Alicia Ault

The federal government's portrayal of enrollment growth in the State Children's Health Insurance Program in 2007 is disingenuous and somewhat misleading, advocates for children's programs said.

According to the Centers for Medicare and Medicaid Services, 7.1 million children were enrolled in the program (SCHIP) in 2007, up from 6.7 million in 2006.

“While we are pleased that SCHIP continues to grow, we must do more to reach those at the lowest income levels who still need this coverage,” Mike Leavitt, Health and Human Services secretary, said in a statement. “Toward that end, we will continue to work with Congress on the reauthorization of this vital program.”

That comment is “disingenuous,” Dr. Steve Wegner, chairman of the child health funding committee at the American Academy of Pediatrics, said in an interview. He noted that President Bush vetoed a compromise agreement to reauthorize SCHIP not once, but twice, in 2007.

“The administration did everything possible to stand in the way of the reauthorization,” Jenny Sullivan, a health policy analyst with Families USA, said in an interview.

SCHIP was finally given a reprieve, with Congress passing, and the president signing, a funding extension through March 2009. But the program still has not been formally reauthorized.

And, said Ms. Sullivan and Dr. Wegner, many millions more children would have been covered in 2007 if the reauthorization had been approved when it was first taken up early in the year.

CMS spokeswoman Mary Kahn said that it was not accurate to imply that the Bush administration did not want to continue the SCHIP program. The administration did, however, want to fund it at a lower level, she said in an interview.

Also in the HHS statement, Kerry Weems, CMS acting administrator, said, “We continue to work with states to [ensure] that as many eligible, uninsured children as possible are enrolled in SCHIP and Medicaid.”

Dr. Wegner took exception to that statement as well, noting that a CMS directive issued in August 2007 has effectively prevented states from expanding eligibility. The CMS said it would limit states' ability to expand coverage to children in families who had incomes at 250% of the poverty level or above.

Ms. Sullivan said that the directive had, in many cases, reversed expansion plans that previously were approved by the CMS.

Twenty-three states are expected to be affected by the directive, according to the Kaiser Family Foundation. Nine already cover children in families with incomes above 250%, and 13 states had received approval to expand eligibility at or above that level. In addition, Washington was covering children at the 250% level and had gotten approval to raise that cap.

The directive is consistent with the administration's belief that every effort should be made to enroll 95% of children eligible at the lowest income levels before expanding it to those who are in higher-income families, said Ms. Kahn.

The increase in SCHIP enrollment was not unusually high for the program, said Ms. Sullivan. And, she said, U.S. Census Bureau figures indicate that the overall number of uninsured children actually increased in the last 2 years. There are approximately 9 million uninsured children in the United States, according to a Families USA analysis.

Both Ms. Sullivan and Dr. Wegner said they expect that number to grow in the current year, as states face harsh budget realities.

A much larger number of children are covered under traditional Medicaid programs—about 28 million in 2005, according to Kaiser—but their coverage is also being threatened because of a series of CMS regulations taking effect this year. Rep. John Dingell (D-Mich.) and Rep. Tim Murphy (R-Penn.) introduced a bill in March (H.R. 5613) that would place a 1-year moratorium on seven of those regulations.

According to Congressional Budget Office estimates the two legislators cite, the regulations could translate to $20 billion in cuts to Medicaid over the next 5 years.

The National Governors Association, the National Association of State Medicaid Directors, and the American Public Human Services Association, have expressed their opposition to the regulations in letters to HHS.

Looking ahead into next year, the picture grows even dimmer.

For fiscal 2009, President Bush proposed increasing SCHIP funding by $19.7 billion (added to the current baseline of $25 billion) through 2013.

That is a far cry from the $35 billion that was authorized in the two legislative packages vetoed by the President last year.

And the budget also seeks to formalize the CMS directive that limited states' expansion plans by proposing to cap SCHIP eligibility at 250% of the poverty level.

The federal government's portrayal of enrollment growth in the State Children's Health Insurance Program in 2007 is disingenuous and somewhat misleading, advocates for children's programs said.

According to the Centers for Medicare and Medicaid Services, 7.1 million children were enrolled in the program (SCHIP) in 2007, up from 6.7 million in 2006.

“While we are pleased that SCHIP continues to grow, we must do more to reach those at the lowest income levels who still need this coverage,” Mike Leavitt, Health and Human Services secretary, said in a statement. “Toward that end, we will continue to work with Congress on the reauthorization of this vital program.”

That comment is “disingenuous,” Dr. Steve Wegner, chairman of the child health funding committee at the American Academy of Pediatrics, said in an interview. He noted that President Bush vetoed a compromise agreement to reauthorize SCHIP not once, but twice, in 2007.

“The administration did everything possible to stand in the way of the reauthorization,” Jenny Sullivan, a health policy analyst with Families USA, said in an interview.

SCHIP was finally given a reprieve, with Congress passing, and the president signing, a funding extension through March 2009. But the program still has not been formally reauthorized.

And, said Ms. Sullivan and Dr. Wegner, many millions more children would have been covered in 2007 if the reauthorization had been approved when it was first taken up early in the year.

CMS spokeswoman Mary Kahn said that it was not accurate to imply that the Bush administration did not want to continue the SCHIP program. The administration did, however, want to fund it at a lower level, she said in an interview.

Also in the HHS statement, Kerry Weems, CMS acting administrator, said, “We continue to work with states to [ensure] that as many eligible, uninsured children as possible are enrolled in SCHIP and Medicaid.”

Dr. Wegner took exception to that statement as well, noting that a CMS directive issued in August 2007 has effectively prevented states from expanding eligibility. The CMS said it would limit states' ability to expand coverage to children in families who had incomes at 250% of the poverty level or above.

Ms. Sullivan said that the directive had, in many cases, reversed expansion plans that previously were approved by the CMS.

Twenty-three states are expected to be affected by the directive, according to the Kaiser Family Foundation. Nine already cover children in families with incomes above 250%, and 13 states had received approval to expand eligibility at or above that level. In addition, Washington was covering children at the 250% level and had gotten approval to raise that cap.

The directive is consistent with the administration's belief that every effort should be made to enroll 95% of children eligible at the lowest income levels before expanding it to those who are in higher-income families, said Ms. Kahn.

The increase in SCHIP enrollment was not unusually high for the program, said Ms. Sullivan. And, she said, U.S. Census Bureau figures indicate that the overall number of uninsured children actually increased in the last 2 years. There are approximately 9 million uninsured children in the United States, according to a Families USA analysis.

Both Ms. Sullivan and Dr. Wegner said they expect that number to grow in the current year, as states face harsh budget realities.

A much larger number of children are covered under traditional Medicaid programs—about 28 million in 2005, according to Kaiser—but their coverage is also being threatened because of a series of CMS regulations taking effect this year. Rep. John Dingell (D-Mich.) and Rep. Tim Murphy (R-Penn.) introduced a bill in March (H.R. 5613) that would place a 1-year moratorium on seven of those regulations.

According to Congressional Budget Office estimates the two legislators cite, the regulations could translate to $20 billion in cuts to Medicaid over the next 5 years.

The National Governors Association, the National Association of State Medicaid Directors, and the American Public Human Services Association, have expressed their opposition to the regulations in letters to HHS.

Looking ahead into next year, the picture grows even dimmer.

For fiscal 2009, President Bush proposed increasing SCHIP funding by $19.7 billion (added to the current baseline of $25 billion) through 2013.

That is a far cry from the $35 billion that was authorized in the two legislative packages vetoed by the President last year.

And the budget also seeks to formalize the CMS directive that limited states' expansion plans by proposing to cap SCHIP eligibility at 250% of the poverty level.

The federal government's portrayal of enrollment growth in the State Children's Health Insurance Program in 2007 is disingenuous and somewhat misleading, advocates for children's programs said.

According to the Centers for Medicare and Medicaid Services, 7.1 million children were enrolled in the program (SCHIP) in 2007, up from 6.7 million in 2006.

“While we are pleased that SCHIP continues to grow, we must do more to reach those at the lowest income levels who still need this coverage,” Mike Leavitt, Health and Human Services secretary, said in a statement. “Toward that end, we will continue to work with Congress on the reauthorization of this vital program.”

That comment is “disingenuous,” Dr. Steve Wegner, chairman of the child health funding committee at the American Academy of Pediatrics, said in an interview. He noted that President Bush vetoed a compromise agreement to reauthorize SCHIP not once, but twice, in 2007.

“The administration did everything possible to stand in the way of the reauthorization,” Jenny Sullivan, a health policy analyst with Families USA, said in an interview.

SCHIP was finally given a reprieve, with Congress passing, and the president signing, a funding extension through March 2009. But the program still has not been formally reauthorized.

And, said Ms. Sullivan and Dr. Wegner, many millions more children would have been covered in 2007 if the reauthorization had been approved when it was first taken up early in the year.

CMS spokeswoman Mary Kahn said that it was not accurate to imply that the Bush administration did not want to continue the SCHIP program. The administration did, however, want to fund it at a lower level, she said in an interview.

Also in the HHS statement, Kerry Weems, CMS acting administrator, said, “We continue to work with states to [ensure] that as many eligible, uninsured children as possible are enrolled in SCHIP and Medicaid.”

Dr. Wegner took exception to that statement as well, noting that a CMS directive issued in August 2007 has effectively prevented states from expanding eligibility. The CMS said it would limit states' ability to expand coverage to children in families who had incomes at 250% of the poverty level or above.

Ms. Sullivan said that the directive had, in many cases, reversed expansion plans that previously were approved by the CMS.

Twenty-three states are expected to be affected by the directive, according to the Kaiser Family Foundation. Nine already cover children in families with incomes above 250%, and 13 states had received approval to expand eligibility at or above that level. In addition, Washington was covering children at the 250% level and had gotten approval to raise that cap.

The directive is consistent with the administration's belief that every effort should be made to enroll 95% of children eligible at the lowest income levels before expanding it to those who are in higher-income families, said Ms. Kahn.

The increase in SCHIP enrollment was not unusually high for the program, said Ms. Sullivan. And, she said, U.S. Census Bureau figures indicate that the overall number of uninsured children actually increased in the last 2 years. There are approximately 9 million uninsured children in the United States, according to a Families USA analysis.

Both Ms. Sullivan and Dr. Wegner said they expect that number to grow in the current year, as states face harsh budget realities.

A much larger number of children are covered under traditional Medicaid programs—about 28 million in 2005, according to Kaiser—but their coverage is also being threatened because of a series of CMS regulations taking effect this year. Rep. John Dingell (D-Mich.) and Rep. Tim Murphy (R-Penn.) introduced a bill in March (H.R. 5613) that would place a 1-year moratorium on seven of those regulations.

According to Congressional Budget Office estimates the two legislators cite, the regulations could translate to $20 billion in cuts to Medicaid over the next 5 years.

The National Governors Association, the National Association of State Medicaid Directors, and the American Public Human Services Association, have expressed their opposition to the regulations in letters to HHS.

Looking ahead into next year, the picture grows even dimmer.

For fiscal 2009, President Bush proposed increasing SCHIP funding by $19.7 billion (added to the current baseline of $25 billion) through 2013.

That is a far cry from the $35 billion that was authorized in the two legislative packages vetoed by the President last year.

And the budget also seeks to formalize the CMS directive that limited states' expansion plans by proposing to cap SCHIP eligibility at 250% of the poverty level.

LAS VEGAS — Large insurers will return to inappropriate billing practices as class action suit agreements expire, according to a compliance expert.

In fact, many companies have been accused of violating the terms already, said Edward R. Gaines III, vice president and chief compliance officer for Healthcare Business Resources in Durham, N.C., who spoke at a meeting on reimbursement sponsored by the American College of Emergency Physicians.

Mr. Gaines said that noncompliance among all the plans that have settled has continued to be an issue, which is being dealt with in the courts and administratively. But, “the problem is, once the settlement agreement expires, I can't go back into federal court through an easy process to make my complaint heard,” he said.

The settlements were struck in response to Multidistrict Litigation 1334, which was certified as a class action in U.S. District Court for the Southern District of Florida in 2002 and named Aetna Inc., Anthem Insurance Cos. Inc., Cigna, Coventry Health Care Inc., Health Net Inc., Humana Inc., PacifiCare Health Systems Inc., Prudential Insurance Co. of America, United Health Care, and WellPoint Health Networks Inc. as defendants. The suits alleged that the insurers violated the federal Racketeer Influenced and Corrupt Organizations Act by engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians.

Several state and county medical societies filed the suits on behalf of virtually every physician in the nation—about 900,000 doctors.

