Jennifer Silverman

WASHINGTON — President Bush's 2006 budget request includes several initiatives to get providers to adopt standards-based, interoperable electronic health records systems.

The Agency for Healthcare Research and Quality (AHRQ) is currently directing $14 million of this year's budget to jump-start regional collaborations that would assist health care providers in employing these types of systems. To continue these activities outside of AHRQ in 2006, the budget proposal includes a new $75 million account in the Office of the National Coordinator for Health Information Technology. Although primary care groups have shown a great deal of interest in a national information technology (IT) health care network, language in the budget isn't likely to affect the individual physician's office—at least not directly, Robert Tennant, senior policy advisor for the Medical Group Management Association (MGMA), said in an interview.

“This will be targeted to the local health information networks that David J. Brailer [the federal coordinator for health IT] has been promoting. That's very different from promoting use in an individual practice,” Mr. Tennant said at the annual conference of the National Academy of Social Insurance.

The hope is these initiatives will produce a network to enhance patient care and encourage practices to spend the money on infrastructures that would link them to this type of network, Mr. Tennant said.

The fact that Dr. Brailer's office is received funding at all means that this issue is on the president's radar screen, “considering that appropriations had eliminated funding for the program in 2005,” Bob Doherty, senior vice president for governmental affairs and public policy with the American College of Physicians, said.

WASHINGTON — President Bush's 2006 budget request includes several initiatives to get providers to adopt standards-based, interoperable electronic health records systems.

The Agency for Healthcare Research and Quality (AHRQ) is currently directing $14 million of this year's budget to jump-start regional collaborations that would assist health care providers in employing these types of systems. To continue these activities outside of AHRQ in 2006, the budget proposal includes a new $75 million account in the Office of the National Coordinator for Health Information Technology. Although primary care groups have shown a great deal of interest in a national information technology (IT) health care network, language in the budget isn't likely to affect the individual physician's office—at least not directly, Robert Tennant, senior policy advisor for the Medical Group Management Association (MGMA), said in an interview.

“This will be targeted to the local health information networks that David J. Brailer [the federal coordinator for health IT] has been promoting. That's very different from promoting use in an individual practice,” Mr. Tennant said at the annual conference of the National Academy of Social Insurance.

The hope is these initiatives will produce a network to enhance patient care and encourage practices to spend the money on infrastructures that would link them to this type of network, Mr. Tennant said.

The fact that Dr. Brailer's office is received funding at all means that this issue is on the president's radar screen, “considering that appropriations had eliminated funding for the program in 2005,” Bob Doherty, senior vice president for governmental affairs and public policy with the American College of Physicians, said.

WASHINGTON — President Bush's 2006 budget request includes several initiatives to get providers to adopt standards-based, interoperable electronic health records systems.

The Agency for Healthcare Research and Quality (AHRQ) is currently directing $14 million of this year's budget to jump-start regional collaborations that would assist health care providers in employing these types of systems. To continue these activities outside of AHRQ in 2006, the budget proposal includes a new $75 million account in the Office of the National Coordinator for Health Information Technology. Although primary care groups have shown a great deal of interest in a national information technology (IT) health care network, language in the budget isn't likely to affect the individual physician's office—at least not directly, Robert Tennant, senior policy advisor for the Medical Group Management Association (MGMA), said in an interview.

“This will be targeted to the local health information networks that David J. Brailer [the federal coordinator for health IT] has been promoting. That's very different from promoting use in an individual practice,” Mr. Tennant said at the annual conference of the National Academy of Social Insurance.

The hope is these initiatives will produce a network to enhance patient care and encourage practices to spend the money on infrastructures that would link them to this type of network, Mr. Tennant said.

The fact that Dr. Brailer's office is received funding at all means that this issue is on the president's radar screen, “considering that appropriations had eliminated funding for the program in 2005,” Bob Doherty, senior vice president for governmental affairs and public policy with the American College of Physicians, said.

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that has already affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.”

The grants would be designed to cover much or all of the costs of extending coverage.

“Any state that succeeded in boosting the fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” said Mr. Aaron, senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population.

“Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.”

This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents who have health insurance coverage, he continued. Depending on local conditions and political preferences, states could use refundable tax credits or vouchers in order to promote individual health insurance.

Some additional strategies that states could use to boost coverage for the uninsured include extending Medicaid or the State Children's Health Insurance Program, imposing employer mandates, and trying to create an intrastate single-payer plan.

States could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans.

None of these options would be mandatory, Mr. Aaron said.

Another panelist, Stuart M. Butler, Ph.D., suggested that Congress should enact a policy “toolbox” that would make a range of ideas available to states, on a voluntary basis. Dr. Butler is vice president of domestic and economic policy studies at the Heritage Foundation, Washington.

Under such an approach, states could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Department of Health and Human Services regarding appropriate waivers to pull such an option together, Mr. Butler explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, he added.

One of the most important goals is to make sure that Medicaid populations are protected, Dr. Butler said. He recommended “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals.”

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that has already affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.”

The grants would be designed to cover much or all of the costs of extending coverage.

“Any state that succeeded in boosting the fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” said Mr. Aaron, senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population.

“Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.”

This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents who have health insurance coverage, he continued. Depending on local conditions and political preferences, states could use refundable tax credits or vouchers in order to promote individual health insurance.

Some additional strategies that states could use to boost coverage for the uninsured include extending Medicaid or the State Children's Health Insurance Program, imposing employer mandates, and trying to create an intrastate single-payer plan.

States could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans.

None of these options would be mandatory, Mr. Aaron said.

Another panelist, Stuart M. Butler, Ph.D., suggested that Congress should enact a policy “toolbox” that would make a range of ideas available to states, on a voluntary basis. Dr. Butler is vice president of domestic and economic policy studies at the Heritage Foundation, Washington.

Under such an approach, states could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Department of Health and Human Services regarding appropriate waivers to pull such an option together, Mr. Butler explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, he added.

One of the most important goals is to make sure that Medicaid populations are protected, Dr. Butler said. He recommended “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals.”

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that has already affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.”

The grants would be designed to cover much or all of the costs of extending coverage.

“Any state that succeeded in boosting the fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” said Mr. Aaron, senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population.

“Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.”

This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents who have health insurance coverage, he continued. Depending on local conditions and political preferences, states could use refundable tax credits or vouchers in order to promote individual health insurance.

