Friday, May 08, 2009

• President Obama's Budget Request Includes $828B for HHS

 

President Obama's Budget Request Includes $828B for HHS
[May 08, 2009]

      President Obama on Thursday presented Congress with a detailed budget plan for the fiscal year beginning Oct. 1, which intends to reduce expenditures through changes to the Medicare program and improve federal food safety efforts, CQ Today reports. The plan would allocate $828 billion for HHS in FY 2010, including $78.3 billion in discretionary spending, which is slightly less than the $78.5 billion in discretionary spending granted to the agency in FY 2009. However, the economic stimulus package provides HHS an extra $22.4 billion for FY 2009 and FY 2010, and $109 billion extra in total (Wayne, CQ Today, 5/7). The budget plan also would allocate:

• $3.2 billion for FDA, a net increase of $511 million over FY 2009 -- the largest increase ever requested for the agency -- that includes $295.2 million in budget authority as well as $215.4 million from proposed user fees (Norman, CQ HealthBeat, 5/7);
  
  
• A $300 million decline in funding for CDC, to $6.8 billion, that is offset entirely by federal stimulus money, although the agency also would receive $156 million to prepare for a pandemic flu outbreak;
  
  
• $452 billion in spending for Medicare, a 6% increase from FY 2009, and $290 billion in Medicaid spending, a 10% increase;
  
  
• $30.8 billion for NIH -- a reduction of $10 billion from FY 2009 that would be made up by $10.4 billion in stimulus funds intended for biomedical research (Wayne, CQ Today, 5/7);
  
  
• $112.8 billion for the Department of Veterans Affairs, about $15.1 billion more than this year, of which $47.4 billion in discretionary spending would be made available for veterans' medical care (Johnson, CQ Today, 5/7);
  
  
• An increase of $454 million for Indian Health Services, bringing its FY 2010 budget level to more than $4 billion;
  
  
• $34 million in additional funding, to $169 million total for FY 2010, for the National Health Service Corps, which provides health care to U.S. residents in underserved communities;
  
  
• $73 million in additional funding for initiatives to improve health care in rural areas;
  
  
• $92 million to help remedy the nation's nursing shortage, bringing total funding for the initiative to $263 million in FY 2010; and
  
  
• $59 million to expand drug courts under the Substance Abuse and Mental Health Services Administration (Norman, CQ HealthBeat, 5/7).

Medicare, Medicaid
The budget proposal states that "as part of health care reform, the administration would support comprehensive, but fiscally responsible, reforms" to Medicare's current payment formula, which has a 21% reduction to physician payments scheduled for next year. According to CQ HealthBeat, budget documents indicate that preventing those cuts and maintaining payments to physicians at the same level over the next decade would cost $311 billion. The budget states that the administration will look into numerous options to reform the payment formula, including whether physician-administered drugs should be covered under the formula. CMS figures estimate that eliminating the cost of those drugs would reduce the 10-year cost of staying in line with physician payment targets by $129.6 billion.

The budget proposal also includes proposed Medicare changes that would allow $288 billion over 10 years to be directed to a reserve fund that would help fund health care reform. The changes include linking Medicare payments to hospitals with the quality of care delivered. According to CQ HealthBeat, the money saved would be directed to a fund that would support additional hospital incentive payments and the Medicare trust fund. The changes also include a plan to reduce Medicare spending by $177 billion through a competitive bidding program that would base payments to private firms offering Medicare Advantage plans on the average of their bids. An additional $16 billion in spending reductions would come from bundling payments for hospital and post-hospital care, according to the budget plan. The budget would add $125 million in discretionary spending to the $1.5 billion that already funds the Health Care Fraud and Abuse Control Program, which directs money to Medicare, Medicaid, the Department of Justice and the HHS Office of Inspector General. Total discretionary spending for the HCFAC program in FY 2010 would be $311 million (Reichard, CQ HealthBeat, 5/7).

Reaction
The current economic conditions likely will make it difficult for Obama to find the money needed to address his priorities, including health care reform, without enacting deeper budget cuts, the AP/San Francisco Chronicle reports (Kuhnhenn, AP/San Francisco Chronicle, 5/8). The new plan's proposed savings represent about 1.4% of the $1.2 trillion deficit projected for FY 2010.

