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FOIA Number:
2006-0885-F
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MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Health Care Task Force
Series/Staff Member:
Rueschemeyer
Subseries:
4721
OA/ID Number:
FolderlD:
Folder Title:
Staff Working Papers/Working Group Drafts [2]
Stack:
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Section:
Shelf:
Position:
S
53
7
9
3
�DETERMINED TO BE AN ADMINISTRATIVE
K I ^ G Per
P c rEXL
^ ^ 12958 as amended. Sec. 3^ (c)
MARKING
Initials:
*
Date: 3
i i ^ / l ^ .
fPRIVILEGED AND
WORKING GROUP DRAFT
CREATING A NEW HEALTH WORKFORCE
Ensuring quality health care and access for all Americans requires adjustments to the
focus of investments in health care training and education in the following areas:
Shifting the balance in the graduate training of physicians from specialties to
primary care.
Increasing investments in the training of nurse practitioners and physician
assistants.
Recruiting and supporting the education of health professionals from population
groups under-represented in the field.
Supporting workforce planning for health professions at the state level.
Adjusting Medicare payment formulas to increase reimbursement for primary
care.
DEVELOPMENT AND SUPPORT FOR GRADUATE MEDICAL EDUCATION
Legislative authority establishes a new system to manage the supply of specialty
training for physicians, encompassing several initiatives:
Managing the number of post-graduate training positions for physicians: After a
five-year phase-in period, at least 50 percent of new physicians are trained in primal}' care
rather than in the specific specialty fields in which an excess supply currently exists. Primary
care includes family medicine, general internal medicine and general pediatrics.
To achieve the goal of bringing primary care and specialty training into balance, the
number of filled primary care residency positions increases by approximately 7 percent each
year over the five-year period. During the same period, the number of filled specialty
training positions in specialties in which excess supply exists decline by approximately 10
percent each year.
(9/1/93)
127
�WORKING GROUP DRAFT
PRIVILEGED AND m f f l r m n m IT
The total number of first-year residency positions available continues to exceed the
number of graduates of U.S. medical and schools in the new system. The new system also
encourages the location and focus of physician training to more closely reflect community
medical practice.
Determination of approved residency positions: The Secretary of the Department of
Health and Human Services determines the number of training positions in each specialty
acting on the recommendations of the National Council on Graduate Medical Education and
allocated to regional councils. Regional councils distribute positions to individual residency
programs within each area of the country.
The Secretary appoints the National Council on Graduate Medical Education, which
includes medical educators, practicing physicians, consumers, hospital administrators, nurses
and others.
The Council recommends the total number of training positions for each medical
specialty, based on the national need for new physicians in specific specialties. The national
Council apportions residency positions to regions taking into account:
•
Current regional distribution and quality of training programs.
•
The need to maintain access to a range of primary care and specialty training
positions for members of under-represented minority groups.
•
Other factors relating to specific specialties and training programs
In developing its recommendations, the Council seeks the views of professional
medical, hospital and educational associations and other appropriate organizations. Positions
are allocated for each post-graduate year to account for differences among specialties in the
point of training when residents enter specialty training. For example, family medicine
training begins in the first year of post-graduate training, while training in internal medicine
specialties begins in the fourth year.
(9/1/93)
128
�WORKING GROUP DRAFT
PRIVILEGED AND
Because the integrity and success of the Graduate Medical Education system depends
on commitment to it by all programs and training institutions, programs operating in
institutions that continue training slots not covered in the allocation under the Graduate
Medical Education system become ineligible for GME funding.
Allocation of residency positions: The Secretary of the Department of Health and
Human Services appoints ten regional councils to allocate training slots among individual
residency training programs.
Regional councils include representatives of academic institutions training physicians
in the region, as well as representatives of regional health alliances and health plans,
consumers and others.
Regional councils receive applications from training institutions in each area for
residency positions in each specialty. Positions are allocated to accredited residency programs
based on such factors as:
•
Program quality.
•
Relevance of the training program curricula to the future practice
of physicians.
•
Participation of under-represented minority groups.
•
Participation of locally coordinated education programs.
The Secretary of the Department of Health and Human Services reviews regional
council decisions and retains therightto amend allocations for good cause. To ensure
continuity, allocations to program are available for periods of up to three years and are made
at least one year in advance of the residency training year.
(9/1/93)
129
�WORKING GROUP DRAFT
PRIVILEGED
Funding for residency training: Funds to support graduate medical education are
pooled from all insurers to reflect the benefits that all patients and health plans receive from
graduate medical education and training. Residency programs receive funds for each
approved training position. Payments are based on a formula which considers the national
average for resident salaries and the costs of faculty supervision and other related teaching
cxpcnses
'
(zs+*d*J J, Ubi/Uofivry
0
Funds from two sources are pooled:
fi !*-!}
•
Medicare contributes to the direct medical education fund based on the
percentage of hospital bed days its patients use (38 percent in 1992).
•
Other payers contribute through a surcharge on health plan premiums.
/
Currently, Medicare pays explicitly for graduate medical education, based on historic
costs. In FY-1992, Medicare payments for Graduate Medical Education totalled $1.5 billion.
(Other payers currently support Graduate Medical Education implicitly through elevated
hospital charges.)
r
sl
Estimated cost: The fund^requires an appropriation ^fapproximately^$6 billionl
Allocation of payments: Funding is provided directly to training programs approved
for residency training positions, encouraging the development of non-hospital based training,
particularly programs that provide a greater portion of their training in ambulatory and
primary-care settings, such as Health Maintenance Organizations and community clinics.
Transition payments: Transition payments are provided to teaching hospitals which
are required to reduce their residency training programs. Hospitals receive transition
payments to offset a portion of the costs associated with hiring replacement staff and
maintaining services.
Payments phase out over afive-yearperiod, beginning at the rate of 150 percent of
the national average for direct medical education payments for an equivalent position under
the new payment system. Payments decline by 25 percent each year.
(9/1/93)
130
�WORKING GROUP DRAFT
PRIVILEGED AND
RE-TRAINING PHYSICIANS IN PRIMARY CARE
In order to further expand the availability of primary care physicians, support are
provided for the development of programs to re-train mid-career specialists to serve as
primary care physicians. Areas to be explored include the use of incentives, the type and
length of effective retraining programs and the development of certification criteria.
COMMUNITY-BASED TRAINING OF PRIMARY CARE PHYSICIANS
Health reform supports community-based undergraduate and graduate medical
training, continuing education and faculty development in primary care, broadening the impact
of existing public support, which is limited to programs at the pre-doctoral and residency
levels in family medicine'(seeti0B^S-4^ and general internal medicine and general pediatrics
(seet-ion-34&>*'
^
SUPPORT FOR TRAINING OF MINORITIES AND DISADVANTAGED PERSONS
To increase the diversity of the health care workforce, support is provided to programs
that increase the number of health professionals among racial minority groups and
disadvantaged persons. The goal of these programs is to double the level of underrepresented minorities enrolled in the first year of medical school to a level of 3,000 students
by the year 2000.
Strategies include:
•
Continuing financial assistance for under-represented minorities and
disadvantaged students entering health professions training programs, under*
»seGtions»724^and«73.6.. «,Y/
1
/
•
Increasing support for recruitment and retention of under-represented minority
and disadvantaged students in medicine, dentistry, nursing, public health and
other health professions,under-seetion^WO^. \ y
•
Maintaining efforts to foster interest in health careers among under-represented
minorities at the pre-professional and professional levels.
(9/1/93)
131
�WORKING GROUP DRAFT
•
PRIVILEGED AND WHVW
Supporting programs to increase the number of minority faculty in the health
professions, minority health services researchers and minority basic scientists.
TRAINING FOR NURSE PRACTITIONERS, NURSE MIDWIVES AND PHYSICIAN
ASSISTANTS
s
Expanded training: Current funding for training of nurse practitionerSr-undeF«sectM>n=*
^8227 and physician assistants,*undep=seetion=-750*will be amended to
•
Increase current funding levels to double the number of graduates produced
annually, giving priority to the expansion of existing programs, and
•
Establish long-term goals and a funding strategy to maintain the supply of
practitioners.
A similar program is implemented to support nurse midwives.
Barriers to practice: To remove inappropriate barriers to practice, the Secretary of
the Department of Health and Human Services develops and encourages the adoption of
model professional practice statutes for advanced practice nurses and physician assistants*,
eittoer-undera^'ew*gener'akauthorit
r
RURAL HEALTH PROVIDER GRANTS
A rural health provider grant program supports a wide range of activities, including
new community training programs for rural practitioners, the development of rurally oriented
health education curricula, and the improvement of medical communications technology.
(9/1/93)
132
�WORKING GROUP DRAFT
PRIVILECiED AND
PRIORITY PROJECTS
A health professions special projects and demonstration training authority is
established to support the transition to the new health system, including support for the
following new projects:
•
Training of providers in mental health, substance abuse treatment and
prevention, geriatrics, and developmental disabilities.
•
Training for school-based health providers in immunization, reduction of
substance abuse, dealing with teen pregnancy, control of violence, and linking
students and families with the community health system.
•
Students in baccalaureate-level nurse training programs preparing for careers in
teaching, community health service, and specialized clinical care.
•
Training related to managed care, cost-effective practice management,
continuous quality improvement practices, and provision of culturally sensitive
care.
•
Training of lower-level administrative and clerical workers in
the health care field for higher-wage, higher-skill positions as
technicians, nurses and physician assistants.
•
Demonstration programs to develop more open occupational
career ladders in health care institutions.
Programs also support Priority Health Training Programs designed to improve the
supply, distribution and quality of providers, including those in areas with inadequate health
systems^ural^ are^s imtie^eetion=738? inner-city areas mdeueME-atttherhyr
(9/1/93)
133
�WORKING GROUP DRAFT
IE
PRIVILEGED AND£££SBEem&g£
)
^
/
^
Support expands for:
•
Service-linked regional educational networks; e.g., AHECs (se<2tion»746!)?
M.-:::Aon tr;
geriatric education centers (seetiontaT?^^
',.t ?jr priis
v
Health administration (section^^), public health training positions (section^
<*&&t), special projects (seeticmwTtfS^and preventive medicine (seetdonJifiS^
Professional nurse clinician and nurse anesthetist training positions and nursjung
special projects (seeti©ns°820p8 24=p822r8 30-and 831 )?'
^
,
;
i!:
^
^
lt
Primary care loans are provided for students in .dentistry* nursing and targeted allied
health professions; e.g., occupational health and physician therapy.
'*") stcia.:'
Federal support for development of information related to the health care workforce ^
expands, including research on primary care training practices in such areas as: relationship'
between
education
practice
patterns,
skills to meet
futureand
needs
in health
care.effective use of practitioners and development of ^
a
c
'••••ci wy-
FUNDING
A--
• • --"rcer.
An additional annual inj^tmetmof $200 million funds wbrkforccTrelated programs^"
^
".v -ir
the ^ £
;
(9/1/93)
134
�WORKING GROUP DRAFT
PRIVILEGED AND
ACADEMIC HEALTH CENTERS
if
;
Academic health*centers perfonn broad community functions that must be sustained in
the competitive environment created under health reform.
ENSURING SUPPORT FOR TEACHING AND RESEARCH MISSIONS
/
The Health Security Act creates a national pool of funds to support costs associated
with the institutional costs of research, development of new medical technology, treatment of
rare and unusually severe illnesses and provision of specialized patient care.
Medicare payments and a surcharge on private health insurance premiums flow into
the pool/ Funds are allocated to academic health centers and affiliated teaching hospitals
through a fixed percentage added to hospital payments.
Academic health centers, including affiliated teaching hospitals, receive a new,
separate payment as reimbursement for costs incurred over and above the cost of routine
patient care. Only institutional costs not covered by typical fees for patient care, and which
can be analytically justified, are included in the formula.
This approach represents a revision of the current Medicare indirect medical education
payment formula to factor in the impact of universal health insurance coverage. The revised
system reduces Medicare payments to teaching hospitals for the cost of caring for uninsured
patients and disproportionate share of low-income patients because such payments will no
longer be required once universal coverage exists.
In Fiscal Year 1992, Medicare Indirect Medical Education payments totalled $3.6
billion, including the cost of bad debts, charity care and other costs not related to medical
education. As these costs decline, Medicare IME costs are reduced accordingly, and
Medicare payments reflect the program's proportionate share of the total remaining costs.
All private payers also contribute explicitly to the national fund on a proportionate basis.
(9/1/93)
�WORKING GROUP DRAFT
PRIVILECiED
FINANCING CLINICAL RESEARCH
The Health Security Act expands investment in clinical investigations and research
related to the delivery of health services and outcomes. Health plans also are required to
provide coverage for routine patient care associated with approved clinical trials. (See
Guaranteed National Benefit Package, Tab 4.)
ENSURING ACCESS TO ACADEMIC HEALTH CENTERS
To ensure that all patients receive the specialized services available through academic
health centers when appropriate:
•
The Department of Health and Human Services, in cooperation with states and
health alliances, identifies rare diseases, specialized procedures and treatments
for which health plans are required to establish contractual relationships with
academic health centers.
•
Health alliances monitor contractual relationships between health plans and
academic health centers to assure appropriate coverage for severity of illness
and to prevent anti-competitive pricing.
•
Health alliances oversee quality management and patient grievance mechanisms
to ensure appropriate detection, referral, morbidity and mortality of illnesses
eligible for referral and specialized treatment.
•
Health alliances provide health professionals and consumers with information
regarding potential eligibility for clinical trials of relevant investigational
treatments.