Some additional strategies that states could use to boost coverage for the uninsured include extending Medicaid or the State Children's Health Insurance Program, imposing employer mandates, and trying to create an intrastate single-payer plan.

States could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans.

None of these options would be mandatory, Mr. Aaron said.

Another panelist, Stuart M. Butler, Ph.D., suggested that Congress should enact a policy “toolbox” that would make a range of ideas available to states, on a voluntary basis. Dr. Butler is vice president of domestic and economic policy studies at the Heritage Foundation, Washington.

Under such an approach, states could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Department of Health and Human Services regarding appropriate waivers to pull such an option together, Mr. Butler explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, he added.

One of the most important goals is to make sure that Medicaid populations are protected, Dr. Butler said. He recommended “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals.”

U.S. medical schools need to improve their tuition- and fee-setting processes to help students pay off their debts, the Association of American Medical Colleges concluded in a new study.

The future affordability of a U.S. medical education may be in jeopardy unless significant changes are made, particularly for lower-income applicants and applicants from racial and ethnic groups underrepresented in medicine, said the study, conducted by an AAMC working group.

The median indebtedness of medical school graduates has increased dramatically during the last 20 years—from $20,000 for both public and private schools in 1984, to almost $140,000 and $100,000 for private and public schools, respectively, last year. Although medical school tuition and fees have increased at rates far in excess of inflation, physician income at the same time has remained relatively flat, the study said.

To address rising tuition costs and student debt, the AAMC recommended that medical schools offer:

▸ Greater predictability about the student costs of a medical education.

▸ Ongoing financial education for medical students.

▸ More financial aid, with an emphasis on need-based scholarships and on programs offering loan repayment and forgiveness in exchange for service in the military or to underserved populations.

▸ Periodic self-reviews of their attendance costs.

Medical schools should also reevaluate their funding of medical education and develop innovative methods to generate financial support at the local, state, and national levels for financial aid programs that would address the nation's current health care needs, the AAMC recommended.

“It's essential that we find more creative ways for students to pay off their educational debt by providing health care services to our uninsured and underserved citizens,” said AAMC President Jordan J. Cohen, M.D.

The American Medical Association has offered some assistance in this area by awarding a total of $40,000 in grants to five medical schools to help medical students and patients care for patients in underserved communities.

The grants, part of the AMA's Reaching Equitable Access to Care for Health Program, will support health promotion and disease prevention projects in free clinics led by medical students. Grant recipients included schools in New York, Texas, Pennsylvania, and Chicago.

U.S. medical schools need to improve their tuition- and fee-setting processes to help students pay off their debts, the Association of American Medical Colleges concluded in a new study.

The future affordability of a U.S. medical education may be in jeopardy unless significant changes are made, particularly for lower-income applicants and applicants from racial and ethnic groups underrepresented in medicine, said the study, conducted by an AAMC working group.

The median indebtedness of medical school graduates has increased dramatically during the last 20 years—from $20,000 for both public and private schools in 1984, to almost $140,000 and $100,000 for private and public schools, respectively, last year. Although medical school tuition and fees have increased at rates far in excess of inflation, physician income at the same time has remained relatively flat, the study said.

To address rising tuition costs and student debt, the AAMC recommended that medical schools offer:

▸ Greater predictability about the student costs of a medical education.

▸ Ongoing financial education for medical students.

▸ More financial aid, with an emphasis on need-based scholarships and on programs offering loan repayment and forgiveness in exchange for service in the military or to underserved populations.

▸ Periodic self-reviews of their attendance costs.

Medical schools should also reevaluate their funding of medical education and develop innovative methods to generate financial support at the local, state, and national levels for financial aid programs that would address the nation's current health care needs, the AAMC recommended.

“It's essential that we find more creative ways for students to pay off their educational debt by providing health care services to our uninsured and underserved citizens,” said AAMC President Jordan J. Cohen, M.D.

The American Medical Association has offered some assistance in this area by awarding a total of $40,000 in grants to five medical schools to help medical students and patients care for patients in underserved communities.

The grants, part of the AMA's Reaching Equitable Access to Care for Health Program, will support health promotion and disease prevention projects in free clinics led by medical students. Grant recipients included schools in New York, Texas, Pennsylvania, and Chicago.

U.S. medical schools need to improve their tuition- and fee-setting processes to help students pay off their debts, the Association of American Medical Colleges concluded in a new study.

The future affordability of a U.S. medical education may be in jeopardy unless significant changes are made, particularly for lower-income applicants and applicants from racial and ethnic groups underrepresented in medicine, said the study, conducted by an AAMC working group.

The median indebtedness of medical school graduates has increased dramatically during the last 20 years—from $20,000 for both public and private schools in 1984, to almost $140,000 and $100,000 for private and public schools, respectively, last year. Although medical school tuition and fees have increased at rates far in excess of inflation, physician income at the same time has remained relatively flat, the study said.

To address rising tuition costs and student debt, the AAMC recommended that medical schools offer:

▸ Greater predictability about the student costs of a medical education.

▸ Ongoing financial education for medical students.

▸ More financial aid, with an emphasis on need-based scholarships and on programs offering loan repayment and forgiveness in exchange for service in the military or to underserved populations.

▸ Periodic self-reviews of their attendance costs.

Medical schools should also reevaluate their funding of medical education and develop innovative methods to generate financial support at the local, state, and national levels for financial aid programs that would address the nation's current health care needs, the AAMC recommended.

“It's essential that we find more creative ways for students to pay off their educational debt by providing health care services to our uninsured and underserved citizens,” said AAMC President Jordan J. Cohen, M.D.

The American Medical Association has offered some assistance in this area by awarding a total of $40,000 in grants to five medical schools to help medical students and patients care for patients in underserved communities.

