CCA Briefing on Dual Eligibles

Tuesday, March 6, 2012

CCA’s Briefing on Dual Eligibles

State and federal agencies are aggressively exploring integrated payment and delivery models needed to raise healthcare quality and lower costs for people eligible for both Medicare and Medicaid. The nation’s dual eligibles are overwhelmingly low income, elderly, and among the most costly to treat.

The Care Continuum Alliance (CCA) notes that in Medicare, 21 percent of enrollees are dually eligible but account for 36 percent of spending and in Medicaid, 15 percent are dually eligible and account for 39 percent of spending so it is paramount that the healthcare system needs to provide integrated and coordinated care to really address the cost issues. Although, dual eligibles at the intersection of Medicaid and Medicare, are a relatively small group consisting of 8 or 9 million people.

“Dual eligibles are among the most challenging populations for Medicaid and Medicare, due to the high incidence of multiple chronic conditions, socioeconomic disparities, and limited coordination between the programs,” CCA President and CEO Tracey Moorhead said.

CCA representing more than 200 organizations and individuals has identified core program components necessary for operating comprehensive integrated dual eligible delivery models. These specific issues are discussed in-depth in their just released Policy Paper “Designing and Deploying Core Components of Integrated Dual Eligible Models”.

On March 1, 2012, CCA sponsored a Capitol Hill briefing to discuss the challenges and the solutions to the problem as reported in their Policy Paper. Representative Bill Cassidy (R-LA) opened the briefing commenting that the present system in the U.S provides dual eligibles with very expensive but at the same time, poor care and in addition, payment incentives are pulling the system in all different directions.

As Richard Fredrickson, Vice President for SSI and LTC Programs at Centene Corp, and a speaker at the briefing pointed out, duals are not a homogenous population and are not all eligible for the same level of care. In fact, 75 percent of Nursing Home eligibles live in the community resulting in significant long term savings in Medicaid spending.

Matt Salo, Executive Director, of the National Association of Medicaid Directors who reported that we need to find solutions to providing care to duals since they consume forty percent of Medicaid funds.

Jerome Vaccaro, M.D. President & COO at APS Healthcare is insistent that an integrated transparent system of care and services is an important part of the solution, and Pam Coleman, Senior Vice President for Government Programs at INSPIRIS a provider-based chronic care management company, wants to see coordinated person-centered care so that patients can receive in-home primary care and care management.

The CCA Policy Paper recommends core solutions such as the need for:

• Centralized, comprehensive, and interconnected data
• Health risk assessments and stratification
• Population-specific and personalized care planning
• Care coordination and transitions of care
• Education, training and incentives for patients and providers
• Program evaluation and outcomes toward improvements

To download the policy paper, go to

Posted by at 4:20 PM

Popular drug costs rise 26%

from the NY Times
March 6, 2012

AARP Study Says Price of Popular Drugs Rose 26%


The prices of drugs used most widely by older Americans rose by nearly 26 percent from 2005 to 2009 — nearly twice the rate of inflation — according to a report issued Tuesday by AARP.

The increase happened even as the price of generic drugs, which account for the vast majority of prescriptions, has been falling in recent years, the report found. “At a time when our country is contracting economically and inflation is really, really low, inflation in the cost of prescription drugs is going in the other direction,” said Cheryl Matheis, the senior vice president for policy strategy at AARP, whose members are 50 and older. “The word we use is relentless because it just doesn’t seem to abate.”

But officials in the pharmaceutical industry criticized the report, saying that the expanded availability of generic drugs has slowed the increase in drug prices in recent years. “AARP has released yet another misleading pricing report that ignores key facts about the marketplace for prescription medicines and paints an inaccurate picture of prescription drug spending in the U.S.,” the Pharmaceutical Research and Manufacturers of America, the industry trade and lobbying group, said in a statement Tuesday.

The AARP report, which examined the retail prices of the 514 brand name and generic drugs most widely used by Medicare recipients, said that the price of generic drugs fell by nearly 31 percent from 2005 to 2009. But at the same time that brand-name drug prices grew by nearly 41 percent and specialty drugs rose more than 48 percent. The rate of inflation, by contrast, grew by just over 13 percent over the same period.

Few dispute that the price of brand name drugs is increasing. “Inflation is alive and well in the drug industry,” said Lawrence Marsh, managing director of equity research at Barclays Capital, who tracks drug prices. He said drug companies had been raising prices on drugs whose patent protections were about to end in an effort to squeeze as much profit as they could before losing market share to generics.

