Washington -- The Senate Finance Committee, whose leaders appear to have taken the helm in the health system reform debate, started a round of public talks with health organizations in a run-up to an aggressive reform timetable.

National reform legislation in the Senate will likely show the influences of an April 21 roundtable discussion. It focused largely on how a rural health system improved care and lowered costs for chronically ill patients, how patient needs and incentives should drive reform, and whether a federal health agency should have more authority to innovate.

The Senate Finance Committee roundtable on improving care and reducing costs was the first of three on major health reform topics. Two more are scheduled for May. Committee members in the days following each discussion will review and comment on each corresponding piece of the legislation before the final package is unveiled publicly for a formal committee markup and vote, possibly as early as June.

Senate Finance Committee Chair Max Baucus (D, Mont.) said it's time to move. "If we don't act now -- that is this year -- the consequences will be dire."

Sen. Charles Grassley (Iowa), the committee's highest-ranking Republican, said tackling health care, which accounts for 16% of the nation's economy, is daunting. "This is the toughest and most needed issue that Sen. Baucus and I have ever been involved in."

The Finance panel and the Senate Health, Education, Labor and Pensions Committee began conferring with health care organization leaders about legislation last year. House committee chairs began holding hearings more recently, and Republican groups in the House also are working on their own proposals. House and Senate committee chairs have agreed to try aiming for floor votes on reform legislation before the August congressional recess.

The Geisinger way

The Senate Finance roundtable on April 21 included 13 participants representing health plans, physician organizations, consumer advocates, auditors, researchers and others.

But committee members spent a significant part of the discussion asking Geisinger Health System President and CEO Glenn Steele Jr., MD, PhD, about replicating on a national scale the organization's care coordination for chronically ill patients and other innovations.

Health care costs account for 16% of the nation's economy.

The Pennsylvania-based health care system is a mostly rural network of physicians, nurses and hospitals combined with a health plan serving about 30% of its patients. Dr. Steele said Geisinger asked its health professionals to follow evidence-based guidelines or to develop consensus-based care standards for prevalent chronic diseases, such as diabetes, coronary artery disease, congestive heart failure and kidney disease. It also targeted the sickest patients in its health plan and assigned additional nurses to assist physicians with care coordination.

"What we've shown is that when you increase quality for these groups of high-utilizing patients, you're also decreasing costs," Dr. Steele said. A number of Geisinger's practice sites saw a 50% or higher decrease in hospitalizations in one year after the project launched about five years ago, he said. Many patients had not been taking their prescribed medications at the right dosage or frequency.

Sen. Debbie Stabenow (D, Mich.) asked about the advantages of having an integrated health system. "That is a different delivery model than we have in a lot of areas," she said. Most patients still receive care in practices with five or fewer physicians, noted participant John Tooker, MD, American College of Physicians executive vice president and CEO.

Dr. Steele said having its own health plan allowed Geisinger financially to reward physicians and nurses who improved patient care. Also, most of the system's patients live in rural areas and do not change residences often. This helps the health system track the outcomes of its care over years, not just weeks or months, he said.

Geisinger's health information technology network is another key factor, Dr. Steele said.

An electronic health record system implemented 14 years ago allows patients to see lab and radiology results, request prescription refills, e-mail questions to doctors and nurses, and schedule their own appointments. "We couldn't do it without [health IT] throughout our entire geography. It would be impossible because of the physical distances," he said.

Centers for innovation?

Baucus asked Dr. Steele how he would apply the lessons he learned at Geisinger on a national basis. "The first thing I would do is to redesign" the Centers for Medicare & Medicaid Services, Dr. Steele said. "I think CMS needs to be an engine of innovation, not a self-defined bureaucracy."

The Geisinger chief said Congress should start by giving CMS more leeway to launch demonstration projects quickly that are focused on Medicare patients who cost the most and receive the least-coordinated care. That would entail giving CMS clear goals for the patients' health and creating a backup reform plan that serves as a stick to motivate the agency to achieve its primary goals. The project could begin with a few million patients and expand to the entire Medicare population, he said.