United Health Care and Coventry both were summarily released from the litigation. Their release has been upheld on appeal.

Aetna and Cigna struck agreements that entailed an immediate payout in response to claims filed by physicians, some changes in billing behavior, and an agreement to provide prospective relief—$300 million from Aetna and $400 million from Cigna.

Cigna's 4-year agreement has now expired, and Aetna's 4-year agreement expired in June 2007; but Aetna's agreement was extended through June 2008 because of compliance disputes. After an investigation, the New Jersey insurance department fined Aetna $9.5 million in June 2007 for failing to properly pay for out-of-network providers. The insurer is paying nonparticipating physicians only 125% of Medicare rates and informing patients that they are not responsible for the difference.

Mr. Gaines urged physicians to hold the health plans that settled accountable to their agreements. Information on settlement terms and how to dispute claims can be found at www.hmosettlements.com

LAS VEGAS — Large insurers will return to inappropriate billing practices as class action suit agreements expire, according to a compliance expert.

In fact, many companies have been accused of violating the terms already, said Edward R. Gaines III, vice president and chief compliance officer for Healthcare Business Resources in Durham, N.C., who spoke at a meeting on reimbursement sponsored by the American College of Emergency Physicians.

Mr. Gaines said that noncompliance among all the plans that have settled has continued to be an issue, which is being dealt with in the courts and administratively. But, “the problem is, once the settlement agreement expires, I can't go back into federal court through an easy process to make my complaint heard,” he said.

The settlements were struck in response to Multidistrict Litigation 1334, which was certified as a class action in U.S. District Court for the Southern District of Florida in 2002 and named Aetna Inc., Anthem Insurance Cos. Inc., Cigna, Coventry Health Care Inc., Health Net Inc., Humana Inc., PacifiCare Health Systems Inc., Prudential Insurance Co. of America, United Health Care, and WellPoint Health Networks Inc. as defendants. The suits alleged that the insurers violated the federal Racketeer Influenced and Corrupt Organizations Act by engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians.

Several state and county medical societies filed the suits on behalf of virtually every physician in the nation—about 900,000 doctors.

United Health Care and Coventry both were summarily released from the litigation. Their release has been upheld on appeal.

Aetna and Cigna struck agreements that entailed an immediate payout in response to claims filed by physicians, some changes in billing behavior, and an agreement to provide prospective relief—$300 million from Aetna and $400 million from Cigna.

Cigna's 4-year agreement has now expired, and Aetna's 4-year agreement expired in June 2007; but Aetna's agreement was extended through June 2008 because of compliance disputes. After an investigation, the New Jersey insurance department fined Aetna $9.5 million in June 2007 for failing to properly pay for out-of-network providers. The insurer is paying nonparticipating physicians only 125% of Medicare rates and informing patients that they are not responsible for the difference.

Mr. Gaines urged physicians to hold the health plans that settled accountable to their agreements. Information on settlement terms and how to dispute claims can be found at www.hmosettlements.com

LAS VEGAS — Large insurers will return to inappropriate billing practices as class action suit agreements expire, according to a compliance expert.

In fact, many companies have been accused of violating the terms already, said Edward R. Gaines III, vice president and chief compliance officer for Healthcare Business Resources in Durham, N.C., who spoke at a meeting on reimbursement sponsored by the American College of Emergency Physicians.

Mr. Gaines said that noncompliance among all the plans that have settled has continued to be an issue, which is being dealt with in the courts and administratively. But, “the problem is, once the settlement agreement expires, I can't go back into federal court through an easy process to make my complaint heard,” he said.

The settlements were struck in response to Multidistrict Litigation 1334, which was certified as a class action in U.S. District Court for the Southern District of Florida in 2002 and named Aetna Inc., Anthem Insurance Cos. Inc., Cigna, Coventry Health Care Inc., Health Net Inc., Humana Inc., PacifiCare Health Systems Inc., Prudential Insurance Co. of America, United Health Care, and WellPoint Health Networks Inc. as defendants. The suits alleged that the insurers violated the federal Racketeer Influenced and Corrupt Organizations Act by engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians.

Several state and county medical societies filed the suits on behalf of virtually every physician in the nation—about 900,000 doctors.

United Health Care and Coventry both were summarily released from the litigation. Their release has been upheld on appeal.

Aetna and Cigna struck agreements that entailed an immediate payout in response to claims filed by physicians, some changes in billing behavior, and an agreement to provide prospective relief—$300 million from Aetna and $400 million from Cigna.

Cigna's 4-year agreement has now expired, and Aetna's 4-year agreement expired in June 2007; but Aetna's agreement was extended through June 2008 because of compliance disputes. After an investigation, the New Jersey insurance department fined Aetna $9.5 million in June 2007 for failing to properly pay for out-of-network providers. The insurer is paying nonparticipating physicians only 125% of Medicare rates and informing patients that they are not responsible for the difference.

Mr. Gaines urged physicians to hold the health plans that settled accountable to their agreements. Information on settlement terms and how to dispute claims can be found at www.hmosettlements.com

WASHINGTON — With health care expenses accounting for the single largest expense in their budget, states are increasingly looking for solutions from within, not from the federal government, according to an annual accounting of state legislative trends compiled by the Blue Cross and Blue Shield Association.

“Health care spending represented nearly one-third of total state expenditures last fiscal year,” said Susan Laudicina, BCBSA director for state research and policy at a briefing for reporters. As the economy weakens, health care costs will continue to rise, while tax revenues will fall. That will add to the pressure to find creative solutions, she said.

The most significant trend observed in the states: an attempt to expand coverage. About half of the state legislatures debated universal coverage or expansion programs for children in fiscal 2007. State mandates requiring individuals to buy insurance were introduced in 12 states. All of those failed, largely because they are controversial, said Ms. Laudicina.

Connecticut and New York expanded eligibility for SCHIP to 400% of the federal poverty level and seven other states raised eligibility to 300%, but those efforts are threatened by a rule change issued by the Department of Health and Human Services last August that ostensibly caps eligibility at 250% of the federal poverty level. Eight states have sued to challenge that ruling.

Eight states—Connecticut, Indiana, Kansas, Louisiana, Maryland, New York, Texas and Washington—created programs in which public funds are used to subsidize the cost of private employer-sponsored health insurance to Medicaid-eligible workers. Oklahoma expanded its existing subsidy program, making more people eligible.

So-called “transparency” initiatives are gaining ground, also. These are proposals that require hospitals—and in some cases, physicians—to publicly share information on infections and other adverse events, and also other quality data and pricing. Twenty-one states debated proposals that would require transparency on some level. Transparency bills were enacted in 10 states: Arkansas, Delaware, Georgia, Indiana, Minnesota, New Jersey, Oregon, Pennsylvania, Texas, and Washington. Eleven states will take up transparency measures in 2008, she said.

WASHINGTON — With health care expenses accounting for the single largest expense in their budget, states are increasingly looking for solutions from within, not from the federal government, according to an annual accounting of state legislative trends compiled by the Blue Cross and Blue Shield Association.

“Health care spending represented nearly one-third of total state expenditures last fiscal year,” said Susan Laudicina, BCBSA director for state research and policy at a briefing for reporters. As the economy weakens, health care costs will continue to rise, while tax revenues will fall. That will add to the pressure to find creative solutions, she said.

The most significant trend observed in the states: an attempt to expand coverage. About half of the state legislatures debated universal coverage or expansion programs for children in fiscal 2007. State mandates requiring individuals to buy insurance were introduced in 12 states. All of those failed, largely because they are controversial, said Ms. Laudicina.

Connecticut and New York expanded eligibility for SCHIP to 400% of the federal poverty level and seven other states raised eligibility to 300%, but those efforts are threatened by a rule change issued by the Department of Health and Human Services last August that ostensibly caps eligibility at 250% of the federal poverty level. Eight states have sued to challenge that ruling.

Eight states—Connecticut, Indiana, Kansas, Louisiana, Maryland, New York, Texas and Washington—created programs in which public funds are used to subsidize the cost of private employer-sponsored health insurance to Medicaid-eligible workers. Oklahoma expanded its existing subsidy program, making more people eligible.

So-called “transparency” initiatives are gaining ground, also. These are proposals that require hospitals—and in some cases, physicians—to publicly share information on infections and other adverse events, and also other quality data and pricing. Twenty-one states debated proposals that would require transparency on some level. Transparency bills were enacted in 10 states: Arkansas, Delaware, Georgia, Indiana, Minnesota, New Jersey, Oregon, Pennsylvania, Texas, and Washington. Eleven states will take up transparency measures in 2008, she said.

WASHINGTON — With health care expenses accounting for the single largest expense in their budget, states are increasingly looking for solutions from within, not from the federal government, according to an annual accounting of state legislative trends compiled by the Blue Cross and Blue Shield Association.

“Health care spending represented nearly one-third of total state expenditures last fiscal year,” said Susan Laudicina, BCBSA director for state research and policy at a briefing for reporters. As the economy weakens, health care costs will continue to rise, while tax revenues will fall. That will add to the pressure to find creative solutions, she said.

The most significant trend observed in the states: an attempt to expand coverage. About half of the state legislatures debated universal coverage or expansion programs for children in fiscal 2007. State mandates requiring individuals to buy insurance were introduced in 12 states. All of those failed, largely because they are controversial, said Ms. Laudicina.

Connecticut and New York expanded eligibility for SCHIP to 400% of the federal poverty level and seven other states raised eligibility to 300%, but those efforts are threatened by a rule change issued by the Department of Health and Human Services last August that ostensibly caps eligibility at 250% of the federal poverty level. Eight states have sued to challenge that ruling.

Eight states—Connecticut, Indiana, Kansas, Louisiana, Maryland, New York, Texas and Washington—created programs in which public funds are used to subsidize the cost of private employer-sponsored health insurance to Medicaid-eligible workers. Oklahoma expanded its existing subsidy program, making more people eligible.

So-called “transparency” initiatives are gaining ground, also. These are proposals that require hospitals—and in some cases, physicians—to publicly share information on infections and other adverse events, and also other quality data and pricing. Twenty-one states debated proposals that would require transparency on some level. Transparency bills were enacted in 10 states: Arkansas, Delaware, Georgia, Indiana, Minnesota, New Jersey, Oregon, Pennsylvania, Texas, and Washington. Eleven states will take up transparency measures in 2008, she said.

WASHINGTON – With Congress scrambling to come up with the money to avert a physician fee cut scheduled for July, it appears once again that Medicare Advantage is being eyed as funding source by Democrats but as sacrosanct by Republicans.

It also may portend a repeat of last year's battle, one that ended with President Bush refusing to sign a legislative package that restored physician reimbursement but slashed Medicare Advantage payments.

The debate was front and center at a March hearing of the House Ways and Means Committee's Subcommittee on Health where recommendations from the Medicare Payment Advisory Commission's (MedPAC) spring report to Congress were discussed, including the recommendation that Congress increase physician fees by 1.5% in 2008 and 2009.

MedPAC said in its report that it supported Medicare Advantage (MA) plans–which let beneficiaries receive coverage from private plans such as HMOs and PPOs, and from private fee-for-service insurers. The commission also made the case that, for the third year in a row, the MA plans are overpaid relative to traditional fee-for-service (FFS) Medicare.

MedPAC Chairman Glenn Hackbarth told the subcommittee that the commission estimates that Medicare has paid the plans $10 billion more than it would have under traditional FFS for each of the last 3 years. Overall, MA plans on average will be paid 13% more than conventional Medicare providers in 2008, a 1% uptick from 2007.

The profit potential in those plans has stimulated a rush into the market and huge enrollment growth–a 101% increase from 2006 to 2007, according to MedPAC. Coordinated care plans, such as HMOs and PPOs, saw only an 8% increase in enrollment during that period, although those plans still account for the largest number of beneficiaries enrolled in an MA. Currently, about 20% of Medicare enrollees are in an MA plan.

Because MA plans are increasingly attractive to beneficiaries–they often offer additional benefits–MedPAC is concerned about the growth of the high-cost private FFS plans, Mr. Hackbarth said.

The plans are being rewarded for their costs and there is no penalty for poor quality, he said. “Payment policy is a powerful signal of what we value,” Mr. Hackbarth said, adding, “The benchmarks we use are a signal of what Medicare wants to buy.” The commission “supports financial neutrality between payment rates for the FFS program and the MA program,” he said, adding that about half of overpayments to MA plans now are going to insurers' bottom lines.