The grants, part of the AMA's Reaching Equitable Access to Care for Health Program, will support health promotion and disease prevention projects in free clinics led by medical students. Grant recipients included schools in New York, Texas, Pennsylvania, and Chicago.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, Joan Sokolovsky, Ph.D., a MedPAC senior analyst indicated. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit. The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From interviews with stakeholders, MedPAC learned prior authorization often creates burdens for beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid for a drug when it was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

One physician reported his practice spends several hours a day trying to resolve prior authorization matters. Private plans have tried to ease this burden by educating members and physicians. “Some plans deal with the burden by simply placing fewer drugs on prior authorization,” she said.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, Joan Sokolovsky, Ph.D., a MedPAC senior analyst indicated. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit. The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From interviews with stakeholders, MedPAC learned prior authorization often creates burdens for beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid for a drug when it was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

One physician reported his practice spends several hours a day trying to resolve prior authorization matters. Private plans have tried to ease this burden by educating members and physicians. “Some plans deal with the burden by simply placing fewer drugs on prior authorization,” she said.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, Joan Sokolovsky, Ph.D., a MedPAC senior analyst indicated. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit. The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From interviews with stakeholders, MedPAC learned prior authorization often creates burdens for beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid for a drug when it was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

One physician reported his practice spends several hours a day trying to resolve prior authorization matters. Private plans have tried to ease this burden by educating members and physicians. “Some plans deal with the burden by simply placing fewer drugs on prior authorization,” she said.

Trading Choice for Savings

More patients are willing to limit their choice of physicians and hospitals to save on out-of-pocket medical costs, the Center for Studying Health System Change (HSC) reported. Between 2001 and 2003, the proportion of working-age Americans with employer health coverage willing to make this trade-off increased from 55% to 59%—after the rate had been stable since 1997, the study found. Low-income consumers were the most willing to give up provider choice in return for lower cost. In addition, the proportion of chronically ill working-age adults with employer coverage who are willing to trade choice for lower costs rose from 51% in 2001 to 56% in 2003. The study's findings were based on HSC's Community Tracking Household Survey. In 2003, the survey included 20,500 adults aged 18-64 with employer-sponsored health coverage; in 2001 it included 28,000 working-age adults with employer coverage.

Physicians Prefer Paper

When it comes to recording patient health information, most physicians and hospitals still prefer paper to the computer, the Centers for Disease Control and Prevention reported. Ambulatory medical care surveys conducted from 2001 to 2003 revealed that only 17% of physicians' offices had electronic medical records to support patient care. Less than a third of hospital facilities (31% of hospital emergency departments and 29% of outpatient departments) had electronic records. Physicians who were younger than age 50 years were twice as likely as their older counterparts to utilize computerized physician order entry systems, the CDC reported.

Part B Costs Expected to Rise

Payments for Medicare Part B services—coverage for physician visits and outpatient services—are expected to grow at an annual average rate of about 6.9% over the next 10 years, the program's trustees announced in their annual report. More use of services such as office visits and lab and diagnostic tests account for the accelerated growth in Part B costs—and needs further detailed examination, said Mark McClellan, M.D., administrator of the Center for Medicare and Medicaid Services. Medicare's hospital fund in the meantime currently isn't expected to dry out until 2020, 1 year later than estimated in last year's report. “However, if you look at historical projections, President Bush has presided over an unprecedented drop in solvency,” countered Rep. Pete Stark (D-Calif.), ranking Democrat on the House Ways and Means health subcommittee, in a statement.

Medicare and Smoking Cessation

It's official: Medicare is adding coverage for smoking and tobacco cessation counseling for certain beneficiaries who want to kick the habit. The coverage decision applies to Medicare patients whose illness is caused or complicated by smoking, such as heart disease, cerebrovascular disease, lung disease, or osteoporosis—diseases that account for a large proportion of Medicare spending. It also applies to beneficiaries whose medications are compromised by tobacco use. “It is our hope that Medicare's decision to pay for smoking cessation counseling will encourage and help seniors quit smoking once and for all,” Ronald Davis, M.D., trustee with the American Medical Association, said in a statement. Of the 440,000 Americans who die annually from smoking-related disease, 300,000 are aged 65 and older, according to the Centers for Disease Control and Prevention. The CDC in 2002 estimated that 57% of smokers aged 65 and older reported a desire to quit smoking.

FDA Guidance on Drug Risks

The Food and Drug Administration has released three guidance documents to help industry improve its methods of assessing and monitoring the risks associated with drugs and biological products in clinical development and general use. One document addresses risk minimization action plans (RiskMAPs) that industry could use to address specific risk-related goals and objectives. How the new guidance protocols would specifically address a drug with red safety flags like Vioxx (rofecoxib), “is hard to speculate,” Paul J. Seligman, M.D., director of the Office of Pharmacoepidemiology and Statistical Science with the FDA's Center for Drug Evaluation and Research, said at a press conference. “It would be difficult for us to come up with a drug that would allow us to walk through the guidances,” as all drugs need to be evaluated on a case-by-case basis, Dr. Seligman said.

Report on Health Care Disparities

Disparities related to race, ethnicity, and socioeconomic status continue to plague the health care system, according to the 2004 National Healthcare Disparities Report from the Agency for Healthcare Research and Quality. Using comparable data from 2000 and 2001, researchers analyzed 38 measures of effectiveness for health care and 31 measures of access to care. Of the measures tracked for these two consecutive years, AHRQ found that blacks received poorer quality of health care than whites for about two-thirds of the quality measures and had worse access to care than whites for about 40% of access measures. Hispanics, Asians, American Indians, and Alaska natives also scored lower than whites on quality measures and access to care. Low-income groups received lower quality of care for about 60% of quality measures and had worse access to care for about 80% of access measures, than those with high incomes.

Trading Choice for Savings

More patients are willing to limit their choice of physicians and hospitals to save on out-of-pocket medical costs, the Center for Studying Health System Change (HSC) reported. Between 2001 and 2003, the proportion of working-age Americans with employer health coverage willing to make this trade-off increased from 55% to 59%—after the rate had been stable since 1997, the study found. Low-income consumers were the most willing to give up provider choice in return for lower cost. In addition, the proportion of chronically ill working-age adults with employer coverage who are willing to trade choice for lower costs rose from 51% in 2001 to 56% in 2003. The study's findings were based on HSC's Community Tracking Household Survey. In 2003, the survey included 20,500 adults aged 18-64 with employer-sponsored health coverage; in 2001 it included 28,000 working-age adults with employer coverage.

Physicians Prefer Paper

When it comes to recording patient health information, most physicians and hospitals still prefer paper to the computer, the Centers for Disease Control and Prevention reported. Ambulatory medical care surveys conducted from 2001 to 2003 revealed that only 17% of physicians' offices had electronic medical records to support patient care. Less than a third of hospital facilities (31% of hospital emergency departments and 29% of outpatient departments) had electronic records. Physicians who were younger than age 50 years were twice as likely as their older counterparts to utilize computerized physician order entry systems, the CDC reported.