Studies using more recent data have shown that the rate of growth in drug spending appears to be leveling off. A report by government economists last year found that total retail spending on prescription drugs was up just 1.2 percent in 2010, a record low rate. And a study by the IMS Institute for Healthcare Informatics, a research group that consults for the drug industry, reported that spending on prescription medicines grew by 2.3 percent in 2010, compared with 5.1 percent in 2009.

Some criticized the AARP report because it reported on only the full retail price consumers paid at the pharmacy, even though many patients were responsible for only a small co-payment or nothing at all. It also did not take into account rebates and other discounts insurers had negotiated with drug companies; AARP said that data was not available to the group. And some said that the widespread use of generics had been driving down the overall cost of drugs for years.

“There are a whole bunch of high quality medicines that are becoming available generically, and the cost is dropping 30, 40 percent,” said Michael Kleinrock, director of research development at the IMS Institute for Healthcare Informatics. A study of the Medicare Part D drug program by the IMS Institute found that the daily cost of drugs fell from 2006 to 2010 for 8 of 10 categories of drugs that make up the most volume of prescriptions under Medicare Part D, the drug program for retirees.

Even so, Mr. Kleinrock said that his research showed that even with discounts, what insurance companies had been paying for drugs on a national level increased consistently by about 5 to 6 percent a year.

Leigh Purvis, one of the authors of the AARP report, said the studies that reported a slower growth in spending did not look at the price of individual drugs. That matters to Americans who do not have health insurance and who have to pay for those drugs out of pocket.

The price of brand-name drugs can also drive up insurance premiums, she said, and push retirees more quickly into the coverage gap — or the so-called doughnut hole — in the Medicare Part D drug program.

Ms. Matheis said this was especially relevant to AARP members, who are older and likely to lose their jobs or have a harder time finding one at the same time that they are more likely to need prescription drugs.

“If they don’t have coverage for those drugs, they are in a world of hurt,” she said.


Oregon reforms healthcare

Reforming healthcare: Oregon steps well past federal model March 6, 2012
By JONATHAN J. COOPER, Associated Press
SALEM, Ore. (AP) — Pregnant with her seventh child and desperate to kick a meth addiction, Madeline Hutchinson turned to a program from the local Medicaid provider that connected her with a mentor and other support that she said helped her get off drugs.
Emmanual, now 2, was born healthy.
“We need mentors. We need advocates,” Hutchinson said. “We need someone that’s going to come along and say, `This baby needs to be clean. And we’re going to show you how.”‘
There’s a smattering of preventative care programs like this around Oregon, and not just for addicted mothers. But there hasn’t been a statewide push — until now.
Oregon Gov. John Kitzhaber last week signed a law that will create new regional entities, called coordinated care organizations, which will be able to spend money on programs like the one Hutchinson credits with turning around her life.
Kitzhaber says the plan will improve care, reduce costs and serve as a model for the rest of the nation.
But critics say that if the program works, more people will use health care benefits and costs will rise.
The coordinated care organizations will be responsible for looking after Medicaid patients in their area. Local organizations will determine their exact models.
But each will be a holistic approach that addresses every aspect of health — mental, medical and dental — with a focus in particular on people with mental illnesses, addictions or chronic conditions like diabetes, heart disease, asthma and kidney failure.
The idea is to target the costliest patients and provide up-front care that can prevent emergency room visits and other expensive interventions, and thus save Medicaid a lot of money.
Oregon has long been a pioneer in finding new approaches to health care, and Kitzhaber — a former emergency room doctor who is passionate about overhauling the system — believes the new law could solve several problems.
Officials say that if all 50 states adopted Oregon’s changes, the federal budget would save more than $1.5 trillion over the next 10 years — more than Congress’ failed “super committee” was trying to save over the same time period.
“I’m convinced … the federal government is going to have to do something drastic about the cost of health care,” Kitzhaber said. “And it’s not going to be driven by how you keep people healthy. It’s going to be driven by how do you keep from defaulting on the national debt, which is two completely different conversations.”
Long before the Oregon Legislature passed the law in February, Kitzhaber took his idea to Washington, D.C., to present it to Obama administration officials, and he caught their attention.
1 of 3    3/7/12 10:21 AM
And the ability to usher in widespread cost savings across the health care system will depend on whether the program can expand beyond Medicai Oregon, there’s no guarantee that other states with different cultural and political environments would see the same results.
Oregon state Sen. Fred Girod, a conservative Republican and a dentist, said he doesn’t think the plan would actually save money because he says i consumption of health care.
“Are we going to get more for less?” Girod said in a committee hearing. “I’ve been in the Legislature for a long time, I’ve been promised that I don’ times and I have yet to see it.”
Proponents dismiss the CBO report, saying their plans go far beyond the limited experiments that were studied, and point to data from projects in elsewhere that more closely align with their plans.
A state-commissioned report found that significant savings were possible from eliminating duplicated tests, preventing hospitalizations and other Oregon’s changes will focus on the neediest, costliest patients. Many of them are on both Medicare, primarily for the elderly, and Medicaid, prima
Various funding streams from all levels of government for mental, physical and dental care will be pooled into a global budget. Each coordinated c a share of that budget and will have broad authority to spend the money as it sees fit. Successful organizations will be rewarded with additional ca
Local officials around Oregon have already begun setting up coordinated care organizations in various parts of the state, and some are expected to on July 1.
Supporters of the new law say a project in central Oregon shows that it can work.
After identifying 144 patients who were frequently visiting the emergency room — at least 10 times in a year — a group of health providers found th health conditions and more than half had no primary care provider who could treat simple disorders outside the ER.
By creating care plans, assigning case managers to help them navigate the health care system and embedding mental health providers at the docto room visits were reduced by 49 percent in six months.
Robin Henderson, a psychologist who is director of behavioral health services for the hospital in Bend, Ore., says the program has promise, “It’s an philosophy to start to look at how you care for the whole person.” (Copyright 2012 by The Associated Press. All Rights Reserved.)