That fact has not been lost on the subcommittee chairman, Rep. Pete Stark (D-Calif.), who has held multiple hearings questioning the value and integrity of the MA plans. Republicans defended the MA program. Ranking minority member Rep. Dave Camp (R-Mich.) intensely questioned Mr. Hackbarth, eliciting the admission that MA plans had been successful in rural areas. Rep. Sam Johnson (R-Tenn.) at one point accused the MedPAC chairman of saying that the government is a more efficient insurer than the private sector.

Mr. Hackbarth disagreed and clarified his position. “The problem with this payment system is we are rewarding inefficient private plans,” he said.

WASHINGTON – With Congress scrambling to come up with the money to avert a physician fee cut scheduled for July, it appears once again that Medicare Advantage is being eyed as funding source by Democrats but as sacrosanct by Republicans.

It also may portend a repeat of last year's battle, one that ended with President Bush refusing to sign a legislative package that restored physician reimbursement but slashed Medicare Advantage payments.

The debate was front and center at a March hearing of the House Ways and Means Committee's Subcommittee on Health where recommendations from the Medicare Payment Advisory Commission's (MedPAC) spring report to Congress were discussed, including the recommendation that Congress increase physician fees by 1.5% in 2008 and 2009.

MedPAC said in its report that it supported Medicare Advantage (MA) plans–which let beneficiaries receive coverage from private plans such as HMOs and PPOs, and from private fee-for-service insurers. The commission also made the case that, for the third year in a row, the MA plans are overpaid relative to traditional fee-for-service (FFS) Medicare.

MedPAC Chairman Glenn Hackbarth told the subcommittee that the commission estimates that Medicare has paid the plans $10 billion more than it would have under traditional FFS for each of the last 3 years. Overall, MA plans on average will be paid 13% more than conventional Medicare providers in 2008, a 1% uptick from 2007.

The profit potential in those plans has stimulated a rush into the market and huge enrollment growth–a 101% increase from 2006 to 2007, according to MedPAC. Coordinated care plans, such as HMOs and PPOs, saw only an 8% increase in enrollment during that period, although those plans still account for the largest number of beneficiaries enrolled in an MA. Currently, about 20% of Medicare enrollees are in an MA plan.

Because MA plans are increasingly attractive to beneficiaries–they often offer additional benefits–MedPAC is concerned about the growth of the high-cost private FFS plans, Mr. Hackbarth said.

The plans are being rewarded for their costs and there is no penalty for poor quality, he said. “Payment policy is a powerful signal of what we value,” Mr. Hackbarth said, adding, “The benchmarks we use are a signal of what Medicare wants to buy.” The commission “supports financial neutrality between payment rates for the FFS program and the MA program,” he said, adding that about half of overpayments to MA plans now are going to insurers' bottom lines.

That fact has not been lost on the subcommittee chairman, Rep. Pete Stark (D-Calif.), who has held multiple hearings questioning the value and integrity of the MA plans. Republicans defended the MA program. Ranking minority member Rep. Dave Camp (R-Mich.) intensely questioned Mr. Hackbarth, eliciting the admission that MA plans had been successful in rural areas. Rep. Sam Johnson (R-Tenn.) at one point accused the MedPAC chairman of saying that the government is a more efficient insurer than the private sector.

Mr. Hackbarth disagreed and clarified his position. “The problem with this payment system is we are rewarding inefficient private plans,” he said.

WASHINGTON – With Congress scrambling to come up with the money to avert a physician fee cut scheduled for July, it appears once again that Medicare Advantage is being eyed as funding source by Democrats but as sacrosanct by Republicans.

It also may portend a repeat of last year's battle, one that ended with President Bush refusing to sign a legislative package that restored physician reimbursement but slashed Medicare Advantage payments.

The debate was front and center at a March hearing of the House Ways and Means Committee's Subcommittee on Health where recommendations from the Medicare Payment Advisory Commission's (MedPAC) spring report to Congress were discussed, including the recommendation that Congress increase physician fees by 1.5% in 2008 and 2009.

MedPAC said in its report that it supported Medicare Advantage (MA) plans–which let beneficiaries receive coverage from private plans such as HMOs and PPOs, and from private fee-for-service insurers. The commission also made the case that, for the third year in a row, the MA plans are overpaid relative to traditional fee-for-service (FFS) Medicare.

MedPAC Chairman Glenn Hackbarth told the subcommittee that the commission estimates that Medicare has paid the plans $10 billion more than it would have under traditional FFS for each of the last 3 years. Overall, MA plans on average will be paid 13% more than conventional Medicare providers in 2008, a 1% uptick from 2007.

The profit potential in those plans has stimulated a rush into the market and huge enrollment growth–a 101% increase from 2006 to 2007, according to MedPAC. Coordinated care plans, such as HMOs and PPOs, saw only an 8% increase in enrollment during that period, although those plans still account for the largest number of beneficiaries enrolled in an MA. Currently, about 20% of Medicare enrollees are in an MA plan.

Because MA plans are increasingly attractive to beneficiaries–they often offer additional benefits–MedPAC is concerned about the growth of the high-cost private FFS plans, Mr. Hackbarth said.

The plans are being rewarded for their costs and there is no penalty for poor quality, he said. “Payment policy is a powerful signal of what we value,” Mr. Hackbarth said, adding, “The benchmarks we use are a signal of what Medicare wants to buy.” The commission “supports financial neutrality between payment rates for the FFS program and the MA program,” he said, adding that about half of overpayments to MA plans now are going to insurers' bottom lines.

That fact has not been lost on the subcommittee chairman, Rep. Pete Stark (D-Calif.), who has held multiple hearings questioning the value and integrity of the MA plans. Republicans defended the MA program. Ranking minority member Rep. Dave Camp (R-Mich.) intensely questioned Mr. Hackbarth, eliciting the admission that MA plans had been successful in rural areas. Rep. Sam Johnson (R-Tenn.) at one point accused the MedPAC chairman of saying that the government is a more efficient insurer than the private sector.

Mr. Hackbarth disagreed and clarified his position. “The problem with this payment system is we are rewarding inefficient private plans,” he said.

WASHINGTON – At least 24 million Americans have diabetes, which cost the nation $174 billion in direct and indirect expenditures in 2007, according to the American Diabetes Association.

The ADA released data that were compiled from a variety of mostly federal sources, including the National Health Interview Survey, the National Health and Nutrition Examination Survey, and the Medical Expenditure Panel Survey. The Lewin Group conducted an analysis of that survey data for the ADA, drawing from the medical, public health, and economics literature.

The report currently does not split costs and incidence according to type of diabetes; those data will be available in a few months, said lead author Tim Dall, at a briefing on the analysis for congressional staff members and reporters.

According to the analysis, the cost of the disease has risen 32% since data were last tabulated in 2002. And the $174 billion figure is likely to be conservative because it doesn't include the approximately 6 million Americans with undiagnosed diabetes, said Ann L. Albright, Ph.D., president of health care and education at the ADA, at the briefing.

The cost estimate also does not include all of the expenses related to diabetes, such as over-the-counter medications or office visits to nonphysician providers other than podiatrists (such as optometrists or dentists).

“The findings reaffirm that diabetes is a public health crisis and its implications are painful and far reaching,” said Dr. Albright, who is also the director of the division of diabetes translation at the Centers for Disease Control and Prevention. “This underscores the importance of early diagnosis and treatment,” she said.

According to the analysis, 17.5 million Americans have been diagnosed with diabetes, up from 12.1 million in 2002. The diabetes population is growing by about 1 million people a year, driven by the aging of the population, more obesity, better detection, decreasing mortality, and growth in minority populations with higher rates of the disease, according to the study, which will be published in Diabetes Care in March (2008;31:1–20).

Most people with diabetes are insured, with their costs covered primarily through government programs. About 8.5 million diabetics are Medicare beneficiaries. Two million are uninsured and a third of those are undiagnosed, estimated the authors.

On the medical expenditure side, the total direct costs were an estimated $116 billion, with $27 billion for direct treatment, $58 billion for chronic complications, and $31 billion in “excess” general medical costs. The largest component of medical spending was for inpatient hospitalization, accounting for $58 billion. The inpatient costs for diabetes-related chronic complications–such as neurologic, peripheral vascular, cardiovascular, and renal–are higher than for diabetes-specific hospitalizations, at $2,281, compared with $1,853.

Diagnosed diabetics have medical costs that are two times higher than they would be without the presence of the disease.

Their expenditures average $11,744 a year, of which $6,649 is attributable directly to diabetes.

The indirect costs–pegged at $58 billion–include increased absenteeism, reduced productivity while at work and reduced productivity for those not in the labor force, unemployment from disease-related disability, and lost productive capacity because of early death. According to the study, there were 284,000 deaths related to diabetes in 2007.

The authors said that while it appears that the disease's burden falls mostly on insurers, employers, and people with diabetes and their families, “the burden is passed along to all of society in the form of higher insurance premiums and taxes, reduced earnings, and reduced standard of living.”

Diabetes affects just under 1 in 10 people, and thus “directly or indirectly touches everyone in society,” they wrote.

WASHINGTON – At least 24 million Americans have diabetes, which cost the nation $174 billion in direct and indirect expenditures in 2007, according to the American Diabetes Association.

The ADA released data that were compiled from a variety of mostly federal sources, including the National Health Interview Survey, the National Health and Nutrition Examination Survey, and the Medical Expenditure Panel Survey. The Lewin Group conducted an analysis of that survey data for the ADA, drawing from the medical, public health, and economics literature.

The report currently does not split costs and incidence according to type of diabetes; those data will be available in a few months, said lead author Tim Dall, at a briefing on the analysis for congressional staff members and reporters.

According to the analysis, the cost of the disease has risen 32% since data were last tabulated in 2002. And the $174 billion figure is likely to be conservative because it doesn't include the approximately 6 million Americans with undiagnosed diabetes, said Ann L. Albright, Ph.D., president of health care and education at the ADA, at the briefing.

The cost estimate also does not include all of the expenses related to diabetes, such as over-the-counter medications or office visits to nonphysician providers other than podiatrists (such as optometrists or dentists).

“The findings reaffirm that diabetes is a public health crisis and its implications are painful and far reaching,” said Dr. Albright, who is also the director of the division of diabetes translation at the Centers for Disease Control and Prevention. “This underscores the importance of early diagnosis and treatment,” she said.

According to the analysis, 17.5 million Americans have been diagnosed with diabetes, up from 12.1 million in 2002. The diabetes population is growing by about 1 million people a year, driven by the aging of the population, more obesity, better detection, decreasing mortality, and growth in minority populations with higher rates of the disease, according to the study, which will be published in Diabetes Care in March (2008;31:1–20).

Most people with diabetes are insured, with their costs covered primarily through government programs. About 8.5 million diabetics are Medicare beneficiaries. Two million are uninsured and a third of those are undiagnosed, estimated the authors.

On the medical expenditure side, the total direct costs were an estimated $116 billion, with $27 billion for direct treatment, $58 billion for chronic complications, and $31 billion in “excess” general medical costs. The largest component of medical spending was for inpatient hospitalization, accounting for $58 billion. The inpatient costs for diabetes-related chronic complications–such as neurologic, peripheral vascular, cardiovascular, and renal–are higher than for diabetes-specific hospitalizations, at $2,281, compared with $1,853.

Diagnosed diabetics have medical costs that are two times higher than they would be without the presence of the disease.

Their expenditures average $11,744 a year, of which $6,649 is attributable directly to diabetes.

The indirect costs–pegged at $58 billion–include increased absenteeism, reduced productivity while at work and reduced productivity for those not in the labor force, unemployment from disease-related disability, and lost productive capacity because of early death. According to the study, there were 284,000 deaths related to diabetes in 2007.

The authors said that while it appears that the disease's burden falls mostly on insurers, employers, and people with diabetes and their families, “the burden is passed along to all of society in the form of higher insurance premiums and taxes, reduced earnings, and reduced standard of living.”

Diabetes affects just under 1 in 10 people, and thus “directly or indirectly touches everyone in society,” they wrote.

WASHINGTON – At least 24 million Americans have diabetes, which cost the nation $174 billion in direct and indirect expenditures in 2007, according to the American Diabetes Association.

The ADA released data that were compiled from a variety of mostly federal sources, including the National Health Interview Survey, the National Health and Nutrition Examination Survey, and the Medical Expenditure Panel Survey. The Lewin Group conducted an analysis of that survey data for the ADA, drawing from the medical, public health, and economics literature.

The report currently does not split costs and incidence according to type of diabetes; those data will be available in a few months, said lead author Tim Dall, at a briefing on the analysis for congressional staff members and reporters.

