses. The law establishes penalties for obstructing a fraud investigation or audit and makes it easier for the government to recapture any funds acquired through fraudulent practices. The law also makes it easier for the Department of Justice (DOJ) to investigate potential fraud or wrongdoing at facilities like nursing homes. Convictions under the Health Care Fraud and Abuse Control Program increased by over 27 percent (583 to 743) between 2009 and 2011, and the number of defendants facing criminal charges filed by federal prosecutors in 2011 increased by 74 percent compared with 2008 (1430 vs. 821).

Enhanced Screening and Other Enrollment Requirements: Last year CMS published rules to enforce some of the Affordable Care Act’s most powerful new fraud prevention tools. New requirements for providers and suppliers wishing to participate in Medicare, Medicaid, and CHIP who may pose a higher risk of fraud or abuse are now required to undergo a higher level of scrutiny. This scrutiny includes licensure checks and site visits to confirm legitimacy and location.

To support the Affordable Care Act’s new requirements for risk-based provider enrollment CMS implemented a new Automated Provider Screening (APS) system in December 2011. The APS uses existing information from public and private sources to automatically and continuously verify information submitted on a provider’s Medicare enrollment application including licensure status. The new system replaces the time- and resource-intensive process of manual review of the enrollment application.

In addition to the enhanced enrollment and screening requirements, the Affordable Care Act also allows the Secretary to impose a temporary moratorium on newly enrolling providers or suppliers of a particular type or in certain geographic areas if necessary to prevent or combat fraud, waste, and abuse. CMS will publish a Federal Register notice to announce any enrollment moratorium and to explain the agency’s rationale for its action.

Increased Coordination of Fraud Prevention Efforts: Many of the Affordable Care Act antifraud provisions increase coordination among states, CMS, and its law enforcement partners at the Office of the Inspector General (OIG) and DOJ. For instance, the law expressly authorizes CMS, in consultation with OIG, to suspend Medicare payments to providers or suppliers during the investigation of a credible allegation of fraud. This initiative reverses a long-standing Medicare practice of paying claims then attempting to recoup funds if the claim is found to be an error or fraudulent. States must also withhold payments to Medicaid providers where there is a pending investigation of a credible allegation of fraud unless the State Medicaid agency has good cause not to do so. The Affordable Care Act also ensures that fraudulent providers and suppliers cannot move easily from state to state or between Medicare and Medicaid by requiring all states to terminate anyone whose billing privileges have been revoked by Medicare or who has been terminated by another state Medicaid program for cause.

Health Care Fraud Prevention and Enforcement Action Team (HEAT): One of the most visible examples of increased collaboration is the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint effort between HHS and DOJ to fight health care fraud. It has engaged law enforcement and professional staff at the highest levels of HHS and DOJ to increase coordination, intelligence sharing, and training among investigators, agents, prosecutors, analysts, and policymakers. A key component of HEAT is the Medicare Strike Force: interagency teams of analysts, investigators, and prosecutors who can target emerging or migrating fraud schemes, including fraud by criminals masquerading as health care providers or suppliers.

In 2011, HEAT coordinated the largest-ever federal health care fraud takedown. In one action, Strike Force teams charged 115 defendants in nine cities, including doctors, nurses, health care company owners and executives, for their alleged participation in Medicare fraud schemes involving more than $240 million in false billing. In another takedown, Strike Force prosecution teams charged 91 defendants in eight cities for their alleged participation in a Medicare fraud scheme involving more than $290 million in false billings.

Use of State-of-the-Art Fraud Detection Technology: To target resources to highly suspect behaviors, CMS has implemented the new Fraud Prevention System, which uses advanced predictive modeling technology to fight fraud. The system has been screening all Medicare fee-for-service claims before payment is made since June 30, 2011. Much like the predictive technologies used in the credit card industry, the Fraud Prevention System uses advanced technology to identify suspicious behavior and billing irregularities. This targets investigative resources on areas of vulnerability that demand immediate attention and response. By streaming claims on a prepayment basis, CMS and its investigative partners are able to more efficiently identify fraudulent claims and respond quickly to emerging trends.

New Focus on Compliance and Prevention: Under the new law, some preventive measures focus on certain categories of providers and suppliers that historically have presented concerns, including Home Health agencies, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers.