Obama administration officials indicated that the $17 billion in savings included in the FY 2010 blueprint are "just a beginning," according to the New York Times (Calmes, New York Times, 5/8). White House Office of Management and Budget Director Peter Orszag said the $17 billion saved under the FY 2010 plan is "real money," adding, "This is an important first step but not the end of the process" (Grier, Christian Science Monitor, 5/7).

Obama also linked his plan to reduce the deficit with his plan to overhaul the health care system, noting that his reform plan would address the rising costs of Medicare and Medicaid. He noted "challenges that will require us to make health care more affordable and to work on a bipartisan basis to address" entitlement programs (Weisman, Wall Street Journal, 5/8). Jared Bernstein, chief economist to Vice President Biden, said, "The big ticket, that's health care. That's where some of our real savings come from in the longer term" (AP/San Francisco Chronicle, 5/8).

However, critics, including Republican lawmakers, complained that more significant cuts are needed, the New York Times reports (New York Times, 5/8). The Christian Science Monitor reports that "Obama's hit list leaves unaddressed what many experts cite as the real U.S. deficit difficulty: fast-growing entitlements, particularly ... Medicare and Medicaid" (Christian Science Monitor, 5/7). House Minority Leader John Boehner (R-Ohio) said, "While we appreciate the newfound attention to saving taxpayer dollars from this administration, we respectfully suggested that we should do far more" (New York Times, 5/8).

The Wall Street Journal reports that the added cost of new programs in the plan "will swamp the $17 billion of potential savings anticipated" from the cuts (Wall Street Journal, 5/8). Orszag acknowledged that more cuts need to be implemented to control the growth of Medicare and Medicaid (Taylor, AP/Boston Globe, 5/8).

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Senate Confirms Corr as Deputy Secretary of HHS, Roubideaux as IHS Secretary
[May 08, 2009]

      The Senate on Wednesday confirmed William Corr as deputy secretary of HHS, CQ HealthBeat reports (CQ HealthBeat, 5/7). He was approved by unanimous consent.

Corr has worked for Rep. Henry Waxman (D-Calif.) and former Senate Majority Leader Tom Daschle (D-S.D.). He also worked as chief of staff at HHS during former President Clinton's administration (Zhang, Wall Street Journal, 5/7). Most recently, he was executive director for the Campaign for Tobacco-Free Kids (CQ HealthBeat, 5/7).

HHS Secretary Kathleen Sebelius in a statement said, "Bill Corr's policy expertise and management experience will be invaluable as we work together to manage the department and pass and implement comprehensive health reform" (Wall Street Journal, 5/7).

Indian Health Service
In related news, the Senate also approved by unanimous consent Yvette Roubideaux, an assistant professor at the University of Arizona College of Medicine, to be director of the Indian Health Service, the Arizona Daily Star reports (Arizona Daily Star, 5/8). Roubideaux previously worked as a medical officer and clinical director for the Indian Health Service (Rapid City Journal, 5/7).

Sebelius said that Roubideaux "has seen the Indian Health Service through the eyes of a patient and a doctor, and I know she is the leader we need to strengthen IHS" (Arizona Daily Star, 5/8).

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Senate HELP Committee Expresses No Opposition During Hearing for FDA Commissioner-Nominee Hamburg
[May 08, 2009]

      Margaret Hamburg, President Obama's nominee for FDA commissioner, on Thursday easily moved through a Senate Health, Education, Labor and Pensions Committee confirmation hearing, the New York Times reports (Harris, New York Times, 5/8). During the hearing, no senators expressed opposition to her nomination (Alonso-Zaldivar, AP/Philadelphia Inquirer, 5/8).

Sen. Orrin Hatch (R-Utah) strongly endorsed Hamburg at the hearing, telling her, "I want you to know that I support you, and I intend to help you not only to get through this process but to do your job out there." Hamburg also received endorsements from Sen. Richard Burr (R-N.C.) and every Democrat who attended the hearing. According to the Times, the "enthusiasm" shown by the senators toward Hamburg might be because many conservatives have expressed reservations about Joshua Sharfstein, who was selected as the agency's principal deputy commissioner but currently is the acting commissioner. Some lawmakers are concerned about Sharfstein's previous ties to Public Citizen and Rep. Henry Waxman (D-Calif.), who is a critic of the drug industry (New York Times, 5/8). Hamburg said that reports that she would split oversight duties with Sharfstein -- in which she would be responsible for food and tobacco and Sharfstein would oversee drug issues -- were "quite misleading" (Armstrong, CQ Today, 5/7).

