Medical Device Daily Washington Editor

WASHINGTON – Two former governors have been named to head a new Medicare reform panel, adding a little more fuel to an already controversial issue in statehouses nationwide – reducing the cost of Medicaid

Don Sundquist, former Republican governor of Tennessee, will chair the commission; Angus King, former Independent governor of Maine, will serve as vice-chair, Secretary of Health and Human Services Mike Leavitt reported on Friday.

The committee, made up of 13 voting members and 15 non-voting members, is charged with recommending ways to trim $10 billion in Medicaid spending in the next five years, as well as other possible reforms. Leavitt held open two voting-member slots to be added after September.

Plans for the panel were unveiled by Leavitt in May (Medical Device Daily, May 24, 2005).

Medicaid, a joint federal and state program, insures more than 50 million of the poorest Americans, including children and nursing home residents. The program has a price tag of more than $320 billion annually.

“In Washington and state capitols across America, there is consensus that now is the time to reform and modernize Medicaid,” Leavitt said on Friday. He said he was looking forward to having “a robust conversation in an open and bipartisan manner” with the commission’s members.

“Together with Congress and the states, we will create a plan that will better help Medicaid fulfill its commitment to quality care in a way that is financially sustainable,” he added.

Opponents of cuts to Medicaid argue that federal and state policy experts should be given time to work out changes to the Medicaid system before Congress sets arbitrary spending limits on the program.

Despite HHS emphasis on a commission that includes leaders from “both sides of the aisle,” many Democrats seem worried that the commission’s findings will result in wholesale cuts along party lines rather than any real talk of reform.

The commission will submit two reports to HHS, with the first due on Sept. 1, and outlining recommendations for the $10 billion savings goal along with performance suggestions.

The second, longer-range report will be due on Dec. 31, 2006. It will make recommendations to maintain “the long-term sustainability of Medicaid,” Leavitt said.

Up to now, both the House and the Senate have worked out their own federal budget resolutions, with the financing of the Medicare and Medicaid programs both the subject of much political wrangling concerning President George Bush’s financial road map.

The White House’s budget for FY06 includes revisions to Medicaid that are estimated to save $14 billion in five years and $60 billion in 10 years.

In April, the House approved a budget resolution with Medicaid savings of $15 billion to $20 billion. The Senate’s version of the budget included no cuts to Medicaid, after senators approved an amendment to eliminate $14 billion in proposed cuts.

Budget resolutions are non-binding, but they set guidelines for congressional consideration as the budget process moves forward.

Voting members of the panel include three current or former Bush administration officials. Leaders from both parties were allowed to appoint four non-voting members. In protest, Democrats refused to name appointees.

In addition to representatives from other government departments and service bureaus, many of the members – especially the non-voting ones – are healthcare providers or they come from institutes and private industry.

Rep. Henry Waxman (D-California), who has been involved in crafting much of the current Medicaid law, was unimpressed with the makeup of the panel.

“Today’s announcement confirms that the purpose of the commission is to rubber-stamp the administration’s failed Medicaid policies,” the 31-year veteran in the House of Representatives told The New York Times.

The Centers for Medicare & Medicaid Services (CMS; Baltimore) did not return calls to clarify its role, if any, in the committee’s activities.

Many states also recently have formed committees to examine how to reign in some of their Medicare costs.

Democrats in Maryland’s legislature announced plans last week for hearings on the state’s decision to terminate Medicaid benefits for nearly 4,000 legal immigrants, which they say may ultimately cost the healthcare system more than it saves.

In January, Gov. Robert Ehrlich Jr., a Republican, proposed eliminating $7 million in annual funding for coverage of pregnant women and children classified as permanent legal residents for fewer than five years. And Tennessee already has moved to drop patients from its Medicaid rolls.

Governors throughout the country have told Congress they need more money to cope with rising healthcare costs and growing populations.

In 2002, the Sundquist administration in Tennessee removed nearly 200,000 people from the Medicaid rolls. A federal judge ruled that the state had not accurately determined those eligible for benefits; it ordered a review that enabled 50,000 people to regain coverage.

The National Governors Association Center for Best Practices will act as an advisor to inform the commission on a range of issues affecting Medicaid.

Medicare coverage plans balloon upward

In other news from CMS, the agency approved 143 new Medicare Advantage coverage plans to provide services, which it said “far exceeds” the number of plans that previously had been available.

With the addition of the new plans, Medicare beneficiaries in 49 states will have access to 428 health plans across the nation, including 41 plans completely new to the Medicare program and 66 new local preferred provider organizations (PPOs).

With these expansions, 73% of Medicare beneficiaries will have access to HMO plans, 52% will have access to PPO plans, and 80% will have access to private fee-for-service plans, CMS said.

The agency said the greater number of options will lead to increased cost savings, lower and “more predictable” co-payments and deductibles than available in the traditional Medicare plan for Medicare-covered services, and a wider range of services.

The majority of beneficiaries in rural areas will have access to private fee-for-service plans, and nearly 20% of beneficiaries in rural areas will have access to HMOs or PPOs, most for the first time.

There are a little more than 5 million beneficiaries currently enrolled in Medicare Advantage health plans, with an average of 50,000 beneficiaries per month joining the plans since last year, CMS said.

For people on Medicare with special needs, such as those who are dually eligible for Medicare and Medicaid, living in institutions, or have severe or chronic or disabling conditions, the new Medicare law allows Medicare Advantage organizations to exclusively or disproportionately en-roll them into special needs plans (SNPs).

CMS has approved 48 SNPs to serve beneficiaries in 2005 and is reviewing more than 100 additional SNP applications that have been submitted to provide services in 2006.

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