Alicia Ault

WASHINGTON — Sensing an opportunity to advance its agenda with the Democrat-controlled congress, the American College of Physicians has set its sights on implementation of the medical home concept by Medicare.

The ACP also is proposing to replace the sustainable growth rate (SGR) formula that governs how much Medicare pays physicians and to expand coverage for the uninsured—two issues high on the to-do list for many legislators and other physician groups, consumers, employers, and insurers.

An “advanced medical home”–in which primary care physicians would receive reimbursement for coordinating care in a way that addresses each patient's individual needs—is the best way to save money and improve patient care, ACP president Lynne Kirk said at a briefing with reporters last month.

“Payment systems used by Medicare, Medicaid, and most private payers reward physicians for the volume of procedures generated and number of office visits performed, rather than for ongoing, continuous, and longitudinal management of the patient's whole health, supported by systems-based practice improvements that lead to better results,” Dr. Kirk said.

The patient-centered medical home, initially conceived by the American Academy of Pediatrics, has been actively promoted by the AAP and the American Academy of Family Physicians (AAFP). The Veterans Affairs department is the only federal agency that supports a medical home model.

As described in a January 2006 ACP policy paper, the advanced medical home would offer a new approach to primary care delivery and payment.

The ACP is proposing that Medicare provide primary care physicians with a “bundled,” prospective, per-patient payment for serving as the locus of all care. One component would cover practice overhead; another element would cover coordination of care, including paperwork as well as telephone and e-mail conversations with other treating physicians and family members. Face-to-face visits would be covered by a fee-for-service component. Finally, there would be a pay-for-performance element, based on patient outcomes.

Only physician practices that have met the medical home criteria—such as having the ability to track patients and communicate with them electronically—would be eligible for the bundled payment, said Dr. Kirk, associate chief of the University of Texas Southwestern Medical School's general internal medicine division. The criteria are still being developed, said Robert Doherty, ACP's senior vice president for governmental affairs and public policy.

Practices that do not fulfill the criteria would be able to receive separate payments for specific care coordination services, Mr. Doherty told reporters.

It may sound like a return to capitation, but the medical home would avoid the pitfalls of that system, Mr. Doherty said. Under capitation, sicker patients could quickly eat up the monthly per-patient fee. Medical home payments would be risk adjusted to compensate for more severely ill patients, he said. Also, physicians will not be asked to be gatekeepers.

A 3-year, eight-state demonstration of the medical home concept for Medicare was included in the Tax and Health Care Relief Act, signed into law in late December by President Bush.

A private sector test of the concept is not far behind. The AAFP is working with IBM to launch a pilot project in Austin, Tex., later this year.

A major hurdle for widespread adoption of the medical home is the continuing shortage of primary care physicians. Dr. Kirk acknowledged that issue, but added, “We hope [the medical home] will make it more attractive to practice primary care.”

The ACP also wants to replace the SGR, gradually phasing it out over 5 years. During the transition, physicians should be given a baseline and positive annual update, Mr. Doherty said.

The ACP also is seeking an immediate expansion of the State Children's Health Insurance Program (SCHIP), echoing proposals advanced in early January by the Health Coverage Coalition for the Uninsured and the Children's Defense Fund (CDF). SCHIP is up for reauthorization this year.

The CDF is seeking to have all children who receive food stamps or school lunch assistance automatically enrolled in SCHIP. All children whose family incomes are below 300% of the poverty level would be eligible. Families with incomes over 300% could buy in to the program.

Under the Health Coverage Coalition's SCHIP proposal, parents would be urged to enroll children at the same time as they applied for food stamps and other programs, making it a “one-stop shop.” The federal government should also provide an estimated $45 billion over the next 5 years to cover all eligible children, and offer tax credits to families earning up to three times the federal poverty level, according to the coalition.

As many as 98% of uninsured children could be covered if these proposals are implemented, estimated Families USA Executive Director Ron Pollack in a briefing with reporters.

The Health Coverage Coalition includes 16 organizations that historically have parted ways on health insurance. AARP, AAFP, American Hospital Association, American Medical Association, American Public Health Association, America's Health Insurance Plans, Blue Cross and Blue Shield Association, Catholic Health Association, Families USA, Federation of American Hospitals, Healthcare Leadership Council, Johnson & Johnson, Kaiser Permanente, Pfizer, United Health Foundation, and the U.S. Chamber of Commerce.

About 47 million Americans, including 8–9 million children, are uninsured. The coalition has proposed expanding Medicaid to cover all adults with incomes below the poverty level, and offering tax credits for those with incomes between 100% and 300% of the poverty level.

The ACP has recommended that low-income Americans be given subsidies to buy insurance coverage through the Federal Employee Health Benefits Program.

In his State of the Union address, President Bush proposed tax breaks to help cover the uninsured, and more federal aid to states that are seeking to cover the uninsured. He also called for expansion of health savings accounts, allowing health insurance to be purchased across state lines, and medical liability reform.

Congress has already started to move. Sen. George Voinovich (R-Ohio) and Sen. Jeff Bingaman (D-N.M.) introduced a bill to provide states with grants to creatively cover the uninsured. Companion legislation was introduced in the House. Sen. Ron Wyden (D-Ore.) introduced a bill seeking to guarantee coverage for all Americans.

“We need more action and less debate,” said Dr. Reed Tuckson, senior vice president of the United Health Foundation, speaking at the Health Coverage Coalition briefing.

WASHINGTON — Sensing an opportunity to advance its agenda with the Democrat-controlled congress, the American College of Physicians has set its sights on implementation of the medical home concept by Medicare.

The ACP also is proposing to replace the sustainable growth rate (SGR) formula that governs how much Medicare pays physicians and to expand coverage for the uninsured—two issues high on the to-do list for many legislators and other physician groups, consumers, employers, and insurers.

An “advanced medical home”–in which primary care physicians would receive reimbursement for coordinating care in a way that addresses each patient's individual needs—is the best way to save money and improve patient care, ACP president Lynne Kirk said at a briefing with reporters last month.

“Payment systems used by Medicare, Medicaid, and most private payers reward physicians for the volume of procedures generated and number of office visits performed, rather than for ongoing, continuous, and longitudinal management of the patient's whole health, supported by systems-based practice improvements that lead to better results,” Dr. Kirk said.

The patient-centered medical home, initially conceived by the American Academy of Pediatrics, has been actively promoted by the AAP and the American Academy of Family Physicians (AAFP). The Veterans Affairs department is the only federal agency that supports a medical home model.

As described in a January 2006 ACP policy paper, the advanced medical home would offer a new approach to primary care delivery and payment.

The ACP is proposing that Medicare provide primary care physicians with a “bundled,” prospective, per-patient payment for serving as the locus of all care. One component would cover practice overhead; another element would cover coordination of care, including paperwork as well as telephone and e-mail conversations with other treating physicians and family members. Face-to-face visits would be covered by a fee-for-service component. Finally, there would be a pay-for-performance element, based on patient outcomes.

Only physician practices that have met the medical home criteria—such as having the ability to track patients and communicate with them electronically—would be eligible for the bundled payment, said Dr. Kirk, associate chief of the University of Texas Southwestern Medical School's general internal medicine division. The criteria are still being developed, said Robert Doherty, ACP's senior vice president for governmental affairs and public policy.

Practices that do not fulfill the criteria would be able to receive separate payments for specific care coordination services, Mr. Doherty told reporters.

It may sound like a return to capitation, but the medical home would avoid the pitfalls of that system, Mr. Doherty said. Under capitation, sicker patients could quickly eat up the monthly per-patient fee. Medical home payments would be risk adjusted to compensate for more severely ill patients, he said. Also, physicians will not be asked to be gatekeepers.

A 3-year, eight-state demonstration of the medical home concept for Medicare was included in the Tax and Health Care Relief Act, signed into law in late December by President Bush.

A private sector test of the concept is not far behind. The AAFP is working with IBM to launch a pilot project in Austin, Tex., later this year.

A major hurdle for widespread adoption of the medical home is the continuing shortage of primary care physicians. Dr. Kirk acknowledged that issue, but added, “We hope [the medical home] will make it more attractive to practice primary care.”

The ACP also wants to replace the SGR, gradually phasing it out over 5 years. During the transition, physicians should be given a baseline and positive annual update, Mr. Doherty said.

The ACP also is seeking an immediate expansion of the State Children's Health Insurance Program (SCHIP), echoing proposals advanced in early January by the Health Coverage Coalition for the Uninsured and the Children's Defense Fund (CDF). SCHIP is up for reauthorization this year.