On November 17, 2010, CMS published final regulations authorized under the Affordable Care Act requiring physician certification of a patient’s “face-to-face” visit with an appropriate health care professional to ensure Medicare only pays for necessary and covered Medicare home health and hospice services. On July 12, 2011, CMS proposed “face-to-face” encounter requirements for Medicaid home health including medical supplies, equipment and appliances. Additional face-to-face requirements to combat fraud among Medicare DME suppliers will be proposed later this year.

Expanded Overpayment Recovery Efforts: The Affordable Care Act expands the Recovery Audit Contractor (RAC) program to Medicaid, Medicare Advantage, and Medicare Part D programs. The Medicaid RAC program became effective on January 1, 2012 and is projected to save $2.1 billion over the next five years, of which $900 million will be returned to states. These efforts build on the success of the Medicare fee-for-service RAC program which in fiscal year 2011 recouped nearly $800 million in overpayments.

New Durable Medical Equipment (DME) Requirements: Under a new risk-based approach to fighting fraud, CMS has focused its efforts on combating fraud among DME suppliers by instituting enhanced enrollment standards and screening requirements. On August 27, 2010, CMS issued final rules enhancing Medicare enrollment standards for DME suppliers such as more stringent operations and facilities requirements to ensure only legitimate suppliers can participate in Medicare. Additionally, the competitive bidding program is expected to save the Medicare program and its beneficiaries $28 billion over 10 years. The second phase of the program will be expanded from 9 to 100 metropolitan areas across the country.

New Resources to Fight Fraud: The Affordable Care Act provides an additional $350 million over 10 years to ramp up anti-fraud efforts, including increasing scrutiny of claims before they’ve been paid, investments in sophisticated data analytics, and an increased number of law enforcement agents and others to fight fraud in the health care system.

Greater Oversight of Private Insurance Abuses: The new law also provides enhanced tools and authorities to address abuses of multiple employer welfare arrangements and protect employers and employees from insurance scams. It also gives new powers to the Secretary and Inspector General to investigate and audit the health insurance exchanges. This, plus the new rules to ensure accountability in the insurance industry, will protect consumers and increase the affordability of health care.

Senior Medicare Patrols: As a part of the new resources dedicated to fighting fraud, the Obama Administration has significantly expanded funding for Senior Medicare Patrols – groups of senior citizen volunteers to educate and empower their peers to identify, prevent and report health care fraud. The 75 percent increased funding from FY2008 to FY 2011 has helped thousands of Medicare beneficiaries host thousands of community meetings and educational events to increase awareness of fraud among people with Medicare and to solicit their help in preventing fraud.

Budget includes familiar cuts to Medicare, Medicaid

By Sam Baker - 02/13/12 12:06 PM ET

The White House budget proposal includes a modest, familiar set of cuts in Medicare benefits, as well as Medicaid cuts that even some Democrats oppose.

The budget proposal would not make major changes to Medicare benefits, unlike Republican proposals to privatize the program. Democrats have found a potent campaign issue in Medicare, and they say smaller-scale adjustments to the program can avert the more dramatic overhaul championed by Rep. Paul Ryan (R-Wis.).

President Obama’s budget proposal would require wealthy seniors to pay for a higher share of certain Medicare benefits. It would charge a copay for home healthcare services and put new limits on supplemental policies known as Medigap.

All of those proposals were floated during various deficit-reduction negotiations last year.

The budget also includes cuts in Medicare’s payments to healthcare providers that would total about $267 million over the next decade. By far the largest share of that total would come from the pharmaceutical industry. Those cuts, too, were floated during earlier budget talks, but congressional Republicans largely dismissed the call to take more money out of drug companies.

On Medicaid, the White House again proposed a streamlined funding system that states do not support. The plan would combine various rates of federal funding into a single percentage. States and budget analysts say that approach would simply shift costs to the states, rather than actually controlling the cost of Medicaid.

Washington Gov. Christine Gregoire, a Democrat, said last year that the consolidated payment rates could be a “huge problem” for states.

Monday, February 13, 2012

Breast cancer kills older women more often: study

Feb 8 (Reuters) - Breast cancer is often considered more deadly among younger women, but older women -- particularly those over 75 -- are actually more likely to die of the disease, according to an international study.

Researchers, who tracked thousands of women and published their findings in the Journal of the American Medical Association, said that among women diagnosed with a certain common type of breast cancer, those over 75 years-old were 63 percent more likely to die of it than women under 65.