According to the analysis, the cost of the disease has risen 32% since data were last tabulated in 2002. And the $174 billion figure is likely to be conservative because it doesn't include the approximately 6 million Americans with undiagnosed diabetes, said Ann L. Albright, Ph.D., president of health care and education at the ADA, at the briefing.

The cost estimate also does not include all of the expenses related to diabetes, such as over-the-counter medications or office visits to nonphysician providers other than podiatrists (such as optometrists or dentists).

“The findings reaffirm that diabetes is a public health crisis and its implications are painful and far reaching,” said Dr. Albright, who is also the director of the division of diabetes translation at the Centers for Disease Control and Prevention. “This underscores the importance of early diagnosis and treatment,” she said.

According to the analysis, 17.5 million Americans have been diagnosed with diabetes, up from 12.1 million in 2002. The diabetes population is growing by about 1 million people a year, driven by the aging of the population, more obesity, better detection, decreasing mortality, and growth in minority populations with higher rates of the disease, according to the study, which will be published in Diabetes Care in March (2008;31:1–20).

Most people with diabetes are insured, with their costs covered primarily through government programs. About 8.5 million diabetics are Medicare beneficiaries. Two million are uninsured and a third of those are undiagnosed, estimated the authors.

On the medical expenditure side, the total direct costs were an estimated $116 billion, with $27 billion for direct treatment, $58 billion for chronic complications, and $31 billion in “excess” general medical costs. The largest component of medical spending was for inpatient hospitalization, accounting for $58 billion. The inpatient costs for diabetes-related chronic complications–such as neurologic, peripheral vascular, cardiovascular, and renal–are higher than for diabetes-specific hospitalizations, at $2,281, compared with $1,853.

Diagnosed diabetics have medical costs that are two times higher than they would be without the presence of the disease.

Their expenditures average $11,744 a year, of which $6,649 is attributable directly to diabetes.

The indirect costs–pegged at $58 billion–include increased absenteeism, reduced productivity while at work and reduced productivity for those not in the labor force, unemployment from disease-related disability, and lost productive capacity because of early death. According to the study, there were 284,000 deaths related to diabetes in 2007.

The authors said that while it appears that the disease's burden falls mostly on insurers, employers, and people with diabetes and their families, “the burden is passed along to all of society in the form of higher insurance premiums and taxes, reduced earnings, and reduced standard of living.”

Diabetes affects just under 1 in 10 people, and thus “directly or indirectly touches everyone in society,” they wrote.

Mental Health Parity Progress

The House of Representatives last month passed its version of a bill that would put mental health coverage on equal footing with benefits for physical conditions. The Paul Wellstone Mental Health and Addiction Equity Act (H.R. 1424) passed 268–148; it now has to be reconciled with a Senate bill that was put on hold in 2007 (see related Guest Editorial on p. 8). The House legislation also included the Genetic Information Nondiscrimination Act, which was reported out of a Senate committee in April 2007. There are sticking points between the House and Senate, however. The House would pay for coverage by increasing drug manufacturers' rebates to Medicaid and by limiting physician ownership of specialty hospitals. The Senate bill was silent on funding. Advocates were optimistic that an agreement was close, after 10 years of lobbying. Dr. Carolyn Robinowitz, president of the American Psychiatric Association, said in a statement that untreated mental illness costs $200 billion a year in lost productivity and increased burdens for public programs. “The costs of not passing parity legislation are too high to ignore,” she said. The House bill would require insurers to have “fairness” between copays, deductibles, and coinsurance for mental and physical illnesses; treatment limitations would also have to be equitable.

MD Mental Health Visits Frequent

In 2005, Americans went to see a physician more often for depression and other mental health issues than for back problems, high blood pressure, and trauma-related reasons, according to the Agency for Healthcare Research and Quality. There were 156 million physician office visits for depression and mental health problems, making it one of the top three reasons why Americans sought treatment in 2005, said AHRQ. Mental health visits increased 30% from 1996 to 2005, according to the agency. The same year, there were 139 million visits for back problems, 79 million for hypertension, and 133 million for trauma, such as fractures. The data come from the Medical Expenditure Panel Survey.

Suicide Tops Violence Admissions

Suicide attempts and self-injury accounted for the greatest portion of violence-related treatment at hospitals in 2005, according to another AHRQ report, “Violence-Related Stays in U.S. Hospitals, 2005.” Sixty-six percent of violence-related admissions were for attempted suicide or self-injury, according to the report. Half of those admitted for self-injury had overdosed or purposely mixed drugs. Thirty-one percent of violence-related admissions were for attempted murder, fights, rape, or other assaults. Only 4% were for sexual or other abuse. Children accounted for half of the abuse cases. Violence-related admissions cost $2.3 billion in 2005; 27% of the admissions were Medicaid patients, and 23% were uninsured.

Rx Abuse Worries Americans

Prescription drug abuse is as big a problem as illegal drug abuse, said respondents to a Wall Street Journal/Harris Interactive health care poll conducted in late February. Slightly less than half of those surveyed said they keep prescription medicines in a place whether others can't access them. Seventy percent said they were somewhat or very concerned about the risk of addiction associated with some prescription pain medications. The vast majority of the 2,027 adults surveyed voiced the same level of concern about side effects and potentially harmful interactions between pain medications and other prescriptions. About 60% said they discuss other prescriptions they are taking when prescribed a new medication.

Woodcock Named CDER Head

Dr. Janet Woodcock has been named director of the Food and Drug Administration's Center for Drug Evaluation and Research. Dr. Woodcock, a rheumatologist, served as director of CDER in the 1990s and has been acting director since October 2007. The drug industry's chief lobbying group, PhRMA, welcomed the appointment. Dr. Woodcock “has demonstrated willingness to work with diverse partners, including researchers, Congress, the White House, patients and pharmaceutical research companies,” said a statement from the group. But Dr. Sidney Wolfe, director of Public Citizen Health Research Group, said in an interview that he's “not terribly hopeful” that Dr. Woodcock will lead the center well, because she doesn't like conflict and controversy. “I don't think she's the kind of CDER director we need right now,” Dr. Wolfe said. “She's aware of a number of drugs on the market that should be taken off the market, but I don't think she has the fortitude to do something about it.”

FDA Would Expand Promotion

The FDA last month proposed guidance to let drug and medical device makers distribute medical or scientific journal articles and reference publications on unapproved uses of their products. Drug and device makers had been allowed to disseminate such materials under guidelines set by the FDA, but that authority expired in September 2006. The FDA's new “Good Reprint Practices” proposal requires the article or reference to be published by an organization that has an editorial board and fully discloses conflicts of interest. In addition, articles should be peer reviewed, and manufacturers should not distribute special supplements or publications funded by product manufacturers, or articles not supported by credible medical evidence. Rep. Henry Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, blasted the proposal, which he said in a statement “is great news for the drug industry but terrible for the public health.”

Mental Health Parity Progress

The House of Representatives last month passed its version of a bill that would put mental health coverage on equal footing with benefits for physical conditions. The Paul Wellstone Mental Health and Addiction Equity Act (H.R. 1424) passed 268–148; it now has to be reconciled with a Senate bill that was put on hold in 2007 (see related Guest Editorial on p. 8). The House legislation also included the Genetic Information Nondiscrimination Act, which was reported out of a Senate committee in April 2007. There are sticking points between the House and Senate, however. The House would pay for coverage by increasing drug manufacturers' rebates to Medicaid and by limiting physician ownership of specialty hospitals. The Senate bill was silent on funding. Advocates were optimistic that an agreement was close, after 10 years of lobbying. Dr. Carolyn Robinowitz, president of the American Psychiatric Association, said in a statement that untreated mental illness costs $200 billion a year in lost productivity and increased burdens for public programs. “The costs of not passing parity legislation are too high to ignore,” she said. The House bill would require insurers to have “fairness” between copays, deductibles, and coinsurance for mental and physical illnesses; treatment limitations would also have to be equitable.

MD Mental Health Visits Frequent

In 2005, Americans went to see a physician more often for depression and other mental health issues than for back problems, high blood pressure, and trauma-related reasons, according to the Agency for Healthcare Research and Quality. There were 156 million physician office visits for depression and mental health problems, making it one of the top three reasons why Americans sought treatment in 2005, said AHRQ. Mental health visits increased 30% from 1996 to 2005, according to the agency. The same year, there were 139 million visits for back problems, 79 million for hypertension, and 133 million for trauma, such as fractures. The data come from the Medical Expenditure Panel Survey.

Suicide Tops Violence Admissions

Suicide attempts and self-injury accounted for the greatest portion of violence-related treatment at hospitals in 2005, according to another AHRQ report, “Violence-Related Stays in U.S. Hospitals, 2005.” Sixty-six percent of violence-related admissions were for attempted suicide or self-injury, according to the report. Half of those admitted for self-injury had overdosed or purposely mixed drugs. Thirty-one percent of violence-related admissions were for attempted murder, fights, rape, or other assaults. Only 4% were for sexual or other abuse. Children accounted for half of the abuse cases. Violence-related admissions cost $2.3 billion in 2005; 27% of the admissions were Medicaid patients, and 23% were uninsured.

Rx Abuse Worries Americans

Prescription drug abuse is as big a problem as illegal drug abuse, said respondents to a Wall Street Journal/Harris Interactive health care poll conducted in late February. Slightly less than half of those surveyed said they keep prescription medicines in a place whether others can't access them. Seventy percent said they were somewhat or very concerned about the risk of addiction associated with some prescription pain medications. The vast majority of the 2,027 adults surveyed voiced the same level of concern about side effects and potentially harmful interactions between pain medications and other prescriptions. About 60% said they discuss other prescriptions they are taking when prescribed a new medication.

Woodcock Named CDER Head

Dr. Janet Woodcock has been named director of the Food and Drug Administration's Center for Drug Evaluation and Research. Dr. Woodcock, a rheumatologist, served as director of CDER in the 1990s and has been acting director since October 2007. The drug industry's chief lobbying group, PhRMA, welcomed the appointment. Dr. Woodcock “has demonstrated willingness to work with diverse partners, including researchers, Congress, the White House, patients and pharmaceutical research companies,” said a statement from the group. But Dr. Sidney Wolfe, director of Public Citizen Health Research Group, said in an interview that he's “not terribly hopeful” that Dr. Woodcock will lead the center well, because she doesn't like conflict and controversy. “I don't think she's the kind of CDER director we need right now,” Dr. Wolfe said. “She's aware of a number of drugs on the market that should be taken off the market, but I don't think she has the fortitude to do something about it.”

FDA Would Expand Promotion

The FDA last month proposed guidance to let drug and medical device makers distribute medical or scientific journal articles and reference publications on unapproved uses of their products. Drug and device makers had been allowed to disseminate such materials under guidelines set by the FDA, but that authority expired in September 2006. The FDA's new “Good Reprint Practices” proposal requires the article or reference to be published by an organization that has an editorial board and fully discloses conflicts of interest. In addition, articles should be peer reviewed, and manufacturers should not distribute special supplements or publications funded by product manufacturers, or articles not supported by credible medical evidence. Rep. Henry Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, blasted the proposal, which he said in a statement “is great news for the drug industry but terrible for the public health.”

Mental Health Parity Progress

The House of Representatives last month passed its version of a bill that would put mental health coverage on equal footing with benefits for physical conditions. The Paul Wellstone Mental Health and Addiction Equity Act (H.R. 1424) passed 268–148; it now has to be reconciled with a Senate bill that was put on hold in 2007 (see related Guest Editorial on p. 8). The House legislation also included the Genetic Information Nondiscrimination Act, which was reported out of a Senate committee in April 2007. There are sticking points between the House and Senate, however. The House would pay for coverage by increasing drug manufacturers' rebates to Medicaid and by limiting physician ownership of specialty hospitals. The Senate bill was silent on funding. Advocates were optimistic that an agreement was close, after 10 years of lobbying. Dr. Carolyn Robinowitz, president of the American Psychiatric Association, said in a statement that untreated mental illness costs $200 billion a year in lost productivity and increased burdens for public programs. “The costs of not passing parity legislation are too high to ignore,” she said. The House bill would require insurers to have “fairness” between copays, deductibles, and coinsurance for mental and physical illnesses; treatment limitations would also have to be equitable.