The CDF is seeking to have all children who receive food stamps or school lunch assistance automatically enrolled in SCHIP. All children whose family incomes are below 300% of the poverty level would be eligible. Families with incomes over 300% could buy in to the program.

Under the Health Coverage Coalition's SCHIP proposal, parents would be urged to enroll children at the same time as they applied for food stamps and other programs, making it a “one-stop shop.” The federal government should also provide an estimated $45 billion over the next 5 years to cover all eligible children, and offer tax credits to families earning up to three times the federal poverty level, according to the coalition.

As many as 98% of uninsured children could be covered if these proposals are implemented, estimated Families USA Executive Director Ron Pollack in a briefing with reporters.

The Health Coverage Coalition includes 16 organizations that historically have parted ways on health insurance. AARP, AAFP, American Hospital Association, American Medical Association, American Public Health Association, America's Health Insurance Plans, Blue Cross and Blue Shield Association, Catholic Health Association, Families USA, Federation of American Hospitals, Healthcare Leadership Council, Johnson & Johnson, Kaiser Permanente, Pfizer, United Health Foundation, and the U.S. Chamber of Commerce.

About 47 million Americans, including 8–9 million children, are uninsured. The coalition has proposed expanding Medicaid to cover all adults with incomes below the poverty level, and offering tax credits for those with incomes between 100% and 300% of the poverty level.

The ACP has recommended that low-income Americans be given subsidies to buy insurance coverage through the Federal Employee Health Benefits Program.

In his State of the Union address, President Bush proposed tax breaks to help cover the uninsured, and more federal aid to states that are seeking to cover the uninsured. He also called for expansion of health savings accounts, allowing health insurance to be purchased across state lines, and medical liability reform.

Congress has already started to move. Sen. George Voinovich (R-Ohio) and Sen. Jeff Bingaman (D-N.M.) introduced a bill to provide states with grants to creatively cover the uninsured. Companion legislation was introduced in the House. Sen. Ron Wyden (D-Ore.) introduced a bill seeking to guarantee coverage for all Americans.

“We need more action and less debate,” said Dr. Reed Tuckson, senior vice president of the United Health Foundation, speaking at the Health Coverage Coalition briefing.

WASHINGTON — Sensing an opportunity to advance its agenda with the Democrat-controlled congress, the American College of Physicians has set its sights on implementation of the medical home concept by Medicare.

The ACP also is proposing to replace the sustainable growth rate (SGR) formula that governs how much Medicare pays physicians and to expand coverage for the uninsured—two issues high on the to-do list for many legislators and other physician groups, consumers, employers, and insurers.

An “advanced medical home”–in which primary care physicians would receive reimbursement for coordinating care in a way that addresses each patient's individual needs—is the best way to save money and improve patient care, ACP president Lynne Kirk said at a briefing with reporters last month.

“Payment systems used by Medicare, Medicaid, and most private payers reward physicians for the volume of procedures generated and number of office visits performed, rather than for ongoing, continuous, and longitudinal management of the patient's whole health, supported by systems-based practice improvements that lead to better results,” Dr. Kirk said.

The patient-centered medical home, initially conceived by the American Academy of Pediatrics, has been actively promoted by the AAP and the American Academy of Family Physicians (AAFP). The Veterans Affairs department is the only federal agency that supports a medical home model.

As described in a January 2006 ACP policy paper, the advanced medical home would offer a new approach to primary care delivery and payment.

The ACP is proposing that Medicare provide primary care physicians with a “bundled,” prospective, per-patient payment for serving as the locus of all care. One component would cover practice overhead; another element would cover coordination of care, including paperwork as well as telephone and e-mail conversations with other treating physicians and family members. Face-to-face visits would be covered by a fee-for-service component. Finally, there would be a pay-for-performance element, based on patient outcomes.

Only physician practices that have met the medical home criteria—such as having the ability to track patients and communicate with them electronically—would be eligible for the bundled payment, said Dr. Kirk, associate chief of the University of Texas Southwestern Medical School's general internal medicine division. The criteria are still being developed, said Robert Doherty, ACP's senior vice president for governmental affairs and public policy.

Practices that do not fulfill the criteria would be able to receive separate payments for specific care coordination services, Mr. Doherty told reporters.

It may sound like a return to capitation, but the medical home would avoid the pitfalls of that system, Mr. Doherty said. Under capitation, sicker patients could quickly eat up the monthly per-patient fee. Medical home payments would be risk adjusted to compensate for more severely ill patients, he said. Also, physicians will not be asked to be gatekeepers.

A 3-year, eight-state demonstration of the medical home concept for Medicare was included in the Tax and Health Care Relief Act, signed into law in late December by President Bush.

A private sector test of the concept is not far behind. The AAFP is working with IBM to launch a pilot project in Austin, Tex., later this year.

A major hurdle for widespread adoption of the medical home is the continuing shortage of primary care physicians. Dr. Kirk acknowledged that issue, but added, “We hope [the medical home] will make it more attractive to practice primary care.”

The ACP also wants to replace the SGR, gradually phasing it out over 5 years. During the transition, physicians should be given a baseline and positive annual update, Mr. Doherty said.

The ACP also is seeking an immediate expansion of the State Children's Health Insurance Program (SCHIP), echoing proposals advanced in early January by the Health Coverage Coalition for the Uninsured and the Children's Defense Fund (CDF). SCHIP is up for reauthorization this year.

The CDF is seeking to have all children who receive food stamps or school lunch assistance automatically enrolled in SCHIP. All children whose family incomes are below 300% of the poverty level would be eligible. Families with incomes over 300% could buy in to the program.

Under the Health Coverage Coalition's SCHIP proposal, parents would be urged to enroll children at the same time as they applied for food stamps and other programs, making it a “one-stop shop.” The federal government should also provide an estimated $45 billion over the next 5 years to cover all eligible children, and offer tax credits to families earning up to three times the federal poverty level, according to the coalition.

As many as 98% of uninsured children could be covered if these proposals are implemented, estimated Families USA Executive Director Ron Pollack in a briefing with reporters.

The Health Coverage Coalition includes 16 organizations that historically have parted ways on health insurance. AARP, AAFP, American Hospital Association, American Medical Association, American Public Health Association, America's Health Insurance Plans, Blue Cross and Blue Shield Association, Catholic Health Association, Families USA, Federation of American Hospitals, Healthcare Leadership Council, Johnson & Johnson, Kaiser Permanente, Pfizer, United Health Foundation, and the U.S. Chamber of Commerce.

About 47 million Americans, including 8–9 million children, are uninsured. The coalition has proposed expanding Medicaid to cover all adults with incomes below the poverty level, and offering tax credits for those with incomes between 100% and 300% of the poverty level.

The ACP has recommended that low-income Americans be given subsidies to buy insurance coverage through the Federal Employee Health Benefits Program.

In his State of the Union address, President Bush proposed tax breaks to help cover the uninsured, and more federal aid to states that are seeking to cover the uninsured. He also called for expansion of health savings accounts, allowing health insurance to be purchased across state lines, and medical liability reform.

Congress has already started to move. Sen. George Voinovich (R-Ohio) and Sen. Jeff Bingaman (D-N.M.) introduced a bill to provide states with grants to creatively cover the uninsured. Companion legislation was introduced in the House. Sen. Ron Wyden (D-Ore.) introduced a bill seeking to guarantee coverage for all Americans.

“We need more action and less debate,” said Dr. Reed Tuckson, senior vice president of the United Health Foundation, speaking at the Health Coverage Coalition briefing.

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total.

The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005.

The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004.

Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers.

“PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion.

At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%.

Although Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total.

The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005.

The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004.

Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers.

“PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion.

At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%.

Although Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total.

The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005.

The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004.

Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers.

“PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion.

At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%.

Although Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access.

“Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

WASHINGTON — As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to a report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities. Those minority beneficiaries generally are in poorer health, according to NASI.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies.

The panel recommended that the federal government start addressing gaps in care by creating incentives to improve quality. Incentives should be carefully structured to avoid exacerbating disparities, however, said Mr. Vladeck.

To increase access, Medicare should ensure that minorities are enrolled in Medicare supplemental insurance—or Medigap—plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs, according to the panel.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses—from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on 94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

Although more plans are collecting data, “we think we have much more to do,” Ms. Ignani said, adding that with more data, health insurers can focus on how to eliminate disparities. But barriers to data collection exist. Six states—California, Maryland, New Hampshire, New Jersey, New York, and Pennsylvania—have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to some concern that data collection might be seen as illegal. But a June 2006 analysis by the George Washington University School of Public Health and Health Services found that not only is it legal for insurers to collect and report health quality data by race and ethnicity, but that it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance in this area, but have not gotten a response yet, according to Sara Rosenbaum, chairman of the university's health policy department.