Hamburg told the committee that she would overhaul protection efforts of the nation's food supply to help prevent disease outbreaks. She also said she wanted to restore public confidence in FDA by emphasizing science primarily in agency operations and running procedures in an open and accountable manner (AP/Philadelphia Inquirer, 5/8). In addition, she said she would support having the agency regulate tobacco products if Congress asked for the change in oversight. She said that she thinks FDA "is the appropriate agency to regulate tobacco" (CQ Today, 5/7).

The HELP Committee could vote as early as next week to send Hamburg's nomination to the Senate (New York Times, 5/8). Her nomination is expected to move to a full Senate vote before May 25th. Although Hamburg said her major ongoing project would be food safety, her first task likely would be overseeing the development of a vaccine for the H1N1 influenza (AP/Philadelphia Inquirer, 5/8).

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Centrist Democrats Issue Policy Proposals for Health Reform, Emphasize Stronger Private Insurance Market
[May 08, 2009]

      Centrist Democrats in both houses of Congress on Thursday expressed support for a variety of health reform policy proposals that emphasize cost-reduction, The Hill reports. During a speech on the Senate floor, Sen. Ben Nelson (D-Neb.) discussed his views on health care reform and said that "two of the highest priorities should be reducing the cost of health care and improving efficiency in our delivery system." Meanwhile, the New Democrat Coalition -- a caucus of more than 50 House members -- issued a statement of principles that focused on strengthening the private insurance market for people seeking insurance on their own or through employers.

According to The Hill, both Nelson and the New Democrats support a variety of health reform measures that are in line with proposals supported by President Obama and other lawmakers, including significant restructuring of the health insurance market, scaling up national health information technology systems, accelerating the availability of generic medications and funding comparative effectiveness research on medical treatments. Rep. Ron Kind (D-Wis.), vice-chair of the New Democrats, said the group will emphasize reforms that reduce health care costs in order to produce "savings that can make the coverage issue doable and sustainable in the long term." Rep. Jason Altmire (D-Pa.), co-chair of the New Democrats, added that the group's primary focus is to preserve the employer-based health insurance system. "Individuals and families that are happy with their current coverage (must be) able to keep it," Altmire said.

Public Plan
Nelson on Thursday also discussed the possibility that health reform efforts could include a public plan, saying that he believed such an option would "undermine health care services for millions of Americans and squander this unique opportunity for substantial reform." Kind said that the New Democrats have a broad range of views on the public plan option, adding that many "have their minds open on it."

According to The Hill, the centrist lawmakers' reservations about a public plan will "serve as counterpoints to the increasingly insistent pleas" from other Democrats about including a public plan in health reform legislation. Altmire said that lawmakers will have to wait until the end of the process to make decisions on the public plan and on whether to implement mandates requiring individuals or employers to purchase insurance. The Hill reports that the New Democrats do not have a position on mandates and Nelson "took no definitive stand" on the issue (Young [1], The Hill, 5/7).

Taxing Health Benefits
Although some lawmakers support levying a tax on employer-provided health benefits, House Ways and Means Committee Chair Charles Rangel (D-N.Y.) on Wednesday "made clear" that he opposed such tax policy changes, the New York Times reports. Opponents of a health benefit tax, who include employer groups and labor officials, claim that such a tax could threaten the current employer-based insurance system and impose additional burdens on employees.

The Times reports that although Obama during his presidential campaign criticized a health benefit tax, the proposal "now has some support in his administration" as an element of health reform efforts. In addition, Senate Finance Committee Chair Max Baucus (D-Mont.) "seems keen on the idea," perhaps because one congressional estimate predicted that the tax could yield $100 billion in revenue over the next five years, according to the Times. Jonathan Oberlander, health policy expert at the University of North Carolina, said, "There aren't that many pots of gold to pay for health reform." According to the Times, lawmakers' challenge in promoting a health benefit tax will be to develop a plan that addresses opponents' concerns either by limiting the tax for high-income individuals or otherwise modifying the proposal (Abelson, New York Times, 5/8).