Most patients receive care from practices with 5 or fewer physicians.

Dr. Steele said CMS must be allowed to adjust the pilot project as needed. "A lot of what we did was accomplished because we were able to change on the fly."

Sen. Jeff Bingaman (D, N.M.) asked the attendees if CMS could tackle such an undertaking. Mark McClellan, MD, PhD, a former CMS administrator, said the agency would need a bigger budget and more authority. "Medicare, the way it is managed now, does not leave a lot of room for discretion in implementing the kinds of reforms we're talking about today."

Glenn Hackbarth, chair of the Medicare Payment Advisory Commission, suggested that Medicare could partner with private payers to work on incentives that reward effective care integration by health professionals.

Grassley asked if national health system reform required additional spending. Other Republican senators questioned the need for new money, considering the billions they said could be saved by reducing fraud and unnecessary care.

Sen. John Ensign (R, Nev.) said Medicare reform also should give beneficiaries financial incentives to shop for the best deal in health care. This could happen if electronic health records delivered health professionals' cost and outcome information to patients, he said. "We don't need more money in the system; we need to spend our money more properly and have the incentives."

Hackbarth said national health spending variations could be leveled by focusing on the highest-spending areas while understanding that "there's not one single right way to deliver efficient health care."

The discussion seemed to resonate with Baucus, who mentioned at a breakfast with reporters days later the possibility of reforming CMS.

Although Medicaid physician fees gained ground on Medicare pay in the past five years, Medicaid pay did not keep pace with general inflation -- much less the increased costs of providing medical care.

Medicaid fees for doctors grew by 15.1% between 2003 and 2008, according to a study by researchers at the Urban Institute, published April 28 in Health Affairs. The calculation is based on fee-for-service rates for primary care, obstetrical care, hospital visits, surgery, radiology and other services.

Primary care fees drove the growth in Medicaid pay. They climbed by 20% on average between 2003 and 2008, the highest of any major category. Pay for all Medicaid services other than primary care grew by only 8.7% during the same period.

Medicaid fees gained ground on Medicare and possibly private health insurance pay as well, the article's authors concluded. Medicaid paid physicians 72% of Medicare rates for the same services in 2008, up from 69% in 2003. Also, Medicare rates remained relatively stable compared with private health plans' fees since 2003, according to the Medicare Payment Advisory Commission.

Prices, however, still grew faster than Medicaid pay. The consumer price index increased by 20.3% between 2003 and 2008, according to the report. The medical care services segment of the index -- which looks at the costs of providing physician services, hospital services and health insurance -- increased by 28.1% for the same period.

Medicaid paid physicians 72% of Medicare rates for the same services in 2008.

"It's a sad fact that Medicaid payments don't come close to covering the cost of caring for the vulnerable patient population that relies on it for coverage," said American Medical Association Board of Trustees Chair Joseph M. Heyman, MD. "The gap between Medicaid and Medicare payments is closing because Medicare payment rates are falling in real-dollar terms, which is alarming as we work to preserve seniors' access to care. We need to ensure that patients who rely on these important programs can get access to needed health care."

States' actions on Medicaid pay during the five-year time period in the study varied widely, with a few states adopting physician pay increases at twice the rate of inflation.

Many states that in 2003 had relatively high Medicaid fees may have limited their increases, the article's authors said. Minnesota had above-average Medicaid pay in 2003 but now falls below the national average. Doctors' fees for the two largest Medicaid programs in the country -- California and New York -- did not keep up with Medicare between 2003 and 2008.

Wyoming ranked first in relative Medicaid physician fees in 2008, the report said. State lawmakers understand the importance of private physician participation in Medicaid and have benefited from budget surpluses, said Dennis Ellis, Wyoming Medical Society's executive director. Still, the state has only a few federally qualified health centers and has a physician shortage.