"I suspect it's undertreatment. We did show the rates of chemotherapy and radiation therapy are less in the older group," said Stephen Jones, medical director at US Oncology Research in Texas and one of the study's authors.

The study focused on nearly 10,000 women who had already gone through menopause and who had been diagnosed with hormone receptor-positive breast cancer.

That's the most common type of the disease and is considered less dangerous than the hormone receptive-negative types because it is often slower growing and might respond to hormone treatments.

Younger women are more likely than older women to have the receptor-negative cancer, and they also tend to be diagnosed at a later stage, leading to the idea that breast cancer is more deadly for them.

In the study, researchers found that five out of every 100 women diagnosed under age 65 and six out of every 100 women diagnosed between 65 and 74 years-old died from breast cancer within five years.

But among women over age 75 at the time of their diagnosis, eight out of every 100 died from the cancer.

"What's different in older women is they tend to get lesser and poorer treatment," said Hyman Muss of the University of North Carolina School of Medicine, who was not involved with the study.

Nearly all the women in the study went through surgery, but just half of the women over age 75 had radiation, and just five percent had chemotherapy.

In comparison, 75 percent of women under age 65 received radiation and 51 percent had chemotherapy.

"There are beliefs that older women do not benefit from chemotherapy as much as younger women, and that the side effects are worse," said Gerrit-Jan Liefers, a researcher at Leiden University Medical Centre in The Netherlands who also worked on the study.

He added that patients themselves may also be more hesitant to treat their cancer aggressively.

Though a recent study found that the rates of breast cancer deaths have been slowing, older women have had smaller gains than younger women, which the authors attributed in part to less aggressive treatment, perhaps due to concerns the treatment could cause more problems than the disease.

Muss said it's possible to overtreat elderly patients, but that otherwise healthy women in their 70s would likely benefit from chemotherapy.

"We need to teach doctors not to think of a person's chronologic age, but think of their functional age," he said. SOURCE: bit.ly/4HWZ7 (Reporting from New York by Kerry Grens at Reuters Health; Editing by Elaine Lies and Bob Tourtellotte)

Quinn to Obama: Illinois moving ahead on Medicaid fraud crackdown

By Ray Long and Alissa Groeninger Clout Street
7:56 p.m. CST, February 9, 2012

SPRINGFIELD— As President Barack Obama presses forward with his signature health care law, his fellow Illinois Democrats running state government have waited more than a year to win federal approval for a new plan to fight fraud in the health program for 2.7 million of the state's poorest residents.

Facing increasing Republican pressure to put reforms in place, this week Quinn’s team told the Obama administration that Illinois will wait no longer.

Later this month, the state’s Healthcare and Family Services Department will start matching addresses of people enrolled in Medicaid against Illinois secretary of state driving records to ensure that care for the poor is going to people who actually live in Illinois. The Quinn administration also is putting together a plan to check income eligibility and plans to roll it out soon, officials said.

The push to tighten access to Medicaid was part of a reform plan lawmakers approved in January 2011. The law required a month’s worth of pay stubs to verify that a person’s income is low enough to receive Medicaid. Only one paycheck had been needed before, and lawmakers thought that opened up the program to fraud. Officials also sought to tighten requirements for proof of residency, such as wanting utility bills or rental documents, but the law does not give specifics.

But Obama health care officials balked, saying Illinois’ new requirements violated tenets of the president’s high-profile U.S. Affordable Care Act that hold no state should make it harder for people to sign up for Medicaid. The Obama administration also maintained that matching names electronically is the best way to verify eligible Medicaid participants and urged the state to use that method.

Julie Hamos, director of Quinn’s Healthcare and Family Services Department, said Illinois set up the electronic matching program and the federal bureaucrats put up more hurdles.

“We just said, ‘That’s it,’ “ Hamos told the Tribune Thursday. “We are going to implement this.”

In a letter sent to the Obama administration this week, Hamos wrote that nearly 6 percent — or about 100,000 — medical identification cards sent to households were returned to her agency as “undeliverable with out-of-state addresses.”

That number shocked the state’s Republicans. They pointed to the figure to buttress their belief that potentially hundreds of millions of dollars of fraud exists in the state’s Medicaid program. Republican lawmakers contend the Quinn administration should have acted faster and pushed the Obama administration harder.

