Citizens’ Council on Health Care
CCHC HEALTH eNEWS
Tuesday, June 19, 2001

+++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ The CCHC Insider Report newsletter was mailed on +
+ Friday to CCHC supporters by U.S. Post. Articles +
+ included CCHC’s in-person review of the +
+ Washington, D.C speech given by Tom Scully, +
+ head of the Medicare and Medicaid Administration. +
+ Contact the office for copies and your +
+ opportunity to financially support CCHC. +
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Providing news and commentary on health care policy,
health insurance issues, and medical confidentiality.
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* AMERICAN MEDICAL CARE GOES GROUP-THINK?

* MN GENETICS UNIT EXPANDS NEWBORN SCREENING/TRACKING

* DOCTORS GO DIGITAL TO SAVE TIME

* THINK TANK MOTIVATES EMPLOYEES TO CONSIDER COST OF CARE

* SENIORS DON’T NEED MEDICARE DRUG BENEFIT

* “PERSONAL HEALTH ACCOUNT” PLAN RAISES MORE CASH

* CONGRESSMEN ADVOCATES HMOs FOR SENIOR CITIZENS - THE LETTER


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AMERICAN MEDICAL CARE GOES GROUP-THINK?

American medical institutions are being encouraged to adopt
the Tavistock Principles” of medical ethics. The principles
were derived from the office of the British Medical Journal on
Tavistock Square. Thus the name. These principles have been
presented to the American College of Chest Physicians (10/24/00)
and written about in Internal Medicine News (3/1/99):

1) Health care is a human right.
2) The care of the individual is at the center of health
care, but the whole system needs to work to improve the
health of populations.
3) The health care system must treat illness, alleviate
suffering and disability, and promote health.
4) Cooperation with each other, those served, and those in
other sectors is essential for all that work in health care.
5) All who provide health care must work to improve it.
6) Do no harm.

The first principle creates an entitlement, the second emphasizes
population-based health care at the expense of the individual, and
the sixth might not be possible if number 2 is followed.

Source: “The ‘Tavistock Principles’ of Medical Ethics,” Jerome C.
Arnett, Jr., MD, Medical Sentinel, (Association of American
Physicians and Surgeons), Summer 2001, http://www.aapsonline.org

---Citizens’ Council on Health Care
---6/18/01


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MN GENETICS UNIT EXPANDS NEWBORN SCREENING/TRACKING

The Minnesota Department of Health (MDH) will expand from
5 to 24 the number of metabolic disorders screened at birth.
The expansion is possible due to the implementation of tandem
mass spectrometry technology in the state’s Newborn Metabolic
Screening Laboratory.

Blood from newborns is sent to MDH’s HUMAN GENETICS UNIT.
Many of the disorders can be screened by a single analysis of a
blood sample using “whole blood collected by heel stick 24 to 48
hours after birth, placed onto the filter paper portion of the
Newborn Screening Card, air dried, and sent to MDH for testing.”

The department will report presumptive diagnoses to the family’s
physician, including a description of the suspected clinical
condition and the names and locations of metabolic specialists
available for consultation. The physician will be asked to
designate a metabolic center for follow-up and MDH will notify
that center about the positive/presumptive result.

MDH notes, “As MDH and the metabolic specialist who follow these
infants accumulate experience detecting and treating these
disorders, the outcomes of treatment will be documented and used
to direct continued improvements.”

Current screening tests babies for phenylketonuria, congenital
hypothyroidism, galactosemia, hemoglobinopathies, and congenital
adrenal hyperplasia. By the end of 2001, the MDH plans to also
screen the blood of newborns for disorders of amino acid and
organic acid metabolism and fatty acid oxidation.

WHAT LAW SAYS:

RESPONSIBLE PARTY:The hospital administrator, nurse midwife or
person registering the birth of the child is responsible for
assuring that every baby is screened.

WHAT THE RULES SAY:

REGISTRY OF CHILDREN WITH METABOLIC DEFECTS
Minnesota Rules 4615.0750 (department regulations written
to flesh out the workings of the law) says that one of the
responsibilities of the MDH is assuring that persons with
metabolic disorders “be included in a registry of cases
for the purpose of coordinating follow-up services.”