Part B Costs Expected to Rise

Payments for Medicare Part B services—coverage for physician visits and outpatient services—are expected to grow at an annual average rate of about 6.9% over the next 10 years, the program's trustees announced in their annual report. More use of services such as office visits and lab and diagnostic tests account for the accelerated growth in Part B costs—and needs further detailed examination, said Mark McClellan, M.D., administrator of the Center for Medicare and Medicaid Services. Medicare's hospital fund in the meantime currently isn't expected to dry out until 2020, 1 year later than estimated in last year's report. “However, if you look at historical projections, President Bush has presided over an unprecedented drop in solvency,” countered Rep. Pete Stark (D-Calif.), ranking Democrat on the House Ways and Means health subcommittee, in a statement.

Medicare and Smoking Cessation

It's official: Medicare is adding coverage for smoking and tobacco cessation counseling for certain beneficiaries who want to kick the habit. The coverage decision applies to Medicare patients whose illness is caused or complicated by smoking, such as heart disease, cerebrovascular disease, lung disease, or osteoporosis—diseases that account for a large proportion of Medicare spending. It also applies to beneficiaries whose medications are compromised by tobacco use. “It is our hope that Medicare's decision to pay for smoking cessation counseling will encourage and help seniors quit smoking once and for all,” Ronald Davis, M.D., trustee with the American Medical Association, said in a statement. Of the 440,000 Americans who die annually from smoking-related disease, 300,000 are aged 65 and older, according to the Centers for Disease Control and Prevention. The CDC in 2002 estimated that 57% of smokers aged 65 and older reported a desire to quit smoking.

FDA Guidance on Drug Risks

The Food and Drug Administration has released three guidance documents to help industry improve its methods of assessing and monitoring the risks associated with drugs and biological products in clinical development and general use. One document addresses risk minimization action plans (RiskMAPs) that industry could use to address specific risk-related goals and objectives. How the new guidance protocols would specifically address a drug with red safety flags like Vioxx (rofecoxib), “is hard to speculate,” Paul J. Seligman, M.D., director of the Office of Pharmacoepidemiology and Statistical Science with the FDA's Center for Drug Evaluation and Research, said at a press conference. “It would be difficult for us to come up with a drug that would allow us to walk through the guidances,” as all drugs need to be evaluated on a case-by-case basis, Dr. Seligman said.

Report on Health Care Disparities

Disparities related to race, ethnicity, and socioeconomic status continue to plague the health care system, according to the 2004 National Healthcare Disparities Report from the Agency for Healthcare Research and Quality. Using comparable data from 2000 and 2001, researchers analyzed 38 measures of effectiveness for health care and 31 measures of access to care. Of the measures tracked for these two consecutive years, AHRQ found that blacks received poorer quality of health care than whites for about two-thirds of the quality measures and had worse access to care than whites for about 40% of access measures. Hispanics, Asians, American Indians, and Alaska natives also scored lower than whites on quality measures and access to care. Low-income groups received lower quality of care for about 60% of quality measures and had worse access to care for about 80% of access measures, than those with high incomes.

Trading Choice for Savings

More patients are willing to limit their choice of physicians and hospitals to save on out-of-pocket medical costs, the Center for Studying Health System Change (HSC) reported. Between 2001 and 2003, the proportion of working-age Americans with employer health coverage willing to make this trade-off increased from 55% to 59%—after the rate had been stable since 1997, the study found. Low-income consumers were the most willing to give up provider choice in return for lower cost. In addition, the proportion of chronically ill working-age adults with employer coverage who are willing to trade choice for lower costs rose from 51% in 2001 to 56% in 2003. The study's findings were based on HSC's Community Tracking Household Survey. In 2003, the survey included 20,500 adults aged 18-64 with employer-sponsored health coverage; in 2001 it included 28,000 working-age adults with employer coverage.

Physicians Prefer Paper

When it comes to recording patient health information, most physicians and hospitals still prefer paper to the computer, the Centers for Disease Control and Prevention reported. Ambulatory medical care surveys conducted from 2001 to 2003 revealed that only 17% of physicians' offices had electronic medical records to support patient care. Less than a third of hospital facilities (31% of hospital emergency departments and 29% of outpatient departments) had electronic records. Physicians who were younger than age 50 years were twice as likely as their older counterparts to utilize computerized physician order entry systems, the CDC reported.

Part B Costs Expected to Rise

Payments for Medicare Part B services—coverage for physician visits and outpatient services—are expected to grow at an annual average rate of about 6.9% over the next 10 years, the program's trustees announced in their annual report. More use of services such as office visits and lab and diagnostic tests account for the accelerated growth in Part B costs—and needs further detailed examination, said Mark McClellan, M.D., administrator of the Center for Medicare and Medicaid Services. Medicare's hospital fund in the meantime currently isn't expected to dry out until 2020, 1 year later than estimated in last year's report. “However, if you look at historical projections, President Bush has presided over an unprecedented drop in solvency,” countered Rep. Pete Stark (D-Calif.), ranking Democrat on the House Ways and Means health subcommittee, in a statement.

Medicare and Smoking Cessation

It's official: Medicare is adding coverage for smoking and tobacco cessation counseling for certain beneficiaries who want to kick the habit. The coverage decision applies to Medicare patients whose illness is caused or complicated by smoking, such as heart disease, cerebrovascular disease, lung disease, or osteoporosis—diseases that account for a large proportion of Medicare spending. It also applies to beneficiaries whose medications are compromised by tobacco use. “It is our hope that Medicare's decision to pay for smoking cessation counseling will encourage and help seniors quit smoking once and for all,” Ronald Davis, M.D., trustee with the American Medical Association, said in a statement. Of the 440,000 Americans who die annually from smoking-related disease, 300,000 are aged 65 and older, according to the Centers for Disease Control and Prevention. The CDC in 2002 estimated that 57% of smokers aged 65 and older reported a desire to quit smoking.

FDA Guidance on Drug Risks

The Food and Drug Administration has released three guidance documents to help industry improve its methods of assessing and monitoring the risks associated with drugs and biological products in clinical development and general use. One document addresses risk minimization action plans (RiskMAPs) that industry could use to address specific risk-related goals and objectives. How the new guidance protocols would specifically address a drug with red safety flags like Vioxx (rofecoxib), “is hard to speculate,” Paul J. Seligman, M.D., director of the Office of Pharmacoepidemiology and Statistical Science with the FDA's Center for Drug Evaluation and Research, said at a press conference. “It would be difficult for us to come up with a drug that would allow us to walk through the guidances,” as all drugs need to be evaluated on a case-by-case basis, Dr. Seligman said.