MD Mental Health Visits Frequent

In 2005, Americans went to see a physician more often for depression and other mental health issues than for back problems, high blood pressure, and trauma-related reasons, according to the Agency for Healthcare Research and Quality. There were 156 million physician office visits for depression and mental health problems, making it one of the top three reasons why Americans sought treatment in 2005, said AHRQ. Mental health visits increased 30% from 1996 to 2005, according to the agency. The same year, there were 139 million visits for back problems, 79 million for hypertension, and 133 million for trauma, such as fractures. The data come from the Medical Expenditure Panel Survey.

Suicide Tops Violence Admissions

Suicide attempts and self-injury accounted for the greatest portion of violence-related treatment at hospitals in 2005, according to another AHRQ report, “Violence-Related Stays in U.S. Hospitals, 2005.” Sixty-six percent of violence-related admissions were for attempted suicide or self-injury, according to the report. Half of those admitted for self-injury had overdosed or purposely mixed drugs. Thirty-one percent of violence-related admissions were for attempted murder, fights, rape, or other assaults. Only 4% were for sexual or other abuse. Children accounted for half of the abuse cases. Violence-related admissions cost $2.3 billion in 2005; 27% of the admissions were Medicaid patients, and 23% were uninsured.

Rx Abuse Worries Americans

Prescription drug abuse is as big a problem as illegal drug abuse, said respondents to a Wall Street Journal/Harris Interactive health care poll conducted in late February. Slightly less than half of those surveyed said they keep prescription medicines in a place whether others can't access them. Seventy percent said they were somewhat or very concerned about the risk of addiction associated with some prescription pain medications. The vast majority of the 2,027 adults surveyed voiced the same level of concern about side effects and potentially harmful interactions between pain medications and other prescriptions. About 60% said they discuss other prescriptions they are taking when prescribed a new medication.

Woodcock Named CDER Head

Dr. Janet Woodcock has been named director of the Food and Drug Administration's Center for Drug Evaluation and Research. Dr. Woodcock, a rheumatologist, served as director of CDER in the 1990s and has been acting director since October 2007. The drug industry's chief lobbying group, PhRMA, welcomed the appointment. Dr. Woodcock “has demonstrated willingness to work with diverse partners, including researchers, Congress, the White House, patients and pharmaceutical research companies,” said a statement from the group. But Dr. Sidney Wolfe, director of Public Citizen Health Research Group, said in an interview that he's “not terribly hopeful” that Dr. Woodcock will lead the center well, because she doesn't like conflict and controversy. “I don't think she's the kind of CDER director we need right now,” Dr. Wolfe said. “She's aware of a number of drugs on the market that should be taken off the market, but I don't think she has the fortitude to do something about it.”

FDA Would Expand Promotion

The FDA last month proposed guidance to let drug and medical device makers distribute medical or scientific journal articles and reference publications on unapproved uses of their products. Drug and device makers had been allowed to disseminate such materials under guidelines set by the FDA, but that authority expired in September 2006. The FDA's new “Good Reprint Practices” proposal requires the article or reference to be published by an organization that has an editorial board and fully discloses conflicts of interest. In addition, articles should be peer reviewed, and manufacturers should not distribute special supplements or publications funded by product manufacturers, or articles not supported by credible medical evidence. Rep. Henry Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, blasted the proposal, which he said in a statement “is great news for the drug industry but terrible for the public health.”

WASHINGTON – With health care expenses accounting for the single largest expense in their budget, states are increasingly looking for solutions from within, not from the federal government, according to an annual accounting of state legislative trends compiled by the Blue Cross and Blue Shield Association.

“Health care spending represented nearly one-third of total state expenditures last fiscal year,” said Susan Laudicina, BCBSA director for state research and policy at a briefing for reporters. And, she noted, as the economy weakens, health care costs will continue to rise, while tax revenues will fall. That will add to the pressure to find creative solutions, she said.

“The challenge for state lawmakers is how to avoid cutting existing programs like Medicaid and the State Children's Health Insurance Program while also finding new ways to cover the uninsured and contain costs,” said Ms. Laudicina.

The most significant trend observed in the states: an attempt to expand coverage. About half of the state legislatures debated universal coverage or expansion programs for children in fiscal 2007. State mandates requiring individuals to buy insurance were introduced in 12 states. All of those failed, largely because they are controversial, she said.

Connecticut and New York expanded eligibility for SCHIP to 400% of the federal poverty level and seven other states raised eligibility to 300%, but those efforts are threatened by a rule change issued by the Department of Health and Human Services last August that ostensibly caps eligibility at 250% of the federal poverty level. Eight states have sued to challenge that ruling.

Eight states–Connecticut, Indiana, Kansas, Louisiana, Maryland, New York, Texas, and Washington–created programs in which public funds subsidize the cost of private employer-sponsored health insurance to Medicaid-eligible workers. Oklahoma expanded its existing subsidy program, making more people eligible.

So-called “transparency” initiatives are gaining ground, also. These are proposals that require hospitals–and in some cases, physicians–to publicly share information on infections and other adverse events, and also other quality data and pricing. Twenty-one states debated proposals that would require transparency on some level. Transparency bills were enacted in 10 states: Arkansas, Delaware, Georgia, Indiana, Minnesota, New Jersey, Oregon, Pennsylvania, Texas, and Washington.

In Texas, for instance, the state now requires hospitals and physicians to provide patients with estimates of charges if requested. Hospitals will also be required to tell patients if there is a possibility that an out-of-network provider will be working in an in-network facility, and to inform them there may be costs to the patient as a result.

The Texas law reflects a growing concern that patients are not aware that they may be balance billed, Ms. Laudicina said.

Eleven states will take up transparency measures in 2008, she said.

The annual State Legislative Health Care and Insurance Issues report compiles information from the BCBSA's survey of 39 independent Blue Cross and Blue Shield plans.

WASHINGTON – With health care expenses accounting for the single largest expense in their budget, states are increasingly looking for solutions from within, not from the federal government, according to an annual accounting of state legislative trends compiled by the Blue Cross and Blue Shield Association.

“Health care spending represented nearly one-third of total state expenditures last fiscal year,” said Susan Laudicina, BCBSA director for state research and policy at a briefing for reporters. And, she noted, as the economy weakens, health care costs will continue to rise, while tax revenues will fall. That will add to the pressure to find creative solutions, she said.

“The challenge for state lawmakers is how to avoid cutting existing programs like Medicaid and the State Children's Health Insurance Program while also finding new ways to cover the uninsured and contain costs,” said Ms. Laudicina.

The most significant trend observed in the states: an attempt to expand coverage. About half of the state legislatures debated universal coverage or expansion programs for children in fiscal 2007. State mandates requiring individuals to buy insurance were introduced in 12 states. All of those failed, largely because they are controversial, she said.

Connecticut and New York expanded eligibility for SCHIP to 400% of the federal poverty level and seven other states raised eligibility to 300%, but those efforts are threatened by a rule change issued by the Department of Health and Human Services last August that ostensibly caps eligibility at 250% of the federal poverty level. Eight states have sued to challenge that ruling.

Eight states–Connecticut, Indiana, Kansas, Louisiana, Maryland, New York, Texas, and Washington–created programs in which public funds subsidize the cost of private employer-sponsored health insurance to Medicaid-eligible workers. Oklahoma expanded its existing subsidy program, making more people eligible.

So-called “transparency” initiatives are gaining ground, also. These are proposals that require hospitals–and in some cases, physicians–to publicly share information on infections and other adverse events, and also other quality data and pricing. Twenty-one states debated proposals that would require transparency on some level. Transparency bills were enacted in 10 states: Arkansas, Delaware, Georgia, Indiana, Minnesota, New Jersey, Oregon, Pennsylvania, Texas, and Washington.

In Texas, for instance, the state now requires hospitals and physicians to provide patients with estimates of charges if requested. Hospitals will also be required to tell patients if there is a possibility that an out-of-network provider will be working in an in-network facility, and to inform them there may be costs to the patient as a result.

The Texas law reflects a growing concern that patients are not aware that they may be balance billed, Ms. Laudicina said.

Eleven states will take up transparency measures in 2008, she said.

The annual State Legislative Health Care and Insurance Issues report compiles information from the BCBSA's survey of 39 independent Blue Cross and Blue Shield plans.

WASHINGTON – With health care expenses accounting for the single largest expense in their budget, states are increasingly looking for solutions from within, not from the federal government, according to an annual accounting of state legislative trends compiled by the Blue Cross and Blue Shield Association.

“Health care spending represented nearly one-third of total state expenditures last fiscal year,” said Susan Laudicina, BCBSA director for state research and policy at a briefing for reporters. And, she noted, as the economy weakens, health care costs will continue to rise, while tax revenues will fall. That will add to the pressure to find creative solutions, she said.

“The challenge for state lawmakers is how to avoid cutting existing programs like Medicaid and the State Children's Health Insurance Program while also finding new ways to cover the uninsured and contain costs,” said Ms. Laudicina.

The most significant trend observed in the states: an attempt to expand coverage. About half of the state legislatures debated universal coverage or expansion programs for children in fiscal 2007. State mandates requiring individuals to buy insurance were introduced in 12 states. All of those failed, largely because they are controversial, she said.

Connecticut and New York expanded eligibility for SCHIP to 400% of the federal poverty level and seven other states raised eligibility to 300%, but those efforts are threatened by a rule change issued by the Department of Health and Human Services last August that ostensibly caps eligibility at 250% of the federal poverty level. Eight states have sued to challenge that ruling.

Eight states–Connecticut, Indiana, Kansas, Louisiana, Maryland, New York, Texas, and Washington–created programs in which public funds subsidize the cost of private employer-sponsored health insurance to Medicaid-eligible workers. Oklahoma expanded its existing subsidy program, making more people eligible.

So-called “transparency” initiatives are gaining ground, also. These are proposals that require hospitals–and in some cases, physicians–to publicly share information on infections and other adverse events, and also other quality data and pricing. Twenty-one states debated proposals that would require transparency on some level. Transparency bills were enacted in 10 states: Arkansas, Delaware, Georgia, Indiana, Minnesota, New Jersey, Oregon, Pennsylvania, Texas, and Washington.

In Texas, for instance, the state now requires hospitals and physicians to provide patients with estimates of charges if requested. Hospitals will also be required to tell patients if there is a possibility that an out-of-network provider will be working in an in-network facility, and to inform them there may be costs to the patient as a result.

The Texas law reflects a growing concern that patients are not aware that they may be balance billed, Ms. Laudicina said.

Eleven states will take up transparency measures in 2008, she said.

The annual State Legislative Health Care and Insurance Issues report compiles information from the BCBSA's survey of 39 independent Blue Cross and Blue Shield plans.

LAS VEGAS – As more of the agreements signed by several large insurers to settle a class action suit alleging inappropriate billing practices expire, the possibility is increasing that the companies will return to the same behavior, especially given that many are being accused of violating the terms already, reported a compliance expert at an emergency medicine meeting.

Several of the health plans have said they will continue to comply with the terms of their settlements once they expire, but “not all have said that,” said Edward R. Gaines III, vice president and chief compliance officer for Healthcare Business Resources in Durham, N.C., who spoke at a meeting on reimbursement sponsored by the American College of Emergency Physicians.

Mr. Gaines said noncompliance among all the plans that have settled has continued to be an issue, which is being dealt with in the courts and administratively. But “the problem is, once the settlement agreement expires, I can't go back into federal court through an easy process to make my complaint heard,” he said.

The settlements were struck in response to Multidistrict Litigation 1334, which was certified as a class action in U.S. District Court for the Southern District of Florida in 2002 and named Aetna Inc., Anthem Insurance Cos. Inc., Cigna, Coventry Health Care Inc., Health Net Inc., Humana Inc., PacifiCare Health Systems Inc., Prudential Insurance Co. of America, United Health Care, and WellPoint Health Networks Inc. as defendants. The suits alleged that the insurers violated the federal Racketeer Influenced and Corrupt Organizations Act by engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians.

Several state and county medical societies filed the suits on behalf of virtually every physician in the nation–about 900,000 doctors.

United Healthcare and Coventry both were summarily released from litigation. Their release has been upheld on appeal.

Aetna and Cigna struck agreements that entailed an immediate payout in response to claims filed by physicians, some changes in billing behavior, and an agreement to provide prospective relief–$300 million from Aetna and $400 million from Cigna.

Cigna's 4-year agreement has now expired, and Aetna's 4-year agreement expired in June 2007; but Aetna's agreement was extended through June 2008 because of compliance disputes. After an investigation, the New Jersey insurance department fined Aetna $9.5 million in June 2007 for failing to properly pay for out-of-network providers. The insurer is paying nonparticipating physicians only 125% of Medicare rates and informing patients that they are not responsible for the difference.