New Jersey ranked last in relative Medicaid physician pay. The state offered doctors only 37% of Medicare rates in 2008. This is despite the fact that the program has generous benefits and an eligibility level of 250% of the federal poverty level, said Michael T. Kornett, the Medical Society of New Jersey's CEO.

State budget constraints have not allowed Medicaid physician fee increases, said New Jersey Dept. of Human Services spokeswoman Suzanne Esterman.

Unlikely partners

Despite reports of relatively low Medicaid pay and continuing care access problems for enrollees in many states, a growing number of organizations support expanding Medicaid to cover more low-income people.

Families USA and the Pharmaceutical Research and Manufacturers of America in April agreed to support expanding Medicaid eligibility to 133% of poverty, the national eligibility standard for children younger than age 6.

Few state programs today offer any coverage to childless adults, and eligibility for parents averages 67% of poverty, said Ron Pollack, Families USA executive director and president.

Both Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee, and President Obama support expanding Medicaid.

AMA policy supports increasing Medicaid eligibility to 100% of poverty nationally, with tax credits to help buy insurance for lower-income residents who earn too much to qualify for Medicaid.

But Rep. Michael Burgess, MD (R, Texas), chair of a House Republican health care caucus, said Medicaid should not be considered a model to expand health coverage because it's much less attractive than private insurance. Pollack also acknowledged Medicaid's access problems, saying, "It's clear that the Medicaid safety net for key populations is much more hole than webbing."

Rep. Phil Gingrey, MD (R, Ga.), chair of a physician-driven House Republican health care caucus, said low-income families need more health insurance options but that Medicaid needs to be fixed before it's expanded.

Still, the cost of increasing health coverage to the nation's 46 million uninsured might force Congress to consider expanding Medicaid instead of offering more robust coverage, Dr. Burgess said. "It may be all we can afford."

The print version of this content appeared in the May 11, 2009 issue of American Medical News.

Cancer patient Judith M. Layzer says she has been in a life-or-death battle for more than two years not only with her illness but also with Medicare. Last month she scored a victory in the latter fight.

Layzer, a 68-year-old retired widow in New York City, has been treating her granulosa cell tumor with daily doses of Cetrotide (cetrorelix acetate) for more than nine years. More traditional treatments were not working, and she and her doctor became convinced that the off-label use of the drug offered the best chance of keeping the cancer in check.

The problem started when Layzer enrolled in Medicare's drug benefit in 2006. Not only was her prescribed use of Cetrotide absent from the drug's labeling, but it also could not be found in any of the three drug compendia that serve as medical reference guides for the use of Part D medications. So the Medicare drug plan said it was barred by federal law from covering the medication unless the labeling or the compendia were changed. An administrative law judge and the Medicare Appeals Council members reviewing the case agreed that the drug should be covered but concluded that their hands were also tied.

Because the hormone treatment costs upwards of $35,000 per month, Layzer could not afford to pay for it without help.

The situation started changing last July, when the Medicare Improvements for Patients and Providers Act clarified that the program can reference research in approved peer-reviewed literature when determining whether an off-label, non-compendia use is medically accepted. Under the clarified policy, an independent reviewer on April 20 approved Layzer's appeal and ordered that Part D cover her Cetrotide therapy.

The rationale: a recent article published in Gynecologic Oncology showed that the drug was effective in treating cancer with minimal toxicity.

A new precedent for cancer patients

The decision has given Layzer hope. She said she's gotten by so far on the generosity of her former employer's insurance company, which has been paying for 75% of her treatment. The ruling by the independent review board, however, has given her more stability and peace of mind.

The Medicare Rights Center, a nonprofit organization in Washington that assists seniors and people with disabilities, said the development goes far beyond one patient's case.

"This victory is important for Mrs. Layzer and all cancer patients," said Paul Precht, the center's director of policy and communications. "It is also a sign for policymakers on Capitol Hill and in the Obama administration that coverage decisions on these types of drug treatments can, and should, be made case by case on the basis of sound evidence vetted through the peer-review process."