Key Players
Summaries of recent news about Baucus and Sen. Orrin Hatch (R-Utah) discussing health reform appear below.

• Baucus: Baucus on Thursday predicted that the health reform legislation he is preparing will receive at least 70 votes in the Senate as a result of Obama's bipartisan outreach efforts. Baucus said, "I'm very confident that a very large majority of senators and House members are going to vote for a good bill." He added that he thinks Obama will "be quite helpful" in facilitating the bill's passage (Young [2], The Hill, 5/7). In addition, Baucus said he intends to keep lawmakers "on track" to deliver Obama health reform legislation to sign this year. He said a committee markup hearing is scheduled for June and reiterated his hope to have a bill on the Senate floor before the August recess. According to CQ HealthBeat, Baucus on May 12 will help lead the third and final Senate Finance Committee roundtable session, which will focus on ways to finance changes to the health insurance system (Norman, CQ HealthBeat, 5/7).
  
  
• Hatch: During a press breakfast sponsored by the Kaiser Family Foundation on Thursday, Senate Finance Committee member Hatch expressed concern that Democrats would use budget reconciliation to accelerate the adoption of "Washington-run" health care. Hatch said that he "would prefer to have 50 state laboratories" enact their own overhaul efforts based on their individual situations (Reichard, CQ HealthBeat, 5/7). Hatch also said regulation of the insurance industry likely would play a major role in health care reform, adding, "To the extent that we can do reasonable regulation to be able to bring about where there's more empathy and more evenness in the system, perhaps, that might be good." In addition, Hatch said that the proposed government-run public plan "is kind of withering away," adding that he believes Democrats have used the public plan idea "as a hammer" to promote more government involvement in health care (Edney, CongressDaily, 5/8).
  
  A webcast of Hatch speaking about health care is available online at kaisernetwork.org.

Opinion Pieces

• Houston Chronicle: Some might prefer that health care reform legislation "enjoy wide bipartisan support," but "the health care system has too many moving parts to allow for much ideological tinkering," syndicated columnist Froma Harrop writes in a Chronicle opinion piece. According to Harrop, the Democrats' count in Congress and their ability to use the budget reconciliation process give them "the freedom to design an effective program" that can bring coverage to everyone and "contain spiraling health care costs while maintaining quality of care." Harrop writes, "Better that Democrats go it alone than help create an ungainly beast in the name of compromise" (Harrop, Houston Chronicle, 5/7).
  
  
• Wall Street Journal: "Americans want a fix" for health care, and the "Democrats promise one," columnist Kimberley Strassel writes in a Journal opinion piece. According to Strassel, Republicans "can't tank the public option simply by complaining it will kill private insurance." She adds that the GOP must "finally elucidate how it plans to allow the private market to work" to improve health care (Strassel, Wall Street Journal, 5/8).
  
  
• Washington Times: If, as some experts warn, a government-run public health insurance option eventually runs private insurers out of business, U.S. residents could be left with a single government plan comparable to Canada's, Ed Feulner, president of the Heritage Foundation, writes in a Times opinion piece. However, Feulner cites research showing that the Canadian government controls costs by rationing care, resulting in many residents waiting extended periods of time for medical care. Feulner concludes, "Let's ensure that policymakers, in their understandable zeal to reform health care, don't make changes that weaken the entire system" (Feulner, Washington Times, 5/8).

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GE Announces Initiative To Develop 100 New Lower-Cost Medical Products That Improve Quality, Access to Care
[May 08, 2009]

      General Electric on Thursday announced that it will attempt to expand its health care business by offering more lower-cost products, the New York Times reports (Lohr, New York Times, 5/8). Under the plan, GE will allocate $6 billion over the next six years to develop up to 100 new medical devices by 2015. The company said the products will help lower costs, increase access and improve health care quality, according to the Wall Street Journal.

The initiative, which GE calls "healthymagination," will allocate $3 billion for the development of the new products such as portable ultrasound machines and decision-support software for physicians. GE said each new product must meet health care quality improvement standards, lower costs and increase access to care by 15% (Glader, Wall Street Journal, 5/8).