ACEP, the North Carolina chapter of ACEP, Wake Emergency Physicians, and the North Carolina Medical Society subsequently followed up with a complaint to the North Carolina insurance department in November, Mr. Gaines said. The North Carolina group is challenging bundling of 12-lead ECGs into evaluation and management codes, and bundling of other procedures using the CPT-25 modifier codes.

“If we don't get prompt action from Aetna, we're going back to court [to] ask for an extension of the settlement agreement term,” he said.

The American Medical Association and Aetna recently said they are working together to resolve outstanding complaints. Prudential's agreement expires in 2009; agreements with HealthNet, Anthem/WellPoint, and Humana expire in 2010.

Agreements were reached with 90% of the nation's Blue Cross and Blue Shield plans and the Blue Cross and Blue Shield Association last April, but the final settlement date was being worked out at press time. The Blues plans agreed to similar terms as did the other payers, with one exception: Anthem/WellPoint and the Blues plans refused to accept assignment of benefits. The Blues plans were willing to walk away from the settlement if they did not win that concession, said Mr. Gaines.

The court gave preliminary approval last November to a settlement with the West Virginia-based Highmark/Mountain State Blue Cross Blue Shield. Claims could still be filed through February 2008. The final settlement date was also to be decided in February.

Mr. Gaines urged physicians to hold the health plans accountable to their agreements. Information on settlement terms and how to dispute claims can be found at www.hmosettlements.com

LAS VEGAS – As more of the agreements signed by several large insurers to settle a class action suit alleging inappropriate billing practices expire, the possibility is increasing that the companies will return to the same behavior, especially given that many are being accused of violating the terms already, reported a compliance expert at an emergency medicine meeting.

Several of the health plans have said they will continue to comply with the terms of their settlements once they expire, but “not all have said that,” said Edward R. Gaines III, vice president and chief compliance officer for Healthcare Business Resources in Durham, N.C., who spoke at a meeting on reimbursement sponsored by the American College of Emergency Physicians.

Mr. Gaines said noncompliance among all the plans that have settled has continued to be an issue, which is being dealt with in the courts and administratively. But “the problem is, once the settlement agreement expires, I can't go back into federal court through an easy process to make my complaint heard,” he said.

The settlements were struck in response to Multidistrict Litigation 1334, which was certified as a class action in U.S. District Court for the Southern District of Florida in 2002 and named Aetna Inc., Anthem Insurance Cos. Inc., Cigna, Coventry Health Care Inc., Health Net Inc., Humana Inc., PacifiCare Health Systems Inc., Prudential Insurance Co. of America, United Health Care, and WellPoint Health Networks Inc. as defendants. The suits alleged that the insurers violated the federal Racketeer Influenced and Corrupt Organizations Act by engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians.

Several state and county medical societies filed the suits on behalf of virtually every physician in the nation–about 900,000 doctors.

United Healthcare and Coventry both were summarily released from litigation. Their release has been upheld on appeal.

Aetna and Cigna struck agreements that entailed an immediate payout in response to claims filed by physicians, some changes in billing behavior, and an agreement to provide prospective relief–$300 million from Aetna and $400 million from Cigna.

Cigna's 4-year agreement has now expired, and Aetna's 4-year agreement expired in June 2007; but Aetna's agreement was extended through June 2008 because of compliance disputes. After an investigation, the New Jersey insurance department fined Aetna $9.5 million in June 2007 for failing to properly pay for out-of-network providers. The insurer is paying nonparticipating physicians only 125% of Medicare rates and informing patients that they are not responsible for the difference.

ACEP, the North Carolina chapter of ACEP, Wake Emergency Physicians, and the North Carolina Medical Society subsequently followed up with a complaint to the North Carolina insurance department in November, Mr. Gaines said. The North Carolina group is challenging bundling of 12-lead ECGs into evaluation and management codes, and bundling of other procedures using the CPT-25 modifier codes.

“If we don't get prompt action from Aetna, we're going back to court [to] ask for an extension of the settlement agreement term,” he said.

The American Medical Association and Aetna recently said they are working together to resolve outstanding complaints. Prudential's agreement expires in 2009; agreements with HealthNet, Anthem/WellPoint, and Humana expire in 2010.

Agreements were reached with 90% of the nation's Blue Cross and Blue Shield plans and the Blue Cross and Blue Shield Association last April, but the final settlement date was being worked out at press time. The Blues plans agreed to similar terms as did the other payers, with one exception: Anthem/WellPoint and the Blues plans refused to accept assignment of benefits. The Blues plans were willing to walk away from the settlement if they did not win that concession, said Mr. Gaines.

The court gave preliminary approval last November to a settlement with the West Virginia-based Highmark/Mountain State Blue Cross Blue Shield. Claims could still be filed through February 2008. The final settlement date was also to be decided in February.

Mr. Gaines urged physicians to hold the health plans accountable to their agreements. Information on settlement terms and how to dispute claims can be found at www.hmosettlements.com

LAS VEGAS – As more of the agreements signed by several large insurers to settle a class action suit alleging inappropriate billing practices expire, the possibility is increasing that the companies will return to the same behavior, especially given that many are being accused of violating the terms already, reported a compliance expert at an emergency medicine meeting.

Several of the health plans have said they will continue to comply with the terms of their settlements once they expire, but “not all have said that,” said Edward R. Gaines III, vice president and chief compliance officer for Healthcare Business Resources in Durham, N.C., who spoke at a meeting on reimbursement sponsored by the American College of Emergency Physicians.

Mr. Gaines said noncompliance among all the plans that have settled has continued to be an issue, which is being dealt with in the courts and administratively. But “the problem is, once the settlement agreement expires, I can't go back into federal court through an easy process to make my complaint heard,” he said.

The settlements were struck in response to Multidistrict Litigation 1334, which was certified as a class action in U.S. District Court for the Southern District of Florida in 2002 and named Aetna Inc., Anthem Insurance Cos. Inc., Cigna, Coventry Health Care Inc., Health Net Inc., Humana Inc., PacifiCare Health Systems Inc., Prudential Insurance Co. of America, United Health Care, and WellPoint Health Networks Inc. as defendants. The suits alleged that the insurers violated the federal Racketeer Influenced and Corrupt Organizations Act by engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians.

Several state and county medical societies filed the suits on behalf of virtually every physician in the nation–about 900,000 doctors.

United Healthcare and Coventry both were summarily released from litigation. Their release has been upheld on appeal.

Aetna and Cigna struck agreements that entailed an immediate payout in response to claims filed by physicians, some changes in billing behavior, and an agreement to provide prospective relief–$300 million from Aetna and $400 million from Cigna.

Cigna's 4-year agreement has now expired, and Aetna's 4-year agreement expired in June 2007; but Aetna's agreement was extended through June 2008 because of compliance disputes. After an investigation, the New Jersey insurance department fined Aetna $9.5 million in June 2007 for failing to properly pay for out-of-network providers. The insurer is paying nonparticipating physicians only 125% of Medicare rates and informing patients that they are not responsible for the difference.

ACEP, the North Carolina chapter of ACEP, Wake Emergency Physicians, and the North Carolina Medical Society subsequently followed up with a complaint to the North Carolina insurance department in November, Mr. Gaines said. The North Carolina group is challenging bundling of 12-lead ECGs into evaluation and management codes, and bundling of other procedures using the CPT-25 modifier codes.

“If we don't get prompt action from Aetna, we're going back to court [to] ask for an extension of the settlement agreement term,” he said.

The American Medical Association and Aetna recently said they are working together to resolve outstanding complaints. Prudential's agreement expires in 2009; agreements with HealthNet, Anthem/WellPoint, and Humana expire in 2010.

Agreements were reached with 90% of the nation's Blue Cross and Blue Shield plans and the Blue Cross and Blue Shield Association last April, but the final settlement date was being worked out at press time. The Blues plans agreed to similar terms as did the other payers, with one exception: Anthem/WellPoint and the Blues plans refused to accept assignment of benefits. The Blues plans were willing to walk away from the settlement if they did not win that concession, said Mr. Gaines.

The court gave preliminary approval last November to a settlement with the West Virginia-based Highmark/Mountain State Blue Cross Blue Shield. Claims could still be filed through February 2008. The final settlement date was also to be decided in February.

Mr. Gaines urged physicians to hold the health plans accountable to their agreements. Information on settlement terms and how to dispute claims can be found at www.hmosettlements.com

WASHINGTON — The nation spent $2 trillion, or $7,000 per person, on health care in 2006. While that was only a small increase from the previous year, America's prescription drug tab increased by 8.5%, fueled largely by the new Medicare Part D drug benefit.

Health spending as a share of the nation's gross domestic product continues to rise, hitting 16% in 2006.

Total spending on physician and clinical services grew 5.9% to $448 billion, which was the slowest rate of growth since 1999. Physician pay crawled almost to a halt, largely because of the freeze in Medicare's reimbursement rates in 2006. Private insurers seemed to have followed suit, said Cathy Cowan, an economist at the Centers for Medicare and Medicaid Services. Cowan, a coauthor of an annual analysis of the nation's health spending, spoke at a briefing on the report, which was published in the January/February issue of Health Affairs.

Spending on nursing home and home health declined from the previous year's growth. Nursing home prices dropped; spending still grew 3.5% in 2006, but that was less than the almost 5% increase in 2005. Home health services—the fastest growing component of personal health spending—grew almost 10% in 2006, down from a 12% increase in 2005.

Medicare had the fastest rate of growth since 1981, according to the report. Spending increased 19% in 2006 to $401 billion, driven largely by the prescription drug benefit and the cost of administration for that benefit and for Medicare Advantage, a managed care program.

Medicaid spending dropped for the first time since the program began in 1965. The 0.9% decrease was largely due to a large number of Medicaid enrollees shifted into Medicare for their prescription drugs.

Overall drug spending grew 8.5% in 2006—a far cry from the double-digit increases seen in the late 1990s, but still an increase from the 5.8% rise in spending in 2005. Half of the 2006 increase was due to greater utilization, not surprising given that about 23 million Medicare beneficiaries took advantage of the new benefit. Prescription prices increased by only a little over 3%, according to an annual analysis by actuaries at the Centers for Medicare and Medicaid Services.

The change in the drug rebate picture also contributed to rising drug costs. Under Medicaid, states received an average 30% rebate from drugmakers. Medicare, however, got only about 5% from manufacturers for the millions of beneficiaries who shifted out of Medicaid.

Medicare spent $41 billion on Part D in 2006, with $35 billion for drug purchases and $6 billion for administration and “net cost of insurance”—that is, the cost of subsidizing premiums for low-income beneficiaries and costs for transferring beneficiaries into private plans. Medicare paid for 18% of all retail drugs, compared with only 2% in 2005. Medicare took on costs that were previously covered by private insurers, Medicaid, and the uninsured. On average, each Part D enrollee received $1,700 in benefits, according to CMS.

The largest increase in drug utilization came from beneficiaries using the Part D benefit. But there was also increased drug use due to new indications for existing drugs, growth in several therapeutic classes, and rising use of specialty drugs such as injectable biologics for rheumatoid arthritis and multiple sclerosis, and anemia drugs for oncology. Hypnotics saw the largest rise in use of any drug class.

The rising availability of generic drugs—and programs designed to encourage use of generics, such as smaller copays for that category—also drove an increase in pharmaceutical utilization. A $4 generic program offered by Wal-Mart contributed to that trend and also helped keep prices down, according to the CMS authors. Of drugs dispensed in the United States in 2006, 63% were generic, according to the report.

Overall, the CMS analysis shows that the largest category of health spending is still hospital care, which consumes 31% of the nation's health dollars. Other spending, which includes dental, home health, durable medical equipment, over-the-counter medications, public health, research, and capital equipment, consumes 25% of the health dollar. Physician and clinical services follow at 21%, then prescription drugs at 10%, administration at 7%, and nursing home care at 6%.

The authors said the data they had at hand and their analysis did not allow them to determine whether the prescription drug benefit had increased or lowered overall health care spending. “Sooner or later, somebody's going to do a dynamite study and figure this out,” said Richard Foster, the chief actuary at CMS.

Mr. Foster told reporters that the study showed that the “overall cost of prescription drugs has changed very little as a result of Part D.” A study by Consumers Union, however, seemed to refute that claim. (See box at left.)

ELSEVIER GLOBAL MEDICAL NEWS

Drug Prices Up, Consumers Union Says

Government economists have concluded that the Medicare Part D prescription drug benefit did not affect the price of pharmaceuticals in 2006, the program's first full year, but Consumers Union has issued another in a series of studies charging that drug prices are indeed rising under the program.