(9/1/93)
138
�WORKING GROUP DRAFT
PRIVILEGED AND
ENSURING RURAL AND URBAN ACCESS TO ACADEMIC HEALTH CENTERS
To secure appropriate access to academic health penters for patients in rural and urban
areas with inadequate health care systems^ ^44 VW^U'H-y (jOr £ \t.tJ j > X; > /
<J$^ ^
•
Grants to academic health centers assist in the development of an information
and referral infrastructure to support rural health networks.
•
Grants to establish health-care networks in inner-city areas build on existing
urban charity hospitals and affiliated neighborhood clinics.
•
Health alliances institute additional protection to ensure access by rural and
urban underserved populations to special services.
(9/1/93)
139
�DETERMINED TO BE A.N ADMIMS ! i ' M
MARKING Per E.O. 12958 as anu ..
Initials: s ^ S ^ ^
WORKING GROUP DRAFT
Date:
PRIVILECJED AND (flJNHl!
HEALTH RESEARCH INITIATIVES
The Health Security Act encourages cost-conscious choices on the part of consumers
and health care providers through explicit financial incentives. At the same time, expanded
investments in health research represent integral features of cost control and quality goals
under health reform. The assessment of costs and effectiveness of new procedures and
technologies will be increased through expanded funding and refocusing of clinical trials on
more common conditions, high cost procedures, and highly variable treatment patterns.
Advances in medical science, development of new medications and technology, as
well as innovations in the organization and delivery of personal and public health services
hold the promise of increased efficiency in the health care system, longevity and improved
quality of life.
New funding for health research focuses on two areas:
•
Prevention research related to biomedical and behavioral aspects of health
promotion and prevention of disease.
•
Health services research related to the development of quality and outcome
measures, access and financing and cost effectiveness, as well as research
related to consumer choice and decision making, primary care and evaluation
of health reform.
PRIORITY AREAS FOR PREVENTION RESEARCH
The National Institutes of Health expands prevention research under*euiTent*authority^
ofeseetion^Gl^af in priority areas including:
•
(9/1/93)
Child health, including perinatal health, birth defects and diseases of
childhood, unintentional injuries, learning and cognitive development,
and adolescent health.
140
�WORKING GROUP DRAFT
PRIVILEGED AND CQNEIQn£HA&^
•
Chronic and recurrent illnesses, including research on Alzheimer's disease,
cancer, cardiovascular diseases, bone and joint diseases, and other chronic
diseases and conditions.
•
Reproductive health, including contraceptive development and use, sexually
transmitted diseases, adolescent pregnancy, and pregnancy-related
complications.
•
Mental health, including research in the area of mental disorders in children
and adolescents, child abuse and neglect, women's mental health, mental
disorders in the elderly and their caregivers, severe mental disorders, and
violence.
•
Substance abuse, including targeted research related to vulnerable populations,
such as high-risk youth, the development of medications and prevention of
dependence on tobacco, alcohol, and drugs.
•
Infectious diseases, focusing on new and emerging infectious diseases, vaccine
development and basic vaccine research, as well as infectious diseases
including:
HFV infection and AIDS - Research on behavior, vaccines, transmission
of HIV, and prevention of disease progression to AIDS.
Tuberculosis - Research on new vaccines to prevent TB, early
diagnosis, and preventing disease progression^
•
Health and Wellness Promotion including:
tl
r
1
Nutrition'-[section 30l (B-)('3)] - Includes defining optimal diets, dietary
links to disease, and obesity.
Physical activity - Includes an emphasis on fitness for all ages, and
fitness and aging.
Environmental health - Includes an emphasis on identifying health
hazards and their effects, and disorder-specific research.
(9/1/93)
141
�WORKING GROUP DRAFT
PRIVILEGED AND'
Prevention Research and Infrastructure Resource Development including basic
science development providing foundations for prevention efforts across a
range of diseases and disorders, encompassing behavioral and social
approaches, and genetics.
Resource development including support for prevention research training and
enhancement of statistical and epidemiologic techniques.
COORDINATION AND FUNDING OF PREVENTION RESEARCH
?
a
^ v ^ " " An additional investmenkofj^Sl^billion annually^funds new research ^ivitiesin th"e'' \
^^^ED^dii^s^ESSI^Iij '^ National Institutes of Health distributes funds using three
"mechanisms: grants, contracts, and NIH intramural research.
r
ie
The NIH Associate Director for Prevention coordinates the prevention research
programs of the national research institutestunderccurrent6authority^of«scCtion?402E(^, and
will report annually to the NIH Director and the Secretary on the status and progress of
prevention research activities.
In consultation with the national research institutes, the NIH Associate Director will
develop an ongoing plan for prevention research activities conducted by the NIH.
Prevention research findings are translated into, or appropriately integrated with,
personal health services and public health programs to maximize the impact of prevention
research on disease reduction and improved health status.
PRIORITY AREAS FOR HEALTH SERVICES RESEARCH
This research provides the knowledge to increase the cost effectiveness,
appropriateness and quality of care in a reformed health care system. The health services
research program includes research designed to improve the effectiveness and appropriateness
of clinical practice through several interrelated activities, including:
•
(9/1/93)
Effectiveness research
142
�WORKING GROUP DRAFT
PRIVILEGED ANDCOKPS
Quality and outcomes research
Development and dissemination of clinical practice guidelines
Research and evaluation related to administrative simplification under health
care reform
'
Research on consumer choice and information resources
Evaluation of health care reform.
A new generation of health services research intended to answer critical questions on
the effectiveness of treatments for common clinical conditions is initiated. Patient-outcomes
research and the development of clinical practice guidelines form a central part of the health
services research agenda.
I
Examples of specific areas of health services research:
•
Effectiveness research which examines the appropriateness and effectiveness of
alternative strategies for the prevention, diagnosis, treatment, and management
of clinical conditions, in terms of patient outcomes. The Medical Treatment
Effectiveness Program research focuses on conditions that meet one of more of
the following criteria:
Large number of individuals are affected.
I
Uncertainty or controversy regarding effectiveness of treatment exists.
Associated risks and/or costs of treatment are high.
•
(9/1/93)
Patient outcomes research teams (PORTs) are 5-year grants that include
elements of formal literature synthesis, data acquisition and analysis,
development of clinical recommendations, dissemination offindings,and
evaluation of the effects offindingson change in clinical practice.
143
�WORKING GROUP DRAFT
i
PRIVILEGED AND . P O ^
•
The development of clinical practice guidelines improves the quality,
appropriateness, and effectiveness of health care. The guidelines also represent
standards of quality, performance measures, and medical review criteria
through which health care providers may assess or review the provision of
health care. Guidelines [assist in the determination of how diseases, disorders,
and other health conditipns can most effectively and appropriately be
prevented, diagnosed, treated, and managed clinically.
•
Research and evaluation, regarding computerized medical records and
information systems simplifies the administration of health care.
i
•
Studies assess the impact of barriers to access, utilization, and continuity of
health care services on health care reform.
•
Research and analytic work contributes to efforts to devise, implement,
maintain, and evaluate the new system of health care budgets, at the national,
state and alliance levels.,
i
i
•
Expanded research into risk adjustment facilitates efficient measurement of
health care needs.
,
•
Long-term care researchj and demonstrations focused on new program models
expand the range of financing and administration for those services.
•
Research into service organization and structure include examination of the
relationship of continuity , accessibility, and comprehensiveness of primary care
to cost, quality, and access.
1
(9/1/93)
144
�WORKING GROUP DRAFT
|
PRIVILEGED AND.
EVALUATION OF HEALTH CARE REFORM
I
The introduction of comprehensive health refonn affects every aspect of American
health care. To support implementation of the Health Security Act, evaluation research
includes:
•
Short-term research - Evaluate the responsiveness of the system to health care
reform, including its effects on institutions, health care professionals, and
specific population groups.
•
Long-term monitoring - Examine the effect of reforms on cost, quality and
access. Longitudinal studies using databases developed through the
augmentation of nationaljand regional surveys and analyses of secondary data
are needed.
•
Demonstrations and evaluations - Address critical issues in health care reform,
such as quality assurance and medical liability.
CONSUMER CHOICE AND DECISION-MAKING RESEARCH
Research aimed at improving information resources that enable purchasers to make
health care choices based on their relatiye value and quality assumes top priority. This
research contributes to improved decision making by consumers, resulting in more costeffective sen ice delivery and health plan selection. Prospective research efforts include:
•
Consumer awareness of benefit plans, availability of supplemental coverage,
cost-sharing, and utilization.
•
Effect of consumer knowledge on the selection of health plans including the
relationship between health status and choice of plan.
•
Types of information and form of media most effective in assisting consumers
in selecting health plans and providers, including information on costs and
quality of care.
(9/1/93)
145
�WORKING GROUP DRAFT
!
PRIVILEGED AND fiSfiSS
•
Impact of improved information on consumer satisfaction, access to care,
quality of care and cost of services.
•
Patient choice and decision making related to treatment alternatives.
COORDINATION AND«EUNDING OF HEALTH SERVICES RESEARCH
„
. _,
......
^ ^ . — - v" V* -
_ -
» -— " i -
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v
,
x
•-• ^- A ^ a d d i t i o n a l ^ O O ^ i l l i ^
supports the health services research program
describ.ed^abbve (funding for,,.the' Oualit^Management Im&o^
.
related to informationnsystem development are"*outlined in otnef^sections of the plan).
\
s
1?
1J
l
The Agency for Health Care Policy and Research in the Public Health Service and the
Office for Research and Demonstrations in the Health Care Financing Administration assume
administrative responsibility for research related to the impact of health care reform.
Research activities are conducted through intramural and extramural programs using the
mechanisms of grants, contracts, and cooperative agreements.
(9/1/93)
.
146
�DETERMINED TO BE AN ADMINISTRATIVE
MARKINCPsr ILQ. 12958 as amended^Sec^33j'
Initials:"ll5lS_Datc:ILi.
;
WORKING GROUP DRAFT
PRIVILEGED AND G©f<
PUBLIC HEALTH INITIATIVE
The public health system and the reformed health care delivery system share a
common purpose: to improve the health of the American population at an affordable cost.
While health reform strengthens the personal care delivery system, an enhanced public
health system also plays an essential role to:
i
•
Protect Americans against preventable, communicable diseases, exposure to
toxic environmental pollutants, harmful products and poor quality health care.
I
•
Identify and control outbreaks of infectious disease and patterns of chronic
disease and injury.
•
Inform and educate consumers and health care providers about their roles in
preventing and controlling disease and the appropriate use of medical services.
•
Define and validate new prevention and control interventions.
The public health initiative in the Health Security Act calls for reinventing public
health to work efficiently and in concert with the personal health care system. It builds on
the capability of health alliances and plans to reach out to individuals in their populations,
providing them with information about prevention and appropriate use of medical services.
The initiative promotes readiness and flexibility in the public health system by strengthening
core functions at the local, state, and federal level. It also focuses attention on specific health
problems of regional and national significance to consolidate categorical programs into an
integrated health system, reducing administrative burdens.
i
The public health initiative repairs, strengthens and consolidates essential federal, state
and local public health functions through three approaches:
•
Improving the performance of the core functions of public health.
•
Authorizing a flexible pool of resources to address priority health problems of
regional and national significance.
(9/1/93)
147
�WORKING GROUP DRAFT
•
PRIVILEGED AND UJl II lULl'l 11AL
Expanding federal support for unified data systems, technical assistance and
information networks.
Because dealing effectively with public health problems requires the coordinated
involvement of multiple parties, the initiative is designed to foster inter-agency collaboration
and public-private partnerships, including close working relationships between public health,
community groups, alliances, and plans.
CORE PUBLIC HEALTH FUNCTIONS
Health reform clears the way for the emphasis of public health activities to shift away
from the direct delivery of health services. It positions public health to maintain a strong
defense against preventable diseases and conditions that affect local communities and to work
with the health delivery system to address them. The following essential functions are
supported:
•
Health-related data collection, surveillance, and outcomes monitoring —
The basic tool for the health care system as a whole, providing for regular
collection and analysis of information on key dimensions to ensure timely
awareness, decisions, and interventions related to epidemics, emerging patterns
of disease and injury, prevalence of risks to health, and outcomes of personal
health services.
•
Protection of environment, housing, food, and water — Enforcement
functions related to air pollution (including indoor air), exposure to high lead
levels, water contamination, handling and preparation of food, sewage and solid
waste disposal, radiation exposure, radon exposure, noise levels and abatement,
consumer protection and safety.
•
Investigation and control of diseases and injuries — Identification,
containment and provision of appropriate emergency and treatment resources
for community-wide health problems, including emergency preparedness and
control of violence.
(9/1/93)
148
�WORKING GROUP DRAFT
PRIVILEGED AND^effl
Public information and education — The mobilization of communities and
motivation of individuals to reduce risks to health, such as tobacco use, abuse
of alcohol and other drugs, sexual activity that increases vulnerability to HIV
infection and sexually transmitted diseases, inadequate nutrition, physical
inactivity, and childhood immunization.
Accountability and quality assurance — Enforcement functions to ensure
that providers, clinics, hospitals, long-term care facilities, laboratories, and
allied health providers meet established standards through licensure,
certification, and inspection.
Laboratory services — The provision of individual testing and pathology
services, including the system of state laboratories that screen for metabolic
diseases in newborns, provide toxicology assessments of blood lead levels and
other environmental toxins, diagnose sexually transmitted disease and
tuberculosis requiring partner notification, test for cholera and other infections
or food-borne diseases, and monitor the safety of water and food supplies.
Training and education — Ensuring adequate training with special emphasis
on public health professionals such as epidemiologists, biostatisticians, health
educators, public health administrators, sanitarians, and laboratorians.