WASHINGTON — As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to a report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities. Those minority beneficiaries generally are in poorer health, according to NASI.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies.

The panel recommended that the federal government start addressing gaps in care by creating incentives to improve quality. Incentives should be carefully structured to avoid exacerbating disparities, however, said Mr. Vladeck.

To increase access, Medicare should ensure that minorities are enrolled in Medicare supplemental insurance—or Medigap—plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs, according to the panel.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses—from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on 94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

Although more plans are collecting data, “we think we have much more to do,” Ms. Ignani said, adding that with more data, health insurers can focus on how to eliminate disparities. But barriers to data collection exist. Six states—California, Maryland, New Hampshire, New Jersey, New York, and Pennsylvania—have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to some concern that data collection might be seen as illegal. But a June 2006 analysis by the George Washington University School of Public Health and Health Services found that not only is it legal for insurers to collect and report health quality data by race and ethnicity, but that it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance in this area, but have not gotten a response yet, according to Sara Rosenbaum, chairman of the university's health policy department.

WASHINGTON — As one of the biggest and most influential payers in medicine, Medicare should use its clout to help reduce and eliminate the disparities in care for racial and ethnic minorities, according to a report from an independent panel of the National Academy of Social Insurance.

The report, along with an updated survey on health plans' progress in identifying disparities, was released at a press briefing sponsored by the journal Health Affairs. NASI, a Washington-based nonprofit organization of experts in Social Security, Medicare and social insurance, made 17 recommendations on how Medicare can improve quality of, and access to care for minorities, educate health care providers in cultural competence, and hold them accountable for reducing disparities.

About 9 million of Medicare's 42 million beneficiaries are minorities. Those minority beneficiaries generally are in poorer health, according to NASI.

Medicare is uniquely positioned to influence practice patterns, and has a duty to ensure that its recipients get care on a fair and equitable basis, said Bruce C. Vladeck, Ph.D., chairman of the NASI panel and Interim President of the University of Medicine and Dentistry of New Jersey, Newark.

NASI's report was funded by the Robert Wood Johnson Foundation, the California Endowment, and the Joint Center for Political and Economic Studies.

The panel recommended that the federal government start addressing gaps in care by creating incentives to improve quality. Incentives should be carefully structured to avoid exacerbating disparities, however, said Mr. Vladeck.

To increase access, Medicare should ensure that minorities are enrolled in Medicare supplemental insurance—or Medigap—plans, said the report. Health systems should increase the number of minority providers and staff, and enhance cultural competence training. Providers should collect data that will help identify minorities and assess their special needs, according to the panel.

Health plans already collect such data, according to Karen Ignani, president and CEO of America's Health Insurance Plans. AHIP, with funding from the Robert Wood Johnson Foundation, queried 260 plans on how and why they collect data on minority enrollees. According to the responses—from 156 plans, covering 87 million people—there has been a 500% increase in data collection since a previous query in 2001, said Ms. Ignani.

Overall, 58.2 million of the 87 million enrollees are in plans that collect race and ethnicity data. Medicare and Medicaid plans were most likely to collect that data. Race and ethnicity data were collected on 94% of enrollees in Medicare and Medicaide plans, compared with 63% of enrollees in commercial plans.

Although more plans are collecting data, “we think we have much more to do,” Ms. Ignani said, adding that with more data, health insurers can focus on how to eliminate disparities. But barriers to data collection exist. Six states—California, Maryland, New Hampshire, New Jersey, New York, and Pennsylvania—have laws or rules that prevent insurers from collecting race and ethnicity data, although only as part of an application process. However, those laws have led to the mistaken perception that any data collection is illegal, said Ms. Ignani.

Title VI of the federal 1964 Civil Rights Act prohibits discrimination on racial or ethnic grounds, which has led to some concern that data collection might be seen as illegal. But a June 2006 analysis by the George Washington University School of Public Health and Health Services found that not only is it legal for insurers to collect and report health quality data by race and ethnicity, but that it might be seen as proof of complying with Title VI when it is used to improve quality of care. The researchers asked the Department of Health and Human Services' Office of Civil Rights to issue guidance in this area, but have not gotten a response yet, according to Sara Rosenbaum, chairman of the university's health policy department.

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005–$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%–-were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies also contributed to the slowdown in drug spending. Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion. The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005–$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%–-were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies also contributed to the slowdown in drug spending. Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion. The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005–$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%–-were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies also contributed to the slowdown in drug spending. Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, which was a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion. The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped.

However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

ELSEVIER GLOBAL MEDICAL NEWS

The Food and Drug Administration on January 11 proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and will collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire Sept. 30.

Under PDUFA, the FDA charges prescription drugmakers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates. “The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal.

“The PDUFA recommendations announced today are a win-win,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement. “If enacted, they will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs.”

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. Some $20 million would go to cover expenses incurred in the last few years to facilitate drugmakers' requests for formal meetings about their products. About $4 million would be devoted to improving information technology for drug reviews, according to the FDA proposal.

FDA is proposing to create a new user fee program solely to fund the review of direct-to-consumer television ads. Companies can now voluntarily submit their ads for review, but the FDA has not been able to keep up with the growing workload, said Dr. Galson.

The Food and Drug Administration on January 11 proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and will collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire Sept. 30.

Under PDUFA, the FDA charges prescription drugmakers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates. “The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal.

“The PDUFA recommendations announced today are a win-win,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement. “If enacted, they will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs.”

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. Some $20 million would go to cover expenses incurred in the last few years to facilitate drugmakers' requests for formal meetings about their products. About $4 million would be devoted to improving information technology for drug reviews, according to the FDA proposal.

FDA is proposing to create a new user fee program solely to fund the review of direct-to-consumer television ads. Companies can now voluntarily submit their ads for review, but the FDA has not been able to keep up with the growing workload, said Dr. Galson.

The Food and Drug Administration on January 11 proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and will collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire Sept. 30.

Under PDUFA, the FDA charges prescription drugmakers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates. “The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal.

“The PDUFA recommendations announced today are a win-win,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement. “If enacted, they will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs.”

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. Some $20 million would go to cover expenses incurred in the last few years to facilitate drugmakers' requests for formal meetings about their products. About $4 million would be devoted to improving information technology for drug reviews, according to the FDA proposal.

FDA is proposing to create a new user fee program solely to fund the review of direct-to-consumer television ads. Companies can now voluntarily submit their ads for review, but the FDA has not been able to keep up with the growing workload, said Dr. Galson.

ACC 2007 Congressional Agenda

Replacing the sustainable growth rate tops the legislative agenda at the American College of Cardiology, Dr. Jack Lewin, the new college CEO, said at a briefing last month. “We have to look for a stable approach” to physician payment, said Dr. Lewin, adding that it's “a big challenge.” When asked about a draft report on alternatives from the Medicare Payment Advisory Commission (MedPAC) that is in circulation, he said, “What I've read doesn't inspire me.” Dr. Lewin, formerly CEO of the California Medical Association, said the ACC recruited him largely because of his experience with benchmarking and pay for performance. Working with Congress and MedPAC on developing “reasonable” quality reporting measures will also be a priority for ACC, along with promoting interoperability of health information technology and improving access to care, he said.

Heart Disease Still No. 1 Killer

The American Heart Association's latest statistics show that heart disease is still the top killer in the United States, with stroke coming in at no. 3. The AHA's 2007 report contains data from 2004, the most recent year for which statistics were available. Cardiovascular disease is the underlying cause for 36% of deaths in America, according to the report. Incidence of stroke, which affects 700,000 people a year, is due to rise precipitously: By 2032, an estimated 275,000 Americans will die from ischemic stroke, a 100% increase from 2000, the AHA said. The AHA wants more patients and physicians to get the message that at least as many women are affected by cardiovascular disease as men. Each year, about 461,200 women die from cardiovascular disease, compared with 410,400 men. At an AHA-sponsored meeting with reporters last month, Dr. Susan Bennett, director of the Women's Heart Program at George Washington University Hospital, Washington, said that while the death rate for men has declined 10% since 1979, it has stayed the same or increased for women. Dr. Bennett is leading the AHA effort to secure congressional passage of the HEART for Women Act, which had 189 sponsors in the last Congress. The bill will be reintroduced this month, according to the AHA.

