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  Latest On Health Reform from Washington week of 12/18/09  

“The crucial hour…the part of the game when you have got it on the line”: That’s how Sen. Ron Wyden, D-Ore., described this moment in the health reform debate.

The Senate is still hoping to pass its version of a bill by Christmas. Senate leaders are focused on what they need to do to get to 60 – the number of votes necessary to overcome a Republican filibuster.

Democrats have 60 members of their caucus, but Joe Lieberman, a Connecticut Independent who caucuses with the Democrats, announced on national television on Sunday that he would vote against the bill in its current form. “You’ve got to take out the Medicare buy-in,” he said. “You’ve got to forget the public option.” The next day, 12 Democrats sent Senate Majority Leader Harry Reid a letter saying they, too, were concerned about the Medicare buy-in. So the feeling in Washington is that the Medicare buy-in, and the public buy-in to a federal-employee-type program as well, will be dropped from the Senate bill.

Monday night the Senate Democratic caucus met in the Capitol to talk about the bill. On Tuesday, they went to the White House to meet with President Obama. The rumor in Washington was that at the end of the meeting, the President would announce that the Senate Democrats had agreed on a bill and had 60 votes to overcome a Republican filibuster.

However, that dramatic ending didn’t occur. Instead, the President announced he was “cautiously optimistic” that a bill would pass. Speaking from the Roosevelt Room, with four senators at his side, he said the White House and Congress were on the verge of "an achievement that's eluded congresses and presidents for generations, an achievement that will touch the lives of every American. But there are still some differences that have to be worked on,” he said. “This was not a roll call. This was a broad-based discussion about how to move forward.

"There is broad consensus around reforms that will, number one, protect Americans against the worst practices" of health insurers, the President continued. "We agree on reforms that will finally reduce the costs of health care."

Later, the Senate voted on four amendments, the first to be voted on since the middle of last week. Included was an amendment that would have allowed individuals, pharmacies and drug wholesalers to re-import prescription drugs from foreign countries, where they are sold cheaper. The amendment failed 51-48 (by agreement between the majority and minority leaders, it takes 60 votes to pass an amendment), largely because it would have disrupted the agreement already made between the White House and drug manufacturers to help pay for reforms.

So far, 370 amendments have been filed. Just over 20 have been considered. But the pace can be accelerated by rolling certain amendments with majority support into one big “manager’s amendment.” Senate leaders are preparing that amendment right now.

Meanwhile, on the House side, Majority Leader Steny Hoyer said the House would be able to pass a health care bill without a public option. A few weeks ago, Speaker Nancy Pelosi had indicated that would not be possible. Rep. Hoyer said that Senate Majority Leader Harry Reid “does not have the votes for a public option, so in a world of alternatives you’ve got to focus on what you can get.” He also said even without a public option, “the guts” of the bill remain. To him, the guts are providing insurance coverage to 30 million people who are without it now.

Rep. Hoyer also dismissed the idea that the House would just rubber stamp the bill the Senate passes. “There's significant, important differences between what the Senate is proposing and what we proposed,” he said, “and those matters will have to be discussed."

Dueling cost reports
Last week, the chief actuary of CMS, the agency that runs Medicare and Medicaid, released his report on the Senate reform plan. He said the Senate plan:

  • Would threaten the profitability of 20 percent of U.S. hospitals and nursing homes in the next
    10 years

  • Would result in some hospitals, doctors and other providers cutting back on the number of Medicare patients they take because of the low reimbursement rates

  • Would increase total national health expenditures by .7 percent

  • Has such weak penalties for not buying insurance that the mandate wouldn’t have a significant impact

  • Would result in some small employers with low-wage employees terminating their insurance plans and letting the employees qualify for taxpayer-subsidized coverage through the exchange

  • Would result in new health care taxes and fees being “passed through to health consumers in the form of higher drug and device prices and higher insurance premiums”

  • By 2013, enrollment in Medicare Advantage plans would decrease by about 33 percent (from a projected level of 13.7 million under current law to 9.2 million under the proposal)

On the positive side, CMS said the Senate plan would extend the life of the Medicare program and would reduce premiums and cost-sharing by about $700 a year per couple. Read the full report here.

Meanwhile, this week the White House Council of Economic Advisers released a paper that came to a different set of conclusions:

  • By 2019, total federal spending on the Medicare and Medicaid programs would be lower if the Senate bill passes than it would be without reform

  • From 2016 to 2019, the annual growth rate of federal spending on Medicare and Medicaid will be at least .7 of a percentage point lower than it otherwise would have been

Christina Romer, chairwoman of the council, told the New York Times, “We are going to be expanding coverage to 30 million Americans. You can’t do that and not spend more.”