Leadership, policy development, and administration — Public health's
responsibility to define health goals, standards, and policies that affect the
health of whole communities; to define health issues of major importance and
devise interventions to address them; to build coalitions with related public
sectors such as housing, public transportation, and agriculture; and to ensure
accountability for public resources devoted to health. Public health coordinates
closely with the leadership of alliances and plans, mobilizing community
support for public health policies and initiatives.
(9/1/93)
149
�WORKING GROUP DRAFT
PRIVILEGED AND e&M4P
Funds are distributed to states using a formula based on three weighted factors that
take into account population (one-third), poverty rate (one-third), and years of productive life
lost (one-third). No state receives an allocation less than the State's grant in the last year
preceding enactment of this initiative. To receive funds under the formula, states are required
to maintain their current level of support for public health and prevention activities at no less
than the average of the past two years' funding level.
funds are used to develop and strengthen public health core functions at the state and
local level, including county, district and municipality levels. Accountability for effective use
of state formula grant funds are monitored through reporting progress in achieving health
improvements using a common data set of health outcomes developed as a part of the Healthy
People 2000 initiative.
PRIORITY HEALTH PROBLEMS OF REGIONAL AND NATIONAL SIGNIFICANCE
Additional funds support a federal program to develop innovative strategies for
addressing priority health needs of regional and national significance. The purpose of this
program is to address specific issues in ways that are responsive to the needs of populations
served by alliances and plans and that consolidate rather than proliferate authorities,
management structures, and funding and reporting requirements.
Congress establishes some priorities for funding through dedicated appropriations. The
Secretary of the Department of Health and Human Services identifies other areas of priorities
relying on recommendations of a national advisory board representing the perspective of the
Public Health Service, states and local public health agencies, as well as regional health
alliances and plans.
The Secretary solicits proposals for innovative interventions that link public health
agencies and the delivery system to achieve measurable reductions in the incidence of illness
and injur)'. Grants are made through competitive awards to state and local government
agencies, not-for-profit organizations and research institutions. As effective interventions
from these projects are identified, information is disseminated to facilitate their adoption in
other communities.
(9/1/93)
150
�WORKING GROUP DRAFT
PRIVILEGED AND
The following are examples of the types of regional and national priority health issues
to be addressed:
•
Infectious diseases
Immunization — Education and outreach to ensure the broadest possible
immunization coverage against childhood vaccine-preventable infectious
diseases, as well as influenza, pneumonia, hepatitis B, and tetanus among
adults.
HIV/AIDS — Education for prevention, confidential screening programs, and
partner notification programs particularly in urban areas with special focus on
minorities, women, children, and adolescents.
Tuberculosis — Case location, targeted education, and training for providers
regarding treatment and control measures, with special attention to its spread
among homeless people.
•
Chronic and environmentally related diseases
Diabetes — Community-oriented diabetes education and control programs,
directed especially to minority and low-income populations at highest risk,
appear to offer economies of scale to complement individually provided
medical services.
(9/1/93)
151
�WORKING GROUP DRAFT
PRIVILEGED AND
Violence and injury control — The leading cause of years of potential life
lost among Americans and the leading cause of death among children,
adolescents, and young adults, this category requires close collaboration among
several systems, including law enforcement, education, transportation, and
recreation and parks. It is linked to alcohol misuse and requires an integrated
multi-faceted set of interventions.
Health-related behavior and other priority issues
Tobacco prevention — The increasing incidence of smoking among
adolescents and women poses future risks for heart disease and cancer, as well
as low-birthweight babies and infant morbidity.
Comprehensive school health — Furthering development of links between
health and education in a nascent program of comprehensive school health
program.
Maternal, child health, and family planning — With continued special
attention is needed to provide education and outreach to prevent infant
mortality and morbidity. In addition, the persistent and intractable incidence of
adolescent and unwanted pregnancy calls for targeted education and outreach in
support of family planning services. Closely linked to social services,
interventions include targeted public education, programs of home visiting, case
management for children with special needs, and child and spouse abuse
services.
(9/1/93)
152
�DETERMINED TO BE AN ADMINISTRATIVE
TNIMKAilVt
MARKINGPer £.0^2958 as ameniied,
r
lnitials:*Xy V^
WORKING GROUP DRAFT
D a t e
.
PRIVILEGED AND COM l U L R
ENHANCEMENT OF FEDERAL CAPACITY TO SUPPORT PUBLIC HEALTH
In support of federal assistance for core public health functions and categorical
activities, additional funds improve direct federal capacity, including:
•
Federal surveillance and health statistics, laboratories, and epidemiologic
services — Whether fighting the "old" diseases such as tuberculosis and
cholera or "newer" ones such as Lyme disease or antimicrobial-resistant
infections, public health's basic tools are data collection and biostatistical
analysis, laboratory capacity, and epidemiologic expertise. An effective and
efficient central capacity at the Federal level provides for economies of scale in
addressing many of these health problems.
An essential part of reinventing public health is the consolidation of currently
fragmented public health data systems and the integration of these systems with
the regional and national data network described in the Information Systems
chapter. The need for separate public health data systems is minimized to the
extent that the elements included in the regional and national data network
support public health functions. The unified health information system
provides timely information to support health policy development, budget
formation, efficient program administration and general improvement of the
public's health and does so at the lowest cost and burden.
•
Technical assistance and national health information networks — To
support the refocus of public health at local, State, and Federal levels and the
application of findings from priority health programs described above, technical
assistance and information networks are needed to link Federal, State, and local
public health agencies and various grant-supported programs carried out by
State, local, and not-for-profit agencies. Information from these networks and
the health data system provide the basis for regular reports to the President and
the Congress for purposes of monitoring the effectiveness of this initiative.
FUNDING
'si
Public health initiatives require'an additional^iiivestment of $1.1 billion.
(9/1/93)
153
^ ^ ^ ^ ^
�WORKING GROUP DRAFT
PRIVILEGED AND
fififflffiefiBCL
INDIAN HEALTH SERVICE
Indian Health Service clinics and hospitals, tribal health centers and urban Indian
programs operate outside regional health alliances. National health reform does not limit
options currently available to tribes to control and operate health facilities under the Indian
Self-Determination and Education Assistance Act. Public Health Service programs for
American Indians and Alaska Natives continue and expand as described under public health
programs.
ELIGIBILITY
American Indians and Alaska Natives and their dependents currently eligible to receive
services at Indian Health Sen-ice are eligible to enroll. All eligible American Indians/Alaska
Natives choosing to receive care through the Indian Health Service must enroll.
American Indians and Alaska Natives may enroll in a health plan offered through the
alliance but receive no federal subsidies for health care costs on the basis of their status as an
American Indian or Alaska Native. American Indians and Alaska Natives , whether enrolled
in a health plan in an alliance or enrolled with the Indian Health Service, are eligible for
financial subsidies on the same basis as other Americans. American Indians and Alaska
Natives who enroll in a health plan in the alliance may receive care through the Indian Health
Service if the health plan contracts with the Indian Health Service.
An Indian Health Sen ice center may sen-e non-Indians enrolled in health plans in the
regional alliance on a contract basis.
BENEFITS
After a five-year transition during which the Indian Health Service renovates and
expands its clinics, Indian Health Service centers begin to deliver the full array of services
guaranteed in the comprehensive benefit package. Indian Health Service centers may contract
with other providers or health plans in order to provide the comprehensive benefit package.
(9/1/93)
211
�PRIVILEGED AND r n ^ m r i r R AT
WORKING GROUP DRAFT
Indian Health Service centers continue to provide the broad range of supplemental
benefits currently available, such as public health nursing and health education, outreach
services, environmental surveillance, health promotion and injury prevention, technical
assistance, training and construction of sanitation infrastructure.
Because American Indiansfand Alaska Natives are^guaranteed access to^the'
f
comprehensivebgnefifpackage if enrolled in anjndian Health ServicejjgntefTthe cunent
requiremeg^tfiit^^
APPROPRIATIONS AND REIMBURSEMENT
/
* American Indians and Alaska Natives enrolled in an Indian Health Service center are
not required to pay individual contributions for health insurance premiums. -EederaLappi^pHati^^eejveiwtJigse^si^
/
tht ability of th£ Indian Health Service to guarantee enrollees in its health plans the
/comprehensive benefit package requires adjustment tojKe Anti-Deficiency Act prohibition
/against the Indian Health Service^assuming obligation's*that might put the*agency at risk
i beyond its appropriation. The appropriations process changes to include a stated amount for
/ the first three quarters of the^fiscal year and "such sums as may be necessary" during the,,,
/ fourth quarter for unanticipated.GOSts^^^
^ ^ ' ^ ^ - ^
^
^
The porfibn of premiums paid by employers on behalf of individual American Indians
and Alaska Natives enrolled in an Indian Health Service center is paid into a fund that
i
supplements appropriations to the Indian Health Service. If the employer is a tribal
j
"V government, the employer is exempt from contributing the employer portion of the premium. \
These provisions do not alter the authority of the Indian Health Service to bill
Medicare, Medicaid and other third-party payers for services provided in Indian Health
Service clinics and permit the Indian Health Service to bill those payers for contract care
delivered outside the Indian Health Service.
An Indian Health Service clinic receives reimbursement for non-Indians enrolled in a
health plan in the regional alliance.
(9/1/93)
212
/
�WORKING GROUP DRAFT
PRIVILEGED AND CONFITlENTIAL*
REGULATORYWD MANAGEMENT CHANGES
1
The Indian Health^Care Improvement iict is amended to authorize the Secretary oi\the
Department of Health^and Human Services to "contract with persons for service^ (including
personal services) for the provision of direct/health care services'/overriding section 37. 1
104(b) of the Federal Acquisition Regulation, which prohibits federal agendes.f om-awarding
personal-service'contracts unless specifically authorized-by-statuteT^"*""
/
1
/
(9/1/93)
-~f~~~
213
/
�p.
EQUAL ACCESS FOR PURCHASERS TO PHARMACEUTICAL DISCOUNTS
U^iOA
Co
A S a C o n d i t i o n O f r p n n i v l n g p n y w w H i i t ^ - f H l n i l m i v r m c i i l PMI
11
1
j ^ a r m a ^ ^ ^ ^ " - unH^r Medicare andj^fiedicaid, manufacturers of
pharmaceutical products In the Uutfca Statcc sold throu'gh interstate ^
commerce would have to offer t<rTnn P^DfiS^S^
purchasers 6& oV
pharmaceuticals on equal terms. This provision would not prohibit
pharmaceutical manufacturers from offering differential price co.
purchasers in return for differential economic advantages realized by the
manufacturer, such as volume buying, prompt payment, prompt delivery, or
other mechanisms that can influence physician prescribing behavior.
t o
A
A
Under this/j5rovision, pharmaceutical manufacturers would be precluded
from providing price concesslOHS to purchasers based solely on the class of
trade to which the purchaser belongs. The^fte^^gnr»PaimUii ALt't5=Hetlealth care programs that directly
-psflmtro pharmaceuticals, such as th^Departments of Veterans Affairs and
Defense, would be exempt from the^e provisions./^These provisions would
become effective two years after the date of enactment.
�DETERMINED TO BE AN ADMINISTRATIVE
MARKING Per E^L 12958 as amended, Sec-JJ (c)
3L^ ^ b - a
WORKING GROUP DRAFT
St y - f?
PRIVILEGED AND dUNHLIHM lUtf^
BUDGET DEVELOPMENT AND ENFORCEMENT
The Health Security Act organizes the market for health care and creates mechanisms
to control costs through enhanced competition, consumer choice, administrative simplification,
and increased negotiating power through health alliances. A national health care budget
serves as a backstop to that system of incentives and organized market power. The budget
ensures that health care costs do not rise faster than other sectors of the economy.
The national health care budget centers on the weighted average premium for the
nationally-guaranteed benefits package in regional health alliances, establishing a target for
how much that average premium may increase each year. The federal government assumes
responsibility for enforcing alliance budgets.
COVERED EXPENDITURES
Health care expenditures covered by the budget include premiums paid to cover the
guaranteed comprehensive benefit package whether paid by employers, employees, or
individuals. Medicare and Medicaid expenditures are included under separate budgets.
Supplemental benefits beyond the comprehensive benefit package, as well as workers'
compensation and auto insurance benefits, are not included in the budget. Premiums for
insurance policies providing coverage for cost sharing are not included.
ANNUAL INCREASES
Medicare, Medicaid and health plan premiums that cover services under the nationally
defined benefit package may not increase at a rate higher than projected growth in the
Consumer Price Index between September, 1993 and December 31, 2000.
Schedule 1. ?????????????????????????????????????????
The National Health Board adjusts the inflation factor for each alliance to reflect
unusual changes in the demographic and socio-economic characteristics of the population
covered by the alliance. The National Health Board develops a methodology for making such
adjustments using commonly accepted actuarial principles. Demographic changes considered
include, at a minimum, age and gender.
(9/1/93)
94
�WORKING GROUP DRAFT
PRIVILEGED AND r n n n n r N T h W .
The Board consults with states and alliances prior to the establishment of the annual
inflation factor.
NATIONAL PER CAPITA BASELINE TARGET
The National Health Board calculates a national per capita premium target based on:
•
Projected per capita health expenditures for the guaranteed benefits package in
the first year of the new system.
•
With adjustments for expected increases in utilization by the uninsured and
under-insured and to recapture currently uncompensated care.
FIRST YEAR BIDDING AND NEGOTIATION PROCESS
In the year prior to implementation, each alliance conducts a bidding and negotiation
process with health plans. The Board provides alliances with information and technical
assistance to aid in the bidding process. The bidding is conducted either by providing plans
with the alliance's budget target prior to bidding, or by inviting blind bids followed by
negotiations and re-bidding.