Unique New Drugs on Decline

The Food and Drug Administration only approved 18 new molecular entities—including 4 biologics therapies and 4 new vaccines—last year, on par with the previous year, but close to a historic low. Throughout the 1980s and 1990s, the agency approved at least 20–30 NMEs annually. The paltry number of approvals and a Government Accountability Office report issued in December may point to a decline in new drug development, according to Rep. Henry Waxman (D-Calif.), Sen. Richard Durbin (D-Ill.), and Sen. Edward Kennedy (D-Mass.). The legislators requested the GAO report, which found that huge increases in drug industry research and development from 1993–2004 were not accompanied by a similar rise in new drug applications to the FDA. From 1993–2004, research and development spending increased 147%, while NME applications increased by only 7%. “These submission trends indicate that the productivity of research and development investments has declined,” the GAO report said. Further, over the same period, FDA has continued to approve most submissions, but the number approved overall has declined.

Cardiac Cath Injection Code Added

The Centers for Medicare and Medicaid Services will now pay national rates for two cardiac catheterization injection codes, CPT 93539 and CPT 93540. The ACC and the Society for Cardiovascular Angiography and Interventions prevailed upon CMS to make an emergency update to the 2007 Medicare physician fee schedule. The two codes previously were priced by local Medicare carriers. Now they have been assigned relative value units, allowing them to be priced nationally, according to ACC. Local Medicare carriers can still price the technical component of the following injection codes, however: 93501, 93533, 93555, and 93556.

Part D Battle Begins in Congress

As promised during the midterm elections, House Democrats began work immediately on tweaking Medicare's Part D drug coverage. Rep. John Dingell (D-Mich.) along with 189 colleagues introduced H.R. 4, the Medicare Prescription Drug Price Negotiation Act of 2007, which would require the Health and Human Services department to negotiate prices with drugmakers. The legislation was passed by the House in January by a vote of 255–170. The Senate Finance Committee held hearings Jan. 11 to investigate the impact of price negotiations. If the legislation is enacted as currently written, new prices would go into effect for the plan year beginning Jan. 1, 2008.

FDA Panels Held Less Often

An advocacy group is charging that the FDA is holding outside advisory panel meetings less often than it did a decade ago. Public Citizen's Health Research Group analyzed the 275 advisory committee meetings held from 1997 to 2006. In 1998 and 1999, almost half of approved NMEs were preceded by panel meetings; from 2000 to 2006, only 24% (35) of the 147 NMEs approved had a committee meeting first, according to Public Citizen, which put its conclusions in a letter published in the Dec. 23 issue of the Lancet. The group also found that the FDA did not present its scientific opinion as a counterbalance to the drug maker's presentation at 18%, or 49 of the 275 meetings. The FDA overruled the panel conclusions 28% of the time, “a figure higher than is generally assumed,” according to Public Citizen.

ACC 2007 Congressional Agenda

Replacing the sustainable growth rate tops the legislative agenda at the American College of Cardiology, Dr. Jack Lewin, the new college CEO, said at a briefing last month. “We have to look for a stable approach” to physician payment, said Dr. Lewin, adding that it's “a big challenge.” When asked about a draft report on alternatives from the Medicare Payment Advisory Commission (MedPAC) that is in circulation, he said, “What I've read doesn't inspire me.” Dr. Lewin, formerly CEO of the California Medical Association, said the ACC recruited him largely because of his experience with benchmarking and pay for performance. Working with Congress and MedPAC on developing “reasonable” quality reporting measures will also be a priority for ACC, along with promoting interoperability of health information technology and improving access to care, he said.

Heart Disease Still No. 1 Killer

The American Heart Association's latest statistics show that heart disease is still the top killer in the United States, with stroke coming in at no. 3. The AHA's 2007 report contains data from 2004, the most recent year for which statistics were available. Cardiovascular disease is the underlying cause for 36% of deaths in America, according to the report. Incidence of stroke, which affects 700,000 people a year, is due to rise precipitously: By 2032, an estimated 275,000 Americans will die from ischemic stroke, a 100% increase from 2000, the AHA said. The AHA wants more patients and physicians to get the message that at least as many women are affected by cardiovascular disease as men. Each year, about 461,200 women die from cardiovascular disease, compared with 410,400 men. At an AHA-sponsored meeting with reporters last month, Dr. Susan Bennett, director of the Women's Heart Program at George Washington University Hospital, Washington, said that while the death rate for men has declined 10% since 1979, it has stayed the same or increased for women. Dr. Bennett is leading the AHA effort to secure congressional passage of the HEART for Women Act, which had 189 sponsors in the last Congress. The bill will be reintroduced this month, according to the AHA.

Unique New Drugs on Decline

The Food and Drug Administration only approved 18 new molecular entities—including 4 biologics therapies and 4 new vaccines—last year, on par with the previous year, but close to a historic low. Throughout the 1980s and 1990s, the agency approved at least 20–30 NMEs annually. The paltry number of approvals and a Government Accountability Office report issued in December may point to a decline in new drug development, according to Rep. Henry Waxman (D-Calif.), Sen. Richard Durbin (D-Ill.), and Sen. Edward Kennedy (D-Mass.). The legislators requested the GAO report, which found that huge increases in drug industry research and development from 1993–2004 were not accompanied by a similar rise in new drug applications to the FDA. From 1993–2004, research and development spending increased 147%, while NME applications increased by only 7%. “These submission trends indicate that the productivity of research and development investments has declined,” the GAO report said. Further, over the same period, FDA has continued to approve most submissions, but the number approved overall has declined.

Cardiac Cath Injection Code Added

The Centers for Medicare and Medicaid Services will now pay national rates for two cardiac catheterization injection codes, CPT 93539 and CPT 93540. The ACC and the Society for Cardiovascular Angiography and Interventions prevailed upon CMS to make an emergency update to the 2007 Medicare physician fee schedule. The two codes previously were priced by local Medicare carriers. Now they have been assigned relative value units, allowing them to be priced nationally, according to ACC. Local Medicare carriers can still price the technical component of the following injection codes, however: 93501, 93533, 93555, and 93556.

Part D Battle Begins in Congress

As promised during the midterm elections, House Democrats began work immediately on tweaking Medicare's Part D drug coverage. Rep. John Dingell (D-Mich.) along with 189 colleagues introduced H.R. 4, the Medicare Prescription Drug Price Negotiation Act of 2007, which would require the Health and Human Services department to negotiate prices with drugmakers. The legislation was passed by the House in January by a vote of 255–170. The Senate Finance Committee held hearings Jan. 11 to investigate the impact of price negotiations. If the legislation is enacted as currently written, new prices would go into effect for the plan year beginning Jan. 1, 2008.

FDA Panels Held Less Often

An advocacy group is charging that the FDA is holding outside advisory panel meetings less often than it did a decade ago. Public Citizen's Health Research Group analyzed the 275 advisory committee meetings held from 1997 to 2006. In 1998 and 1999, almost half of approved NMEs were preceded by panel meetings; from 2000 to 2006, only 24% (35) of the 147 NMEs approved had a committee meeting first, according to Public Citizen, which put its conclusions in a letter published in the Dec. 23 issue of the Lancet. The group also found that the FDA did not present its scientific opinion as a counterbalance to the drug maker's presentation at 18%, or 49 of the 275 meetings. The FDA overruled the panel conclusions 28% of the time, “a figure higher than is generally assumed,” according to Public Citizen.

ACC 2007 Congressional Agenda

Replacing the sustainable growth rate tops the legislative agenda at the American College of Cardiology, Dr. Jack Lewin, the new college CEO, said at a briefing last month. “We have to look for a stable approach” to physician payment, said Dr. Lewin, adding that it's “a big challenge.” When asked about a draft report on alternatives from the Medicare Payment Advisory Commission (MedPAC) that is in circulation, he said, “What I've read doesn't inspire me.” Dr. Lewin, formerly CEO of the California Medical Association, said the ACC recruited him largely because of his experience with benchmarking and pay for performance. Working with Congress and MedPAC on developing “reasonable” quality reporting measures will also be a priority for ACC, along with promoting interoperability of health information technology and improving access to care, he said.