Each month since December 2005, the consumer advocacy group has tracked the prices of five drugs commonly used by Medicare beneficiaries in a single ZIP code in each of five states—California, Florida, Illinois, New York, and Texas. The data are taken directly from

Medicare.gov

Medicare beneficiaries might be bearing the brunt of price increases, especially because they usually are liable for a percentage of the drug's price as a copayment. “We're seeing a lot of inflation,” said Consumers Union Senior Policy Analyst Bill Vaughan in an interview.

The group also found that prices generally rise the most from December to January—after a beneficiary has locked into a plan for the upcoming year. The average increase for the five drugs as a package (Lipitor, Celebrex, Zoloft, nifedipine ER, and Altace) was $369 from December 2007 to January 2008, according to Consumers Union.

“Most of these Medicare drug plans are increasing costs [at] double or triple the rate of inflation, which really torpedoes the insurance industry's claim that they are getting the best deal for seniors,” said Mr. Vaughan. “These continual price hikes are Exhibit A for Congress to give renewed attention to negotiating drug prices on behalf of America's taxpayers and seniors, and offering the option of a Medicare-run drug benefit.”

WASHINGTON — The nation spent $2 trillion, or $7,000 per person, on health care in 2006. While that was only a small increase from the previous year, America's prescription drug tab increased by 8.5%, fueled largely by the new Medicare Part D drug benefit.

Health spending as a share of the nation's gross domestic product continues to rise, hitting 16% in 2006.

Total spending on physician and clinical services grew 5.9% to $448 billion, which was the slowest rate of growth since 1999. Physician pay crawled almost to a halt, largely because of the freeze in Medicare's reimbursement rates in 2006. Private insurers seemed to have followed suit, said Cathy Cowan, an economist at the Centers for Medicare and Medicaid Services. Cowan, a coauthor of an annual analysis of the nation's health spending, spoke at a briefing on the report, which was published in the January/February issue of Health Affairs.

Spending on nursing home and home health declined from the previous year's growth. Nursing home prices dropped; spending still grew 3.5% in 2006, but that was less than the almost 5% increase in 2005. Home health services—the fastest growing component of personal health spending—grew almost 10% in 2006, down from a 12% increase in 2005.

Medicare had the fastest rate of growth since 1981, according to the report. Spending increased 19% in 2006 to $401 billion, driven largely by the prescription drug benefit and the cost of administration for that benefit and for Medicare Advantage, a managed care program.

Medicaid spending dropped for the first time since the program began in 1965. The 0.9% decrease was largely due to a large number of Medicaid enrollees shifted into Medicare for their prescription drugs.

Overall drug spending grew 8.5% in 2006—a far cry from the double-digit increases seen in the late 1990s, but still an increase from the 5.8% rise in spending in 2005. Half of the 2006 increase was due to greater utilization, not surprising given that about 23 million Medicare beneficiaries took advantage of the new benefit. Prescription prices increased by only a little over 3%, according to an annual analysis by actuaries at the Centers for Medicare and Medicaid Services.

The change in the drug rebate picture also contributed to rising drug costs. Under Medicaid, states received an average 30% rebate from drugmakers. Medicare, however, got only about 5% from manufacturers for the millions of beneficiaries who shifted out of Medicaid.

Medicare spent $41 billion on Part D in 2006, with $35 billion for drug purchases and $6 billion for administration and “net cost of insurance”—that is, the cost of subsidizing premiums for low-income beneficiaries and costs for transferring beneficiaries into private plans. Medicare paid for 18% of all retail drugs, compared with only 2% in 2005. Medicare took on costs that were previously covered by private insurers, Medicaid, and the uninsured. On average, each Part D enrollee received $1,700 in benefits, according to CMS.

The largest increase in drug utilization came from beneficiaries using the Part D benefit. But there was also increased drug use due to new indications for existing drugs, growth in several therapeutic classes, and rising use of specialty drugs such as injectable biologics for rheumatoid arthritis and multiple sclerosis, and anemia drugs for oncology. Hypnotics saw the largest rise in use of any drug class.

The rising availability of generic drugs—and programs designed to encourage use of generics, such as smaller copays for that category—also drove an increase in pharmaceutical utilization. A $4 generic program offered by Wal-Mart contributed to that trend and also helped keep prices down, according to the CMS authors. Of drugs dispensed in the United States in 2006, 63% were generic, according to the report.

Overall, the CMS analysis shows that the largest category of health spending is still hospital care, which consumes 31% of the nation's health dollars. Other spending, which includes dental, home health, durable medical equipment, over-the-counter medications, public health, research, and capital equipment, consumes 25% of the health dollar. Physician and clinical services follow at 21%, then prescription drugs at 10%, administration at 7%, and nursing home care at 6%.

The authors said the data they had at hand and their analysis did not allow them to determine whether the prescription drug benefit had increased or lowered overall health care spending. “Sooner or later, somebody's going to do a dynamite study and figure this out,” said Richard Foster, the chief actuary at CMS.

Mr. Foster told reporters that the study showed that the “overall cost of prescription drugs has changed very little as a result of Part D.” A study by Consumers Union, however, seemed to refute that claim. (See box at left.)

ELSEVIER GLOBAL MEDICAL NEWS

Drug Prices Up, Consumers Union Says

Government economists have concluded that the Medicare Part D prescription drug benefit did not affect the price of pharmaceuticals in 2006, the program's first full year, but Consumers Union has issued another in a series of studies charging that drug prices are indeed rising under the program.

Each month since December 2005, the consumer advocacy group has tracked the prices of five drugs commonly used by Medicare beneficiaries in a single ZIP code in each of five states—California, Florida, Illinois, New York, and Texas. The data are taken directly from

Medicare.gov

Medicare beneficiaries might be bearing the brunt of price increases, especially because they usually are liable for a percentage of the drug's price as a copayment. “We're seeing a lot of inflation,” said Consumers Union Senior Policy Analyst Bill Vaughan in an interview.

The group also found that prices generally rise the most from December to January—after a beneficiary has locked into a plan for the upcoming year. The average increase for the five drugs as a package (Lipitor, Celebrex, Zoloft, nifedipine ER, and Altace) was $369 from December 2007 to January 2008, according to Consumers Union.

“Most of these Medicare drug plans are increasing costs [at] double or triple the rate of inflation, which really torpedoes the insurance industry's claim that they are getting the best deal for seniors,” said Mr. Vaughan. “These continual price hikes are Exhibit A for Congress to give renewed attention to negotiating drug prices on behalf of America's taxpayers and seniors, and offering the option of a Medicare-run drug benefit.”

WASHINGTON — The nation spent $2 trillion, or $7,000 per person, on health care in 2006. While that was only a small increase from the previous year, America's prescription drug tab increased by 8.5%, fueled largely by the new Medicare Part D drug benefit.

Health spending as a share of the nation's gross domestic product continues to rise, hitting 16% in 2006.

Total spending on physician and clinical services grew 5.9% to $448 billion, which was the slowest rate of growth since 1999. Physician pay crawled almost to a halt, largely because of the freeze in Medicare's reimbursement rates in 2006. Private insurers seemed to have followed suit, said Cathy Cowan, an economist at the Centers for Medicare and Medicaid Services. Cowan, a coauthor of an annual analysis of the nation's health spending, spoke at a briefing on the report, which was published in the January/February issue of Health Affairs.

Spending on nursing home and home health declined from the previous year's growth. Nursing home prices dropped; spending still grew 3.5% in 2006, but that was less than the almost 5% increase in 2005. Home health services—the fastest growing component of personal health spending—grew almost 10% in 2006, down from a 12% increase in 2005.

Medicare had the fastest rate of growth since 1981, according to the report. Spending increased 19% in 2006 to $401 billion, driven largely by the prescription drug benefit and the cost of administration for that benefit and for Medicare Advantage, a managed care program.

Medicaid spending dropped for the first time since the program began in 1965. The 0.9% decrease was largely due to a large number of Medicaid enrollees shifted into Medicare for their prescription drugs.

Overall drug spending grew 8.5% in 2006—a far cry from the double-digit increases seen in the late 1990s, but still an increase from the 5.8% rise in spending in 2005. Half of the 2006 increase was due to greater utilization, not surprising given that about 23 million Medicare beneficiaries took advantage of the new benefit. Prescription prices increased by only a little over 3%, according to an annual analysis by actuaries at the Centers for Medicare and Medicaid Services.

The change in the drug rebate picture also contributed to rising drug costs. Under Medicaid, states received an average 30% rebate from drugmakers. Medicare, however, got only about 5% from manufacturers for the millions of beneficiaries who shifted out of Medicaid.

Medicare spent $41 billion on Part D in 2006, with $35 billion for drug purchases and $6 billion for administration and “net cost of insurance”—that is, the cost of subsidizing premiums for low-income beneficiaries and costs for transferring beneficiaries into private plans. Medicare paid for 18% of all retail drugs, compared with only 2% in 2005. Medicare took on costs that were previously covered by private insurers, Medicaid, and the uninsured. On average, each Part D enrollee received $1,700 in benefits, according to CMS.

The largest increase in drug utilization came from beneficiaries using the Part D benefit. But there was also increased drug use due to new indications for existing drugs, growth in several therapeutic classes, and rising use of specialty drugs such as injectable biologics for rheumatoid arthritis and multiple sclerosis, and anemia drugs for oncology. Hypnotics saw the largest rise in use of any drug class.

The rising availability of generic drugs—and programs designed to encourage use of generics, such as smaller copays for that category—also drove an increase in pharmaceutical utilization. A $4 generic program offered by Wal-Mart contributed to that trend and also helped keep prices down, according to the CMS authors. Of drugs dispensed in the United States in 2006, 63% were generic, according to the report.

Overall, the CMS analysis shows that the largest category of health spending is still hospital care, which consumes 31% of the nation's health dollars. Other spending, which includes dental, home health, durable medical equipment, over-the-counter medications, public health, research, and capital equipment, consumes 25% of the health dollar. Physician and clinical services follow at 21%, then prescription drugs at 10%, administration at 7%, and nursing home care at 6%.

The authors said the data they had at hand and their analysis did not allow them to determine whether the prescription drug benefit had increased or lowered overall health care spending. “Sooner or later, somebody's going to do a dynamite study and figure this out,” said Richard Foster, the chief actuary at CMS.

Mr. Foster told reporters that the study showed that the “overall cost of prescription drugs has changed very little as a result of Part D.” A study by Consumers Union, however, seemed to refute that claim. (See box at left.)

ELSEVIER GLOBAL MEDICAL NEWS

Drug Prices Up, Consumers Union Says

Government economists have concluded that the Medicare Part D prescription drug benefit did not affect the price of pharmaceuticals in 2006, the program's first full year, but Consumers Union has issued another in a series of studies charging that drug prices are indeed rising under the program.

Each month since December 2005, the consumer advocacy group has tracked the prices of five drugs commonly used by Medicare beneficiaries in a single ZIP code in each of five states—California, Florida, Illinois, New York, and Texas. The data are taken directly from

Medicare.gov

Medicare beneficiaries might be bearing the brunt of price increases, especially because they usually are liable for a percentage of the drug's price as a copayment. “We're seeing a lot of inflation,” said Consumers Union Senior Policy Analyst Bill Vaughan in an interview.

The group also found that prices generally rise the most from December to January—after a beneficiary has locked into a plan for the upcoming year. The average increase for the five drugs as a package (Lipitor, Celebrex, Zoloft, nifedipine ER, and Altace) was $369 from December 2007 to January 2008, according to Consumers Union.

“Most of these Medicare drug plans are increasing costs [at] double or triple the rate of inflation, which really torpedoes the insurance industry's claim that they are getting the best deal for seniors,” said Mr. Vaughan. “These continual price hikes are Exhibit A for Congress to give renewed attention to negotiating drug prices on behalf of America's taxpayers and seniors, and offering the option of a Medicare-run drug benefit.”

Hospitals participating in a Medicare-sponsored pay-for-performance demonstration continue to sustain initial gains in quality improvement and have seen a huge decline in costs and mortality for selected conditions over the project's first 3 years, according to data released by Premier Inc., a hospital performance improvement alliance.

Overall, the median hospital cost per patient dropped by $1,000 in the first 3 years, and median mortality dropped by 1.87%. The project has 250 participating hospitals, and more than 1 million patient records were analyzed.