The decision is a welcome one to experts who think relying on drug compendia alone to determine off-label coverage is going to leave some vulnerable patients out of luck.

"The value of basing coverage on peer-reviewed literature is that it is a source of information that is available much sooner than the compendia, which are only updated periodically," said Michael Miller, MD, president of HealthPolCom Consulting, a health policy, analysis and communications firm in Cambridge, Mass.

For some rarer cancers, such important data might never make it into the compendia, Dr. Miller said. "Thus, those patients unfortunate enough to have unusual malignancies could be permanently prevented from receiving the best treatments."

The Centers for Medicare & Medicaid Services said it does not comment on decisions from independent review entities, nor would it respond to criticism of the drug compendia.

The fight is not over. When initial appeals failed, the Medicare Rights Center in late 2007 sued the Dept. of Health and Human Services on behalf of Layzer and another patient, in an effort to challenge Medicare's interpretation of the off-label restrictions. That suit is still pending.

The legislative clarification of the Medicare statute, which took effect Jan. 1, still does not apply to non-cancer therapies, though the HHS secretary could approve additional compendia that list more off-label drug uses.

The print version of this content appeared in the May 11, 2009 issue of American Medical News.

Washington -- State laws in place to protect patients' confidentiality may be causing some hospitals to be more skittish about adopting electronic medical records systems, a factor that could impede the push for the industry to go paperless, a study says.

Researchers from the Massachusetts Institute of Technology and the University of Virginia recently concluded that state privacy regulations reduce aggregate EMR adoption by between 20% and 30%. States that got rid of some of their regulations experienced a 21% gain in hospital EMR adoption rates around the years the laws changed compared with just an 11% gain in states that kept them intact, said the study.

The authors concluded that state laws could hinder the federal government's goal of achieving industry-wide interoperability. Earlier this year, Congress allocated roughly $20 billion over 10 years in economic stimulus funding toward Medicare and Medicaid bonuses for physicians, hospitals and others that adopt paperless systems.

"What needs to happen is a lot more coordination of these privacy laws so hospitals don't have to deal with these patchwork systems," said Catherine Tucker, PhD, assistant professor of marketing at MIT's Sloan School of Management and one of the report's authors.

Several hospitals reported difficulties in exchanging information with systems in other states due to filters that must be installed to ensure that the transactions are done according to law, she said. "The extent you have to customize becomes very costly when you try to exchange health information," Tucker said.

Cost is the No. 1 reason hospitals don't adopt EMR systems.

Tucker used data from the 2005 release of the Healthcare Information and Management Systems Society Analytics Database for the research along with survey data from the American Hospital Assn. from 1995 to 2005. Data from more than 2,900 hospitals were analyzed.

The researchers measured adoption rates by whether hospitals had installed or were in the process of installing enterprise EMR systems or basic software with the capability for potential add-ins, such as clinical decision support and data repositories.

The study's findings were met with skepticism from some privacy advocates, who argued that uniformity exists between the states regarding privacy laws, contrary to what the researchers concluded.

Deborah Peel, MD, a psychiatrist and chair of the Patient Privacy Rights Foundation, a watchdog group based in Austin, Texas, said many states have laws that follow the standards set in the American Medical Association's Code of Medical Ethics, which helps provide strong protections for health information.

"The idea that there are somehow states in the U.S. that have vastly different laws protecting health information privacy is a fallacy," Dr. Peel said. If any factors are impeding EMR adoption, they are cost and system architectural designs that make them hard to maintain and support, she said.

Cost was cited as the No. 1 factor for low adoption rates of hospital paperless records systems in a study published in the March 25 online version of the New England Journal of Medicine. That study found only 1.5% of nonfederal U.S. hospitals use a comprehensive system, and only about 8% use a basic system in at least one unit that includes physician or nurse notes.

