Ex-Medicare Administrator: Premium Support “Is Going To Have To Happen”

By Marilyn Werber Serafini

KHN Staff Writer

May 31, 2012

No matter which party dominates Washington after November’s election, policy makers will have to agree to big changes in the mammoth Medicare program to limit federal spending, says Thomas Scully, senior counsel at Alston & Bird, and a former Medicare administrator under President George W. Bush. In an interview with Kaiser Health News, Scully urged Democrats and Republicans to set aside partisan differences and take a closer look at the controversial premium-support model, which would give beneficiaries a set amount of money to purchase coverage.

Here are edited excerpts of the interview.

Q: Will Congress and President Obama return to Washington after the election to cut a budget deal, which would mean major reductions in Medicare spending?  

We’re never going to have a lame duck session. These guys hate each other, sadly. They’re going to come back three weeks after an election with half of these guys having lost and they’re going to get the votes to do something big? …They’ll kick the can no matter who wins. If it’s President Romney, they’ll kick the can to June, because a new president can’t find the men’s room for the first four months. There’s no staff, no people. There are too many pieces and the relationships aren’t there. The votes aren’t there.

Q: In the longer term, will policy makers move beyond their partisan disagreements and restructure Medicare using the Republican-backed premium support model, which would limit federal spending per beneficiary?

Premium support is Part D, [Medicare’s prescription drug benefit]. When we designed Medicare Advantage, [the private health plan program in Medicare] it was premium support. Premium support is the Federal Employee Health Benefits Plan. … That is a reasonable way to fix the Medicare program, phased in over the long term. … The problem is these things get so politicized. … The world was going to end because we were going to pass Part D. … It’s worked out fine. Republicans were too dumb to take credit for it. Most Democrats like it.

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You need to raise the retirement age to 67. … The retirement age of Social Security is 66 now [67 for those born after 1959]. Nobody noticed because it happened one [month] at a time for 12 years. You need to do the same thing for Medicare. You need to gradually move it to a premium support model so it looks more like the Federal Employee Retirement Program. You’re not limiting spending. You’re putting it under some kind of a rational, non-open ended fee-for-service entitlement. That’s going to have to happen.

Q: What is the scenario if Mitt Romney becomes president?

If Gov. Romney becomes president, and you have a Republican Senate and a Republican House, they may do so much that they’re in for two years then blow themselves up. They will cut spending, they will move to premium support, and they will do some radical stuff on the entitlement side. I don’t think they’ll block grant Medicaid, but what’s a block grant? It’s a waiver. You’ve got 27 states with waivers and they’ll waive everybody and do kind of a per capita program on Medicaid. They’ll move toward premium support. They’ll probably raise the retirement age. There will be a lot of radical change. People may not like it.

Q: And if President Obama remains in the White House?

The other scenario is, if President Obama wins a second term, he realizes that we’ve got a national, fiscal crisis that should have been dealt with a couple of years ago and there’s going to have to be a big deal. And big deals require compromise. I don’t think the relationships are, sadly, what they used to be [on Capitol Hill]. But, if you put [House Ways and Means Committee Chairman Dave Camp, R-Mich.,] who’s a great guy, in a room with [Senate Finance Committee Chairman Max Baucus, D-Mont.,] who’s a great guy, you’d probably get a hell of a good result. … They’re both terrific moderates, very smart, know their stuff. There’s clearly room for a deal if you can get the political support for it.

Relatively balanced analysis of Affordable Care Act

Published Wednesday, Apr. 04, 2012

Answers to questions about possible changes to Medicare

By Marilyn Werber Serafini

WASHINGTON — Congress is unlikely to consider legislation that would fundamentally restructure Medicare until a new Congress — and possibly a new president — are seated next year. But politicians have sought to tackle the growth in Medicare costs several times in the past two years, most notably in the 2010 health care law and then in last year’s federal budget deal.

The more immediate pressure is to reduce the federal budget deficit by the end of this year to stop automatic 2 percent spending cuts from going into effect in 2013, as last year’s budget agreement requires. That probably will entail slowing spending growth in Medicare, which provides health care to 47 million seniors and people with disabilities and consumes about 15 percent of the federal budget.

Here Kaiser Health News answers several frequently asked questions about the timeline for overhauling Medicare and reducing spending, and proposals under consideration.

Q. The House of Representatives passed a budget last week that included a Medicare overhaul. Will it become law?

A. No. With strictly Republican support, the House last Thursday approved a federal budget for 2013 that included controversial Medicare changes, written by Budget Committee Chairman Paul Ryan, R-Wis. Democrats control the Senate, however, and they’ve said they won’t take up a budget resolution this year.