The registry is “a permanent record maintained by the
department on each patient diagnosed by a physician and
reported to the department...”

In addition, “The registry shall be updated not more often than
annually by direct contact with the patient to determine their
address and their need for medical treatment services,
educational materials, and counseling related to their metabolic
disease. The registry shall include the following minimum data
on each patient:

A. name of patient;

B. gender;

C. date of birth;

D. place of birth;

E. parents’ names;

F. current address of patient;

G. diagnosis;

H. name and address of physician; and

I. other data the commissioner deems necessary for follow-up services.”

Sources:
Disease Control Newsletter, Minnesota Department of Health, May 2001: http://www.health.state.mn.us/divs/dpc/ades/dcn/0105dcn.pdf

Minnesota Rules 4615.0300 -4615.0760
Minnesota Statutes 2000, Chapter 144.125
http://www.leg.state.mn.us/

Newborn Screening information (MDH website): http://www.health.state.mn.us/divs/fh/mcshn/nbshome.htm

---Citizens’ Council on Health Care
---6/18/01


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DOCTORS GO DIGITAL TO SAVE TIME

”Doctors Go Digital
By Sally Squires
Washington Post Staff Writer
Tuesday, May 15, 2001; Page HE10

In a four-minute gap between seeing patients, physician
Catherine Picken stands at a hallway workstation to catch
up on some “paperwork.”With a few keystrokes and a point of
her stylus on her notebook-sized computer, she transmits a
patient report to a referring physician, checks for phone
messages, okays two prescription refills, attaches a reminder
to a patient’s electronic medical chart and fields a question
from her office manager about when she wants to go on vacation...
”I can catch up throughout the day,” Troost says. “I feel less
hassled. I have breathing time. I feel like I have gotten my
life back....”

Source: “Doctors Go Digital, Sally Squires, Washington Post,
May 15, 2001.
http://washingtonpost.com/wp-dyn/health/A26648-2001May14.html


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THINK TANK MOVES TO EMPLOYEES TO CHECK COSTS

The Evergreen Freedom Foundation is Olympia, Washington is
moving its 15 employees into a revised version of the defined
contribution concept. The EFF is contributing $110 per month to
each employee from which they can purchase a major-medical policy.

According to the Business Journal: “Foundation employees are
responsible for the first $500 of their health-care bills during
the year. After that, the foundation will pay for medical expenses
up to a combined total of $2,499 per employee. And should expenses
hit $2,500, the employee’s major-medical health insurance will kick
in.”

Defined contribution plans have been widely discussed, but rarely
implemented, because many employees and unions consider them a “take
away” option. However with double-digit increases in health care
premiums, employers are looking for options that still permit them
to provide some health coverage.

But Stephan Barchet who spearheaded the move for the Foundation says
employees need to look beyond the benefits package: “Few employees
understand that the $200 a month for single-employee coverage, and
$500 a month for employee and family coverage, represents foregone
salaries or wages that would otherwise be paid to the employees.”

Source:”Looking for definition,” Peter Neurath, Puget Sound Business
Journal, June 15, 2001.

---Citizens’ Council on Health Care
---6/18/01


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SENIORS DON’T NEED MEDICARE DRUG BENEFIT

Some sort of prescription drug benefit for the elderly will
become law. The Congressional Budget Office estimated the cost of
a Senate Democrat plan at $318 billion over 10 years—close to
the $300 billion provided for in the budget.

But once implemented the cost of a prescription drug plan
inevitably will skyrocket. Estimates never accurately predict how
such programs will change behavior. When the government pays the
bills for prescription drugs, people will use a lot more of them.
Moreover, the increased demand will raise prices.

But the larger question is, Why enact this benefit at all? There
is really no demonstrable need for it.