Hospitals face more cuts

Looming Budget Cuts Make Hospital Belt-Tightening Increasingly Difficult

John Commins, for HealthLeaders Media , March 5, 2012

The economy might be on the rebound, but the nation’s hospitals should still brace for the possibility of $360 billion in cuts in Medicaid, Medicare, and other federally funded healthcare programs and services over the next decade.

Moody’s Investors Service said in a credit outlook that the ongoing reductions in federal funding for healthcare in the fiscal 2013 budget and beyond could make it disproportionately more difficult and more expensive to borrow money for hospitals that rely on Medicare.

“If adopted, the cuts would reduce reimbursement to hospitals, forcing these institutions to continue finding additional expense savings or new sources of revenue to avoid the credit negative deterioration of their profit margins,” Moody’s said in a budget analysis.

“Most hospitals have been adjusting to negative credit trends since 2008, and many have improved their quality and efficiency substantially. But past operating savings reflect harvesting ‘low-hanging fruit,’ while future savings will be harder to achieve and will require more wrenching change.”

Medicare rate increase reductions installed under the healthcare reforms will enter their third year when the fiscal 2013 budget takes effect in October. Over the next decade, Moody’s says, about $268 billion in Medicare reductions could adversely impact funding for critical access hospitals, graduate medical education, and bad debt relief.

Moody’s noted that the Medicare Payment Advisory Commission in January recommended a Medicare rate adjustment of 1% for the coming budget cycle, which is less than half the rate of inflation in the overall economy.

Lisa Goldstein, associate managing director at Moody’s, told HealthLeaders Media that hospitals have done a good job confronting cost growth. “Low-hanging fruit examples would be reductions in work force, not filling existing positions, matching clinical needs with nursing skill sets better, looking at supply costs, negotiating bigger discounts with vendors, buying in bulk for example,” Goldstein says.

However, she believes the “wrenching change” that hospitals may now have to undertake will be considerably more involved.

“‘More wrenching change’ speaks to the next level of cost reduction and expense management, which is more about gaining efficiencies. That is taking apart the fundamental basic building blocks of patient care and recreating them all over again in a more efficient manner,” she says. “We have heard from providers across the country, examining how they deliver healthcare, the processes, the operations, the patient flow to become more efficient and extract permanent savings that way.”

The federal budget also calls for about $52 billion in cuts to federal funding for Medicaid in the coming years. Moody’s said those changes could include replacing current funding formulas with a single matching rate for each state, rebasing disproportionate share payments, and limiting the federal funding match for provider taxes.

“A limit on federal matches for provider tax payments would be a significant development because these programs have proliferated significantly over the past several years, and receive on a combined basis an increasing amount of federal support,” Moody’s said.

“Prior to 2008, 15 states operated provider fee programs. Today, this number has grown to 33, with another three states considering a program. These programs most benefit hospitals with high exposure to indigent populations and their elimination would negatively affect those hospitals the most,” the report said.

Goldstein says the federal government could eventually shut down provider tax schemes as a cost cutting measure for the federal deficit. “Most hospitals realize that these provider tax programs may not go on forever,” she says. “We look to hear how those hospitals and management teams will lower their reliance on these funds. How are you going to manage if this program abates one day?”

John Commins is an editor with HealthLeaders Media. He can be reached at