Freshmen amendment package
A group of 11 freshman Democratic senators led by Sen. Mark Warner, D-Va., have filed an amendment that focuses on cost containment and delivery reforms. It has won the support of a cross section of important interests, including the Business Roundtable, AFL/CIO, hospital groups, pharmacists, the AARP, the White House, some of the nation’s top economists, and the former head of the federal agency that oversees Medicare and Medicaid, Mark McClellan.

In the memo describing the amendment package, the freshmen say their amendments would take Medicare changes further than the Senate bill would “by replacing studies with action, recognizing success stories already underway, modernizing Medicare’s tools to evaluate and implement delivery system reforms that work, and broadening the scope of the (Health and Humana Service) secretary’s authority to put effective cost containment in place.”

The package includes amendments that would:

  • Require Medicare to implement true pay-for-performance for an expanded list of providers – including hospices, ambulatory surgical centers, psychiatric hospitals and others – by 2018

  • Expand accountable care programs – that is, coordinated care by physician groups – to private plans as well as to Medicare

  • Modernize Medicare’s data systems so that data can be shared in a “reliable, complete and timely manner” with providers and beneficiaries

  • Broaden the scope of the new Independent Medicare Advisory Board to look at total health system spending and make system-wide recommendations to assure that we are lowering costs not shifting them

Read the memo from the freshmen here.

Humana’s view: These amendments represent a good next step, but if they all pass they would only save $200 million over 10 years. There is still much work to be done around cost containment and delivery system reforms.

Study shows advantage of Medicare Advantage
Last Friday, AHIP released the third in a series of reports comparing patterns of care among patients enrolled in Medicare Advantage plans and in Medicare's traditional fee-for-service program. Based on the simple average of 18 areas and 10 companies studied, the risk-adjusted comparisons showed reductions in hospital days (20 percent fewer for Medicare Advantage), admissions (11 percent lower for Medicare Advantage), emergency room visits (24 percent fewer for Medicare Advantage), hospital re-admissions for the same diagnosis in a calendar quarter (39 percent lower for Medicare Advantage), and potentially avoidable admissions (10 percent lower for Medicare Advantage enrollees).

The new data suggest that a wide variety of Medicare Advantage plans in various parts of the country – large and small, regional or national, for-profit or not-for-profit – are able to help patients avoid inpatient hospital stays, emergency room visits, re-admissions, and potentially avoidable admissions, relative to the results shown in FFS.

Read the report here.

What is in the Senate bill?
Following last week's breakthrough compromise on health reform, Majority Leader Reid called a special caucus meeting to update the rest of his Senate Democratic colleagues on the tentative deal. The components of the compromise agreement included:

  • The Medicare "buy-in" option for people aged 55-64,

  • The Federal Employee Health Benefit Plan-style program that would be offered under the oversight of the Office of Personnel Management,

  • A "trigger" provision that would create a government-run plan if the program run by OPM didn't achieve desired results,

  • Additional regulations on health insurers, including a requirement that health plans spend at least 90 percent of premium dollars on health care services – i.e., a 90 percent MLR (medical loss ratio) requirement.

The deal was negotiated by a group of 10 Senate Democrats – five liberals and five centrists. But two business groups were unhappy with the result. The U.S. Chamber of Commerce rallied more than 70 business leaders, association executives, and local chambers of commerce members from 18 states to Capitol Hill for a meeting with Senate Republicans. The group gathered to urge Congress to start health reform deliberations over and draft reform that lowers cost.

Meantime, the National Federation of Independent Business (NFIB), one of the nation's largest small-business associations, released a letter in opposition to the Senate health care reform proposal. Among its reasons for disagreement, NFIB says that the current bill does not reduce costs for small-business owners and their employees, and that the bill's small-business taxes, mandates and lack of cost controls equal a future "worse than the status quo." Read the full letter.

At least some elements of the compromise – the Medicare buy-in and the public plan – are being dropped during the current negotiations.

House committee says MA plans profit too much
Last week, House Democrats released a report that says private health insurance companies offering Medicare Advantage plans "funnel billions of dollars toward company profits, and to marketing and advertising rather than to patient care."

The report, from Democrats on the House Energy and Commerce Committee, targets 34 insurers, including Humana, and was released as lawmakers push forward on legislation to overhaul the nation's health care system, including significant cuts to Medicare Advantage.

The report, titled "Profits, Marketing, and Corporate Expenses in the Medicare Advantage Market," claims that from 2005 to 2008, MA insurers devoted $27 billion to profits, marketing and other expenses. Supporters of the report assert that "requiring all Medicare Advantage insurers to have a medical loss ratio of 85 percent would provide billions of dollars in additional medical services to seniors." Get the full report here.

Karen Ignagni, president and CEO of America's Health Insurance Plans (AHIP), said Wednesday that "Medicare Advantage plans provide essential health care services that are not available in the traditional Medicare program, including disease management, care coordination, and prevention and wellness initiatives.

"Recent reports have found that seniors in Medicare Advantage receive higher quality care compared to fee-for-service Medicare." Those reports include the AHIP study discussed above.


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