Premier, which is managing the Centers for Medicare and Medicaid Services-funded Hospital Quality Incentive Demonstration project, estimated that if every hospital in the United States achieved the same benchmarks, there would be 70,000 fewer deaths each year and hospital costs would drop by as much as $4.5 billion a year.

At a briefing to release the results, Mark Wynn, Ph.D., director of payment policy demonstrations at CMS, said that the hospital project is considered one of the agency's primary arguments in favor of value-based purchasing. CMS has been pushing that policy as the most effective way to restructure Medicare reimbursement to reward efficiency and value.

Dr. Wynn acknowledged that the financial incentives have been very small, but even so, there has been significant improvement. "Relatively modest dollars can have huge impacts," he said.

Dr. Evan Benjamin, chief quality officer for Baystate Health System in Springfield, Mass., agreed that even small financial carrots have an effect. Dr. Benjamin was the lead author of a study looking at earlier data from the improvement project. He and his colleagues found that quality was higher among the 250 hospitals that were given incentives than it was in control hospitals that were required to report their data publicly but were not given pay-for-performance incentives (N. Engl. J. Med. 2007;356:486–96).

There's room for even more improvement, Dr. Benjamin said at the briefing, noting that most of the hospitals started at a relatively high level of quality and that larger financial incentives might push greater gains.

The Hospital Quality Incentive Demonstration project began in October 2003; the data released covered every quarter through June 2007.

Hospitals were given aggregate scores for each of five conditions—acute myocardial infarction, heart failure, coronary artery bypass graft, pneumonia, and hip and knee replacement—based on reporting for 27 process measures. Hospitals with fewer than eight cases per quarter were excluded.

Overall, hospitals improved by an average 17% on a composite quality score used by the project. Improvements were largest in pneumonia and heart failure. For instance, only 70% of patients were receiving appropriate pneumonia care at the start, but by June 2007, 93% were. For heart failure, the numbers rose from 64% to 93% of patients getting quality care. Savings were also greatest for heart failure, at about $1,339 per case.

There was a continuing downward trend in performance variation among the hospitals, with all moving toward the ideal, said Richard Norling, president and CEO of Premier Inc. For the hospitals that were on target 100% of the time with 100% of patients, costs and mortality were lowest, he said. For instance, the mortality rate for coronary artery bypass graft patients was close to 6% at hospitals that met appropriate care benchmarks in only half the patients or fewer. Mortality was just under 2% for facilities that met those benchmarks in 75%–100% of the patients, Mr. Norling said.

Attaining the goals of the demonstration project required huge cultural shifts and large investments in information systems, according to two hospital executives whose facilities participated in the project. Before the project, the Aurora Health Care system was reactive and was achieving only incremental quality improvement, despite having a culture and leadership that focused on better care, said Dr. Nick Turkal, president and CEO of the Milwaukee-based nonprofit system.

Participation in the demonstration has changed the mind-set to "a pursuit of perfection," Dr. Turkal said at the briefing. The system's 13 hospitals have 100,000 admissions annually. Data on meeting the pay-for-performance goals are given to employees every 60 days, and are updated regularly on the system's Web site for the public to see. Mortality and costs are down significantly across the system, but "we're not done yet," he said.

Improvements are possible regardless of facility size or location, said Dr. Mark Povroznik, director of quality initiatives at United Hospital Center, Clarksburg, W.Va. The 375-bed facility has about 15,000 admissions a year and is facing a large and growing uncompensated care burden, he said at the briefing.

The facility has gone from being among the top 20% in two conditions during the first year to being on track to hitting that mark for four conditions in the upcoming year, said Dr. Povroznik. The payout has been tiny, with an estimated $143,000 in bonuses due for 2007, but the rewards are large in quality improvement, he said.

The demonstration project has proved that incentives can work, said Dr. Wynn. CMS is tinkering slightly with the project, however. Starting this year, there will be incentives not just for improvement over baseline and for hitting the top 20%, but also for hospitals that show the greatest improvement. A total of $12 million will be available, he said.

Hospitals participating in a Medicare-sponsored pay-for-performance demonstration continue to sustain initial gains in quality improvement and have seen a huge decline in costs and mortality for selected conditions over the project's first 3 years, according to data released by Premier Inc., a hospital performance improvement alliance.

Overall, the median hospital cost per patient dropped by $1,000 in the first 3 years, and median mortality dropped by 1.87%. The project has 250 participating hospitals, and more than 1 million patient records were analyzed.

Premier, which is managing the Centers for Medicare and Medicaid Services-funded Hospital Quality Incentive Demonstration project, estimated that if every hospital in the United States achieved the same benchmarks, there would be 70,000 fewer deaths each year and hospital costs would drop by as much as $4.5 billion a year.

At a briefing to release the results, Mark Wynn, Ph.D., director of payment policy demonstrations at CMS, said that the hospital project is considered one of the agency's primary arguments in favor of value-based purchasing. CMS has been pushing that policy as the most effective way to restructure Medicare reimbursement to reward efficiency and value.

Dr. Wynn acknowledged that the financial incentives have been very small, but even so, there has been significant improvement. "Relatively modest dollars can have huge impacts," he said.

Dr. Evan Benjamin, chief quality officer for Baystate Health System in Springfield, Mass., agreed that even small financial carrots have an effect. Dr. Benjamin was the lead author of a study looking at earlier data from the improvement project. He and his colleagues found that quality was higher among the 250 hospitals that were given incentives than it was in control hospitals that were required to report their data publicly but were not given pay-for-performance incentives (N. Engl. J. Med. 2007;356:486–96).

There's room for even more improvement, Dr. Benjamin said at the briefing, noting that most of the hospitals started at a relatively high level of quality and that larger financial incentives might push greater gains.

The Hospital Quality Incentive Demonstration project began in October 2003; the data released covered every quarter through June 2007.

Hospitals were given aggregate scores for each of five conditions—acute myocardial infarction, heart failure, coronary artery bypass graft, pneumonia, and hip and knee replacement—based on reporting for 27 process measures. Hospitals with fewer than eight cases per quarter were excluded.

Overall, hospitals improved by an average 17% on a composite quality score used by the project. Improvements were largest in pneumonia and heart failure. For instance, only 70% of patients were receiving appropriate pneumonia care at the start, but by June 2007, 93% were. For heart failure, the numbers rose from 64% to 93% of patients getting quality care. Savings were also greatest for heart failure, at about $1,339 per case.

There was a continuing downward trend in performance variation among the hospitals, with all moving toward the ideal, said Richard Norling, president and CEO of Premier Inc. For the hospitals that were on target 100% of the time with 100% of patients, costs and mortality were lowest, he said. For instance, the mortality rate for coronary artery bypass graft patients was close to 6% at hospitals that met appropriate care benchmarks in only half the patients or fewer. Mortality was just under 2% for facilities that met those benchmarks in 75%–100% of the patients, Mr. Norling said.

Attaining the goals of the demonstration project required huge cultural shifts and large investments in information systems, according to two hospital executives whose facilities participated in the project. Before the project, the Aurora Health Care system was reactive and was achieving only incremental quality improvement, despite having a culture and leadership that focused on better care, said Dr. Nick Turkal, president and CEO of the Milwaukee-based nonprofit system.

Participation in the demonstration has changed the mind-set to "a pursuit of perfection," Dr. Turkal said at the briefing. The system's 13 hospitals have 100,000 admissions annually. Data on meeting the pay-for-performance goals are given to employees every 60 days, and are updated regularly on the system's Web site for the public to see. Mortality and costs are down significantly across the system, but "we're not done yet," he said.

Improvements are possible regardless of facility size or location, said Dr. Mark Povroznik, director of quality initiatives at United Hospital Center, Clarksburg, W.Va. The 375-bed facility has about 15,000 admissions a year and is facing a large and growing uncompensated care burden, he said at the briefing.

The facility has gone from being among the top 20% in two conditions during the first year to being on track to hitting that mark for four conditions in the upcoming year, said Dr. Povroznik. The payout has been tiny, with an estimated $143,000 in bonuses due for 2007, but the rewards are large in quality improvement, he said.

The demonstration project has proved that incentives can work, said Dr. Wynn. CMS is tinkering slightly with the project, however. Starting this year, there will be incentives not just for improvement over baseline and for hitting the top 20%, but also for hospitals that show the greatest improvement. A total of $12 million will be available, he said.

Hospitals participating in a Medicare-sponsored pay-for-performance demonstration continue to sustain initial gains in quality improvement and have seen a huge decline in costs and mortality for selected conditions over the project's first 3 years, according to data released by Premier Inc., a hospital performance improvement alliance.

Overall, the median hospital cost per patient dropped by $1,000 in the first 3 years, and median mortality dropped by 1.87%. The project has 250 participating hospitals, and more than 1 million patient records were analyzed.

Premier, which is managing the Centers for Medicare and Medicaid Services-funded Hospital Quality Incentive Demonstration project, estimated that if every hospital in the United States achieved the same benchmarks, there would be 70,000 fewer deaths each year and hospital costs would drop by as much as $4.5 billion a year.

At a briefing to release the results, Mark Wynn, Ph.D., director of payment policy demonstrations at CMS, said that the hospital project is considered one of the agency's primary arguments in favor of value-based purchasing. CMS has been pushing that policy as the most effective way to restructure Medicare reimbursement to reward efficiency and value.

Dr. Wynn acknowledged that the financial incentives have been very small, but even so, there has been significant improvement. "Relatively modest dollars can have huge impacts," he said.

Dr. Evan Benjamin, chief quality officer for Baystate Health System in Springfield, Mass., agreed that even small financial carrots have an effect. Dr. Benjamin was the lead author of a study looking at earlier data from the improvement project. He and his colleagues found that quality was higher among the 250 hospitals that were given incentives than it was in control hospitals that were required to report their data publicly but were not given pay-for-performance incentives (N. Engl. J. Med. 2007;356:486–96).

There's room for even more improvement, Dr. Benjamin said at the briefing, noting that most of the hospitals started at a relatively high level of quality and that larger financial incentives might push greater gains.

The Hospital Quality Incentive Demonstration project began in October 2003; the data released covered every quarter through June 2007.

Hospitals were given aggregate scores for each of five conditions—acute myocardial infarction, heart failure, coronary artery bypass graft, pneumonia, and hip and knee replacement—based on reporting for 27 process measures. Hospitals with fewer than eight cases per quarter were excluded.

Overall, hospitals improved by an average 17% on a composite quality score used by the project. Improvements were largest in pneumonia and heart failure. For instance, only 70% of patients were receiving appropriate pneumonia care at the start, but by June 2007, 93% were. For heart failure, the numbers rose from 64% to 93% of patients getting quality care. Savings were also greatest for heart failure, at about $1,339 per case.

There was a continuing downward trend in performance variation among the hospitals, with all moving toward the ideal, said Richard Norling, president and CEO of Premier Inc. For the hospitals that were on target 100% of the time with 100% of patients, costs and mortality were lowest, he said. For instance, the mortality rate for coronary artery bypass graft patients was close to 6% at hospitals that met appropriate care benchmarks in only half the patients or fewer. Mortality was just under 2% for facilities that met those benchmarks in 75%–100% of the patients, Mr. Norling said.

Attaining the goals of the demonstration project required huge cultural shifts and large investments in information systems, according to two hospital executives whose facilities participated in the project. Before the project, the Aurora Health Care system was reactive and was achieving only incremental quality improvement, despite having a culture and leadership that focused on better care, said Dr. Nick Turkal, president and CEO of the Milwaukee-based nonprofit system.

Participation in the demonstration has changed the mind-set to "a pursuit of perfection," Dr. Turkal said at the briefing. The system's 13 hospitals have 100,000 admissions annually. Data on meeting the pay-for-performance goals are given to employees every 60 days, and are updated regularly on the system's Web site for the public to see. Mortality and costs are down significantly across the system, but "we're not done yet," he said.

Improvements are possible regardless of facility size or location, said Dr. Mark Povroznik, director of quality initiatives at United Hospital Center, Clarksburg, W.Va. The 375-bed facility has about 15,000 admissions a year and is facing a large and growing uncompensated care burden, he said at the briefing.

The facility has gone from being among the top 20% in two conditions during the first year to being on track to hitting that mark for four conditions in the upcoming year, said Dr. Povroznik. The payout has been tiny, with an estimated $143,000 in bonuses due for 2007, but the rewards are large in quality improvement, he said.

The demonstration project has proved that incentives can work, said Dr. Wynn. CMS is tinkering slightly with the project, however. Starting this year, there will be incentives not just for improvement over baseline and for hitting the top 20%, but also for hospitals that show the greatest improvement. A total of $12 million will be available, he said.