Politics and Policy

Healthcare reform is on the lips of every 2008 Presidential hopeful. Take a look beyond the lip service and examine the platforms of Democratic and Republican front-runners.

Healthcare reform is on the lips of every 2008 Presidential hopeful. Take a look beyond the lip service and examine the platforms of Democratic and Republican front-runners.

As the debate over healthcare reform accelerates, policy makers are weighing in with proposals to unlink coverage from the work place.

Pressure is mounting on Capitol Hill once again to ax payments to Medicare Advantage plans. The legislators need to save $10 billion in order to rescind a planned cut in Medicare rates for physicians by year-end. Conveniently, the Congressional Budget Office (CBO) estimates that equalizing payments between MA plans and fee-for-service Medicare will save $50 billion over five years. If Congress wants to expand the State Children's Health Insurance Program (SCHIP) and keep physicians happy, "excessive" MA rates are the prime target.

There has been a lot of good news about the Medicare drug benefit lately. Surveys show a substantial increase in coverage, particularly among low-income seniors. Costs are less than expected; employers continue to offer retiree benefits; major insurers are sticking with the program; and product coverage remains fairly broad. Beneficiaries seem generally satisfied with the program, and the much-feared "donut hole" appears less lethal than anticipated.

WASHINGTON, D.C.-Instead of going back to academia, former FDA Commissioner and Medicare Administrator Mark McClellan, MD, is setting up his own shop to tackle health reform and drug safety more actively. Dr. McClellan will head the Engelberg Center for Health Care Reform at the Brookings Institution, starting with $20 million in funding from Alfred Engelberg and Leonard Schaeffer.

WASHINGTON, D.C.-Instead of going back to academia, former FDA Commissioner and Medicare Administrator Mark McClellan, MD, is setting up his own shop to tackle health reform and drug safety more actively. Dr. McClellan will head the Engelberg Center for Health Care Reform at the Brookings Institution, starting with $20 million in funding from Alfred Engelberg and Leonard Schaeffer.

The need to reauthorize the State Children's Health Insurance Program (SCHIP) by September 30, has evolved into a broader debate about the role of government in providing healthcare to Americans. The Bush administration wants to maintain a limited program for low-income children, while Democrats envision more open-ended coverage for more children and families.

The landmark Massachusetts healthcare reform plan requires all adults in the state to have purchased health insurance by July 1, and policy makers are scrutinizing whether the combination of "carrots" and "sticks" has spurred compliance. The legislation, adopted in April 2006, aims to establish universal coverage by subsidizing insurance for lower-income individuals and penalizing those with higher incomes who fail to sign up. Employers with more than 10 workers have to play or pay: provide coverage to employees or pay an annual fee.

The long-sought national interoperable health information system remains far from reality as standards prove difficult to establish, provider uptake goes slowly and privacy concerns continue. A year ago, there were high expectations that Congress would adopt legislation supporting the creation of standards for electronic health records (EHRs). That bill faltered over disagreements about anti-kickback language and new billing codes.

Economists and health experts on all sides are clamoring for more evidence on how medical products and procedures compare in safety, efficacy and cost. Legislative proposals before Congress include a range of initiatives to spur more comparative effectiveness (CE) research.

Despite a mounting clamor for reform from many health policy experts, Senate action to reduce payments to Medicare Advantage may be postponed this year. Influential senators oppose an across-the-board cut, which would reduce MA plan activity in rural and low-cost regions.

The State Children's Health Insurance Program (SCHIP) will expire September 30, 2007, unless Congress approves legislation reauthorizing this popular program offering healthcare services for children and some adults. The deadline puts this issue at the top of the Congressional agenda as an opportunity for Democratic leaders to increase public access to care. Efforts to expand coverage for children and secure the Medicare program are important to the managed care community because the legislators are eyeing "overpayments" to Medicare Advantage plans as a possible source for some $50 billion to fund SCHIP and other healthcare programs.