Once an alliance is satisfied with the negotiated health plan premiums, it submits them
to the National Health Board for review. The first-year bidding process occurs earlier than in
subsequent years to allow time for a more thorough review by the National Health Board and
possible re-negotiation of premiums.
NATIONAL BOARD REVIEW
The Board calculates for each alliance a per capita premium target, using the national
per capita baseline target as a reference point. For each alliance, the Board adjusts the
national target for current regional variations in health care spending and for rates of underinsurance and underinsurance. To measure regional variations in health care spending, the
Board uses such factors as:
•
(9/1/93)
Variations in premiums across states based on surveys and other data.
95
�WORKING GROUP DRAFT
PRIVILEGED AND fniSlHIlHM I
•
Variations in per capita health spending by state, as measured by the Health
Care Financing Administration.
•
Variations across states in per capita spending under the Medicare program.
•
Area rating factors commonly used by actuaries.
The Board establishes the premium targets for alliances so that the weighted average
of the alliance targets equals the national per capita baseline target.
The Board calculates an estimated weighted-average premium for each alliance, using
the proposed premiums submitted by the alliance and a projection of the distribution of
enrollment across plans. If the estimated weighted average premium for an alliance is greater
than the alliance's premium target, then the Board notifies the alliance and allows it to renegotiate premiums. If an alliance chooses to re-negotiate premiums, it submits the revised
premiums to the Board and proceeds with enrollment.
-k ^
/}/'•-<>
FIRST YEAR BUDGET ENFORCEMENT
£y^f<" p ^ ^ - ^
co.-f - ^
The Board calculates an estimated weighted-average premium cased on the final bids
submitted by the alliance. If the estimated weighted-average premiumVor the alliance
exceeds the alliance's premium target, an assessment is imposed on eachVlan whose bid
exceeds the target, and on the providers receiving payment from that plaiul The assessment
on the plan is equal to a portion of the percentage amount by which the alliance target is
below the bid. The "portion" is calculated so that the weighted average of premiums after
assessments equals the alliance's premium target. Payments to providers by that plan are
assessed at the same percentage^ u/.'tv~ rcve^-t' ^ y ^ j - ^ k ^ ' ^ A 4^3 "ft-c pl^r* ,
ESTABLISHING A BASELINE BUDGET FOR EACH ALLIANCE
Following the first open enrollment period, the Board calculates for each alliance the
weighted average premium, using actual premiums and enrollment figures. The first year
weighted average premium becomes the baseline per capita budget for the alliance.
In each subsequent year, an alliance's per capita budget equals its budget for the
(9/1/93)
96
�WORKING GROUP DRAFT
PRIVILEGED AND geMMUfaN ltAb>
previous year, increased by the inflation factor.
ADJUSTING THE PREMIUM INFLATION FACTOR
In general, as described above, the premium inflation factor is the increase in the
Consumer Price Index. If, however, an alliance's actual weighted-average premium in a
given year exceeds its premium target, then the inflation factor for that alliance is reduced for
the following two years to recover excess spending.
PROCESS FOR MAKING ADJUSTMENTS IN TARGETS OVER TIME
The National Health Board appoints an advisory commission to recommend
adjustments to the methodology for calculating premium targets. The Board provides states
and alliances with information about regional differences in health care costs and practice
patterns. The commission explores methods to reduce variations in budget targets across
states due to differences in practice patterns, physician supply, population characteristics, and
other appropriate factors. Adjustments to targets may not be made without Congressional
action.
ENFORCEMENT OF THE BUDGET
The federal government is responsible for enforcing the health care budget. By
October 1 of each year — beginning in 1996 — alliances submit to the National Health
Board for approval their proposed health plan premiums.
Based on proposed premiums, the Board calculates the anticipated weighted average
premium for each alliance. The anticipated weighted average premium is the average of the
proposed premiums weighted by current enrollment in each plan, with special rules in cases
of plans entering or leaving the alliance.
(9/1/93)
97
�WORKING GROUP DRAFT
PRIVILEGED AND U s W l D I i m T r t f r
If an alliance's anticipated weighted-average premium exceeds its per capita budget
target, an assessment is imposed on each plan whose premium increase (adjusted upward^o
reflect the previous year's assessment) exceeds the alliance's premium inflation factor. l^The
same assessment is imposed on providers receiving payment from that plan. The assessment
on the plan is equal to a portion of the difference between the plan's premium increase and
the alliance's budget inflation factor (adjusted upward to reflect the previous year's
assessment). The "portion" is calculated so that the weighted average of premiums after
assessments equals the alliance's per capita budget target. Payments to providers by that plan
are assessed at the same percentagej. ^ , 1 > ^uC-wC
't -t-^ Ct U ^ i ^ ^ — - i "
v
TOOLS TO MEET PREMIUM TARGETS
In addition to creating a well-structured marketplace for health coverage, alliances
have the ability to control costs through premium negotiations and the authority to refuse
contracts with health plans whose premiums are too high. Tools available to states to contain
costs include:
•
Premium negotiation and regulation.
•
Limiting enrollment in high-cost plans by:
•
Freezing new enrollment in high-cost plans.
•
Surcharging high-cost plans or paying rebates to consumers who enroll
in low-cost plans.
•
Setting rates for health providers.
•
Controlling health care investments through planning.
(9/1/93)
98
�WORKING GROUP DRAFT
PRIVILEGED AND
BUDGETS FOR CORPORATE ALLIANCES
A large employer may operate a corporate alliance rather than purchasing health
coverage through a regional alliance, provided it complies with cost-containment goals.
Large employers whose health plans do not meet national spending goals are required to
purchase coverage through regional alliances.
During the first two years of implementation , the inflation equals the increas in the
?????????????????????
The National Health Board develops a methodology for calculating an annual premium
equivalent within a corporate alliance. Beginning after the third year of implementation of
health reform, each corporate alliance annually reports its average premium equivalent for the
previous three years to the Department of Labor.
If the increase in the premium equivalent exceeds the allowed rate of growth during
two of any three years, the Department of Labor shall require the employer to purchase health
coverage through a regional alliance. An employer may petition the Department of Labor for
an adjustment in its inflation factor to compensate for unusual changes in the risk profile of
its workforce.
(9/1/93)
99
�SUGGESTED REVISION OF 8/6/93 DRAFT
(Page 55)
STATE REGULATION OF PLANS
S t a t e s q u a l i f y h e a l t h plans t o p a r t i c i p a t e i n a l l i a n c e s .
Each s t a t e e s t a b l i s h e s a mechanism t o assess t h e q u a l i t y o f
h e a l t h p l a n s , t h e i r f i n a n c i a l s t a b i l i t y and c a p a c i t y t o d e l i v e r
the comprehensive b e n e f i t package t o t h e proper geograhic
market o f each p l a n . S t a t e s w i l l d i s c l o s e t h e c r i t e r i a t h a t
each h e a l t h p l a n must s a t i s f y t o become q u a l i f i e d .
Health
plans which s a t i s f y those c r i t e r i a s h a l l be q u a l i f i e d .
Only
plans q u a l i f i e d by t h e s t a t e rnay o f f e r h e a l t h coverage t h r o u g h
alliances.
�SUGGESTED REVISION OF 8/6/93 DRAFT
(Pages 177-178)
ANTITRUST
The a n t i t r u s t laws serve an i m p o r t a n t f u n c t i o n i n the new
h e a l t h care system, e n f o r c i n g r u l e s o f c o m p e t i t i o n c r i t i c a l t o
the e f f i c i e n t o p e r a t i o n o f the new system.
While the v i g o r o u s enforcement o f the a n t i t r u s t laws i s
i m p o r t a n t , i n s e v e r a l areas l e g i t i m a t e concerns e x i s t about t h e
need f o r g r e a t e r c l a r i t y concerning enforcement p o l i c y and the
a b i l i t y o f some h e a l t h care p r o v i d e r s t o be sure t h e i r conduct
comports w i t h sound a n t i t r u s t r u l e s .
HOSPITAL MERGERS
H o s p i t a l s s m a l l e r than a c e r t a i n s i z e , as measured, f o r
example, by number o f beds o r p a t i e n t census, r e q u i r e c e r t a i n t y
t h a t they w i l l not be c h a l l e n g e d by the f e d e r a l government i f
they attempt t o merge. Such h o s p i t a l s o f t e n are s o l e community
p r o v i d e r s t h a t do not compete w i t h o t h e r h o s p i t a l s .
The Department o f J u s t i c e and the Federal Trade Commission
p u b l i s h g u i d e l i n e s t h a t p r o v i d e s a f e t y zones f o r such mergers
and an e x p e d i t e d business review or a d v i s o r y o p i n i o n procedure
t h r o u g h which the p a r t i e s t o such mergers can o b t a i n t i m e l y
( i . e . , w i t h i n 90 days) a d d i t i o n a l assurance t h a t t h e i r merger
w i l l not be c h a l l e n g e d .
G u i d e l i n e s a l s o w i l l p r o v i d e the
a n a l y s i s the agencies use t o e v a l u a t e mergers among largerhospitals .
HOSPITAL JOINT VENTURES AND PURCHASING ARRANGMENTS
H o s p i t a l s may e n t e r i n t o j o i n t v e n t u r e s i n v o l v i n g h i g h
t e c h n o l o g y o r expensive equipment and a n c i l l a r y s e r v i c e s , as
w e l l as j o i n t purchasing arrangements i n v o l v i n g the goods and
s e r v i c e s they need.
The Department o f J u s t i c e and the Federal Trade Commission
p u b l i s h g u i d e l i n e s t h a t p r o v i d e s a f e t y zones f o r such j o i n t
v e n t u r e s and arrangements, examples o f v e n t u r e s t h a t would not
be c h a l l e n g e d by the agencies, and an e x p e d i t e d business review
or a d v i s o r y o p i n i o n procedure t h r o u g h which the p a r t i e s t o
j o i n t v e n t u r e s can o b t a i n t i m e l y ( i . e . , w i t h i n 90 days) advice
and assurance as t o whether v e n t u r e s t h a t do not f a l l w i t h the
s a f e t y zones w i l l be c h a l l e n g e d .
�PHYSICIAN NETWORK JOINT VENTURES
r
P h y s i c i a n s . r e q u i r e a d d i t i o n a l guidance r e g a r d i n g t h e
a p p l i c a t i o n ofMzhe a n t i t r u s t laws t o t h e i r f o r m a t i o n o f
J :W ^hye i-e-ta n networks t h a t would n e g o t i a t e e f f e c t i v e l y w i t h h e a l t h
plans.
The Department o f J u s t i c e and t h e F e d e r a l Trade Commission
p u b l i s h g u i d e l i n e s t h a t p r o v i d e s a f e t y zones f o r p h y s i c i a n
network j o i n t v e n t u r e s t h a t do not possess market power (below
20 p e r c e n t ) and t h a t share f i n a n c i a l r i s k , examples o f networks
t h a t would not be c h a l l e n g e d by t h e agencies, and an e x p e d i t e d
business review or a d v i s o r y o p i n i o n procedure t h r o u g h which t h e
p a r t i e s t o networks t h a t do not f a l l w i t h i n t h e s a f e t y zones
can o b t a i n t i m e l y ( i . e . , w i t h i n 90 days) a d v i c e and assurance
as t o whether t h e i r network w i l l be c h a l l e n g e d .
STATE ACTION
IMMUNITY
^ ^ s ^ n q e } t ^ r ^ 7 Z y ^ l r f l ft)
cCARRAN-FERGUSON
(No change from 8/6/93 d r a f t )
^ A
3c
�WORKING GROUP DRAFT
PRIVILEGED AND (2C
DETERMINED TO BE AN ADMINISTRATIVE
MARKING Per EJJ. 12958 as amended, Sec.JJic)
PROVIDER COLLABORATION
initialsDate ^ J i i S J i ^
During the transition to the new health care system, physicians and other providers
may require some protection to negotiate effectively with health plans and to form their own
plans. To protect physicians and other providers from the market power of third party payers
forming health plans, providers are provided a narrow safe harbor to establish and negotiate
prices if the providers bear some financial risk in the plan. The financial risk may not be
simply fee discounting.
Physicians who provide health services for the benefit package may combine to
establish or negotiate prices for the health services offered if the providers bear risk and if the
combined market power of the providers does not exceed 20 percent. This safe harbor does
not apply to the implicit or explicit threat of a boycott.
STATE ACTION IMMUNITY
zz&. state 4b5t seeks to grant antitrust immunity to hospitals and other institutional health
providers* has the authority to do so under the state action ^octrinc^
If a state establishes a clearly articulated and affirmatively expressed policy to replace
competition with regulation and actively supervises the arrangements, the hospitals and other
institutional providers involved will have certainty that they will not face enforcement action
by the federal government.
f l o v / DZiL^ Tie
&e>
& <^
6
^
McCARRAN-FERGUSON
The current exemption from the antitrust laws enjoyed by health insurers is repeale/
eliminating the ability of health plans to collectively determine the rates they charge.
(8/6/93)
178
��DETERMINED TO BE AN ADMINISTRATIVE
MARKINGPer E_Q. 12958 as ameiMied, Sec. J.3 (c)
Initials: J ^ f P
Date: 3>Jl
0 , / ( S L
WORKING GROUP DRAFT
PRIVILEGED AND GONTIPCtmAL
INCENTIVES FOR PHYSICIANS TO PROVIDE PRIMARY CARE
In addition to refocusing federal support for physician education to focus on primary
care, the Medicare programs increases its rates of reimbursement for primary care physicians.
RATE INCREASES
Reduce rates for office consultations to equal office visits and use savings to
increase fees for all office visits: Office consultations are reduced to the same level as other
office visits. The relative values for office consultations are redistributed to office visits
without increasing total spending.