“Here you have the president of the United States who trots around the country, back when he’s selling the Affordable Care Act, or Obamacare, as the answer to all our ills when it comes to fraud and abuse,” said Sen. Dale Righter, a Mattoon Republican and onetime Obama colleague in the Illinois Senate. “It’s the very provisions of the Affordable Care Act that the president is saying is going to help get rid of fraud and abuse that are standing in the way of trying to root out fraud and abuse here in Illinois.

Righter and Republican Rep. Patti Bellock of Hinsdale, both convention delegate candidates for Republican presidential candidate Mitt Romney, charged the Quinn and Obama administrations with foot dragging during a Springfield news conference last week.

Hamos, however, disputed the contention that she was acting only now in response to the GOP pressure. Hamos provided a series of letters and a timeline of contacts with the Obama administration on the issue and said she also met personally with top federal agency officials. Hamos has estimated the state’s anti-fraud measures could save closer to $1 million, saying she prefers to give a conservative estimate.

Hamos acknowledged it’s a “risk, a small risk” to move ahead with the anti-fraud approach without the federal government signing off, but said it needed to be done to protect the integrity of Illinois’ Medicaid program.
On Thursday, federal officials released a statement from a spokesperson with the Centers for Medicare & Medicaid Services within the U.S. Department of Health and Human Services.

“We requested additional information from Illinois regarding the nature of their program integrity concerns and we are reviewing this response,” the statement reads. “We are committed to giving Illinois and all states the ability to maintain the integrity of their Medicaid programs, while ensuring that beneficiaries continue to receive access to the care they need to live healthier lives.”

Hamos said she feared the federal process would have involved waiting and appealing and “then six months from now we would still be tearing our hair out and saying, ‘Where is the approval?’”

“We support the Affordable Care Act,” Hamos said. “We are in the minority of states right now that really want it to work. We’re all working very hard to make it work. So we don’t see any conflict here. That’s what I’m hoping that they will understand.”

Stuffing the Belly Could Starve the Mind in Seniors

By Michael Smith, North American Correspondent, MedPage Today
Published: February 12, 2012
Reviewed by Robert Jasmer, MD; Associate Clinical Professor of Medicine, University of California, San Francisco.

Action Points
• Overeating is associated with an increased risk of mild cognitive impairment (MCI) in people 70 or older.
• Note that the study also observed a dose-response pattern, with more calories being associated with a higher risk of MCI.

Overeating is associated with an increased risk of mild cognitive impairment (MCI) in people 70 or older, researchers are reporting.

In a population-based, case-control study, people who consumed more than 2,142, kilocalories a day had nearly twice the risk of MCI as those eating fewer than 1,526 kilocalories a day, according to Yonas Geda, MD, of the Mayo Clinic in Scottsdale, Ariz., and colleagues.

The researchers also observed a dose-response pattern. "The higher the amount of calories consumed each day, the higher the risk of MCI," Geda said in a statement.

The full study is slated for presentation at the annual meeting of the American Academy of Neurology (AAN) in New Orleans in April, but some data were released early.

Geda and colleagues noted that dietary intake has been associated previously with MCI, but the role of daily energy consumption has not been clear.

Indeed, the study is "noteworthy" in that regard, according to Neelum Aggarwal, MD, of Rush University Medical Center in Chicago, who was not part of the research team.

In an email to MedPage Today, Aggarwal, a member of the AAN, said the findings might have clinical implications, as doctors and patients discuss "the links between common healthy living practices [and] overall cognitive function."

The findings might also help the research agenda by highlighting possible mechanisms for the onset of mental decline, she said.

People with MCI are not regarded as having dementia, but they have cognitive deficits that appear to precede the development of such diseases as Alzheimer's.

To understand the links between caloric intake and MCI, Geda and colleagues turned to the Mayo Clinic Study of Aging, a continuing population-based cohort study in Olmsted County, Minn.

They asked a random sample of 1,233 non-demented study participants, ages 70 through 89, to fill out a food frequency questionnaire for the year preceding an interview.

The volunteers included 1,070 cognitively normal people and 163 with MCI, as determined by an expert consensus panel on the basis of published criteria.

The volunteers were divided into three groups, based on the caloric intake derived from their questionnaire answers.

The reference group for subsequent analysis was participants who ate between 600 and 1,526 kilocalories a day. The middle group ate from 1,526 to 2,142.5 kilocalories a day, while the third group ate 2,142.5 to 6,000 kilocalories a day.

Geda and colleagues conducted multivariable logistic regression analyses, adjusting for age, sex, education, depression, apolipoprotein E (APOE) genotype, history of stroke, coronary artery disease, diabetes, and body mass index.