Increasingly the elderly are rich, in large part because they
don’t have to pay for things the working population has to pay
for, such as health care.

o According to the Census Bureau, those age 65 to 69 have
the highest median net worth of any age group: $106,408 in
1995 (see figure http://www.ncpa.org/pd/gif/pd061801a.gif ).

o By contrast, those under age 35 had a net worth of just
$7,428, and those between the ages of 35 and 44 had a net
worth of only $31,691.

A prime source of the elderly’s growing wealth is that many own
their homes free and clear. According to the Bureau of Labor
Statistics, 65.4 percent of elderly homeowners in 1997 had no
mortgage.

o According to the CBO, the average after-tax income of
elderly households is just 10 percent less than the
nonelderly: $44,000 and $48,500, respectively.

o Taking into account Medicare and assets, the elderly as a
group are 24 percent better off than the nonelderly, say
economists Stephen Crystal and Dennis Shea of Rutgers
University.

o Furthermore, the elderly are 83 percent better off than
families with small children.

Source: Bruce Bartlett, senior fellow, National Center for Policy
Analysis, June 14, 2001.

For text http://www.ncpa.org/oped/bartlett/bartlett01.html

For Census data on wealth
http://www.census.gov/hhes/www/wealth/1995/wlth95-1.html

For CBO prescription drug benefit cost estimates
http://www.cbo.gov/showdoc.cfm?index=2873&sequence=0&from=7

Directly quoted from Daily Policy Digest, National Center
for Policy Analysis, 6/18/01, http://www.ncpa.org

_______________________________________________
"PERSONAL HEALTH ACCOUNT” PLAN RAISES MORE CASH

On June 13, 2001, Minneapolis-based Definity Health announced
that it has raised $25 million in its’ second round of private
financing. Primary investors included Psilos Group Managers,
Merrill Lynch Ventures, Alta Partners, Toronto Dominion
Investments and Brightstone Capital. More than a year ago,
in April 2000, Definity had received $23 million in initial
financing.

The Definity health benefits program does not claim to be a
Medical Savings Account, however, the employees pay for their
choice of health insurance from a personal account funded by
their employer. Funds left over in the account can be rolled over
and used for future medical expenses. If a person experiences a
major medical expense, the health care policy will provide
coverage after funds in the account are exceeded and the
deductible is met.

Source: “Definity raised $25 million,” St. Paul Pioneer Press,
June 14, 2001.

---Citizens’ Council on Health Care
6/18/01

______________________________________________
CONGRESSMEN ADVOCATES HMOs FOR SENIOR CITIZENS

(weblink to letter below)


Health Care Financing Administration’s (HCFA) Management of
Medicare+Choice

June 7, 2001



Mr. Tom Scully
Administrator
Health Care Financing Administration
200 Independence Ave., S.W.
Washington, D.C. 20201

Dear Administrator Scully:

As an ongoing part of our Patients First Project, today we are writing to inquire about the Health Care Financing Administration’s (HCFA) management of the Medicare Part C program, also commonly referred to as Medicare+Choice. In 1997, Congress passed the Balanced Budget Act (BBA) of 1997, which included provisions to create the Medicare+Choice program. This legislation redesigned the system for setting Medicare payment rates for managed health care plans that contract with Medicare. The goals in creating Medicare+Choice were to expand health plans to markets where access to managed care plans was limited or nonexistent, and to offer new types of health plans in all areas. Unfortunately, some of these goals have not been realized.

As you know, Medicare managed care enrollment has remained nearly level since the implementation of the Medicare+Choice program, increasing from about 14% of the Medicare population in 1997 to about 16% of the Medicare population by September, 2000. At the same time, more than 100 plans have either terminated their contracts and fully withdrawn from the program or partially withdrawn by reducing the geographic areas they served. Many participating plans have cited the cost of regulatory requirements imposed by HCFA as a barrier in their efforts to preserve and expand health care choices for the Medicare beneficiaries that they serve.