Report on Health Care Disparities

Disparities related to race, ethnicity, and socioeconomic status continue to plague the health care system, according to the 2004 National Healthcare Disparities Report from the Agency for Healthcare Research and Quality. Using comparable data from 2000 and 2001, researchers analyzed 38 measures of effectiveness for health care and 31 measures of access to care. Of the measures tracked for these two consecutive years, AHRQ found that blacks received poorer quality of health care than whites for about two-thirds of the quality measures and had worse access to care than whites for about 40% of access measures. Hispanics, Asians, American Indians, and Alaska natives also scored lower than whites on quality measures and access to care. Low-income groups received lower quality of care for about 60% of quality measures and had worse access to care for about 80% of access measures, than those with high incomes.

U.S. medical schools need to improve their tuition- and fee-setting processes to help students pay off their debts, the Association of American Medical Colleges concluded in a new study.

The median indebtedness of medical school graduates has increased dramatically during the last 20 years—from $20,000 for both public and private schools in 1984, to almost $140,000 and $100,000 for private and public schools, respectively, last year. Physician income has remained relatively flat, according to the study conducted by an AAMC working group

To address rising tuition costs and student debt, the AAMC recommended that medical schools offer:

▸ Greater predictability about the student costs of a medical education.

▸ Ongoing financial education for medical students.

▸ More financial aid, with an emphasis on need-based scholarships and on programs offering loan repayment and forgiveness in exchange for service in the military or to underserved populations.

▸ Periodic self-reviews of attendance costs.

Medical schools should also reevaluate their funding of medical education and develop innovative methods to generate financial support for financial aid programs that would address current health care needs, the AAMC recommended.

U.S. medical schools need to improve their tuition- and fee-setting processes to help students pay off their debts, the Association of American Medical Colleges concluded in a new study.

The median indebtedness of medical school graduates has increased dramatically during the last 20 years—from $20,000 for both public and private schools in 1984, to almost $140,000 and $100,000 for private and public schools, respectively, last year. Physician income has remained relatively flat, according to the study conducted by an AAMC working group

To address rising tuition costs and student debt, the AAMC recommended that medical schools offer:

▸ Greater predictability about the student costs of a medical education.

▸ Ongoing financial education for medical students.

▸ More financial aid, with an emphasis on need-based scholarships and on programs offering loan repayment and forgiveness in exchange for service in the military or to underserved populations.

▸ Periodic self-reviews of attendance costs.

Medical schools should also reevaluate their funding of medical education and develop innovative methods to generate financial support for financial aid programs that would address current health care needs, the AAMC recommended.

U.S. medical schools need to improve their tuition- and fee-setting processes to help students pay off their debts, the Association of American Medical Colleges concluded in a new study.

The median indebtedness of medical school graduates has increased dramatically during the last 20 years—from $20,000 for both public and private schools in 1984, to almost $140,000 and $100,000 for private and public schools, respectively, last year. Physician income has remained relatively flat, according to the study conducted by an AAMC working group

To address rising tuition costs and student debt, the AAMC recommended that medical schools offer:

▸ Greater predictability about the student costs of a medical education.

▸ Ongoing financial education for medical students.

▸ More financial aid, with an emphasis on need-based scholarships and on programs offering loan repayment and forgiveness in exchange for service in the military or to underserved populations.

▸ Periodic self-reviews of attendance costs.

Medical schools should also reevaluate their funding of medical education and develop innovative methods to generate financial support for financial aid programs that would address current health care needs, the AAMC recommended.

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that already has affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.”

The federal grants would be set to cover much or all of the costs associated with extending coverage.

“Any state that succeeded in boosting a fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” noted Mr. Aaron, who is a senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first, do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population.

“Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.”

This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents with health insurance coverage, he continued. Depending on local conditions and political preferences, individual states could use refundable tax credits or vouchers to promote individual insurance.

Individual states could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans; extend Medicaid or the State Children's Health Insurance Program; impose employer mandates; or try to create an intrastate single-payer plan.

None of these options would be mandatory, he said.

Another panelist, Stuart M. Butler, Ph.D., vice president, domestic and economic policy studies, the Heritage Foundation, Washington, suggested that members of Congress enact a policy “toolbox” that would make a range of ideas available to individual states, on a voluntary basis.

Under such an approach, state lawmakers could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Health and Human Services department on appropriate waivers to pull such an option together, Mr. Butler explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, Mr. Butler explained.

The real key is to make sure that Medicaid populations are protected, “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals,” he added.

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that already has affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.”

The federal grants would be set to cover much or all of the costs associated with extending coverage.

“Any state that succeeded in boosting a fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” noted Mr. Aaron, who is a senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first, do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population.

“Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.”

This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents with health insurance coverage, he continued. Depending on local conditions and political preferences, individual states could use refundable tax credits or vouchers to promote individual insurance.

Individual states could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans; extend Medicaid or the State Children's Health Insurance Program; impose employer mandates; or try to create an intrastate single-payer plan.

None of these options would be mandatory, he said.

Another panelist, Stuart M. Butler, Ph.D., vice president, domestic and economic policy studies, the Heritage Foundation, Washington, suggested that members of Congress enact a policy “toolbox” that would make a range of ideas available to individual states, on a voluntary basis.

Under such an approach, state lawmakers could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Health and Human Services department on appropriate waivers to pull such an option together, Mr. Butler explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, Mr. Butler explained.

The real key is to make sure that Medicaid populations are protected, “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals,” he added.

WASHINGTON — Rewarding states based on quality is one way to cover more uninsured Americans, Henry J. Aaron said at the annual meeting of the National Governors Association.

Following up on a trend that already has affected the physician community, Mr. Aaron proposed a “pay-for-performance” system, where states could receive federal grants based on their “actual measured progress of increasing the number and proportion of state residents covered by health insurance.”

The federal grants would be set to cover much or all of the costs associated with extending coverage.

“Any state that succeeded in boosting a fraction of its population [covered by] health insurance would receive federal support. The states that made no such progress would receive nothing,” noted Mr. Aaron, who is a senior fellow for economic studies at the Brookings Institution.

The federal government should first define a standard for health insurance coverage, Mr. Aaron said, suggesting that the minimum be “similar to the actuarial value of the Federal Employees Health Benefits Program.”