The initiative also allocates $2 billion toward the expansion of GE's electronic health records service and other health information technologies in rural and underserved regions of the U.S. Additional funds also have been reserved to expand and improve health care services and programs abroad (Manning, AP/Boston Globe, 5/8).

According to the Times, the move is intended to help its health care business, known for its medical imaging and diagnostic devices, which has been "struggling" during the economic downturn because many hospitals and clinics are scaling back on capital spending. Jeffrey Immelt, chair and CEO of GE, said, "The high end in health care is never going to go away," adding, "But this will make us broader in terms of price points and offerings" (New York Times, 5/8).

Immelt noted that while the company's health care goals are in line with those advocated by the Obama administration, the new initiative has been in development for several years and is not dependent on stimulus funding (Wall Street Journal, 5/8).

NBC's "Nightly News" on Thursday reported on the launch of the new initiative (Williams, "Nightly News," NBC, 5/7).

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Cuomo's Medicaid Fraud Control Office Best in U.S., According to HHS
[May 08, 2009]

      HHS on Wednesday named New York Attorney General Andrew Cuomo's (D) Medicaid fraud control unit the best in the U.S., the New York Daily News reports. According to the HHS Office of Inspector General, Cuomo's office "clearly demonstrated its outstanding ability to effectively and efficiently detect, investigate and prosecute Medicaid provider fraud and patient abuse and neglect."

In 2008, the office won 143 convictions in cases involving Medicaid provider fraud and patient abuse -- the highest total in the last five years. New York state recovered $263.5 million in civil damages and criminal restitution, which more than exceeds the combined amounts collected in 2006 and 2007. According to HHS, the return on investment in 2008 was approximately $6.64 for every federal dollar spent on the investigations.

Cuomo said, "In the current economic crisis, this mission of preventing fraud, waste and abuse in our Medicaid system has become more essential than ever" (Lovett, New York Daily News, 5/7).

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Massachusetts Commission To Recommended New Reimbursement Model
[May 08, 2009]

      The Massachusetts Special Commission on the Health Care Payment System this month is expected to recommend that the state change the method by which physicians and hospitals are reimbursed for services, the Boston Globe reports. According to Dolores Mitchell, a member of the panel and head of the state employees' health insurance program, the current "fee-for-service" system "has all the wrong incentives." She added, "It encourages excessive use and does nothing to discourage waste. People know the system has been dysfunctional for years."

Commission members -- who include members of the state Legislature and representatives from hospitals, physicians and insurers -- will recommend that providers be paid a single, annual fee for each patient that covers all care for the year. The hope is that such a system will discourage doctors from performing procedures that have a questionable benefit and improve coordinated care and quality. According to the Globe, "Massachusetts would be the first state to broadly adopt such a system, which would essentially put doctors and hospitals on a budget in an effort to restrain health spending."

The administration of Gov. Deval Patrick (D) supports the proposal. Leslie Kirwan, secretary of the state's Administration and Finance division and co-chair of the panel, said, "We need to move forward as quickly as we can," adding, "but this is going to take a very thoughtful transition." Commission members still must develop a time frame for the proposal and decide how to divide payments among primary care doctors, specialists and hospitals, which could delay the process, according to Globe. In addition, the state would have to receive federal approval for payment changes to Medicare and Medicaid programs.

James Mongan -- president of Partners HealthCare, which already is set up to handle global payments -- said, "The devil is in the details," adding, "Most of the healthcare system is not structured in a way that could really work out a very rational global payment system" (Kowalczyk, Boston Globe, 5/7).

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Missouri House Fails To Pass Bill Expanding Medicaid; Lawmakers Working on Alternative Plan
[May 08, 2009]

      The Missouri House on Wednesday rejected a spending bill that would have expanded Medicaid coverage to nearly 35,000 parents, the Kansas City Star reports. Instead, a committee of lawmakers from both chambers of the state Legislature agreed to retain the $146.8 million slated for the expansion and use it for an alternative plan that has not yet been written. The deal was viewed as necessary so that the budget can pass by Friday as required by the state's constitution (Noble, Kansas City Star, 5/6). According to the AP/Southeast Missourian, the bill failed by an 85-75 vote.