We believe that an important part of modernizing the Medicare program is laying the foundation for more competition and future innovation in the Medicare program and to foster growth in private sector heath plan participation. Medicare+Choice is a fundamental component in this effort. It is our goal that with your help we can evaluate several regulatory requirements that HCFA has placed on Medicare+Choice organizations and HCFA’s administrative structure for managing the Medicare+Choice program. To that end, we would appreciate your cooperation by providing us with answers to the following questions:

1.Currently, authority for the Medicare+Choice program is divided among three HCFA centers, the Center for
Health Plans and Providers, the Center for Beneficiary Services, and the Office of Clinical Standards and
Quality. Please describe the functions and budgets for each center. Within the agency’s administrative
hierarchy, to whom do these centers report? Please describe how HCFA ensures that regulatory decisions
affecting the administration of the Medicare+Choice program made by one of these agency centers are related
to and coordinate with requirements being developed or implemented by any other agency center. Please
describe the internal administrative procedures that HCFA uses to assign regulatory decision making authority to
an agency center when two or more agency centers are reviewing identical or similar regulatory issues. Does
HCFA regularly review the time that it takes to make regulatory decisions that affect the administration of the
Medicare+Choice program? If so please provide the Committee with copies of the methodology used to perform
any such reviews and the results of them. If not, please explain why.
2.Please describe the internal process undertaken at HCFA for outlining the agency’s programmatic priorities and
goals for the Medicare+Choice program. In your description of this process, please indicate the agency’s time
frame for reviewing its own performance in achieving its outlined programmatic goals and regularly assessing
areas of the Medicare+Choice program that could be improved.
3.Prior to 1997, management authority for the Medicare+Choice program was assigned to a single consolidated
center within HCFA. Please provide the Committee with all internal HCFA documents pertaining to the agency’s
review of its infrastructure that led to the decision to restructure management authority for the Medicare+Choice
program to its current structure.
4.Do you believe that HCFA’s current administrative structure for the Medicare+Choice program is more efficient
than a consolidated center for Medicare+Choice policy whose Director reports to the HCFA Administrator? Has
HCFA ever or is it currently considering reorganization of its administrative infrastructure that considers and sets
policy for the Medicare+Choice program? Has HCFA ever performed an analysis of the effectiveness of its
administrative infrastructure for regulating the Medicare+Choice program? If so please provide the Committee
with will copies.
5.How does HCFA ensure that its 10 regional offices issue consistent instructions and policy interpretations to
Medicare+Choice organizations across the country? When a Medicare+Choice organization requests a
regulatory clarification from HCFA if it believes that it has received a conflicting interpretation of the rules by two
or more HCFA regional offices or with HCFA central, what is HCFA’s process for addressing these inquiries?
6.Please describe how HCFA ensures that Medicare+Choice organizations are providing all of the health care
services to Medicare beneficiaries as required by the BBA. Does HCFA have a consistent, standardized process
for evaluating Medicare+Choice organizations? Does HCFA reduce its review requirements of Medicare+Choice
organizations that perform well and concentrate greater agency resources on Medicare+Choice organizations
that merit closer review through their performance history? If so, please explain HCFA’s methodology for
apportioning its Medicare+Choice organization review resources. If not, please explain why.
7.Please describe HCFA’s approach to compiling data for the implementation of a risk adjustment methodology.
What percentage of encounter data from inpatient and outpatient claims does HCFA require Medicare+Choice
organizations to collect and submit to the agency? Describe any other information that HCFA requires from
Medicare+Choice organizations in its effort to implement a risk adjustment methodology. Please provide all
documents generated by HCFA using this encounter data in its efforts to implement a risk adjustment
methodology. In its efforts to collect data from Medicare+Choice organizations for the implementation of the risk
adjustment methodology, has HCFA undertaken any reviews to measure the impact of its data collection
requirements on Medicare+Choice organizations? If so, please provide the Committee with copies.
8.In its efforts to collect encounter data, has HCFA reviewed alternative approaches to data collection such as
using the existing data systems capabilities possessed by Medicare+Choice organizations? Does HCFA have
