Washington Notes

March, 2007

Association Health Plans Under Consideration Again

Congress may again consider legislation to exempt association-sponsored health insurance plans (called Association Health Plans or ‘AHPs’) from existing state consumer protections. While promoted as a way to address health insurance affordability problems facing small businesses and their employees, the research overwhelmingly indicates that these types of proposals will make health insurance less accessible, less affordable and less secure for the vast majority of small employers and individual consumers.

You need to send Congress a message! Go to the Action Alert on the Advocacy site and tell your representative AHPs are not the answer for diabetes care.

Growth of Managed Care Plans Threatens Medicare's Finances

Medicare Payment Advisory Commission (MedPAC) Chairman Glenn M. Hackbarth warned Congress that Medicare overpayments to managed care plans, and the plans' resulting ability to offer additional benefits, could draw seniors into managed care, even though most fee-for-service plans deliver care more efficiently. Testifying before the House Ways and Means Health Subcommittee, Hackbarth said Medicare overpayments to managed care plans threaten to "suck millions of additional beneficiaries" into such plans, even though they are "demonstrably less efficient" than traditional Medicare plans.

Medicare Advantage ‘On the Table’ for Democrats Seeking Budget Savings

Only days after MedPAC reported to Congress that Medicare pays 12 percent more to managed care health plans than traditional fee-for-service plans for providing care to beneficiaries, top-ranking Democrats in the House and Senate said they are looking at the Medicare Advantage program as a potential area for major budget savings.

GAO Suggests Doctor ‘Profiling' as One Method to Control Costs

Comparing physicians' performance to an efficiency standard as part of a doctor "profiling" program has the potential to generate savings under Medicare Part B, according to preliminary findings released by the Government Accountability Office (GAO). "Although savings from physician profiling alone would clearly not be sufficient to correct Medicare's long-term fiscal imbalance, it could be an important part of package of reforms aimed at future sustainability."

CMS Extends Deadline for Using Old Version of Provider Claims Form

The Centers for Medicare & Medicaid Services is allowing certain providers to keep using a Medicare claim form past the intended April 1 expiration due to problems with the new version of the CMS-1500 form.

Specifically, CMS has extended the time for accepting Form CMS-1500 (12-90) until further notice because of problems with the newer version Form CMS-1500 (08-05) released in July 2006. CMS said the delay is the result of some print vendors, primarily the Government Printing Office, selling incorrectly formatted versions of the new form.

Form CMS-1500 is the standard Medicare claim form used by noninstitutional providers and suppliers that qualify for a waiver of the requirement that claims be electronically submitted. Some Medicaid agencies also use the form.

CMS Seeks Fiscal 2008 Budget Savings With Program Integrity Efforts

The Centers for Medicare & Medicaid Services (CMS) expects to find a "fairly significant" amount of savings from program integrity efforts to meet its goal of cutting Medicare regulatory spending $10 billion over five years, as set out in President Bush’s fiscal year 2008 spending proposal. Program integrity efforts will be a key to producing the savings called for in the president's budget. CMS will target hospices, home health agencies, and psychiatric hospitals to realize the savings. The agency also will seek savings in the long-term care hospitals proposed rule and from Medicare capital payments to hospitals.

MedPAC Examines Ways to Cut Readmissions to Hospitals, Sees Possible Big Savings for Medicare

The Medicare Payment Advisory Commission (MedPAC) is examining options for reducing inpatient hospital readmissions, which it says might save Medicare billions of dollars annually. MedPAC is investigating whether Medicare could save money as well as improve quality by reducing inpatient hospital readmissions, and have put forth an option of partially withholding hospital payments if an institution's readmission rate is higher than an established benchmark for the industry. Numerous MedPAC commissioners objected to that idea, however, saying that hospitals are not in control of what happens to patients once they are discharged and that little is known about what constitutes a preventable readmission.

Incentive-Based Physician Payment System May Slow Rising Health Costs

The director of the Congressional Budget Office (CBO), Peter R. Orszag, has told Congress it must find ways to slow spending growth in Medicare and Medicaid without harming patients’ health or medical innovation. Rapid spending growth in the programs raises "fundamental questions" about their economic sustainability. Orszag suggested possible ways to slow spending in Medicare include introducing pay-for-performance to its physician reimbursement system.