Compared with the reference group, those in the middle group had an elevated risk of MCI, but it did not reach statistical significance (odds ratio 1.05, 95% CI 0.63 to 1.77).

On the other hand, daily energy consumption in the third group was associated with a greater chance of having MCI (OR 2.41, 95% CI 1.51 to 3.86).

There was also a significant trend (P<0.001) for increasing caloric consumption to increase the risk of MCI, they reported.

One implication of the study might be that "cutting calories and eating foods that make up a healthy diet may be a simpler way to prevent memory loss as we age," Geda said.

Aggarwal told MedPage Today the study includes a large number of non-demented people from the general community in the U.S., which might make the results relatively widely applicable.

However, some questions remain including:
• What sort of questionnaire was used and how it was administered and interpreted?
• Was there an effect of male or female sex or race and ethnicity?
• Did the researchers distinguish between amnestic MCI, in which memory is affected, and MCI in which other cognitive domains, such as orientation, language, and executive function, are impaired?

The study was supported by the NIH, the Robert Wood Johnson Foundation, and the Robert H. and Clarice Smith and Abigail van Buren Alzheimer's Disease Research Program.

The authors did not report any conflicts of interest in the AAN abstract.
Primary source: American Academy of Neurology

Source reference:
Geda Y, et al "Caloric intake, aging, and mild cognitive impairment: a population-based study" AAN 2012.

Today's Datapoint

$91,000 … would be the reduction in health care costs if 100 50-year-old pre-diabetic overweight adults were enrolled in a program targeting their condition for three years, which would prevent 15 new cases of type-2 diabetes, according to Ken Thorpe, Ph.D., chair of Emory University’s Dept. of Health Policy and Management, speaking at a recent meeting of the National Assn. of Health Underwriters.

Assistant Administrator of Houston Hospital Indicted for Alleged Role in $116 Million Medicare Fraud Scheme

February 8, 2012

WASHINGTON – An assistant administrator of a Houston hospital was arrested today on charges related to his alleged participation in a $116 million Medicare fraud scheme involving false claims for mental health treatment, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

An indictment filed in the Southern District of Texas and unsealed today charges Mohammed Khan, 62, of Houston, with one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive illegal health care kickbacks and five counts of paying or offering to pay health care kickbacks. Khan is expected to make his initial appearance in federal court today in Houston.

“The indictment against Mr. Kahn alleges that he used his position as a hospital assistant administrator to submit millions in false claims to the Medicare program,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “According to the charges, he paid kickbacks to patient recruiters, owners of group homes and assisted living facilities, and beneficiaries so that he could fill his hospital with patients for whom he could bill the government for medically unnecessary services or services that were never provided. We will continue aggressively to pursue individuals who attempt to enrich themselves at the expense of the Medicare program.”

“The defendant charged in this indictment is accused of stealing precious Medicare resources by billing for services that were medically unnecessary or never provided," said Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office. “Our health care fraud efforts have never been more collaborative and aggressive. We will continue to work with our law enforcement partners to protect patients and fight against health care fraud.”

According to the indictment, Khan, as the assistant administrator of a Houston hospital, allegedly operated a scheme to defraud Medicare beginning in 2008 and continuing until his arrest today. Khan allegedly caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services to Medicare through the hospital. A PHP is a form of intensive outpatient treatment for severe mental illness.

The indictment alleges that Khan paid kickbacks to owners and operators of group care homes and assisted living facilities and to patient recruiters in exchange for delivering ineligible Medicare beneficiaries to the hospital’s PHPs. The indictment alleges that Khan also paid kickbacks to Medicare beneficiaries who attended the hospital’s PHPs. These kickbacks included cigarettes, food and coupons redeemable for items available at the hospital’s “country stores.” Khan and his co-conspirators submitted or caused to be submitted approximately $116 million in claims to Medicare for PHP services purportedly provided by the hospital to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.

Today’s charges were announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; Special Agent in Charge Morris of the FBI’s Houston Field Office; Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of the Inspector General (HHS-OIG); the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU ); Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service (IRS) Houston Field Office; Joseph J. Del Favero, Special Agent in Charge of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG); and Scott Rezendes, Special Agent in Charge of Field Operations of the Office of Personnel Management, Office of Inspector General (OPM-OIG).