Deven McGraw is director of the health privacy project at the Center for Democracy and Technology, a public policy organization based in Washington, D.C. She dismissed the study's findings as well, noting "there have been a lot of developments that have happened since they looked at the data," such as the passage of the most recent economic stimulus bill.

Dr. Peel said she's concerned that policymakers could look at this study and use it as a rationale for scaling back patient privacy protections, which she said are jeopardized as it is by the private data-mining industry. "It's far more lucrative than taking care of sick people. The data is going everywhere we don't want it to go. And the two people who should have it -- the patient and their doctor -- can't get their hands on it."

AMA policy supports prohibiting the sale and exchange of personally identifiable health information for commercial purposes without a patient's consent.

Washington -- The Obama administration is proceeding with a Medicare durable medical equipment competitive bidding program it inherited from the previous administration. Absent another legislative intervention, the program will start again in 2010.

Earlier this year, the White House delayed the effective date of a rule outlining final details for competitive bidding in order to review late changes approved by the Bush administration. But the Centers for Medicare & Medicaid Services announced that the new April 18 effective date would not be delayed any further, prompting criticism from the American Assn. for Homecare and other organizations representing suppliers.

"We are very disappointed that CMS has moved forward with this program without allowing more opportunity to examine it," said Walter Gorski, vice president of government affairs for the association. "As designed, the program will eliminate approximately 90% of suppliers in any marketplace. We believe that is unacceptable, especially when all efforts by the [Obama] administration and Congress are aimed at job promotion and creation."

The competitive bidding program was originally launched July 1, 2008, in an effort to lower DME costs, enhance quality and prevent fraud. Beneficiaries in selected areas who needed certain equipment were required to obtain it from suppliers chosen by the government through a bidding process. But the initiative was halted after two weeks when lawmakers agreed to an 18-month moratorium under the Medicare Improvements for Patients and Providers Act.

If Congress had not stopped the program, it would have limited Medicare coverage of selected equipment in 10 metropolitan areas to suppliers that submitted winning bids. CMS since has made minor changes to the program required by the legislation, including preparing to conduct a second competition to select suppliers.

Despite the final rule, CMS said it will have no immediate effect on how Medicare patients obtain durable medical equipment, prosthetics, orthotics and supplies. Beneficiaries may still use current suppliers.

Gorski said CMS will hold a meeting of its Program Advisory and Oversight Committee in the near future to discuss when suppliers and beneficiaries can expect changes. CMS also will issue further guidance with the timeline and details for the contract re-bid in advance of a January 2010 target relaunch date.

In the meantime, the homecare association said it would continue to lobby Congress to halt to the competitive bidding program, which suppliers maintain lowers the quality of care and reduces access to care. Because it selectively contracts with a small group of suppliers based largely on who has the lowest bid, it will force out firms that use high-quality equipment or provide critical patient services, the organization has stated.

The association and 27 regional and state homecare associations sent a letter to CMS and the White House in a last-ditch effort to have the administration rescind the bidding rule.

The suppliers also rallied several lawmakers to their cause. A bipartisan group of 84 House members, led by Rep. Betty Sutton (D, Ohio), sent a letter to the administration urging the revocation of the competitive bidding program, which the group said is deeply flawed. "Of the more than 4,000 providers in the initial bidding areas, only 376 were deemed to have met the bidding program requirements," Sutton said. "This is not a solution to Medicare reform and would only reduce quality and access to care for seniors and people with disabilities."

The homecare association said medical equipment and related care is already a cost-effective program and comprises the slowest-growing portion of Medicare spending, increasing only 0.75% per year.

Gorski said suppliers will continue to work with Congress on legislation to repeal the program, and they are hopeful that its language will be included in any health system reform bill that might be introduced this year. "We remain cautiously optimistic that we can show this program will not yield the results anticipated."

But when competitive bidding launched last summer, the Bush administration and some lawmakers said Medicare substantially overpays DME suppliers and that medical equipment billing fraud is rampant, making the program a necessity.

The print version of this content appeared in the May 11, 2009 issue of American Medical News.