Rising pressure to reduce federal spending for Medicare has put the spotlight on payments and policies governing the Medicare Advantage program. MA plans are "vastly overpaid," according to Rep. Pete Stark (D-Calif.), chairman of the House Ways & Means Health subcommittee, largely because they sign up more healthy beneficiaries. Senate Finance Committee chairman Max Baucus (D-Mont.) is looking closely at whether "funneling dollars into private plans gets us the most bang for our healthcare buck."

The new House leadership delivered on one of its prime campaign promises last month by pushing through legislation requiring the Health and Human Services (HHS) secretary to negotiate directly with pharmaceutical companies on prices for medications covered by the Medicare drug benefit. The bill (HR 4) repeals the so-called "non-interference" clause in the Medicare Modernization Act (MMA) and replaces it with a provision requiring the secretary to negotiate prices that manufacturers may charge prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PDs).

The high-profile health policy issues for the new Congress are to reduce Medicare prescription drug prices and expand federal government funding for embryonic stem cell research. Congressional leaders want to enact legislation that will permit the federal government to negotiate drug prices (see Newswire), a move that eventually could alter the role of private plans in providing healthcare benefits to seniors.

The Democrats are back on top in the House and Senate after more than a decade playing second fiddle to the GOP. Although health reform was not a prime issue moving votes this November, health policy is on the Democrats' "100 hours" to-do list.

The emergence of pharmacy benefit management companies (PBMs) as major players in drug benefit design and pricing has generated criticism as well as praise. PBMs previously served as drug benefit administrators for employers and other payers. But as sponsors of Medicare Prescription Drug Plans (PDPs), they now assume risk and design coverage and payment options.

To no one's surprise, Mark McClellan, MD, announced last month that he would leave his job as administrator of the Centers for Medicare and Medicaid Services (CMS) after six years with the Bush Administration.

When the Academy for International Health Studies traveled to Prague in April for its annual trade/study mission, little did the delegates know they were about to enter a healthcare war zone. Weeks in advance of a contentious national election, the country's prime minister recently had fired the minister of health and named a successor with a mandate to implement some quick fixes. Insurers managed their strained cash flows by slowing payments to providers while the new minister, seemingly arbitrarily, mandated price reductions. The result was a physician-organized strike and thousands of angry, untreated patients.

All health plans and providers that do business with Medicare, Medicaid and other federally sponsored health programs soon will have to adopt information technology standards and quality-measurement tools. The Medicare Modernization Act of 2003 (MMA) requires the Department of Health and Human Services (HHS) to establish standards for electronic prescription drug prescribing by 2008, and this policy is driving broader efforts to build health IT systems.

Supporters of consumer-directed healthcare options want Congress to increase tax breaks and coverage limits to broaden the appeal of health savings accounts (HSAs) linked to high-deductible health plans. Health insurers and employers back legislation that would expand tax credits and higher HSA contribution limits plus increase flexibility in the use of HSA funds.

The rhetoric is heating up as health insurers and pharmacy benefit managers (PBMs) try to fend off an escalating attack from retail pharmacists about late or lost payments. Delayed payments are "simply profits these giant corporations will pocket," says National Community Pharmacists Assn. CEO Bruce Roberts. "The PBM industry adds no value to the healthcare delivery system."

The good news from Washington last month was that millions ofseniors have signed up for the Medicare drug benefit, includingsome 6 million through Medicare Advantage prescription drug plans(MA-PDs). But troubling reports indicate that the Medicare programoverall is in poor health and faces insolvency sooner thanexpected. In fact, President Bush may be compelled to proposesignificant cuts in Medicare spending next year if current trendscontinue. The remedies lie in higher taxes, reduced benefits,higher premiums for seniors and lower payments to plans andproviders-none very attractive.

Transparency. If that's not the hottest topic in managed caretoday, I don't know what is. So many of the consumer-directedhealthcare advocates I've talked with this year have told me thattransparency will be the big coup for consumers, regardless ofwhich plan design they choose or how much they spend in any givenyear.