The case is being prosecuted by Trial Attorney Laura M.K. Cordova, Attorney Allan Medina, Assistant Chief William Pericak and Deputy Chief Sam S. Sheldon of the Criminal Division’s Fraud Section. The case was investigated by the FBI, HHS-OIG, MFCU, IRS, RRB-OIG and OPM-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas.

Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.2 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Quote of the Day

“The biggest message [Aetna is] trying to get across [with its new rebranding strategy] is we’re not an insurance company…not a health plan, not a provider. It’s probably as much of running away from something as running toward something….[They are orienting their marketing] toward the consumer end of things, rather than the old-school method, which is a B-to-B model.”
— Joe Paduda, president of Health Strategy Associates, LLC, told AIS's Health Plan Week.

Friday, February 10, 2012

Orthopedists Say Tab for Defensive Medicine Is 'Billions'

By John Gever, Senior Editor, MedPage Today
Published: February 09, 2012

SAN FRANCISCO -- U.S. orthopedic surgeons in a large survey said roughly 30% of tests and referrals they ordered were medically unnecessary, with an estimated annual cost exceeding $2 billion, a researcher reported here.

The survey, which had responses from 1,241 orthopedic surgeons from across the country, indicated that large numbers of procedures and consultations were mainly aimed at reducing physicians' exposure to liability suits, said A. Alex Jahangir, MD, of Vanderbilt University in Nashville.

Not only were 19% to more than 44% of imaging studies and lab tests largely defensive, but survey respondents indicated that liability concerns had driven 7% of their hospital admission, Jahangir told attendees at the American Academy of Orthopaedic Surgeons' annual meeting.

He and colleagues had sent the survey to 2,000 orthopedic surgeons in all 50 states. The response rate was 61%.

Jahangir told MedPage Today that the survey was one of the largest and most comprehensive conducted to date. It asked for the total number of procedures in various categories that they order in a typical month, and the number ordered "due to concerns about liability."

Results for the different types of procedures, expressed as the percentage of procedures ordered for defensive purposes, were as follows:
• Plain x-rays: 19%
• CT scans: 26%
• MRI scans: 31%
• Ultrasound studies: 44%
• Blood and other lab tests: 23%
• Biopsies and aspirations: 18%
• Subspecialty referrals and consultations: 35%
• Hospital admissions: 7%

In response to another question, 77% of respondents said they would order fewer tests and procedures "if there was significant medical liability reform."

Moreover, 70% indicated they had reduced the number of high-risk patients they had taken on in the past five years, and 84% reported reducing the number of high-risk services or procedures they performed.

Using Medicare reimbursements for the categories of services covered in the survey, Jahangir and colleagues calculated that 23.6% of the total cost of these tests and procedures could be attributed to liability concerns.

Per respondent, the annual cost worked out to about $102,000, Jahangir said. And, extrapolated to the 20,400 orthopedic surgeons in the U.S., the yearly price tag for defensive medicine in orthopedics is about $2.1 billion.

"Defensive medicine drives up the cost of patient care and limits patient access to specialty care, neither of which are in the interest of our patients who deserve the best and least costly care possible," said Douglas W. Lundy, MD, an AAOS spokesman on medical liability, in a statement.

"Unfortunately, the current legal climate forces good doctors to order these tests and practice defensive medicine," he said.

Asked about the disconnect between the judicial system's and physicians' interpretations of medical necessity, Jahangir told MedPage Today that evidence-based clinical practice guidelines would go a long way toward eliminating it.

Such guidelines, he said, would better define what constitutes necessary versus unnecessary procedures -- "what really needs to happen [to achieve] the patient's best outcome."

The survey had no commercial funding.

Jahangir said he had no relevant financial interests. Lundy reported relationships with Synthes and Livengood Engineering.

Primary source: American Academy of Orthopaedic Surgeons
Source reference:
Sethi M, et al "The prevalence and costs of defensive medicine among orthopaedic surgeons: a national survey study" AAOS 2012; Abstract 378.

Wednesday, February 8, 2012

Today's Datapoint

58 … Medicare Advantage plans covered fitness-club memberships for their enrollees in 2008, up from just 14 in 2002, according to a new study by Brown University researchers published in the Jan. 12 New England Journal of Medicine.

Tuesday, February 7, 2012

House and Senate at Impasse on Medicare Payments

Published: February 6, 2012

WASHINGTON — House and Senate negotiators are deadlocked over how to prevent a deep cut in Medicare payments to doctors who treat millions of Medicare beneficiaries, an impasse that could threaten broader legislation on a payroll tax cut.