The bill would have expanded Medicaid coverage to custodial parents with incomes of up to 50% of the federal poverty level. Missouri's current income eligibility threshold for the program is $292 per month. According to the AP/Missourian, the agreement gives lawmakers an additional week to reach a compromise on legislation that would expand coverage. The legislative session ends on May 15 (Lieb, AP/Southeast Missourian, 5/7).

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Kaiser Daily Health Policy Report Feature Highlights Recent Blog Entries
[May 08, 2009]

      "Blog Watch" offers readers a roundup of health policy-related blog posts.

Bloggers seized on a leaked memo from GOP strategist Frank Luntz on the best way for Republicans to oppose Democratic ideas about health reform.

The Plum Line's Greg Sargent said "the language echoes, to a striking degree, the same language that was used in the infamous 'Harry and Louise' ads to defeat health care reform back in 1993 -- 16 years ago. ... He recommends they emphasize the word 'denial,' saying the Dems' health care will 'deny people' treatments they're seeking." Don McCanne of Physicians for a National Health Program advises fellow single-payer advocates: "What is sobering is that we have to use the truth to attack both the Republican and the Democratic politicians." McCanne also agrees with Luntz's claim that the Democratic proposals are a bailout for the insurance industry.

The New Republic's Jonathan Cohn decides to parse Luntz's arguments and points to other Westernized countries' health systems to challenge claims that health reform would decrease access or increase rationing. Igor Volsky of the Center for American Progress Action Fund's Wonk Room concludes that the memo "tries to obstruct health reform by ignoring what Obama is actually offering. Instead, Luntz is attacking an easy extreme -- what he wishes the Democrats were proposing -- and pretending that the Republicans actually have some kind of health care solution (the memo instructs Republicans to focus on targeting waste, fraud and abuse)."

With words evocative of Luntz's strategy, Republican Rep. John Shadegg of Arizona, writing for Net Right Nation, also uses an example of a foreign system. He invokes the possibility of rationing: "You and your doctor will no longer make the call, government will. This is already happening in the United Kingdom, where the national health care board recently confirmed a ban on three of four life-prolonging drugs for its kidney cancer patients."

And the Healthcare Economist's Jason Shafrin dug up a National Bureau of Economic Research study that clients of Luntz could potentially use to support their approach. The research indicates that health insurance markets appear to be competitive if there are at least 10 insurers, but not with six or fewer.

Of course, political strategy will shift once a bill is presented to the Senate, and cost is still a concern. Finance Committee Chair Sen. Max Baucus (D-Mont.) indicated last week that he believes "health care reform is in jeopardy" if CBO doesn't score sufficient savings in the senator's health plan. James Capretta of Diagnosis took notice of his comment and says there's good reason CBO might not find enough savings: "In the end, CBO is very likely to deliver the same message to Senator Baucus that they have delivered to many others at various times over the years: There's no politically easy way to 'bend the cost curve.' If there were, it would have been done already." Bob Laszewski of Health Care Policy and Marketplace Review chimes in, "The only thing standing between BS reform and real reform are the men and women -- real men and real women -- over at the CBO. I'm proud of you."

Expressing a similar sentiment, University of California-San Diego professor Richard Kronick on KQED's Healthy Ideas says that "there is almost no serious discussion of ideas" that would constrain health care spending to grow only 1% greater than the gross domestic product per year (it's currently growing at about 2.4% faster than GDP). Kronick then lists several en vogue health policy concepts -- HIT, medical homes, quality improvement -- and laments, "[These] may be good ideas and might well lead to improvements in quality and efficiency, but are not likely, by themselves, to substantially slow the adoption or diffusion of new technology, or to move us much closer to GDP+1."

Interesting elsewhere:

• CBO Director Douglas Elmendorf lists the names of the 50+ people currently working on health care;
  
  
• The American Prospect's Ezra Klein reports that Baucus has assigned Finance Committee members to oversee specific aspects of health reform legislation and he details who they are and what they're working on;
  
  
• Jim Gimpel of the Monkey Cage posts a map that illustrates insurance rates throughout the nation by county using U.S. Census data;
  
  
• John Goodman discusses frustrations addressing errors when electronic medical records are used for billing purposes, in addition to patient care.

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