That means the GOP document will serve mostly as an election-year rallying point. Republicans will cite it as proof that they’re serious about reducing the nation’s deficit, while Democrats will portray it as an attack on senior citizens and others.

On Tuesday, for instance, in a speech in Washington before the American Society of News Editors, President Barack Obama called the Ryan Medicare plan a “bad idea” that “will ultimately end Medicare as we know it” and force seniors — particularly sicker ones — to bear a larger share of their health care costs.

Q. So Medicare will remain untouched at least until next year?

A. No. The 2010 health care law made some potentially important money-saving changes to the program. It saves $500 billion in Medicare spending over 10 years, in part by cutting rates to private Medicare Advantage plans and reducing payments to hospitals and other medical providers.

It also requires higher-income seniors to pay more for their care. In addition, the law created a yet-to-be-constituted panel of experts, called the Independent Payment Advisory Board, to cap federal spending on Medicare at no more than the growth rate of the gross domestic product plus 1 percent.

After November’s elections, lawmakers will seek agreement on ways to cut the deficit once again, including through targeted proposals to lower Medicare spending. If they’re unsuccessful, automatic spending cuts of 2 percent are slated to start taking effect next year, all from payments to hospitals and other care providers.

Q. What about more structural changes, such as the ones that Ryan has been pushing?

A. Ryan has gotten a lot of attention for his Medicare proposals, which are likely to be considered along with other overhaul plans next year, especially if Republicans win control of the Senate, the White House or both.

The latest Ryan proposal was nearly identical to a premium support idea that he put forward in December with Sen. Ron Wyden, D-Ore., and one that GOP presidential hopeful Mitt Romney crafted in November. It would provide a set amount of money for future Medicare beneficiaries — those currently younger than 55 — to purchase either private health plans or the traditional government-administered program through a newly created Medicare exchange. That subsidy would replace the guaranteed set of benefits the federal government now provides regardless of costs.

Q. Does Wyden’s support mean that other Democrats will get behind it?

A. Not likely. Even Wyden didn’t endorse the House Republican budget, because it has stricter spending limits than the plan the two co-authored. Democrats dislike how Ryan’s plan would shift risk to seniors, and they plan to campaign against it next fall.

They point to a Congressional Budget Office analysis of a similar proposal last year that projected that by 2030 a typical 65-year-old would be required to pay 68 percent of the cost of his or her Medicare-covered services. That compares with the 25 percent that he or she would pay under current law.

 

Also, some critics argue that the promise in Ryan’s latest proposal that future beneficiaries can choose the traditional, government-run program is disingenuous. They cite the risk that the government-run plan would attract the sickest people, driving up its costs, while private plans lured the healthiest, and that medical providers might abandon the program if Medicare cuts their rates to curb costs.

 

Q. Is there anything that Democrats and Republicans agree on?

A. Ryan and Obama have proposed capping the growth of Medicare to the annual increase in the gross domestic product plus 0.5 percent. Members of both parties talk about increasing the eligibility age of Medicare from 65 to 67 and requiring higher-income beneficiaries to pay more.

 

Q. Where do the presidential candidates stand on Medicare?

A. Romney’s plan is similar to the one the House approved last week, which he and competitor Newt Gingrich have endorsed. Rick Santorum, another GOP competitor, also supports Ryan’s ideas, but has said he’d prefer eliminating the traditional, government-run program and requiring beneficiaries to choose from plans offered by private insurers. Candidate Ron Paul, a Republican congressman from Texas, would maintain Medicare for current seniors but would wean younger people away from the insurance program in favor of free-market approaches.

Obama takes a somewhat different tack: His health care law retains Medicare’s benefit structure but authorizes some efforts to try restraining spending by moving to a reimbursement system that rewards providers based on patient outcomes, rather than on volume.

 

The law also requires higher-income beneficiaries to pay more for their care, and it created a panel to make recommendations to cap Medicare’s growth if it exceeds a certain percentage of the GDP.

Last year, the president rebuked Ryan for his earlier proposal to overhaul Medicare in a speech at George Washington University, saying it was “less about reducing the deficit than it is about changing the basic social compact in America.” Obama called for what he said was a “balanced approach” that included spending cuts as well as tax increases.

(Kaiser Health news is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization that isn’t affiliated with Kaiser Permanente.)