Heart Disease Still No. 1 Killer

The American Heart Association's latest statistics show that heart disease is still the top killer in the United States, with stroke coming in at no. 3. The AHA's 2007 report contains data from 2004, the most recent year for which statistics were available. Cardiovascular disease is the underlying cause for 36% of deaths in America, according to the report. Incidence of stroke, which affects 700,000 people a year, is due to rise precipitously: By 2032, an estimated 275,000 Americans will die from ischemic stroke, a 100% increase from 2000, the AHA said. The AHA wants more patients and physicians to get the message that at least as many women are affected by cardiovascular disease as men. Each year, about 461,200 women die from cardiovascular disease, compared with 410,400 men. At an AHA-sponsored meeting with reporters last month, Dr. Susan Bennett, director of the Women's Heart Program at George Washington University Hospital, Washington, said that while the death rate for men has declined 10% since 1979, it has stayed the same or increased for women. Dr. Bennett is leading the AHA effort to secure congressional passage of the HEART for Women Act, which had 189 sponsors in the last Congress. The bill will be reintroduced this month, according to the AHA.

Unique New Drugs on Decline

The Food and Drug Administration only approved 18 new molecular entities—including 4 biologics therapies and 4 new vaccines—last year, on par with the previous year, but close to a historic low. Throughout the 1980s and 1990s, the agency approved at least 20–30 NMEs annually. The paltry number of approvals and a Government Accountability Office report issued in December may point to a decline in new drug development, according to Rep. Henry Waxman (D-Calif.), Sen. Richard Durbin (D-Ill.), and Sen. Edward Kennedy (D-Mass.). The legislators requested the GAO report, which found that huge increases in drug industry research and development from 1993–2004 were not accompanied by a similar rise in new drug applications to the FDA. From 1993–2004, research and development spending increased 147%, while NME applications increased by only 7%. “These submission trends indicate that the productivity of research and development investments has declined,” the GAO report said. Further, over the same period, FDA has continued to approve most submissions, but the number approved overall has declined.

Cardiac Cath Injection Code Added

The Centers for Medicare and Medicaid Services will now pay national rates for two cardiac catheterization injection codes, CPT 93539 and CPT 93540. The ACC and the Society for Cardiovascular Angiography and Interventions prevailed upon CMS to make an emergency update to the 2007 Medicare physician fee schedule. The two codes previously were priced by local Medicare carriers. Now they have been assigned relative value units, allowing them to be priced nationally, according to ACC. Local Medicare carriers can still price the technical component of the following injection codes, however: 93501, 93533, 93555, and 93556.

Part D Battle Begins in Congress

As promised during the midterm elections, House Democrats began work immediately on tweaking Medicare's Part D drug coverage. Rep. John Dingell (D-Mich.) along with 189 colleagues introduced H.R. 4, the Medicare Prescription Drug Price Negotiation Act of 2007, which would require the Health and Human Services department to negotiate prices with drugmakers. The legislation was passed by the House in January by a vote of 255–170. The Senate Finance Committee held hearings Jan. 11 to investigate the impact of price negotiations. If the legislation is enacted as currently written, new prices would go into effect for the plan year beginning Jan. 1, 2008.

FDA Panels Held Less Often

An advocacy group is charging that the FDA is holding outside advisory panel meetings less often than it did a decade ago. Public Citizen's Health Research Group analyzed the 275 advisory committee meetings held from 1997 to 2006. In 1998 and 1999, almost half of approved NMEs were preceded by panel meetings; from 2000 to 2006, only 24% (35) of the 147 NMEs approved had a committee meeting first, according to Public Citizen, which put its conclusions in a letter published in the Dec. 23 issue of the Lancet. The group also found that the FDA did not present its scientific opinion as a counterbalance to the drug maker's presentation at 18%, or 49 of the 275 meetings. The FDA overruled the panel conclusions 28% of the time, “a figure higher than is generally assumed,” according to Public Citizen.

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped. However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access. “Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped. However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access. “Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

Overall health spending growth for 2005 hit the lowest level since 1999, largely because of a continuing slowdown in retail prescription drug sales and an increased use of generic drugs, according to a report issued by the Centers for Medicare and Medicaid Services in January.

The CMS report, the official government tally, found that overall, health care spending grew 6.9% in 2005, compared with 7.2% in 2004 and 8.1% in 2003.

“It is unclear whether this is temporary or indicative of a longer-term trend,” lead author Aaron Catlin, a CMS economist, said in a statement.

Even with the slowdown, the United States spent slightly more per capita in 2005—$6,697 per person—than in 2004, when expenditures were $6,322 per person.

The percentage of personal income devoted to health care is rising as well. Out-of-pocket spending grew from $235 billion in 2004 to $249 billion in 2005, with prescription drugs accounting for 20% of that expense.

Total spending in 2005 hit $2 trillion, according to the CMS (Health Affairs 2007;26:142–53, and Health Affairs 2007;26:249–57).

Medicare was the biggest spender, accounting for $342 billion of the $2 trillion total. The figure does not include the Part D drug benefit, which did not begin until 2006. Medicaid spent $311 billion in 2005, a 7.2% increase from the previous year. But that growth rate was on par with 2004, when spending rose 7.5%.

Cost-containment efforts by the Medicaid program helped hold down the nation's overall drug bill, according to the report. For Medicaid, drug spending grew only 2.8% in 2005. The nation's total drug tab in 2005 was $200 billion, an increase of 5.8% over the previous year, when drug spending rose 8.6%.

Most drugs—about 73%—were covered by private sources in 2005. Private spending grew only 6%, down from 7.2% in 2004. Drug price increases remained stable from 2004 to 2005, at about 3.5% overall and 6% for brand names.

The pharmacy benefit management industry took credit for helping to keep a lid on spending, noting that industry tools such as formularies, rebates, generic drugs, and mail-service are being used by both private and public payers. “PBMs have played a huge role in helping to drive prescription drug trends to an historic low,” Mark Merritt, president of the Pharmaceutical Care Management Association, said in a statement.

Both CMS and America's Health Insurance Plans said that increasing use of multitiered drug formularies—which require consumers to pay more for higher-cost medicines—also contributed to the slowdown in drug spending.

Spending on physician and clinical services hit $421 billion in 2005, which made it the second biggest category of spending, after hospitals. That represented a 7% increase from 2004, when spending rose 7.4%. Medicare, however, spent 9.5% more on physician services in 2005, a slight decline from the 10.4% growth in 2004.

Hospital spending grew about 8% in 2005 and 2004, hitting $611 billion.

The fastest growing component of health spending was freestanding home health care, rising 11% in 2005 to $47.5 billion. At least three-quarters of home care is covered by public payers.

Spending for nursing home care grew 6% in 2005 to $121 billion. That was a larger increase than in the previous year, when spending rose 4%. Though Medicaid is the largest payer, accounting for 44% of funding for nursing home care, its expenditures increased by only 4% in 2005, compared with Medicare's 12% rise.

Growth in the cost of health insurance premiums also declined. In 2005, premiums increased 6.6%, compared with 7.9% in 2004. It was the third consecutive year that premium increases dropped. However, the CMS researchers noted that employees are still paying more for their health care through higher coinsurance and deductibles and other out-of-pocket costs.

Consumers are taking a big hit on health costs, agreed Karen Davis, president of the Commonwealth Fund, a private nonpartisan foundation that is working toward a health system that offers better quality and more access. “Even the slower spending growth of 6.9% continues to outpace inflation and growth in wages for the average worker in the United States,” Ms. Davis said in a statement.

ELSEVIER GLOBAL MEDICAL NEWS

The Food and Drug Administration said it will beef up oversight of prescription drug safety, with a particular focus on risks and benefits once a product has been launched into the marketplace.

The initiatives were announced in January in a long-awaited response to last September's Institute of Medicine critique of pharmaceutical safety monitoring practices at the agency.

The FDA said it had taken a close look at the IOM's 25 recommendations, and that it would focus its efforts on three major areas:

1. Strengthening the science used during product reviews and finding new tools to detect safety issues from preclinical testing through postmarketing.

2. Improving communications, especially about risk, to patients, physicians, and other interested parties.

3. Improving management practices.

The IOM criticized an agency culture that it saw as too concentrated on drug approval at the expense of product safety.

Some of the FDA initiatives are already underway. Others were published in the Federal Register as part of recommendations for the reauthorization of the Prescription Drug User Fee Act. Under the next PDUFA law, which if enacted would begin in fiscal 2008, the FDA aims to collect $29 million from drug makers over 5 years specifically for post-marketing safety programs.