His plan also would include a “first, do no harm” standard, prohibiting states from materially eroding coverage for the current Medicaid population.

“Even now, Medicaid is substantially less costly than private insurance of the same scope. Still, state costs for long-term care [are] on track to rise relentlessly as baby boomers age.”

This means that states need continued financial protection from adverse trends—and not a cap on federal support.

“[States] also need flexibility to modernize Medicaid but within the limits that maintain the per capita protection of the most vulnerable populations in our nation,” Mr. Aaron said.

Within these broad guidelines, states should be encouraged to pursue any approach that would increase the proportion of state residents with health insurance coverage, he continued. Depending on local conditions and political preferences, individual states could use refundable tax credits or vouchers to promote individual insurance.

Individual states could also facilitate new insurance groups by allowing churches, unions, and the like to create association health plans; extend Medicaid or the State Children's Health Insurance Program; impose employer mandates; or try to create an intrastate single-payer plan.

None of these options would be mandatory, he said.

Another panelist, Stuart M. Butler, Ph.D., vice president, domestic and economic policy studies, the Heritage Foundation, Washington, suggested that members of Congress enact a policy “toolbox” that would make a range of ideas available to individual states, on a voluntary basis.

Under such an approach, state lawmakers could propose an initiative for preserving coverage, selecting certain elements from the toolbox, and negotiating with the U.S. Health and Human Services department on appropriate waivers to pull such an option together, Mr. Butler explained.

In an attempt to maintain and extend the functional equivalent of Medicaid during these very tight budget times, states could utilize an enhanced federal refundable tax credit from the policy toolbox, using additional federal funds to create purchasing alliances or pools, Mr. Butler explained.

The real key is to make sure that Medicaid populations are protected, “encouraging innovations through the states [and] rewarding pay-for-performance successes by the states, to reach these goals,” he added.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, Joan Sokolovsky, Ph.D., a MedPAC senior analyst indicated. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit.

The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said that private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From its interviews with stakeholders, MedPAC learned that prior authorization often creates burdens for both beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid out of pocket for a drug when the drug was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, Joan Sokolovsky, Ph.D., a MedPAC senior analyst indicated. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit.

The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said that private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From its interviews with stakeholders, MedPAC learned that prior authorization often creates burdens for both beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid out of pocket for a drug when the drug was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

WASHINGTON — Patients may find it easier to appeal denials of payment for medications under Medicare's new Part D prescription drug benefit than they do under other health programs, an analyst said during a meeting of the Medicare Payment Advisory Commission.

Specifically, the new benefit offers quicker alternatives to getting formulary exceptions for nonpreferred drugs than private plans or Medicaid, Joan Sokolovsky, Ph.D., a MedPAC senior analyst indicated. The new prescription drug benefit, a part of the Medicare Modernization Act of 2003, goes into effect in January.

MedPAC analysts reviewed the appeals processes in several private plans and in Medicaid to see how they compare with the upcoming Part D prescription drug benefit.

The commission queried a number of stakeholders in these markets, including physicians, pharmacists, consumer advocates, health plan representatives, and pharmacy benefit manager representatives.

While Medicare's regulations on appeals generally support the processes of Medicaid and private health plans, MedPAC did find some fundamental differences, Dr. Sokolovsky said.

More situations are considered “coverage determinations” under the Part D benefit and may be appealed, she said. For example, Medicare beneficiaries will be able to appeal an increased copayment if they are prescribed a nonpreferred drug as opposed to a preferred drug. Dr. Sokolovsky said that private plans reported having little experience with this kind of adjustment.

The time frame for handling exception requests is also shorter under Part D, Dr. Sokolovsky continued. “If under an urgent request for an exception, a [Medicare Part D] plan must handle these determinations within 24 hours. That's typically faster than required for most [private insurers] now.”

Shorter, expedited time frames and the ability to appeal copays, however, may lead to an increased volume of appeals, and possibly higher premiums, she said.

To minimize appeals, Medicare Part D plans may put fewer restrictions on separate, tiered cost sharing on nonpreferred drugs. “Good communication is important to prevent an excessive increase in appeals,” she said.

In some cases, physicians under Part D must get prior approval or authorization before nonpreferred drugs are covered.

From its interviews with stakeholders, MedPAC learned that prior authorization often creates burdens for both beneficiaries and providers in commercial and Medicaid plans.

Prior authorization should ideally take place before the prescription is written—but often doesn't, Dr. Sokolovsky said.

“Physicians frequently don't know what the drugs are on their patients' formularies, or which ones require prior authorization.” Patients often become aware of the need for prior authorization when the pharmacist tries to process the prescription and gets a notice that the drug is not covered, but lists other drugs that would be covered.

Private health plans tend to keep detailed information on the disposition of exception requests; however, some information never comes back to a plan, she said.

For example, the private plans MedPAC surveyed didn't seem to know how often a beneficiary paid out of pocket for a drug when the drug was not covered, how often pharmacists contact physicians or the plan member when a drug isn't covered, or if the physician even had time to respond to the situation.

Some discount medical cards provide value, while others have serious drawbacks such as high-pressure sales tactics, exaggerated claims of savings, inaccurate promotions, or difficulty finding participating physicians, a survey from the Commonwealth Fund concluded.

The cards promise discounts for a range of providers, including physicians, hospitals, laboratory work, and surgical procedures. Some discount card companies are seeking to reform the market through a trade association and voluntary code of conduct. Because the cards aren't regulated, “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the authors stated.

“Uninsured individuals … are turning to discount cards to provide at least some financial protection,” said Commonwealth Fund President Karen Davis in a written statement. “Some even buy cards in the mistaken belief that they are insurance plans—in part because of misleading marketing.”

Researchers tested 5 of 27 cards by undergoing the application process, seeking health care services from participating providers, and then canceling the cards.

Some discount medical cards provide value, while others have serious drawbacks such as high-pressure sales tactics, exaggerated claims of savings, inaccurate promotions, or difficulty finding participating physicians, a survey from the Commonwealth Fund concluded.

The cards promise discounts for a range of providers, including physicians, hospitals, laboratory work, and surgical procedures. Some discount card companies are seeking to reform the market through a trade association and voluntary code of conduct. Because the cards aren't regulated, “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the authors stated.

“Uninsured individuals … are turning to discount cards to provide at least some financial protection,” said Commonwealth Fund President Karen Davis in a written statement. “Some even buy cards in the mistaken belief that they are insurance plans—in part because of misleading marketing.”