MORE FROM KAISER HEALTH NEWS

Medicare Now Covers Depression Screening

Medicare Now Covers Annual Screening For Depression

Topics: Health Costs, Delivery of Care, Insurance, Marketplace, Quality, Medicare

By Michelle Andrews

Apr 03, 2012

Bette Davis, who had breast cancer and suffered a series of strokes before her death in 1989 at age 81, famously remarked that old age is not for sissies.

Many people assume that as health problems multiply and loved ones die, it’s inevitable that the elderly become depressed. Not true, say experts. Older people have lower rates of depression than younger groups.

But depression often goes undiagnosed in the elderly, who feel the stigma of mental illness more acutely than younger people and are often less likely to seek help. At the same time, older people are more likely to have multiple chronic conditions that consume their primary-care provider’s attention in the limited time available during a typical office visit.

The situation may be changing. In October, Medicare began to coverannual depression screening in primary-care settings with no cost sharing for beneficiaries.

Paying doctors to screen for depression — Medicare’s going rate is $17.36 per person — may well increase how often they do it, say experts. “Doctors are trying to do the right thing, but how do you prioritize what to do in 21 minutes with a complex person?” asks Ken Duckworth, medical director for the National Alliance on Mental Illness, http://www.nami.org/ an advocacy group. “If they get paid for it, they structure it into their practices.”

Medicare covers 60 percent of the treatment for mental health problems, including depression. (Under a 2008 law, that figure is scheduled to rise to 80 percent in 2014.)

A Rapid Test

Most primary-care practices that screen for depression use a tool called the patient health questionnaire. The PHQ-9, as it’s called, asks people to describe how frequently during the past two weeks they have felt down or hopeless or taken little interest or pleasure in doing things. It also asks about sleep patterns, appetite and concentration, among other things. Although the test can be taken in just a few minutes, a 2001 study indicated it identifies depression and pinpoints its severity nearly 90 percent of the time.

Nearly 17 percent of people will have a major depressive disorder during their lifetimes, according to 2007 data from the National Comorbidity Survey of mental health disorders. For people 60 and older, however, the lifetime prevalence is much lower, 10.7 percent. “It’s the survivor factor,” says Michael Friedman, an adjunct associate professor at Columbia University’s schools of social work and public health. “You’re more likely to die young if you have depression.”

The lower figures don’t tell the whole story, say experts. Older people are much more likely to suffer from chronic conditions such as diabetes and heart disease, which can complicate diagnosis and treatment of both depression and other medical problems.

“Depression worsens the effect of other illnesses,” says Charles Nemeroff, a geriatric psychiatrist at the University of Miami. “People with depression are more vulnerable to [disease], and once it happens, it’s worse.”

People with depression often don’t take very good care of themselves. They don’t exercise or eat right. They don’t take their medications or get their blood work done to make sure their blood pressure, blood sugar and cholesterol levels are under control. And people with multiple chronic conditions probably take multiple medications that may interact with each other.

In addition, diabetes and heart disease can actually cause a late-life form of depression called vascular depression, which may occur when blood vessels harden, reducing blood flow to the brain.

All of these factors present a challenge for primary-care providers. There’s no point in screening for depression, after all, if you don’t have the resources to help people get the treatment they need.

An Encouraging Trial

Mental health experts point to a model called collaborative care as one that has shown good results. In one trial conducted at 14 primary-care clinics in Washington state, patients who had poorly controlled diabetes and/or heart disease as well as depression received help from a nurse to improve their efforts to control their diseases over a 12-month period. The nurse worked closely with a psychiatrist, primary-care physician and psychologist to track patient progress and adjust medications as necessary.

Patients who received the intensive team approach showed significantly more improvement in both their depression and other medical conditions compared with patients who received usual care, according to a study published in the New England Journal of Medicine in December 2010 about the trial. Lead author Wayne Katon, a professor of psychiatry at the University of Washington School of Medicine, said the clinics saved an average of $600 per patient over a two-year period.

Most primary-care practices don’t provide that kind of comprehensive, coordinated care, Katon says.

But as policymakers and insurers increasingly offer incentives to primary care physicians to transform their practices into medical homes for their patients and reward providers for better disease control rather than simply running tests and doing procedures, the landscape should change.

Depressed people are more likely to receive diagnoses and be treated in primary-care settings than elsewhere. Research shows that elderly people, in fact, prefer to deal with their primary-care provider on mental health issues. In that context, coverage of depression screening may help more Medicare beneficiaries get the help they need.

Please send questions or ideas for future topics for the Insuring Your Health column to questions@kaiserhealthnews.org.