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HealthBiz: Medicare scandal grows

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WASHINGTON, Mar 18, 2004 (United Press International via COMTEX) -- The Medicare bill scandal grows daily inside the Beltway, over whether the government's chief actuary was improperly threatened by his boss if he released cost estimates on the Medicare bill that were far more than the Congressional Budget Office was proffering.

The Health and Human Services Office of Inspector General is investigating, congressional committees are gearing up hearings, and there are calls by Democrats for a re-vote on the legislation passed last year -- by a few slim votes on the House side.

Rep. Henry Waxman, D-Calif., ranking minority member of the House Committee on Government Reform, told HHS Secretary Tommy Thompson in a letter on Wednesday if HHS does not release the complete actuarial estimates by the Centers for Medicare and Medicaid Services' Richard Foster, Waxman and colleagues will initiate legal action to obtain the documents. The letter said the committee repeatedly has requested the information but HHS has refused to provide it.

Foster has said he thought he would be fired by then-CMS administrator Tom Scully if he made public his estimates showing the bill would cost $550 billion over 10 years, not the $400 billion the CBO had estimated.

The furor over threats and deception have trumped -- rightly or wrongly, depending on a person's political point of view -- the fact that CBO and the Centers for Medicare and Medicaid Services from the start had distinctly different estimates plugged in on the number of seniors who would participate in Medicare Advantage and the Part D drug program run by the health plans. Those differences were well documented in hearings but not necessarily translated into cost numbers -- CMS did not release a formal cost estimate until well after the bill became law -- and therein lies the problem.

In the middle of the upheaval, however, health plans -- the key to Medicare Advantage -- remain focused, says Mohit Ghose of America's Health Insurance Plans, the industry group formerly known as AAHP.

Ghose told UPI's HealthBiz that the plans will continue to work with CMS to implement "congressional intent" on Medicare Advantage as soon as regulations are finalized.

Despite some hard lessons learned -- on payment rates and regulations -- about Medicare+Choice, plans are showing a great deal of interest. The question remains, however, given the political storm, whether Medicare Advantage will look the same in 2006, when it is to begin, as it does now.

In a related issue, the Committee on Standards of Official Conduct voted Wednesday to conduct a full investigation into allegations House Republican leadership bribed Rep. Nick Smith, R-Mich., into voting for the Medicare bill.

An investigative subcommittee "will have jurisdiction to conduct a full and complete inquiry into alleged communications received by Representative Nick Smith linking support for the congressional candidacy of his son with Representative Smith's vote on that legislation," the committee said.

The House vote was held open for an unprecedented three hours while Republicans tried to muster enough votes for passage. It was during that time, Smith said later, that party leadership approached him with a possible bribe concerning his son's candidacy in exchange for an affirmative vote on the bill. He later backed off that statement and said the conversations were really about the GOP's general support of his son's bid to replace him when he retires.


U.S. health insurers had a very good financial year in 2003 -- and are having a good year in 2004 -- but 2005 and beyond are up in the air, said Dr. Peter Kongstvedt, a vice president in Cap, Gemini, Ernst & Young's health practice.

"I haven't talked to a single executive who believes that they can keep it up for another year (after 2004)," he told HealthBiz.

Weiss Ratings Inc.'s March 2 report indicated managed care reported a $4.3 billion profit during the first six months of 2003, a 73.3 percent increase from the $2.5 billion earned during the same period in 2002. Leading the way were CareFirst, Aetna, Pacificare, Blue Shield of California and Blue Cross Blue Shield of Michigan. Weiss had reported an 81 percent increase in profits for 2002, with earnings of $5.5 billion, compared to $3 billion in 2001.

Kongstvedt and other Cap Gemini researchers talked to executives around the country in putting together "Balancing Success 2004: The Top Ten Issues Facing the Managed Health Care Industry."

Health plans are concerned about continued premium increases for employers who then add to employee cost sharing. Kongstvedt said managed care is moving away from the old HMO models -- reabsorbing them into the broader spectrum of offerings and focusing on options that allow for different benefit structures and more consumer involvement.

Other key healthcare issues that affect managed care: the problem of the uninsured, which Kongstvedt says will not see any major policy or industry action until perhaps five to seven years down the road.

More on this next week.


Two cardiologists argued Wednesday Medicare should give more patients access to implantable cardiovascular defibrillators. Sudden cardiac arrest is poorly understood by the public, yet it was the leading cause of death in the United States in 1999, with a 5 percent survival rate, said Dr. Bruce Wilkoff of the Cleveland Clinic. With up to 450,000 fatalities, it surpassed stroke, lung cancer, breast cancer and AIDS combined.

Recent large-scale studies suggest ICDs could prevent about a third of these deaths, Wilkoff said, but Medicare has refused to cover the device --which shocks the heart into a normal rhythm -- unless the heart pumps a specific volume of blood. "We have a huge education gap," Wilkoff told a news conference in Washington.

Dr. Mark Silver, a Raleigh, N.C., cardiologist, said many medical treatments now covered by Medicare are not clinically proven and end up costing more money than ICDs in the long run. He also raised ethical concerns about doctors making medical judgments based on cost.

"You can't have doctors judging the value of life of their patients," he said.

Pacemakers, which are about five times as common, are covered by Medicare and range from $3,000 to $14,000.

Medtronic, a Minneapolis, Minn., manufacturer of ICDs, sponsored the news conference.


Friday is the first meeting on the new Task Force on Drug Importation -- we've been calling it reimportation -- that is looking at how drugs from Canada and elsewhere can be safely brought to the United States and what impact that would have on patients, medical costs and pharmaceutical company research and development.

Health and Human Services Secretary Tommy G. Thompson named 13 people to the panel with U.S. Surgeon General Richard H. Carmona serving as chairman. The panel is loaded with HHS and other government officials but no one from the healthcare industry is included.

The task force Friday will listen to a dozen invited consumer groups and other listening sessions are set for April 2 with healthcare purchasers, April 28 with providers, May 6 with industry reps and May 14 with international stakeholders. A public hearing is set for May 14. By law reimportation cannot begin until Thompson signs off on it.


An analysis of data from the Lobbying Disclosure Act finds health-related organizations spent $237 million or 15 percent of all lobbying dollars in 2000.

Researchers from Case Western Reserve University, in a report published in the American Journal of Medicine, shows 1,192 organizations, and found pharmaceutical and health product companies accounted for $96 million, physicians and other health professionals spent $46 million, with hospitals, health insurance and managed care, disease advocacy groups, and public health organizations making up the rest.

Within pharmaceutical companies were drug manufacturers, at $74 million, and medical supply companies, at $14 million. Spending increases from 1997 to 2000 show the largest was by the hospital/nursing home sector at 59 percent, and the lowest was by physicians/health care professionals at 10 percent.

That makes sense considering 1997-2000 were the years the American Hospital Association and others in that group besieged Capitol Hill with complaints, reports of funding problems and predictions of dire healthcare consequences because of the Balanced Budget Act of 1997. They were successful getting amendments to that bill that restored Medicare payments to hospitals. During that time, however, physicians were considerably less effective in getting their concerns addressed by members of Congress.


(Thanks to UPI's David Kent in Washington for contributing to this column)


Ellen Beck's e-mail is

Copyright 2004 by United Press International.

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