Researchers tested 5 of 27 cards by undergoing the application process, seeking health care services from participating providers, and then canceling the cards.

Some discount medical cards provide value, while others have serious drawbacks such as high-pressure sales tactics, exaggerated claims of savings, inaccurate promotions, or difficulty finding participating physicians, a survey from the Commonwealth Fund concluded.

The cards promise discounts for a range of providers, including physicians, hospitals, laboratory work, and surgical procedures. Some discount card companies are seeking to reform the market through a trade association and voluntary code of conduct. Because the cards aren't regulated, “legislative action is needed that gives state insurance departments the authority and resources to have direct oversight of the discount medical card industry,” the authors stated.

“Uninsured individuals … are turning to discount cards to provide at least some financial protection,” said Commonwealth Fund President Karen Davis in a written statement. “Some even buy cards in the mistaken belief that they are insurance plans—in part because of misleading marketing.”

Researchers tested 5 of 27 cards by undergoing the application process, seeking health care services from participating providers, and then canceling the cards.

WASHINGTON — Mix a little money with solid incentives physicians can relate to, and you've got a successful recipe for a pay-for-performance program, Ronald P. Bangasser, M.D., said at the annual National Managed Health Care Congress.

Physicians try to deliver the highest level of medical care they can, but most can't keep track of the needs of every patient, said Dr. Bangasser, a family physician and immediate past president of the California Medical Association.

Studies show that 50% of patients don't get what they need in quality of care, he said. “Most patients rate their doctor a four out of five, but they hate the health care system.”

That's one reason physician groups need a data-based approach to help reduce errors and improve care, he continued. A new program in California has yielded positive results, and is “certainly one way to pay for quality,” Dr. Bangasser said.

Backed by a state foundation grant, the statewide Integrated Healthcare Association (IHA) got together with medical groups, health plans, purchasers, and consumer groups several years ago to collaborate on a plan to reduce expenses for physician reporting.

The program was able to achieve this savings “by accumulating all of the health plans together, so physician groups only had one reporting mechanism instead of seven or eight,” said Dr. Bangasser, medical director of the wound care department of the Beaver Medical Group LP, at Redlands (Calif.) Community Hospital. The group participates in the IHA program.

All of the health plans and medical groups had to agree on a common set of measures and a common way to report those measures. The IHA in turn acted as a “neutral convener,” in coming up with standards for reporting the data, he said.

Technical and steering committees were formed to work with technical experts on proposing measures.

The measures had to be valid and accurate, meaningful to consumers and physicians, and important to public health in California. “They also had to get harder over time,” Dr. Bangasser said. In the IHA program, physicians get paid not just for performance, but also for performance improvement. “We actually have a calculator [that determines whether] people are improving.”

The first payout took place in 2004, based on first-year data from 2003.

Physicians are assessed on three types of measures: clinical, patient experience, and information-technology investment.

First-year results saw little variation among the participating groups on patient experience, although variations were seen among clinical and IT measures.

There was room for improvement in both of these areas, Dr. Bangasser said. Fewer groups participated in IT measures than in the other measures, and of those who tried, “only two thirds of them got full credit for it. It showed us that we had a huge IT deficit.”

Variations occurred in the clinical measures because not all of the groups used a registry-type system—a list that details the specific diagnoses of each patient. Physicians using a registry can find out if a patient got a certain test or if they need one, Dr. Bangasser said. To date, groups that use registries “are doing much better on these measures than groups that don't.”

One of the biggest improvement areas was in cervical cancer screening, he said. Based on data comparisons between 2002 and 2003—the year the program got started—nearly 150,000 more women were screened for cervical cancer, and 35,000 more women were screened for breast cancer.

An additional 10,000 children got two needed immunizations, and 180,000 more patients were tested for diabetes.

Although some groups scored fairly high, specialists didn't fare as well. Patients cited problems with access to specialists as a specific complaint in the satisfaction surveys, Dr. Bangasser said.

The estimated aggregate payment to physician groups in the IHA program in 2003 was between $40 million and $50 million, although some groups thought they didn't get paid properly, Dr. Bangasser said. There were some concerns about increased utilization and cost of services for groups participating in the program, and what the long-term returns on investment would be.

It was also determined that groups serving large Hispanic or Native American populations should get “extra credit” for having to deal with more diverse, culturally different populations.

Applying the right types of incentives is key, he said. “If a physician thinks the measure is a good idea, putting a little money behind it will speed quality improvement. However, if the physician thinks the measure is not going to improve quality, $1 million will not change behavior.”

Sometimes, the simplest incentives can produce good results. Dr. Bangasser mentioned a particularly bad influenza season in 1998, when patients had to wait in long lines to see physicians in his group practice. “I asked all of the doctors if they'd take on two more patients a day. That's a long day, but I gave them two tickets to a movie theater for Christmas.”

All but two physicians took on the extra patients. “This meant that over 60 physicians saw an extra 120 patients per day,” he said.

WASHINGTON — Mix a little money with solid incentives physicians can relate to, and you've got a successful recipe for a pay-for-performance program, Ronald P. Bangasser, M.D., said at the annual National Managed Health Care Congress.

Physicians try to deliver the highest level of medical care they can, but most can't keep track of the needs of every patient, said Dr. Bangasser, a family physician and immediate past president of the California Medical Association.

Studies show that 50% of patients don't get what they need in quality of care, he said. “Most patients rate their doctor a four out of five, but they hate the health care system.”

That's one reason physician groups need a data-based approach to help reduce errors and improve care, he continued. A new program in California has yielded positive results, and is “certainly one way to pay for quality,” Dr. Bangasser said.

Backed by a state foundation grant, the statewide Integrated Healthcare Association (IHA) got together with medical groups, health plans, purchasers, and consumer groups several years ago to collaborate on a plan to reduce expenses for physician reporting.

The program was able to achieve this savings “by accumulating all of the health plans together, so physician groups only had one reporting mechanism instead of seven or eight,” said Dr. Bangasser, medical director of the wound care department of the Beaver Medical Group LP, at Redlands (Calif.) Community Hospital. The group participates in the IHA program.

All of the health plans and medical groups had to agree on a common set of measures and a common way to report those measures. The IHA in turn acted as a “neutral convener,” in coming up with standards for reporting the data, he said.

Technical and steering committees were formed to work with technical experts on proposing measures.