Key among the new initiatives announced in late January is a “report card” on the postmarketing safety of new molecular entities. The FDA has proposed a pilot feasibility study this year. These periodic, regularly scheduled reports would encompass data from the Adverse Events Reporting System (AERS), epidemiologic studies, postmarketing clinical trials, and from “mining” of various other databases. The first report would come 18 months after a drug's launch. The goal of this effort is “to identify potential safety concerns early in the product life cycle,” according to the FDA.

The FDA also proposed sharing data more often with other agencies, and said it was already collaborating with the Agency for Health Care Quality and Research, the Centers for Disease Control and Prevention, and the Veterans Affairs department. The VA will provide real-world data on how its patients use pharmaceuticals and medical devices.

To address criticism that the FDA has not done a good job of communicating what it knows about a drug's risks on a timely basis, the agency is putting together a new advisory committee. The IOM panel had thought it would take new legislation to establish a risk communications committee, but the agency said it could—and would—move quickly to establish such a panel.

The FDA also said it would hold a public meeting in early March to explore the creation of a nationwide public-private medical product safety network. The agency envisions a network that would let both health care providers and regulators rapidly collect and exchange information about adverse events—and would do so at the point of care to help providers make better-informed treatment decisions.

American Medical Association board member Dr. Edward Langston said the AMA generally supported FDA's proposals. “The AMA agrees that the approaches used to communicate information to patients about the risks associated with drug products need significant improvement,” said Dr. Langston in a statement.

However, longtime FDA critics in Congress said the agency had not gone far enough.

“Today's report is thoughtful, and provides important recommendations for administrative action, but only legislation can give the FDA the tools it needs to ensure that the agency is the gold standard for safety,” said Sen. Edward M. Kennedy (D-Mass.), who, along with Sen. Michael Enzi (R-Wyo.) soon will introduce a bill to further overhaul the agency's postmarketing safety program.

Sen. Christopher J. Dodd (D-Conn.) said that he and Sen. Chuck Grassley (R-Iowa) were also introducing a bill that would “revamp and prioritize the postmarket surveillance process within the Food and Drug Administration.”

That bill, called the Food and Drug Administration Safety Act, would establish a Center for Postmarket Evaluation and Research for Drugs and Biologics.

“Congress will act on FDA-related legislation this year, and meaningful structural reforms to the agency need to be a part of what Congress does with regard to drug safety,” said Sen. Grassley in a statement.

The Food and Drug Administration said it will beef up oversight of prescription drug safety, with a particular focus on risks and benefits once a product has been launched into the marketplace.

The initiatives were announced in January in a long-awaited response to last September's Institute of Medicine critique of pharmaceutical safety monitoring practices at the agency.

The FDA said it had taken a close look at the IOM's 25 recommendations, and that it would focus its efforts on three major areas:

1. Strengthening the science used during product reviews and finding new tools to detect safety issues from preclinical testing through postmarketing.

2. Improving communications, especially about risk, to patients, physicians, and other interested parties.

3. Improving management practices.

The IOM criticized an agency culture that it saw as too concentrated on drug approval at the expense of product safety.

Some of the FDA initiatives are already underway. Others were published in the Federal Register as part of recommendations for the reauthorization of the Prescription Drug User Fee Act. Under the next PDUFA law, which if enacted would begin in fiscal 2008, the FDA aims to collect $29 million from drug makers over 5 years specifically for post-marketing safety programs.

Key among the new initiatives announced in late January is a “report card” on the postmarketing safety of new molecular entities. The FDA has proposed a pilot feasibility study this year. These periodic, regularly scheduled reports would encompass data from the Adverse Events Reporting System (AERS), epidemiologic studies, postmarketing clinical trials, and from “mining” of various other databases. The first report would come 18 months after a drug's launch. The goal of this effort is “to identify potential safety concerns early in the product life cycle,” according to the FDA.

The FDA also proposed sharing data more often with other agencies, and said it was already collaborating with the Agency for Health Care Quality and Research, the Centers for Disease Control and Prevention, and the Veterans Affairs department. The VA will provide real-world data on how its patients use pharmaceuticals and medical devices.

To address criticism that the FDA has not done a good job of communicating what it knows about a drug's risks on a timely basis, the agency is putting together a new advisory committee. The IOM panel had thought it would take new legislation to establish a risk communications committee, but the agency said it could—and would—move quickly to establish such a panel.

The FDA also said it would hold a public meeting in early March to explore the creation of a nationwide public-private medical product safety network. The agency envisions a network that would let both health care providers and regulators rapidly collect and exchange information about adverse events—and would do so at the point of care to help providers make better-informed treatment decisions.

American Medical Association board member Dr. Edward Langston said the AMA generally supported FDA's proposals. “The AMA agrees that the approaches used to communicate information to patients about the risks associated with drug products need significant improvement,” said Dr. Langston in a statement.

However, longtime FDA critics in Congress said the agency had not gone far enough.

“Today's report is thoughtful, and provides important recommendations for administrative action, but only legislation can give the FDA the tools it needs to ensure that the agency is the gold standard for safety,” said Sen. Edward M. Kennedy (D-Mass.), who, along with Sen. Michael Enzi (R-Wyo.) soon will introduce a bill to further overhaul the agency's postmarketing safety program.

Sen. Christopher J. Dodd (D-Conn.) said that he and Sen. Chuck Grassley (R-Iowa) were also introducing a bill that would “revamp and prioritize the postmarket surveillance process within the Food and Drug Administration.”

That bill, called the Food and Drug Administration Safety Act, would establish a Center for Postmarket Evaluation and Research for Drugs and Biologics.

“Congress will act on FDA-related legislation this year, and meaningful structural reforms to the agency need to be a part of what Congress does with regard to drug safety,” said Sen. Grassley in a statement.

The Food and Drug Administration said it will beef up oversight of prescription drug safety, with a particular focus on risks and benefits once a product has been launched into the marketplace.

The initiatives were announced in January in a long-awaited response to last September's Institute of Medicine critique of pharmaceutical safety monitoring practices at the agency.

The FDA said it had taken a close look at the IOM's 25 recommendations, and that it would focus its efforts on three major areas:

1. Strengthening the science used during product reviews and finding new tools to detect safety issues from preclinical testing through postmarketing.

2. Improving communications, especially about risk, to patients, physicians, and other interested parties.

3. Improving management practices.

The IOM criticized an agency culture that it saw as too concentrated on drug approval at the expense of product safety.

Some of the FDA initiatives are already underway. Others were published in the Federal Register as part of recommendations for the reauthorization of the Prescription Drug User Fee Act. Under the next PDUFA law, which if enacted would begin in fiscal 2008, the FDA aims to collect $29 million from drug makers over 5 years specifically for post-marketing safety programs.

Key among the new initiatives announced in late January is a “report card” on the postmarketing safety of new molecular entities. The FDA has proposed a pilot feasibility study this year. These periodic, regularly scheduled reports would encompass data from the Adverse Events Reporting System (AERS), epidemiologic studies, postmarketing clinical trials, and from “mining” of various other databases. The first report would come 18 months after a drug's launch. The goal of this effort is “to identify potential safety concerns early in the product life cycle,” according to the FDA.

The FDA also proposed sharing data more often with other agencies, and said it was already collaborating with the Agency for Health Care Quality and Research, the Centers for Disease Control and Prevention, and the Veterans Affairs department. The VA will provide real-world data on how its patients use pharmaceuticals and medical devices.

To address criticism that the FDA has not done a good job of communicating what it knows about a drug's risks on a timely basis, the agency is putting together a new advisory committee. The IOM panel had thought it would take new legislation to establish a risk communications committee, but the agency said it could—and would—move quickly to establish such a panel.

The FDA also said it would hold a public meeting in early March to explore the creation of a nationwide public-private medical product safety network. The agency envisions a network that would let both health care providers and regulators rapidly collect and exchange information about adverse events—and would do so at the point of care to help providers make better-informed treatment decisions.

American Medical Association board member Dr. Edward Langston said the AMA generally supported FDA's proposals. “The AMA agrees that the approaches used to communicate information to patients about the risks associated with drug products need significant improvement,” said Dr. Langston in a statement.

However, longtime FDA critics in Congress said the agency had not gone far enough.

“Today's report is thoughtful, and provides important recommendations for administrative action, but only legislation can give the FDA the tools it needs to ensure that the agency is the gold standard for safety,” said Sen. Edward M. Kennedy (D-Mass.), who, along with Sen. Michael Enzi (R-Wyo.) soon will introduce a bill to further overhaul the agency's postmarketing safety program.