Because office consultations currently pay more than office visits, the change has the
effect of increasing fees for office visits. Because primary care physicians perform
consultations less often than sub-specialists perform them, it increases payments for primary
care without increasing Medicare spending.
Increase the relative value of allowances for office visits to reflect time spent
before and after visits: Currently, the relative values for procedures, including medical
visits, account for physician time spent immediately prior to an office visit for preparation
and immediately after an office visit for chart work, patient instructions, etc.
Increasing the work component under primary care services by 10 percent increases spending
for those serv ices; the increase is offset by reducing relative values for all non-primary care
services.
Establish a resource-based method to pay for the physician overhead component
of the physician fee-schedule: The Secretary develops a methodology and data sets for
implementing a resource-based system for determining practice expense relative value units
for each physician's service. In addition, primary care practice expense RVUs increase 10
percent.
The current physician-fee schedule includes a work component that accounts for the
physician's activities and a practice expense component that accounts for overhead (other than
malpractice). The work component is based on resources used; the practice expense
component is based on historic charges.
(9/1/93)
135
�WORKING GROUP DRAFT
'RIVILEGED AND
Because primaw, care serv^'ces'^cur more oftgptiffoffice, settings, actual overhead
costs are higher than for surgicati services. Unjieflne current system, surgical services are
assigned a higher overhka<Lf£e than pmparffcare services. Collecting data on actual overhead
costs and developing an allocatior^aliSmod for assigning overhead to individual procedures
increases the relative value npdfary care services and decreases it for many non-primary care
services.
^r^.
- - - ..,<?u-'f
Provide a separate ejtpetfditure target rate of growth fbpprimary care: Establish
/third category for pnjntsffca.it services, expanding the existifig two categories which cover
^urgical services
other services.
-•—
o'0
Provide a higher expenditure target rate of growth for the separate primary care
services target: Increasing the target for primary care services to GDP per capita plus 5
percentage points for FY-1995 decreases the target for other services.
.„ .<_-,
Bonus Payments: EUminating ihe 10 percent [bonus payment for non-primary care
services in urban Health Professional Shortage Areas/shifts additional resources to increaflc
tfie- bonus payment to 20 percent for primary care services in those areas, ru^f f
wfa^^
1
Reduce Outlier Intensity Procedures: Reducing the work component of services with
"outlier intensity" values allows the application of savings to increase the work component of
the relative value of primary care services.
(9/1/93)
136
�FEHBP
T h i s t h r e e page paper i s u n c o n v i n c i n g i n i t s t w o - l i n e promise
t h a t "coverage w i l l c o n t i n u e f o r employees w o r k i n g abroad," and
t h a t " a n n u i t a n t s w i l l be h e l d harmless."
There a r e two problems.
F i r s t , these promises a r e on t h e i r face i n c o n s i s t e n t w i t h t h e
r e p e a t e d statement t h a t Chapter 89 o f t h e U.S. Code w i l l be
r e p e a l e d . Second, these promises a r e d e v o i d o f any d e t a i l o f any
k i n d which might l e n d them c o n t e n t o r c r e d i b i l i t y .
Since t h e r e
are s e v e r a l m i l l i o n a n n u i t a n t s concerned, more i s needed.
We suggest e l i m i n a t i n g r e f e r e n c e s t o r e p e a l o r date o f r e p e a l ,
and r e p l a c i n g them w i t h r e f e r e n c e s t o coverage o f employees
ending. A l t e r n a t i v e l y , i f t h e r e i s some s t r o n g e d i t o r i a l reason
f o r w a n t i n g t o r e t a i n t h e term " r e p e a l , " a sentence should be
added s a y i n g t h a t "new l e g i s l a t i o n w i l l d e a l w i t h e l i g i b i l i t y ,
r e l a t i o n s h i p t o a l l i a n c e s , and coverage o f employees abroad and
annuitants."
As t o d e t a i l , t h e f o l l o w i n g sentences w i l l a l l a y most
concerns:
We expect f e e - f o r - s e r v i c e plans o f f e r e d by A l l i a n c e s t o
cover employees abroad.
A n n u i t a n t s w i t h o u t Medicare w i l l o b t a i n i n s u r a n c e t h r o u g h
a l l i a n c e s , and a n n u i t a n t s w i t h Medicare t h r o u g h an OPMa d m i n i s t e r e d Medigap p l a n . I n both cases OPM w i l l pay a
premium c o n t r i b u t i o n which w i l l h o l d a n n u i t a n t s ' d o l l a r
c o s t s harmless r e l a t i v e t o c o s t s under t h e c u r r e n t program
I n a d d i t i o n , we suggest t h e f o l l o w i n g changes:
Add a sentence s a y i n g t h a t t h e p l a n w i l l n o t o v e r r i d e t h e
b e n e f i t s o b t a i n e d by p o s t a l employees who have achieved a^
h i g h e r t h a n 80 p e r c e n t employer c o n t r i b u t i o n t h r o u g h
c o l l e c t i v e bargaining.
Some o f t h e v a r i o u s d i s c u s s i o n s o f phase-out a r e c o n f u s i n g
We suggest c l a r i f y i n g t h a t t h e statement t h a t " d u r i n g t h e
phase-out p e r i o d , t h e employer c o n t r i b u t i o n c o n t i n u e s a t
c u r r e n t l e v e l s " means t h a t as a l l i a n c e s become f u n c t i o n a l
and employees e n r o l l , t h e o l d c o n t r i b u t i o n w i l l be phased
out, a l l i a n c e by a l l i a n c e . As w r i t t e n , i t i m p l i e s t h a t
u n t i l every s i n g l e a l l i a n c e i s o p e r a t i o n a l a l l employees
w i l l g e t t h e o l d r a t e . The d i s c u s s i o n o f d i v i d i n g r e s e r v e
funds between employees and government i s c o n f u s i n g as t o
whether i t a p p l i e s t o those who were e n r o l l e d i n a p l a n when
the l e g i s l a t i o n i s r e p e a l e d / r e p l a c e d ( b u t o n l y p a i d o u t when
the plans cease o p e r a t i o n ) , t o those e n r o l l e d when they
t r a n s f e r r e d t o an a l l i a n c e p l a n , t o those few who were
e n r o l l e d i n a p l a n when i t a c t u a l l y ceased o p e r a t i o n , o r t o
�those very few s t i l l e n r o l l e d when the o l d program
completely ceases operation. We assume the former i s
intended, but t h i s i s not clear.
�1
HHS
COMMENTS ON
THE
HEALTH REFORM PLAN
The Department of H e a l t h and Human Services has p r e v i o u s l y
p r o v i d e d comments on p r i o r d r a f t s of the h e a l t h r e f o r m p l a n .
Many of our p r e v i o u s comments have been e i t h e r accepted or
s p e c i f i c HHS p o s i t i o n s have been noted i n the most r e c e n t p l a n
d r a f t ; however, o t h e r s are not r e f l e c t e d and may not have been
considered.
We are not r e s u b m i t t i n g comments on issues f o r which s p e c i f i c HHS
p o s i t i o n s are now noted i n the c u r r e n t d r a f t . We would
u n d e r l i n e , however, t h a t many of these are issues about which we
have t h e s t r o n g e s t r e s e r v a t i o n s and concerns — f o r example:
M e d i c a i d as a s e p a r a t e l y
f i n a n c e d program.
P r o v i s i o n s f o r i n t e g r a t i n g Medicare i n t o the A l l i a n c e system
and f o r i n d i v i d u a l s t u r n i n g 65 t o s t a y w i t h c u r r e n t h e a l t h
plans.
Making Medicare the p r i m a r y payer f o r c e r t a i n Department of
Veterans A f f a i r s and Department of Defense b e n e f i c i a r i e s .
I g g ^ i n g mechapistnif
The
—
are. i s s e d
voTuntraj^LJ^osjt__CQ^
G i v i n g A l l i a n c e s a u t h o r i t y t o r e q u i r e H e a l t h Plans t o e n r o l l y ^ T .J)^
R e g i o n a l A l l i a n c e members i f they e n r o l l Corporate A l l i a n c e
v
members.
G i v i n g A l l i a n c e s a u t h o r i t y t o exclude H e a l t h Plans whose
premiums cause i t t o exceed i t s budget.
G i v i n g s t a t e s a u t h o r i t y t o a d j u s t payments t o Plans t o
r e f l e c t r e g i o n a l d i f f e r e n c e s i n costs across s e r v i c e areas .(j)
The proposed d i v i s i o n of r e s p o n s i b i l i t y between HHS
N a t i o n a l Board.
and the ,• , \
VN'-'
We are e n c l o s i n g , a t TAB A, t h r e e d r o p - i n pieces r e g a r d i n g
the
Medicare Drug B e n e f i t , P u b l i c H e a l t h Service I n i t i a t i v e s , and
P u b l i c H e a l t h Core F u n c t i o n s and P r e v e n t i o n .
Based on p r i o r
d i s c u s s i o n s , we understand t h a t t h e r e i s general agreement i n
these areas and t h a t our proposed language r e p r e s e n t s agreed upon
improvements t o the t e x t .
We are e n c l o s i n g , a t TAB B, those i s s u e papers p r e v i o u s l y
p r o v i d e d you but which are not r e f l e c t e d i n the p l a n e i t h e r as
t e x t changes or areas of disagreement. These i n c l u d e Medicaid
Maintenance of E f f o r t , Out-Of-Pocket Subsidies, N u r s i n g Home
I n s p e c t i o n s , and A n t i t r u s t . We a l s o note t h a t the o b j e c t i o n a b l e
p r o v i s i o n l i m i t i n g issuance of Medicare r e g u l a t i o n s t o once every
s i x months remains i n the plan's c u r r e n t t e x t .
�I n a d d i t i o n , based on review of the August 18 version, we wish t o
o f f e r some f u r t h e r comments on of the plan. These are provided
at Tab C as e i t h e r new or revised issue papers.
F i n a l l y , TAB D r e f l e c t s a d d i t i o n a l e d i t o r i a l comments and page
mark-ups.
�TAB A
PUBLIC HEALTH CORE FUNCTION AND PREVENTION INITIATIVES
The p u b l i c h e a l t h system and t h e reformed p e r s o n a l h e a l t h care
d e l i v e r y system share a common purpose: t o improve t h e h e a l t h o f
a l l s e c t o r s o f t h e American p o p u l a t i o n a t an a f f o r d a b l e c o s t .
H e a l t h care r e f o r m w i l l s t r e n g t h e n t h e p e r s o n a l care d e l i v e r y
system by e n s u r i n g access t o comprehensive s e r v i c e s f o r a l l ,
c r e a t i n g r e g i o n a l a l l i a n c e s and h e a l t h plans r e s p o n s i b l e a t t h e
l o c a l l e v e l f o r d e f i n e d p o p u l a t i o n s , and e s t a b l i s h i n g a f i n a n c i n g
and payment system t h a t rewards a l l i a n c e s and plans f o r keeping
t h e i r p o p u l a t i o n s w e l l . A strengthened r o l e f o r p u b l i c h e a l t h i s
also e s s e n t i a l i n order t o :
•
p r o t e c t Americans a g a i n s t p r e v e n t a b l e , communicable
diseases, t o x i c e n v i r o n m e n t a l exposures, h a r m f u l p r o d u c t s ,
and poor q u a l i t y p l a n s ;
•
i d e n t i f y and c o n t r o l outbreaks o f i n f e c t i o u s disease and
community-wide p a t t e r n s o f c h r o n i c disease and i n j u r y ;
•
i n f o r m and educate consumers and p r o v i d e r s about t h e i r r o l e s
i n p r e v e n t i n g and c o n t r o l l i n g disease and t h e a p p r o p r i a t e
use o f m e d i c a l s e r v i c e s ; and
•
d e f i n e and v a l i d a t e new p r e v e n t i o n and c o n t r o l
interventions.
I f c a r r i e d o u t e f f e c t i v e l y , t h i s p u b l i c h e a l t h r o l e promises
v i t a l support f o r t h e p e r s o n a l h e a l t h care d e l i v e r y system. I t
reduces t h e need f o r m e d i c a l s e r v i c e s t o t r e a t c o n d i t i o n s t h a t
can be prevented, thereby h e l p i n g t o c o n t r o l c o s t s ; i t enhances
the use o f a p p r o p r i a t e p r e v e n t i v e and e a r l y d i a g n o s t i c s e r v i c e s
p r o v i d e d by t h e d e l i v e r y system; and i t d e f i n e s major h e a l t h
problems and measures h e a l t h outcomes on a p o p u l a t i o n b a s i s i n
o r d e r t o determine e f f i c i e n t resource a l l o c a t i o n .
I t also
p r o t e c t s consumers by h o l d i n g plans and p r o v i d e r s accountable f o r
the q u a l i t y of t h e i r services.
To f u l f i l l t h i s e s s e n t i a l r o l e , i t i s necessary t o r e o r i e n t
p u b l i c h e a l t h i n t h e U n i t e d S t a t e s . The c a p a c i t y o f governmentbased p u b l i c h e a l t h s e r v i c e s has been eroded i n r e c e n t years by
the demands o f p r o v i d i n g p e r s o n a l medical s e r v i c e s t o u n i n s u r e d
and u n d e r - i n s u r e d i n d i v i d u a l s . C a t e g o r i c a l Federal programs
enacted f o r t h e p r e v e n t i o n and c o n t r o l o f p a r t i c u l a r diseases and
c o n d i t i o n s have fragmented r a t h e r than strengthened p u b l i c
h e a l t h ' s c a p a c i t y by c r e a t i n g competing b u r e a u c r a t i c s t r u c t u r e s
and burdensome f u n d i n g / r e p o r t i n g requirements.