Lawmakers in both parties said they wanted to give doctors a small increase, but could not agree on how to cover the cost. The issue, which is being negotiated as part of the talks over maintaining a reduction in payroll taxes for 160 million Americans, pits health care providers against one another — doctors versus hospitals — in a type of conflict that is most likely to become more common as the federal government tries to throttle back the growth of Medicare costs. The payroll legislation would also continue jobless benefits for many of the nation’s unemployed.

In the absence of agreement, doctors’ fees will be cut 27 percent next month, and many doctors say they could not continue treating Medicare patients under the lower payments.

“Because of this uncertainty, some doctors are already telling patients they will no longer be able to accept Medicare,” said Representative Allyson Y. Schwartz, Democrat of Pennsylvania. Ms. Schwartz is one of 20 lawmakers trying to work out differences between the House and the Senate.

To help offset the cost of paying doctors, House Republicans want to reduce certain Medicare payments to hospitals. By contrast, Democrats and at least one powerful Republican senator, Jon Kyl of Arizona, want to cover the cost with money saved by winding down the wars in Iraq and Afghanistan.

An influential federal advisory panel has voted to recommend cutting Medicare payments to hospitals for some of the most common outpatient services, and House Republicans cite that recommendation to justify their plan.

The panel, the Medicare Payment Advisory Commission, says the government should pay the same rates for “evaluation and management” services regardless of whether they are performed in doctors’ offices or hospital outpatient departments. Rates for hospital clinics are now much higher — for example, $124 compared with $69 for an office visit involving a medium level of services to an established patient, the commission said.

Hospitals say the higher payments are justified because they treat sicker patients and have much higher overhead costs, resulting from the fact that they are open round the clock and stand ready to respond to medical emergencies.

Kenneth E. Raske, president of the Greater New York Hospital Association, said that if the cuts took effect, hospitals would curtail services and close some clinics.

“The cuts would reduce access to care for many of the nation’s most vulnerable patients and destroy our ability to invest in outpatient care, which everybody from the White House to the statehouse says we need to do to keep people healthy,” Mr. Raske said.

The American Medical Association and other doctor groups are making an all-out push for Congress to scrap the formula used to calculate their payments.

The formula sets annual goals for Medicare spending on doctors’ services. When actual spending exceeds the goals, payments are supposed to be reduced. If Congress intervenes to block a cut — as it often does — Medicare is supposed to recoup the money by making deeper cuts in future years.

Dr. Peter W. Carmel, president of the medical association, said: “There have been 13 short-term patches passed by Congress. These patches increase both the long-term cost to taxpayers and the severity of scheduled cuts to physicians who care for Medicare patients.”

Representative Henry A. Waxman, Democrat of California and a member of the conference committee, said “it makes a lot of sense to use war savings as a primary source of money” to eliminate the Medicare payment formula.

“It was Congress’s mistake to set up that formula,” Mr. Waxman said. “We should not make Medicare beneficiaries and physicians pay for our mistake.”

Mr. Kyl said it was logical to use war savings to wipe out the debt that Congress had built up by repeatedly overriding reductions in payments to doctors.

“What I’m proposing is using one budgetary gimmick to pay for another — specifically, using funds budgeted for the wars and wiping clean the bad debt accumulated” under the Medicare formula, Mr. Kyl said.

Aides to Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said he saw that approach as “a viable way” to make sure older Americans could continue visiting their doctors.

But Representative Dave Camp, Republican of Michigan and chairman of the Ways and Means Committee, said the purpose of the House-Senate conference committee was to resolve differences between the House and the Senate. The use of war savings to pay for Medicare is “outside the scope” of the committee because it was not in the legislation passed by either house, he said.

House Republican negotiators prefer the savings in the House-passed bill, which calls for “parity in Medicare payments” in doctors’ office and outpatient hospital clinics.

Cori E. Uccello, a member of the Medicare Payment Advisory Commission, said, “It just does not make sense to pay a lot more for pretty much the same service in the hospital setting.”
Hospitals around the country are buying up physician practices, and in many cases Medicare then pays the doctors at the higher rates allowed for outpatient hospital services.

Glenn M. Hackbarth, chairman of the Medicare commission, said that this shift could —under current law — increase costs for the Medicare program and for beneficiaries, who would have higher premiums and co-payments.