Sen. Christopher J. Dodd (D-Conn.) said that he and Sen. Chuck Grassley (R-Iowa) were also introducing a bill that would “revamp and prioritize the postmarket surveillance process within the Food and Drug Administration.”

That bill, called the Food and Drug Administration Safety Act, would establish a Center for Postmarket Evaluation and Research for Drugs and Biologics.

“Congress will act on FDA-related legislation this year, and meaningful structural reforms to the agency need to be a part of what Congress does with regard to drug safety,” said Sen. Grassley in a statement.

The Food and Drug Administration on Jan. 11 proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and planned to collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire on Sept. 30, 2007.

Under PDUFA, the FDA charges prescription drug makers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates.

“The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal.

“The PDUFA recommendations announced today are a win-win,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement. “If enacted, they will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs.”

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. With those funds, the agency said it could hire 82 new employees, and acquire the best tools and databases for improving the detection and analysis of safety signals. The agency also will institute new programs to reduce medication errors, in response to an Institute of Medicine report issued in September 2006 calling for drug safety improvements at the agency.

Some $20 million would go to cover expenses incurred in the last few years to facilitate drug makers' requests for formal meetings about their products. Sheila Mullin, FDA assistant commissioner for planning, said that in fiscal 2005, the agency held 1,800 formal meetings at manufacturers' request.

About $4 million would be devoted to improving information technology for drug reviews, with the goal of moving to “an all-electronic environment,” according to the FDA proposal.

“Reviewing data electronically helps to improve the efficiency of the drug approval process and expedites getting important new drugs to the patients who need them,” said Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, in a statement.

The agency is proposing to create a new user fee program solely to fund the review of direct-to-consumer television ads. Currently, companies can voluntarily submit their ads for review, but the FDA has not been able to keep up with the growing workload, said Dr. Galson.

The FDA anticipates charging $6 million in the first year of the program, which would subsidize the hiring of 27 new employees. Another $6 million would be collected for a reserve fund, to cope with unanticipated increases in volume of advertisements.

PhRMA lauded the new program.

“The FDA would have more resources to develop comments for companies before their ads are broadcast, which would help to ensure the advertising's accuracy, balance and compliance with all regulatory requirements,” said Mr. Tauzin.

The Food and Drug Administration on Jan. 11 proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and planned to collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire on Sept. 30, 2007.

Under PDUFA, the FDA charges prescription drug makers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates.

“The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal.

“The PDUFA recommendations announced today are a win-win,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement. “If enacted, they will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs.”

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. With those funds, the agency said it could hire 82 new employees, and acquire the best tools and databases for improving the detection and analysis of safety signals. The agency also will institute new programs to reduce medication errors, in response to an Institute of Medicine report issued in September 2006 calling for drug safety improvements at the agency.

Some $20 million would go to cover expenses incurred in the last few years to facilitate drug makers' requests for formal meetings about their products. Sheila Mullin, FDA assistant commissioner for planning, said that in fiscal 2005, the agency held 1,800 formal meetings at manufacturers' request.

About $4 million would be devoted to improving information technology for drug reviews, with the goal of moving to “an all-electronic environment,” according to the FDA proposal.

“Reviewing data electronically helps to improve the efficiency of the drug approval process and expedites getting important new drugs to the patients who need them,” said Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, in a statement.

The agency is proposing to create a new user fee program solely to fund the review of direct-to-consumer television ads. Currently, companies can voluntarily submit their ads for review, but the FDA has not been able to keep up with the growing workload, said Dr. Galson.

The FDA anticipates charging $6 million in the first year of the program, which would subsidize the hiring of 27 new employees. Another $6 million would be collected for a reserve fund, to cope with unanticipated increases in volume of advertisements.

PhRMA lauded the new program.

“The FDA would have more resources to develop comments for companies before their ads are broadcast, which would help to ensure the advertising's accuracy, balance and compliance with all regulatory requirements,” said Mr. Tauzin.

The Food and Drug Administration on Jan. 11 proposed greatly increasing the fees its drug division collects from pharmaceutical manufacturers, saying that current fees collected under the Prescription Drug User Fee Act have not kept pace with inflation or the agency's growing workload.

Most of the additional money would be used to upgrade the agency's postmarketing drug safety monitoring. The FDA also is proposing to create a separate program to collect fees from companies that want their direct-to-consumer television ads reviewed by the agency.

The FDA published its proposals in the Jan. 11 Federal Register and planned to collect comments on them at a public meeting on Feb. 16. The final proposal will be sent to Congress later this year, said Jane Axelrad, associate director for policy at the Center for Drug Evaluation and Research (CDER), in a teleconference sponsored by the FDA.

Time is of the essence, as PDUFA—first established in 1992 and reauthorized in 5-year increments—is due to expire on Sept. 30, 2007.

Under PDUFA, the FDA charges prescription drug makers a set fee to review the safety and efficacy of products submitted under a new drug application. In return, the agency has to meet deadlines for review and approval.

The law has helped FDA to reduce review times and increase its postmarketing oversight, said Dr. Steven K. Galson, CDER director, during the teleconference.

Under the new proposal, FDA seeks to collect $393 million annually, $87 million more than it currently takes in each year. Drug user fees account for about half of CDER's budget, said Dr. Galson, adding that he could not say whether that would hold true going forward, since the agency has not yet received its appropriation for fiscal 2007 or a budget for fiscal 2008.

However, Ms. Axelrad said that drug user fees represent an increasing proportion of CDER's budget.

Public Citizen's Health Research Group criticized that trend, saying that the agency should not receive so much of its funding from the industry it regulates.

“The FDA's crucial drug regulatory functions are too important to be tainted and compromised by direct funding from the very companies whose drugs the agency reviews for safety,” said Dr. Sidney Wolfe, director of the advocacy group, in a statement.

The biotechnology and pharmaceutical industries praised the FDA proposal.

“The PDUFA recommendations announced today are a win-win,” said Jim Greenwood, president and CEO of the Biotechnology Industry Organization, in a statement. “If enacted, they will help enhance and improve drug safety while providing resources to continue to enable efficient and comprehensive review of new drugs.”

The largest portion of the increase, $29 million, would be devoted to postmarketing safety. With those funds, the agency said it could hire 82 new employees, and acquire the best tools and databases for improving the detection and analysis of safety signals. The agency also will institute new programs to reduce medication errors, in response to an Institute of Medicine report issued in September 2006 calling for drug safety improvements at the agency.

Some $20 million would go to cover expenses incurred in the last few years to facilitate drug makers' requests for formal meetings about their products. Sheila Mullin, FDA assistant commissioner for planning, said that in fiscal 2005, the agency held 1,800 formal meetings at manufacturers' request.

About $4 million would be devoted to improving information technology for drug reviews, with the goal of moving to “an all-electronic environment,” according to the FDA proposal.

“Reviewing data electronically helps to improve the efficiency of the drug approval process and expedites getting important new drugs to the patients who need them,” said Billy Tauzin, president and CEO of the Pharmaceutical Research and Manufacturers of America, in a statement.

The agency is proposing to create a new user fee program solely to fund the review of direct-to-consumer television ads. Currently, companies can voluntarily submit their ads for review, but the FDA has not been able to keep up with the growing workload, said Dr. Galson.

The FDA anticipates charging $6 million in the first year of the program, which would subsidize the hiring of 27 new employees. Another $6 million would be collected for a reserve fund, to cope with unanticipated increases in volume of advertisements.

PhRMA lauded the new program.

“The FDA would have more resources to develop comments for companies before their ads are broadcast, which would help to ensure the advertising's accuracy, balance and compliance with all regulatory requirements,” said Mr. Tauzin.

A Medicare advisory panel has concluded that it has low confidence in spinal fusion as a treatment for lower-back pain, but for now, the federal insurance program has no plans to deny coverage for the procedure.

The Medicare Coverage Advisory Committee met in late 2006 to weigh the available evidence on spinal fusion. The panel voted on six questions. It said that the available data provide an intermediate level of confidence in addressing the outcomes needed to determine whether fusion is effective for low-back pain resulting from degenerative disk disease.

For all the other questions posed, which all pertained to degenerative disk disease, MCAC found that the evidence fell below the intermediate level of confidence for determining improved outcomes—as compared with conservative treatment—for both the first 2 years post surgery and beyond 2 years. They said the data were similarly lacking for fusions both with and without instrumentation. And, said the panel, the results in the literature are reasonably likely to generalize to the Medicare population.

The Centers for Medicare and Medicaid Services decided to hold a meeting to explore fusions after it denied coverage to the Charité artificial disk, according to an agency spokesman.