This i n i t i a t i v e c a l l s f o r r e i n v e n t i n g p u b l i c h e a l t h t o work
e f f i c i e n t l y and i n c o n c e r t w i t h t h e p e r s o n a l h e a l t h care system
t o address community problems. I t b u i l d s on t h e c a p a b i l i t y o f
�the reformed d e l i v e r y system t o assume r e s p o n s i b i l i t y f o r
p e r s o n a l h e a l t h s e r v i c e s — w i t h t h e i r a t t e n d a n t c o s t s — f o r most o f
the population.
I t a l s o b u i l d s on t h e c a p a b i l i t y o f a l l i a n c e s
and p l a n s t o reach o u t t o i n d i v i d u a l s i n t h e i r p o p u l a t i o n s ,
p r o v i d i n g them w i t h i n f o r m a t i o n about p r e v e n t i o n and a p p r o p r i a t e
use o f m e d i c a l s e r v i c e s .
The i n i t i a t i v e promotes r e a d i n e s s and
f l e x i b i l i t y i n t h e p u b l i c h e a l t h system by s t r e n g t h e n i n g generic
core f u n c t i o n s a t l o c a l , S t a t e , and F e d e r a l l e v e l s . I t a l s o
focuses a t t e n t i o n on s p e c i f i c h e a l t h problems o f r e g i o n a l and
n a t i o n a l s i g n i f i c a n c e i n ways t h a t c o n s o l i d a t e programs i n t o an
i n t e g r a t e d h e a l t h system, thus r e d u c i n g a d m i n i s t r a t i v e burdens
and a c h i e v i n g economies o f s c a l e .
Major g a i n s i n h e a l t h s t a t u s have come from e f f o r t s t h a t a f f e c t
whole p o p u l a t i o n s — p r o g r a m s l i k e those t a r g e t e d t o i m p r o v i n g
s a n i t a t i o n , water p u r i t y , n u t r i t i o n , i n f e c t i o u s disease c o n t r o l ,
and i m m u n i z a t i o n . As evidenced by r e c e n t outbreaks r e l a t e d t o
contaminated food and water s u p p l i e s and s h o r t f a l l s i n
i m m u n i z a t i o n o f p r e s c h o o l e r s , when these p u b l i c h e a l t h f u n c t i o n s
f a i l , t h e p e r s o n a l h e a l t h care system i s overwhelmed. As
evidenced by unforeseen c h a l l e n g e s posed by n a t u r a l d i s a s t e r s and
urban v i o l e n c e , a c a p a c i t y t o a c t q u i c k l y t o i d e n t i f y h e a l t h
t h r e a t s and move t o c o n t r o l t h e i r spread i s as fundamental t o t h e
community's w e l l - b e i n g as p o l i c e and f i r e p r o t e c t i o n . I n t h e
face o f problems l i k e tobacco, drug and a l c o h o l abuse, adolescent
pregnancy, v i o l e n c e , and HIV i n f e c t i o n - - p r o b l e m s r e q u i r i n g
community-wide r e s p o n s e s — p u b l i c h e a l t h ' s c a p a c i t y t o a c t as t h e
community's agent f o r p r e v e n t i o n , e d u c a t i o n , and r e s e a r c h and
development needs t o be r e v i t a l i z e d .
Under reform, these
f u n c t i o n s b e n e f i t t h e d e l i v e r y system f i n a n c i a l l y because p l a n
expenses and a l l i a n c e premiums are lowered t o t h e e x t e n t t h a t t h e
h e a l t h s t a t u s o f t h e i r p o p u l a t i o n s i s improved.
T h i s i n i t i a t i v e i s designed t o r e p a i r , s t r e n g t h e n , and
c o n s o l i d a t e e s s e n t i a l F e d e r a l , S t a t e , and l o c a l p u b l i c h e a l t h
f u n c t i o n s i n t h r e e ways:
•
by i m p r o v i n g t h e performance o f t h e core f u n c t i o n s o f p u b l i c
health;
•
by a u t h o r i z i n g a f l e x i b l e p o o l o f resources f o r p r i o r i t y
h e a l t h problems o f r e g i o n a l and n a t i o n a l s i g n i f i c a n c e ; and
•
by expanding F e d e r a l p u b l i c h e a l t h support f o r u n i f i e d data
systems, t e c h n i c a l a s s i s t a n c e and i n f o r m a t i o n networks.
Since d e a l i n g e f f e c t i v e l y w i t h p u b l i c h e a l t h problems r e q u i r e s
t h e c o o r d i n a t e d involvement o f m u l t i p l e p a r t i e s , t h e i n i t i a t i v e
i s designed t o f o s t e r i n t e r a g e n c y c o l l a b o r a t i o n s ( a t t h e Federal,
S t a t e , and l o c a l l e v e l s ) and p u b l i c - p r i v a t e p a r t n e r s h i p s
( i n c l u d i n g c l o s e w o r k i n g r e l a t i o n s h i p s between p u b l i c h e a l t h ,
community groups, a l l i a n c e s , and p l a n s ) .
�I.
CORE PUBLIC HEALTH FUNCTIONS
H e a l t h r e f o r m w i l l a l l o w p u b l i c h e a l t h emphasis t o s h i f t from t h e
d e l i v e r y o f p e r s o n a l h e a l t h s e r v i c e s t o core p u b l i c h e a l t h
functions.
I n d o i n g so, p u b l i c h e a l t h w i l l be b e t t e r p o s i t i o n e d
t o m a i n t a i n a s t r o n g defense a g a i n s t p r e v e n t a b l e diseases and
c o n d i t i o n s t h a t a f f e c t l o c a l communities and t o work w i t h t h e
d e l i v e r y system t o address community problems as they a r i s e .
Under t h e proposed i n i t i a t i v e , t h e f o l l o w i n g e s s e n t i a l f u n c t i o n s
are s u p p o r t e d :
•
H e a l t h - r e l a t e d data c o l l e c t i o n , s u r v e i l l a n c e , and outcomes
m o n i t o r i n g — t h e basic t o o l f o r t h e both t h e p u b l i c h e a l t h
and p e r s o n a l care d e l i v e r y systems, p r o v i d i n g f o r t h e
r e g u l a r c o l l e c t i o n and a n a l y s i s o f i n f o r m a t i o n t o ensure
t i m e l y awareness, d e c i s i o n s , and i n t e r v e n t i o n s r e l a t e d t o
epidemics, emerging p a t t e r n s o f disease and i n j u r y ,
i
p r e v a l e n c e o f r i s k s t o h e a l t h , and access t o and outcomes o f
personal health services.
Plans p r o v i d e t h e basic source
f o r most data, emanating from p a t i e n t e n r o l l m e n t and
encounters w i t h h e a l t h care p r o v i d e r s ; b u t i n o r d e r t o
m o n i t o r a c c u r a t e l y t h e d e v e l o p i n g h e a l t h issues f o r a given
p o p u l a t i o n , p u b l i c h e a l t h supplements t h i s i n f o r m a t i o n w i t h
v i t a l and h e a l t h s t a t i s t i c s and complementary survey data.
Timely analyses o f these data a r e c r i t i c a l t o t h e t a s k o f
d e f i n i n g community h e a l t h problems and assessing t h e
performance o f b o t h t h e p e r s o n a l care d e l i v e r y system and
p u b l i c h e a l t h system i n addressing these problems.
•
P r o t e c t i o n o f environment, housing, food, and water —
p u b l i c h e a l t h ' s enforcement f u n c t i o n g o v e r n i n g a i r p o l l u t i o n
( i n c l u d i n g i n d o o r a i r ) , exposure t o h i g h l e a d l e v e l s , water
c o n t a m i n a t i o n , h a n d l i n g and p r e p a r a t i o n o f food, sewage and
s o l i d waste d i s p o s a l , r a d i a t i o n exposure, radon exposure,
n o i s e l e v e l s and abatement, consumer p r o t e c t i o n , r e c r e a t i o n r e l a t e d s a f e t y , and worker s a f e t y . This p u b l i c h e a l t h
f u n c t i o n i s o f major importance i n keeping p l a n s ' e n r o l l e e
p o p u l a t i o n s h e a l t h y , thus r e d u c i n g unnecessary h e a l t h care
costs.
•
I n v e s t i g a t i o n and c o n t r o l o f diseases and i n j u r i e s -- t h e
c a p a c i t y t o i d e n t i f y , c o n t a i n , and marshal a p p r o p r i a t e
emergency and t r e a t m e n t resources t o t r e a t diseases and
c o n d i t i o n s a f f e c t i n g whole communities, i n c l u d i n g h e a l t h r e l a t e d emergency preparedness c a p a b i l i t y and c o o p e r a t i v e
a c t i v i t i e s t o c o n t r o l v i o l e n c e . P u b l i c h e a l t h ' s r o l e as t h e
quick-response agent i s c l o s e l y c o o r d i n a t e d t h r o u g h t h e
p l a n s w i t h h e a l t h care p r o v i d e r s t o f a c i l i t a t e t h e i r a b i l i t y
t o cope w i t h outbreaks o f disease,
exposure-related
c o n d i t i o n s , and o t h e r changes among t h e i r p a t i e n t
populations.
•
P u b l i c i n f o r m a t i o n and e d u c a t i o n — t h e ongoing c a p a b i l i t y
t o mount p u b l i c e d u c a t i o n programs t o m o b i l i z e communities
�and motivate individuals to take action involving risks to
health (such as use of tobacco, alcohol and other drugs,
sexual activity that increases vulnerability to HIV
infection and sexually transmitted diseases, poor diet,
physical inactivity, and childhood immunization). Public
health is specifically responsible for health education
provided through nonclinical channels, such as schools,
worksites, community organizations, and the media.
Plans
and alliances also play a central role, transmitting public
health messages in clinical settings and at the time of
enrplrtTnent~.
N ^ c c o u n t a b i l i t ^ y a n d Q u a l i t y assurance — governments'
reSpefisifeitirCy t o a c t on b e h a l f o f t h e community t o assure
t h a t : ( 1 ) a l l segments o f t h e p o p u l a t i o n have access t o
needed s e r v i c e s , and ( 2 ) p r o v i d e r s , c l i n i c s , h o s p i t a l s ,
l o n g - t e r m care f a c i l i t i e s , l a b o r a t o r i e s , and a l l i e d h e a l t h
p r o v i d e r s meet e s t a b l i s h e d standards t h r o u g h l i c e n s u r e ,
c e r t i f i c a t i o n , and i n s p e c t i o n .
I n carrying out t h i s
f u n c t i o n , government agencies have an o v e r s i g h t and
enforcement r o l e , and a l s o work c l o s e l y w i t h plans and
a l l i a n c e s t o achieve q u a l i t y improvement.
L a b o r a t o r y s e r v i c e s — as a complement t o p r i v a t e c l i n i c a l
l a b o r a t o r i e s p r o v i d i n g i n d i v i d u a l t e s t i n g and p a t h o l o g y
s e r v i c e s , a system o f State-based l a b o r a t o r i e s t h a t screen
f o r m e t a b o l i c diseases i n newborns, p r o v i d e t o x i c o l o g y
assessments o f b l o o d l e a d l e v e l s and o t h e r e n v i r o n m e n t a l
t o x i n s , diagnose s e x u a l l y t r a n s m i t t e d disease and
tuberculosis r e q u i r i n g partner n o t i f i c a t i o n , t e s t f o r
c h o l e r a and o t h e r i n f e c t i o n s o r food-borne diseases, and
m o n i t o r t h e s a f e t y o f water and food s u p p l i e s .
Public
h e a l t h l a b o r a t o r i e s both v a l i d a t e the r e s u l t s of planc o n t r a c t e d c l i n i c a l l a b o r a t o r i e s and serve as t h e d i r e c t
s u p p o r t f o r p u b l i c h e a l t h ' s i n v e s t i g a t i o n and c o n t r o l
function.
T r a i n i n g and e d u c a t i o n — e n s u r i n g t h a t p r o v i s i o n s a r e made
f o r necessary p r e p r o f e s s i o n a l and c o n t i n u i n g e d u c a t i o n f o r
a l l h e a l t h p r o f e s s i o n a l s , w i t h s p e c i a l emphasis on p u b l i c
h e a l t h p r o f e s s i o n a l s such as e p i d e m i o l o g i s t s ,
b i o s t a t i s t i c i a n s , h e a l t h educators, p u b l i c h e a l t h
a d m i n i s t r a t o r s , s a n i t a r i a n s , and l a b o r a t o r y t e c h n i c i a n s .
L e a d e r s h i p , p o l i c y development, and a d m i n i s t r a t i o n — p u b l i c
h e a l t h ' s r e s p o n s i b i l i t y t o d e f i n e h e a l t h goals, standards,
and p o l i c i e s t h a t a f f e c t t h e h e a l t h o f whole communities; t o
d e f i n e h e a l t h i s s u e s o f major importance and d e v i s e
i n t e r v e n t i o n s t o address them; t o b u i l d c o a l i t i o n s w i t h
r e l a t e d p u b l i c s e c t o r s such as housing, p u b l i c t r a n s p o r t a t i o n , and a g r i c u l t u r e ; and t o ensure a c c o u n t a b i l i t y f o r
p u b l i c resources devoted t o h e a l t h . P u b l i c h e a l t h
c o o r d i n a t e s c l o s e l y w i t h t h e l e a d e r s h i p o f a l l i a n c e s and
�p l a n s , m o b i l i z i n g community support f o r p u b l i c h e a l t h
p o l i c i e s and i n i t i a t i v e s .