The measures had to be valid and accurate, meaningful to consumers and physicians, and important to public health in California. “They also had to get harder over time,” Dr. Bangasser said. In the IHA program, physicians get paid not just for performance, but also for performance improvement. “We actually have a calculator [that determines whether] people are improving.”

The first payout took place in 2004, based on first-year data from 2003.

Physicians are assessed on three types of measures: clinical, patient experience, and information-technology investment.

First-year results saw little variation among the participating groups on patient experience, although variations were seen among clinical and IT measures.

There was room for improvement in both of these areas, Dr. Bangasser said. Fewer groups participated in IT measures than in the other measures, and of those who tried, “only two thirds of them got full credit for it. It showed us that we had a huge IT deficit.”

Variations occurred in the clinical measures because not all of the groups used a registry-type system—a list that details the specific diagnoses of each patient. Physicians using a registry can find out if a patient got a certain test or if they need one, Dr. Bangasser said. To date, groups that use registries “are doing much better on these measures than groups that don't.”

One of the biggest improvement areas was in cervical cancer screening, he said. Based on data comparisons between 2002 and 2003—the year the program got started—nearly 150,000 more women were screened for cervical cancer, and 35,000 more women were screened for breast cancer.

An additional 10,000 children got two needed immunizations, and 180,000 more patients were tested for diabetes.

Although some groups scored fairly high, specialists didn't fare as well. Patients cited problems with access to specialists as a specific complaint in the satisfaction surveys, Dr. Bangasser said.

The estimated aggregate payment to physician groups in the IHA program in 2003 was between $40 million and $50 million, although some groups thought they didn't get paid properly, Dr. Bangasser said. There were some concerns about increased utilization and cost of services for groups participating in the program, and what the long-term returns on investment would be.

It was also determined that groups serving large Hispanic or Native American populations should get “extra credit” for having to deal with more diverse, culturally different populations.

Applying the right types of incentives is key, he said. “If a physician thinks the measure is a good idea, putting a little money behind it will speed quality improvement. However, if the physician thinks the measure is not going to improve quality, $1 million will not change behavior.”

Sometimes, the simplest incentives can produce good results. Dr. Bangasser mentioned a particularly bad influenza season in 1998, when patients had to wait in long lines to see physicians in his group practice. “I asked all of the doctors if they'd take on two more patients a day. That's a long day, but I gave them two tickets to a movie theater for Christmas.”

All but two physicians took on the extra patients. “This meant that over 60 physicians saw an extra 120 patients per day,” he said.

WASHINGTON — Mix a little money with solid incentives physicians can relate to, and you've got a successful recipe for a pay-for-performance program, Ronald P. Bangasser, M.D., said at the annual National Managed Health Care Congress.

Physicians try to deliver the highest level of medical care they can, but most can't keep track of the needs of every patient, said Dr. Bangasser, a family physician and immediate past president of the California Medical Association.

Studies show that 50% of patients don't get what they need in quality of care, he said. “Most patients rate their doctor a four out of five, but they hate the health care system.”

That's one reason physician groups need a data-based approach to help reduce errors and improve care, he continued. A new program in California has yielded positive results, and is “certainly one way to pay for quality,” Dr. Bangasser said.

Backed by a state foundation grant, the statewide Integrated Healthcare Association (IHA) got together with medical groups, health plans, purchasers, and consumer groups several years ago to collaborate on a plan to reduce expenses for physician reporting.

The program was able to achieve this savings “by accumulating all of the health plans together, so physician groups only had one reporting mechanism instead of seven or eight,” said Dr. Bangasser, medical director of the wound care department of the Beaver Medical Group LP, at Redlands (Calif.) Community Hospital. The group participates in the IHA program.

All of the health plans and medical groups had to agree on a common set of measures and a common way to report those measures. The IHA in turn acted as a “neutral convener,” in coming up with standards for reporting the data, he said.

Technical and steering committees were formed to work with technical experts on proposing measures.

The measures had to be valid and accurate, meaningful to consumers and physicians, and important to public health in California. “They also had to get harder over time,” Dr. Bangasser said. In the IHA program, physicians get paid not just for performance, but also for performance improvement. “We actually have a calculator [that determines whether] people are improving.”

The first payout took place in 2004, based on first-year data from 2003.

Physicians are assessed on three types of measures: clinical, patient experience, and information-technology investment.

First-year results saw little variation among the participating groups on patient experience, although variations were seen among clinical and IT measures.

There was room for improvement in both of these areas, Dr. Bangasser said. Fewer groups participated in IT measures than in the other measures, and of those who tried, “only two thirds of them got full credit for it. It showed us that we had a huge IT deficit.”

Variations occurred in the clinical measures because not all of the groups used a registry-type system—a list that details the specific diagnoses of each patient. Physicians using a registry can find out if a patient got a certain test or if they need one, Dr. Bangasser said. To date, groups that use registries “are doing much better on these measures than groups that don't.”

One of the biggest improvement areas was in cervical cancer screening, he said. Based on data comparisons between 2002 and 2003—the year the program got started—nearly 150,000 more women were screened for cervical cancer, and 35,000 more women were screened for breast cancer.

An additional 10,000 children got two needed immunizations, and 180,000 more patients were tested for diabetes.

Although some groups scored fairly high, specialists didn't fare as well. Patients cited problems with access to specialists as a specific complaint in the satisfaction surveys, Dr. Bangasser said.

The estimated aggregate payment to physician groups in the IHA program in 2003 was between $40 million and $50 million, although some groups thought they didn't get paid properly, Dr. Bangasser said. There were some concerns about increased utilization and cost of services for groups participating in the program, and what the long-term returns on investment would be.

It was also determined that groups serving large Hispanic or Native American populations should get “extra credit” for having to deal with more diverse, culturally different populations.

Applying the right types of incentives is key, he said. “If a physician thinks the measure is a good idea, putting a little money behind it will speed quality improvement. However, if the physician thinks the measure is not going to improve quality, $1 million will not change behavior.”

Sometimes, the simplest incentives can produce good results. Dr. Bangasser mentioned a particularly bad influenza season in 1998, when patients had to wait in long lines to see physicians in his group practice. “I asked all of the doctors if they'd take on two more patients a day. That's a long day, but I gave them two tickets to a movie theater for Christmas.”

All but two physicians took on the extra patients. “This meant that over 60 physicians saw an extra 120 patients per day,” he said.