“It was also to identify where the holes are so that medical societies and industry and others could start to develop better data on those areas,” said Eric Muehlbauer, executive director of the North American Spine Society, in an interview.

Mr. Muehlbauer said that CMS is essentially wielding its clout to spur better data collection.

The North American Spine Society is considering three proposals on how to improve the evidence base on fusion, he said. There is an especially glaring need for data specific to the Medicare population, partly because fusions are rarer in that age group, said Mr. Muehlbauer.

Medical device makers, represented by the Advanced Medical Technology Association (AdvaMed), said that access should not be restricted during the evidence gathering process.

“We encourage the Centers for Medicare and Medicaid Services to allow Medicare patients access to spinal fusion surgery as a treatment option as the body of clinical evidence develops over time,” said AdvaMed president and CEO Stephen J. Ubl in a statement.

The American Academy of Neurological Surgeons and the Congress of Neurological Surgeons are starting the second year of a pilot program to collect outcomes data on patients who have operations for lumbar stenosis, said Dr. Daniel Resnick, of the department of neurological surgery at the University of Wisconsin, Madison, in an interview.

Fifteen practices are taking part in the pilot, which is testing the best way to gather data, Dr. Resnick said. Expansion is likely if a grant comes through, he said.

There are several obstacles to getting good data, said Dr. Resnick. “We're hampered by an imperfect understanding of the physiology of pain in many patients,” he noted. And most patients will not enroll in a study in which there's a 50% chance they would get conservative treatment instead of surgery, he said, adding that most U.S. patients have already undergone many therapies before they undergo a procedure.

Both he and Mr. Muehlbauer said there is evidence that fusions work in the right patient. But they said they weren't surprised that CMS is examining the procedure, given the increase in fusions since the introduction of instrumentation.

A study on trends estimated that lumbar fusion increased 250% from 1992 to 2003 (Spine 2006;31:2707–14). Medicare payments for fusion rose from $75 million in 1992 to $482 million in 2003, estimated the authors, who are affiliated with Dartmouth Medical School and Dartmouth-Hitchcock Medical Center. They also found geographic variations.

Dr. Resnick said that fusions have increased partly because there are new technologies and techniques that offer options to previously untreatable patients.

A Medicare advisory panel has concluded that it has low confidence in spinal fusion as a treatment for lower-back pain, but for now, the federal insurance program has no plans to deny coverage for the procedure.

The Medicare Coverage Advisory Committee met in late 2006 to weigh the available evidence on spinal fusion. The panel voted on six questions. It said that the available data provide an intermediate level of confidence in addressing the outcomes needed to determine whether fusion is effective for low-back pain resulting from degenerative disk disease.

For all the other questions posed, which all pertained to degenerative disk disease, MCAC found that the evidence fell below the intermediate level of confidence for determining improved outcomes—as compared with conservative treatment—for both the first 2 years post surgery and beyond 2 years. They said the data were similarly lacking for fusions both with and without instrumentation. And, said the panel, the results in the literature are reasonably likely to generalize to the Medicare population.

The Centers for Medicare and Medicaid Services decided to hold a meeting to explore fusions after it denied coverage to the Charité artificial disk, according to an agency spokesman.

“It was also to identify where the holes are so that medical societies and industry and others could start to develop better data on those areas,” said Eric Muehlbauer, executive director of the North American Spine Society, in an interview.

Mr. Muehlbauer said that CMS is essentially wielding its clout to spur better data collection.

The North American Spine Society is considering three proposals on how to improve the evidence base on fusion, he said. There is an especially glaring need for data specific to the Medicare population, partly because fusions are rarer in that age group, said Mr. Muehlbauer.

Medical device makers, represented by the Advanced Medical Technology Association (AdvaMed), said that access should not be restricted during the evidence gathering process.

“We encourage the Centers for Medicare and Medicaid Services to allow Medicare patients access to spinal fusion surgery as a treatment option as the body of clinical evidence develops over time,” said AdvaMed president and CEO Stephen J. Ubl in a statement.

The American Academy of Neurological Surgeons and the Congress of Neurological Surgeons are starting the second year of a pilot program to collect outcomes data on patients who have operations for lumbar stenosis, said Dr. Daniel Resnick, of the department of neurological surgery at the University of Wisconsin, Madison, in an interview.

Fifteen practices are taking part in the pilot, which is testing the best way to gather data, Dr. Resnick said. Expansion is likely if a grant comes through, he said.

There are several obstacles to getting good data, said Dr. Resnick. “We're hampered by an imperfect understanding of the physiology of pain in many patients,” he noted. And most patients will not enroll in a study in which there's a 50% chance they would get conservative treatment instead of surgery, he said, adding that most U.S. patients have already undergone many therapies before they undergo a procedure.

Both he and Mr. Muehlbauer said there is evidence that fusions work in the right patient. But they said they weren't surprised that CMS is examining the procedure, given the increase in fusions since the introduction of instrumentation.

A study on trends estimated that lumbar fusion increased 250% from 1992 to 2003 (Spine 2006;31:2707–14). Medicare payments for fusion rose from $75 million in 1992 to $482 million in 2003, estimated the authors, who are affiliated with Dartmouth Medical School and Dartmouth-Hitchcock Medical Center. They also found geographic variations.

Dr. Resnick said that fusions have increased partly because there are new technologies and techniques that offer options to previously untreatable patients.

A Medicare advisory panel has concluded that it has low confidence in spinal fusion as a treatment for lower-back pain, but for now, the federal insurance program has no plans to deny coverage for the procedure.

The Medicare Coverage Advisory Committee met in late 2006 to weigh the available evidence on spinal fusion. The panel voted on six questions. It said that the available data provide an intermediate level of confidence in addressing the outcomes needed to determine whether fusion is effective for low-back pain resulting from degenerative disk disease.

For all the other questions posed, which all pertained to degenerative disk disease, MCAC found that the evidence fell below the intermediate level of confidence for determining improved outcomes—as compared with conservative treatment—for both the first 2 years post surgery and beyond 2 years. They said the data were similarly lacking for fusions both with and without instrumentation. And, said the panel, the results in the literature are reasonably likely to generalize to the Medicare population.

The Centers for Medicare and Medicaid Services decided to hold a meeting to explore fusions after it denied coverage to the Charité artificial disk, according to an agency spokesman.

“It was also to identify where the holes are so that medical societies and industry and others could start to develop better data on those areas,” said Eric Muehlbauer, executive director of the North American Spine Society, in an interview.

Mr. Muehlbauer said that CMS is essentially wielding its clout to spur better data collection.

The North American Spine Society is considering three proposals on how to improve the evidence base on fusion, he said. There is an especially glaring need for data specific to the Medicare population, partly because fusions are rarer in that age group, said Mr. Muehlbauer.

Medical device makers, represented by the Advanced Medical Technology Association (AdvaMed), said that access should not be restricted during the evidence gathering process.

“We encourage the Centers for Medicare and Medicaid Services to allow Medicare patients access to spinal fusion surgery as a treatment option as the body of clinical evidence develops over time,” said AdvaMed president and CEO Stephen J. Ubl in a statement.

The American Academy of Neurological Surgeons and the Congress of Neurological Surgeons are starting the second year of a pilot program to collect outcomes data on patients who have operations for lumbar stenosis, said Dr. Daniel Resnick, of the department of neurological surgery at the University of Wisconsin, Madison, in an interview.

Fifteen practices are taking part in the pilot, which is testing the best way to gather data, Dr. Resnick said. Expansion is likely if a grant comes through, he said.

There are several obstacles to getting good data, said Dr. Resnick. “We're hampered by an imperfect understanding of the physiology of pain in many patients,” he noted. And most patients will not enroll in a study in which there's a 50% chance they would get conservative treatment instead of surgery, he said, adding that most U.S. patients have already undergone many therapies before they undergo a procedure.

Both he and Mr. Muehlbauer said there is evidence that fusions work in the right patient. But they said they weren't surprised that CMS is examining the procedure, given the increase in fusions since the introduction of instrumentation.

A study on trends estimated that lumbar fusion increased 250% from 1992 to 2003 (Spine 2006;31:2707–14). Medicare payments for fusion rose from $75 million in 1992 to $482 million in 2003, estimated the authors, who are affiliated with Dartmouth Medical School and Dartmouth-Hitchcock Medical Center. They also found geographic variations.

Dr. Resnick said that fusions have increased partly because there are new technologies and techniques that offer options to previously untreatable patients.