Funds a r e d i s t r i b u t e d t o States u s i n g a f o r m u l a based on t h r e e
w e i g h t e d f a c t o r s t h a t take i n t o account p o p u l a t i o n ( o n e - t h i r d ) ,
p o v e r t y r a t e ( o n e - t h i r d ) , and years o f p r o d u c t i v e l i f e l o s t (onethird).
No S t a t e r e c e i v e s an a l l o c a t i o n l e s s than t h e S t a t e ' s
g r a n t i n t h e l a s t year p r e c e d i n g enactment o f t h i s i n i t i a t i v e .
To r e c e i v e funds under t h e f o r m u l a , S t a t e s a r e r e q u i r e d t o
m a i n t a i n t h e i r c u r r e n t l e v e l o f support f o r p u b l i c h e a l t h and
p r e v e n t i o n a c t i v i t i e s a t no l e s s than t h e average o f t h e past two
years-—fxmd±rtg---leiigj_.
1
1
^unds w i l l be used t o develop and s t r e n g t h e n p u b l i c h e a l t h core
^ f u n c t i o n s a t b o t h S t a t e and l o c a l (county, d i s t r i c t ,
licipalityjl^eveisA e c o u n t a b i l i t y f e ^ — e f f e c t i v e use^o4—S^a'te
formtrirar yTarft funds w i l l be m o n i t o r e d t h r o u g h r e p o r t i n g progress
i n a c h i e v i n g h e a l t h improvements u s i n g a common data s e t o f
h e a l t h outcomes t h a t have been developed as a p a r t o f t h e H e a l t h y
People 2000 i n i t i a t i v e .
II.
PRIORITY HEALTH PROBLEMS OF REGIONAL AND NATIONAL
SIGNIFICANCE
A d d i t i o n a l p r o j e c t g r a n t funds support a F e d e r a l program t o
develop i n n o v a t i v e s t r a t e g i e s f o r addressing p r i o r i t y h e a l t h
needs o f r e g i o n a l and n a t i o n a l s i g n i f i c a n c e . The purpose o f t h i s
program i s t o address s p e c i f i c issues i n ways t h a t a r e responsive
t o t h e needs o f p o p u l a t i o n s served by a l l i a n c e s and plans and
t h a t c o n s o l i d a t e r a t h e r than p r o l i f e r a t e a u t h o r i t i e s , management
s t r u c t u r e s , and f u n d i n g and r e p o r t i n g r e q u i r e m e n t s .
/ - P r i o r i t y h e a l t h prdETems—addressed
' i d e n t i f i e d i n two ways. Some, w i t h d e d i c a t e d f u n d i n g , a r e
s p e c i f i e d by t h e Congress. Others a r e i d e n t i f i e d by t h e
S e c r e t a r y o f HHS, based on recommendations o f a n a t i o n a l a d v i s o r y
I board r e p r e s e n t i n g t h e p e r s p e c t i v e s n o t o n l y o f PHS and S t a t e and
\ l o c a l p u b l i c h e a l t h agencies b u t a l s o o f a l l i a n c e s and p l a n s .
l
-
Proposals a r e s o T T c l t e d f o r i n n o v a t i v e i n t e r v e n t i o n s t h a t T t r r k
p u b l i c h e a l t h agencies and t h e d e l i v e r y system t o achieve
measurable r e d u c t i o n s i n t h e i n c i d e n c e and/or prevalence o f these
h i g h p r i o r i t y diseases, c o n d i t i o n s , o r p a t t e r n s o f i n j u r y .
Grants a r e made t h r o u g h c o m p e t i t i v e awards t o S t a t e and l o c a l
government agencies, n o t - f o r - p r o f i t o r g a n i z a t i o n s , r e s e a r c h
i n s t i t u t i o n s , and c o a l i t i o n s l i n k i n g these groups, t a r g e t i n g t h e
most needy geographic areas and p o p u l a t i o n s . As e f f e c t i v e
i n t e r v e n t i o n s from these p r o j e c t s a r e i d e n t i f i e d , t h e y a r e
d i s s e m i n a t e d n a t i o n w i d e t o a s s i s t i n t h e i r e a r l y a d o p t i o n by
p u b l i c h e a l t h agencies, p l a n s , and p r o v i d e r s .
�The f o l l o w i n g are examples o f t h e types o f r e g i o n a l and n a t i o n a l
p r i o r i t y h e a l t h issues t h a t may be addressed:
•
Infectious
diseases
Immunization — P u b l i c h e a l t h e d u c a t i o n and o u t r e a c h t o
complement i n d i v i d u a l l y p r o v i d e d h e a l t h s e r v i c e s t o ensure
t h e broadest p o s s i b l e immunization coverage a g a i n s t
c h i l d h o o d v a c c i n e - p r e v e n t a b l e i n f e c t i o u s diseases, as w e l l
as i n f l u e n z a , pneumonia, h e p a t i t i s B, and t e t a n u s among
a d u l t s . Programs would t a r g e t communities where
immunization r a t e s f o r c h i l d r e n and a d u l t s are lowest.
HIV/AIDS -- B e t t e r models a r e needed i n e d u c a t i o n f o r
p r e v e n t i o n , c o n f i d e n t i a l screening programs, and p a r t n e r
n o t i f i c a t i o n programs, e s p e c i a l l y i n urban areas where h i g h
r i s k p o p u l a t i o n s are most c o n c e n t r a t e d .
S p e c i a l focus i s
needed f o r m i n o r i t i e s , women, c h i l d r e n , and adolescents.
Programs addressing t h e i n t e r r e l a t i o n s h i p between HIV/AIDS
and o t h e r s e x u a l l y t r a n s m i t t e d diseases are c r i t i c a l l y
important.
T u b e r c u l o s i s — This reemerging disease whose i n c i d e n c e i s
i n c r e a s i n g a l a r m i n g l y i n urban areas r e q u i r e s c a s e - f i n d i n g ,
t a r g e t e d e d u c a t i o n , and t r a i n i n g f o r p r o v i d e r s r e g a r d i n g
t r e a t m e n t and c o n t r o l measures, w i t h s p e c i a l a t t e n t i o n t o
i t s spread among homeless people.
•
Chronic d i s e a s e s
and environmentally-related problems
D i a b e t e s — C o n t r o l o f d i a b e t e s p r o v i d e s t h e most i m p o r t a n t
i n t e r v e n t i o n a g a i n s t an a r r a y o f s e r i o u s , c o s t l y , and o f t e n
f a t a l c o m p l i c a t i o n s , i n c l u d i n g e n d - s t a t e r e n a l disease,
b l i n d n e s s , lower e x t r e m i t y amputation, i n f a n t death and
major c o n g e n i t a l m a l f o r m a t i o n s .
Community-oriented d i a b e t e s
e d u c a t i o n and c o n t r o l programs, d i r e c t e d e s p e c i a l l y t o
m i n o r i t y and low-income p o p u l a t i o n s a t h i g h e s t r i s k , appear
t o o f f e r economies o f s c a l e t o complement i n d i v i d u a l l y
p r o v i d e d medical s e r v i c e s .
V i o l e n c e and i n j u r y c o n t r o l — The l e a d i n g cause o f years o f
p o t e n t i a l l i f e l o s t among Americans and t h e l e a d i n g cause o f
death among c h i l d r e n , adolescents, and young a d u l t s , t h i s
c a t e g o r y r e q u i r e s c l o s e c o l l a b o r a t i o n among s e v e r a l systems,
i n c l u d i n g law enforcement, e d u c a t i o n , t r a n s p o r t a t i o n , and
r e c r e a t i o n and parks.
I t i s l i n k e d t o a l c o h o l misuse and
r e q u i r e s an i n t e g r a t e d m u l t i - f a c e t e d s e t o f i n t e r v e n t i o n s .
•
Health-related
behavior and other p r i o r i t y i s s u e s
C i g a r e t t e smoking - - R i s i n g smoking t r e n d s among adolescents
and women pose t h e l i k e l i h o o d o f f u t u r e unnecessary h e a r t
disease and cancer, as w e l l as l o w - b i r t h w e i g h t babies and
i n f a n t m o r b i d i t y caused by p r e n a t a l exposure. While
�r e d u c t i o n s i n tobacco use i n the t o t a l p o p u l a t i o n can be
seen as a p u b l i c h e a l t h success o f t h e l a s t 25 years, these
t r e n d s prove the need f o r c o n t i n u e d a c t i o n .
Comprehensive s c h o o l h e a l t h — Perhaps the most i m p o r t a n t o f
a l l t h e p r e v e n t i o n i n t e r v e n t i o n s a v a i l a b l e , l i n k s between
h e a l t h and e d u c a t i o n a r e j u s t b e g i n n i n g t o be f o r g e d i n a
nascent program o f comprehensive school h e a l t h . Because o f
t h e l o c a l c o n t r o l o f school programs, s p e c i a l p u b l i c h e a l t h s u p p o r t e d o r g a n i z a t i o n and e d u c a t i o n a r e needed t o expand
t h i s movement.
Maternal, c h i l d h e a l t h , and family planning — With over 24%
of pregnant women s t i l l not r e c e i v i n g appropriate prenatal
care and approximately 7% of b i r t h s a t low-birthweight,
continued s p e c i a l a t t e n t i o n i s needed to develop communitybased models f o r prevention of infant m o r t a l i t y and
morbidity. A p r i o r i t y i n t h i s regard i s linkage with s o c i a l
and educational s e r v i c e s to address the p e r s i s t e n t and
i n t r a c t a b l e incidence of adolescent and unwanted__preqnaTicy. L
•
—'
^-vxV
' I I I . ENHANCEMENT OF FEDERAL CAPACITY TO SUPPORT PUBLIC HEALTH
FUNCTIONS
I n s u p p o r t o f the F e d e r a l a s s i s t a n c e p r o v i d e d f o r core p u b l i c
h e a l t h f u n c t i o n s and c a t e g o r i c a l a c t i v i t i e s , funds a r e p r o v i d e d
t o improve d i r e c t F e d e r a l c a p a c i t y , i n c l u d i n g :
•
F e d e r a l s u r v e i l l a n c e and h e a l t h s t a t i s t i c s , l a b o r a t o r i e s ,
and e p i d e m i o l o g i c s e r v i c e s — Whether f i g h t i n g the " o l d "
diseases such as t u b e r c u l o s i s and c h o l e r a o r "newer" ones
such as Hanta v i r u s , Lyme disease, o r a n t i m i c r o b i a l r e s i s t a n t i n f e c t i o n s , p u b l i c h e a l t h ' s b a s i c t o o l s a r e data
c o l l e c t i o n and b i o s t a t i s t i c a l a n a l y s i s , l a b o r a t o r y c a p a c i t y ,
and e p i d e m i o l o g i c e x p e r t i s e . An e f f e c t i v e and e f f i c i e n t
c e n t r a l c a p a c i t y a t the F e d e r a l l e v e l p r o v i d e s f o r economies
o f s c a l e i n a d d r e s s i n g many o f these h e a l t h problems.
An e s s e n t i a l p a r t o f r e i n v e n t i n g p u b l i c h e a l t h i s t h e
c o n s o l i d a t i o n o f c u r r e n t l y fragmented p u b l i c h e a l t h data
systems and the i n t e g r a t i o n o f these systems w i t h t h e
r e g i o n a l and n a t i o n a l data network d e s c r i b e d i n t h e
I n f o r m a t i o n Systems c h a p t e r . The need f o r separate p u b l i c
h e a l t h data systems i s minimized t o the e x t e n t t h a t t h e
elements and r e f i n e d c o d e s / d e f i n i t i o n s i n c l u d e d i n the data
network from the d e l i v e r y system support p u b l i c h e a l t h
functions.
The u n i f i e d h e a l t h i n f o r m a t i o n system p r o v i d e s
t i m e l y i n f o r m a t i o n t o support h e a l t h p o l i c y development,
budget f o r m a t i o n , program a d m i n i s t r a t i o n , performance-based
program e v a l u a t i o n , and g e n e r a l improvement o f the p u b l i c ' s
h e a l t h and does so a t t h e lowest c o s t and burden.
•
T e c h n i c a l a s s i s t a n c e and n a t i o n a l h e a l t h i n f o r m a t i o n
networks — To support t h e i n i t i a t i v e s d e s c r i b e d i n I and I I
�above, S t a t e s w i l l need e x p e r t t e c h n i c a l a s s i s t a n c e t o
improve t h e i r p u b l i c h e a l t h core f u n c t i o n s , and i n f o r m a t i o n
networks w i l l need t o be developed t o enhance communication
o f i n f o r m a t i o n among F e d e r a l , S t a t e , and l o c a l p u b l i c h e a l t h
agencies. I n f o r m a t i o n from these networks and t h e h e a l t h
d a t a system w i l l p r o v i d e t h e b a s i s f o r r e g u l a r r e p o r t s t o
the P r e s i d e n t and t h e Congress f o r purposes o f m o n i t o r i n g
the e f f e c t i v e n e s s o f t h i s i n i t i a t i v e .
ADDITIONAL—FUNDTNG
- A n ^ a d d i t i o n a l investment o f $1.1 b i l l i o n i n FY 1996, w i t h
a d d i - t i o n a l i n c r e a s e s i n t h e succeeding f o u r years ,i§^r^quested
f o r t h e ^ u l ^ l i c Health I n i t i a t i v e .
These f u n d s ^ a - r g ^ d i s t r i b u t e d as
follows:
•
Core p u b l i c hearth^func.t-i'dns' -- $700 m i l l i o n i n f i r s t
•
P r i o r i t y healtjv-programs
•
F e d e r a l " i n t r a m u r a l f u n c t i o n s -- $ 1 OO^miJ^lion i n f i r s t
^=^$300 m i l l i o n i n f i r s t
year
year
year.