any plans, or is it currently looking into the viability of working with Medicare+Choice organizations on using
existing health plan methods for collecting data to be used on creating a risk adjustment methodology? If so,
please assess the status of these efforts. If not, please explain why.
9.Please describe HCFA’s methodology for developing the Quality Improvement System for Managed Care
(QISMC). Under QISMC, please describe all of the quality improvement projects that the agency will be requiring
Medicare+Choice organizations to complete and the reason that the agency feels that they are necessary for
the effective management of the Medicare+Choice program. How does HCFA believe the QISMC requirements
will affect HCFA’s effort to implement deeming of private sector accrediting organizations? Is HCFA currently
evaluating its approach to the implementation of deeming practices? If so, please describe HCFA’s current
efforts to implement deeming methods. Since the passage of the Balanced Budget Refinement Act (BBRA),
how many new private sector accrediting organizations have been granted “deeming authority” by HCFA.
10.Please provide the Committee with one copy of every HCFA document sent to Medicare+Choice organizations
from January 1, 2000 to present. Please provide all written analysis by HCFA of the information or data that has
been collected from Medicare+Choice organizations. Describe all programmatic and policy changes made by
HCFA in the Medicare+Choice program that have occurred as a result of information that has been collected
and analyzed from Medicare+Choice organizations. Additionally, please describe how HCFA has utilized data
collected from Medicare+Choice organizations to alter payment methodologies during 1999, 2000 and 2001, if
at all. How does the agency foresee using this data for 2002?
11.Please describe HCFA’s guidelines for reviewing beneficiary materials promulgated by Medicare+Choice
organizations. How does the agency ensure that its guidelines are applied consistently across, and within,
HCFA’s regional offices? HCFA has implemented a 45-day deadline for conducting its review of these materials,
please provide the Committee with a summary of all materials submitted by Medicare+Choice organizations to
the agency over the last year and the average time the agency has taken to review them and issue a decision.
Is HCFA currently reviewing its standardization initiative in an effort narrow the agency’s focus to summaries of
plan benefits, allowing Medicare+Choice organizations more flexibility in communicating with their potential
customers in the fashion they find most effective? What steps is HCFA currently taking to reduce the time that it
takes to review marketing and beneficiary materials? Does HCFA feel that this is an appropriate function that a
private sector contractor could perform, and has HCFA explored the feasibility of contracting this function out
under its deeming authority? If so, please describe what steps HCFA is taking to reduce the length of time it
takes to review these materials. If not, please explain why.
12.Please describe all of the beneficiary materials that HCFA requires Medicare+Choice organizations to submit to
the agency for review. Additionally, please include a description of why HCFA feels that reviewing each of these
materials is necessary for conducting its management of the Medicare+Choice program. Please provide the
Committee with all reviews conducted by HCFA that led the agency to decide to require Medicare+Choice
organizations to submit the various beneficiary materials for approval. Has HCFA considered revising its
standardization initiative to focus solely on the standardized summary of benefits?
13.Given the BBA’s objective of enhancing Medicare beneficiaries’ access to Medicare Part C health plans, what
efforts have been taken by HCFA in recent years to recruit FTEs with expertise in managed care issues and
payment methodologies? Has the agency developed a plan to address the perceived shortage of staff working
on managed care issues? If so, please provide the Committee with copies of all HCFA documents addressing
this issue.

We are requesting that HCFA provide its responses to the above questions to the Committee by June 21, 2001. If you have any questions, please do not hesitate to contact us or have your staff contact Joe Greenman of the Energy and Commerce Committee Majority staff at (202) 226-2424. We look forward to working with you on this important matter.

Sincerely,


W.J. “Billy” Tauzin
Chairman

James C. Greenwood
Chairman
Subcommittee on Oversight and Investigations

Michael Bilirakis
Chairman
Subcommittee on Health


cc: The Honorable John D. Dingell
Ranking Minority Member, Energy and Commerce Committee

The Honorable Peter Deutsch
Ranking Minority Member, Subcommittee on Oversight and Investigations

The Honorable Sherrod Brown
Ranking Minority Member, Subcommittee on Health


The Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515
(202) 225-2927

SOURCE: http://energycommerce.house.gov/107/letters/06072001_269.htm

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