�MEDICARE OUTPATIENT PRESCRIPTION DRUG BENEFIT
Two years from t h e date o f
o f f e r e d under t h e .Medicare
p r e s c r i p t i o n drugs\ Thus,
the new drug b e n e f i t would
1996 .
enactment o f t h e Plan, b e n e f i t s
program expand t o cover o u t p a t i e n t
assuming enactment i n December 1993,
be i n e f f e c t b e g i n n i n g i n January
Any Medicare b e n e f i c i a r y who e l e c t s t o e n r o l l i n t h e P a r t B
program (97 p e r c e n t o f Y t h e Medicare p o p u l a t i o n ) a u t o m a t i c a l l y
e n r o l l s i n t h e new p r e s W i p t i o n drug b e n e f i t .
As w i t h o t h e r P a r t B b e n e f i t s , t h e Medicare p r e s c r i p t i o n drug
b e n e f i t i s funded by b o t h g e n e r a l revenues and b e n e f i c i a r y
premiums. The P a r t B premium i n c r e a s e s t o cover t h e new b e n e f i t .
Premiums c u r r e n t l y finance\25 p e r c e n t o f t h e c o s t o f P a r t B
coverage.
Thus, b e n e f i c i a r \ i e s would pay 25 p e r c e n t o f t h e c o s t
o f t h e new drug b e n e f i t . Ouher r u l e s r e l a t e d t o e n r o l l m e n t i n
Medicare P a r t B a l s o apply t o t h e p r e s c r i p t i o n drug b e n e f i t .
COINSURANCE, DEDUCTIBLES AND CAPS
The new drug b e n e f i t c a r r i e s a\$250 annual d e d u c t i b l e . Once t h e
d e d u c t i b l e has been met, b e n e f i c i a r i e s pay 20 p e r c e n t o f t h e c o s t
of each p r e s c r i p t i o n w i t h an annual l i m i t on o u t - o f - p o c k e t
e x p e n d i t u r e s o f $1000.
The amount o f t h e d e d u c t i b l e i s se^t a t a v a r i a b l e r a t e t o assure
t h a t t h e same number o f b e n e f i c i a r i e s meet t h e d e d u c t i b l e each
year as d u r i n g t h e f i r s t year o f coverage.
Both t h e annual
d e d u c t i b l e and o u t - o f - p o c k e t cap are\ indexed each year t o assure
t h a t t h e same percentage o f b e n e f i c i a r i e s c o n t i n u e t o r e c e i v e
b e n e f i t s as d i d w i t h t h e i n i t i a l $ 2 5 o \ d e d u c t i b l e and $1000 o u t o f - p o c k e t cap.
COVERAGE
The Medicare drug b e n e f i t covers a l l druga, b i o l o g i c a l p r o d u c t s
and i n s u l i n approved by t h e Food and Drug A d m i n i s t r a t i o n (FDA)
f o r t h e i r m e d i c a l l y accepted i n d i c a t i o n s asXdefined i n a t l e a s t
one o f t h e t h r e e n a t i o n a l compendia which arte t h e American
M e d i c a l A s s o c i a t i o n Drug E v a l u a t i o n s , t h e American H o s p i t a l
Formulary S e r v i c e , and t h e U n i t e d S t a t e s Pharnvacopeia, o r o t h e r
a u t h o r i t a t i v e compendia i d e n t i f i e d by t h e S e c r e t a r y o r as
determined by t h e c a r r i e r based on evidence presented i n peer
reviewed m e d i c a l l i t e r a t u r e .
The Medicare drug b e n e f i t i n c l u d e s coverage o f home IV drugs. I n
a d d i t i o n , t h e c u r r e n t l i m i t e d coverage o f o u t p a t i e r v t drugs under
Medicare such as immunosuppressive drugs a r e i n c o r p c i r a t e d i n t o
the drug b e n e f i t .
The S e c r e t a r y o f H e a l t h and Human Services has t h e d i s W e t i o n n o t
t o cover c e r t a i n p h a r m a c e u t i c a l p r o d u c t s l i s t e d i n S e c t i o n
�1927(d) o f t h e S o c i a l S e c u r i t y A c t . Examples i n c l u d e f e r t i l i t y
drugs, m e d i c a t i o n s used t o t r e a t a n o r e x i a and drugs used f o r
cosmetic purposes.
However, benzodiazepines and b a r b i t u r a t e s
would be covered under t h e Medicare drug b e n e f i t . F u r t h e r , t h e
S e c r e t a r y has t h e a u t h o r i t y t o e s t a b l i s h maximum q u a n t i t i e s per
p r e s c r i p t i o n o r l i m i t t h e number o f r e f i l l s i n o r d e r t o
d i s c o u r a g e waste.
The S e c r e t a r y may r e q u i r e p h y s i c i a n s o r pharmacists t o o b t a i n
p r i o r approval before p r e s c r i b i n g or dispensing c e r t a i n
m e d i c a t i o n s based on evidence t h a t t h e y a r e s u b j e c t t o c l i n i c a l
misuse o r i n a p p r o p r i a t e use o r because t h e S e c r e t a r y determines
t h a t they are not cost e f f e c t i v e .
COST CONTAINMENT
As a c o n d i t i o n o f p a r t i c i p a t i o n i n Medicare and Medicaid, drug
m a n u f a c t u r e r s must s i g n r e b a t e agreements w i t h t h e S e c r e t a r y .
Rebates a r e p a i d t o t h e S e c r e t a r y on a q u a r t e r l y b a s i s .
For s i n g l e source and i n n o v a t o r m u l t i p l e source drugs,
m a n u f a c t u r e r s pay a r e b a t e t o Medicare f o r each drug based on t h e
d i f f e r e n c e between t h e average manufacturer p r i c e (AMP) t o t h e
r e t a i l c l a s s o f t r a d e and t h e weighted average o f t h e p r i c e s o f
the drug i n t h e n o n - r e t a i l marketplace, o r 15 p e r c e n t o f t h e AMP,
whichever i s g r e a t e r . The S e c r e t a r y has t h e a u t h o r i t y t o v e r i t y
the AMP.
For s i n g l e source and i n n o v a t o r m u l t i p l e source drugs, an
a d d i t i o n a l r e b a t e i s r e q u i r e d on a drug-by-drug b a s i s f o r
m a n u f a c t u r e r s who i n c r e a s e p r i c e s a t a h i g h e r r a t e than
inflation.
The b a s e l i n e indexed p r i c e i s t h e average
m a n u f a c t u r e r s p r i c e from A p r i l t h r o u g h June 1993.
I n t h e case o f new drugs t h a t t h e S e c r e t a r y determines a r e
e x c e s s i v e l y o r i n a p p r o p r i a t e l y p r i c e d , t h e S e c r e t a r y has t h e
a u t h o r i t y t o n e g o t i a t e a s p e c i a l r e b a t e w i t h t h e manufacturer.
Such a d e t e r m i n a t i o n by t h e S e c r e t a r y would be based on such
f a c t o r s as t h e p r i c e s o f o t h e r drugs i n t h e same t h e r a p e u t i c
c l a s s , c o s t i n f o r m a t i o n s u p p l i e d by t h e manufacturer t o t h e
S e c r e t a r y , p r i c e s o f t h e drug i n o t h e r comparable c o u n t r i e s , and
other relevant factors.
I f a manufacturer r e f u s e s t o n e g o t i a t e
or t h e S e c r e t a r y i s unable t o n e g o t i a t e a p r i c e t h a t t h e
S e c r e t a r y determines t o be reasonable, t h e S e c r e t a r y may exclude
the new drug and any o t h e r drug p r o d u c t produced by t h e
m a n u f a c t u r e r from coverage under Medicare.
I n t h e case o f d u a l e l i g i b l e s , t o p r e v e n t manufacturers from
p a y i n g r e b a t e s t o Medicare and Medicaid, Medicare be t h e
r e c i p i e n t of the rebate.
A manufacturer i s considered the e n t i t y holding l e g a l t i t l e t o o r
possession o f t h e new drug code (NDC) f o r t h e covered o u t p a t i e n t
drug.
�The new program p r o v i d e s i n c e n t i v e s t o encourage t h e use o f
g e n e r i c drugs. The b e n e f i t o n l y covers g e n e r i c drugs unless t h e
p h y s i c i a n i n d i c a t e s t h a t a brand name m e d i c a t i o n i s r e q u i r e d .
The S e c r e t a r y may r e q u i r e t h a t p h y s i c i a n s o b t a i n p r i o r a p p r o v a l
b e f o r e p r e s c r i b i n g s p e c i f i c brand-name drugs i f a g e n e r i c
substitute i s available.
REIMBURSEMENT
For brand name drugs, reimbursement i s t h e lower o f t h e 90th
p e r c e n t i l e o f a c t u a l charges i n a p r e v i o u s p e r i o d , o r t h e
e s t i m a t e d a c q u i s i t i o n c o s t (EAC) p l u s a d i s p e n s i n g f e e .
For g e n e r i c drugs, Medicare pays t h e lower o f t h e pharmacist's
a c t u a l charge o r t h e median o f a l l g e n e r i c p r i c e s ( t i m e s t h e
number o f u n i t s dispensed) p l u s
For p a r t i c i p a t i n g pharmacies, t h e d i s p e n s i n g f e e i s $5, indexed
t o t h e Consumer P r i c e Index (CPI). P a r t i c i p a t i n g pharmacies a r e
r e q u i r e d t o accept assignment on a l l p r e s c r i p t i o n s . Nonp a r t i c i p a t i n g pharmacists r e c e i v e $2 l e s s per p r e s c r i p t i o n .
CHANGES IN PRIVATE INSURANCE REQUIREMENTS
The N a t i o n a l A s s o c i a t i o n o f Insurance Commissioners (NAIC) w i l l
be i n s t r u c t e d t o make t h e necessary adjustments t o Medigap
p o l i c e s t o r e f l e c t t h e p r e s c r i p t i o n drug coverage under Medicare,
P r i v a t e i n s u r a n c e plans may cover Medicare d e d u c t i b l e s and copayments f o r p r e s c r i p t i o n drugs.
SUBSIDIES
Low-income Medicare b e n e f i c i a r i e s r e c e i v e t h e same f i n a n c i a l
a s s i s t a n c e f o r o u t - o f - p o c k e t c o s t s a s s o c i a t e d w i t h t h e drug
b e n e f i t as p r o v i d e d f o r o t h e r c o s t - s h a r i n g amounts.
REVIEWS
The Medicare DUR program p a r a l l e l s t h e program e s t a b l i s h e d i n
OBRA 1990 f o r Medicaid.
P a r t i c i p a t i n g pharmacists a r e r e q u i r e d
t o o f f e r c o u n s e l i n g t o Medicare customers on t h e use o f
medications.
The S e c r e t a r y e s t a b l i s h e s a n a t i o n a l system o f E l e c t r o n i c Claims
Management as t h e p r i m a r y method f o r d e t e r m i n i n g e l i g i b i l i t y ,
p r o c e s s i n g and a d j u d i c a t i n g c l a i m s , and p r o v i d i n g i n f o r m a t i o n t o
t h e pharmacist about t h e p a t i e n t ' s drug use under t h e Medicare
drug program.
�RATIONALE FOR DRUG BENEFIT CHANGES
1.
Proposed change: The e f f e c t i v e date should be a t l e a s t two
years from t h e date o f enactment.
R a t i o n a l e : The t i m e l i n e f o r t h e a d m i n i s t r a t i o n o f t h e new
b e n e f i t was determined by t h e HCFA's Bureau o f Program
Operations (BPO) t o be a t l e a s t 24 months a f t e r enactment.
The o r i g i n a l January 1, 1996 e f f e c t i v e date assumed t h a t
enactment would occur l a t e i n 1993. With enactment more
l i k e l y t o occur mid 1994 o r e a r l y 1994, t h e e f f e c t i v e date
s h o u l d be changed a c c o r d i n g l y .
DEDUCTIBLES, CO-PAYMENTS AND CAPS
1.
Proposed change: Change "the same NUMBER o f b e n e f i c i a r i e s "
t o "the same PERCENTAGE o f b e n e f i c i a r i e s . "
R a t i o n a l e : Use o f "number" would l e a d t o b e n e f i t r e a c h i n g a
s m a l l e r percentage o f b e n e f i c i a r i e s over t i m e .
2.
Proposed change:
"coinsurance."
S t r i k e "co-payment" and i n s e r t
R a t i o n a l e : Copayment u s u a l l y r e f e r s t o a f i x e d amount w h i l e
c o i n s u r a n c e r e f e r s t o a f i x e d percentage.
3.
Proposed change: Index t h e $1000 o u t - o f - p o c k e t cap i n t h e
same manner as t h e $250 annual d e d u c t i b l e .
See r e v i s e d
language i n a t t a c h e d d r a f t .
Rationale:
over t i m e .
4.
Assures t h e same percentage o f b e n e f i c i a r i e s
Proposed change: I n s e r t "Once t h e d e d u c t i b l e i s met" b e f o r e
" b e n e f i c i a r i e s a l s o pay 20 p e r c e n t o f t h e c o s t o f each
prescription
R a t i o n a l e : B e n e f i c i a r i e s o n l y pay t h e 20 p e r c e n t
c o i n s u r a n c e a f t e r t h e d e d u c t i b l e has been reached.
COVERAGE
1.
Proposed change: References t o m e d i c a l l y accepted
i n d i c a t i o n s f o r drugs should p a r a l l e l t h e a n t i - c a n c e r drug
p r o v i s i o n s i n OBRA 93 which r e f e r e n c e t h e drug compendia as
w e l l as peer reviewed l i t e r a t u r e .
See a t t a c h e d d r a f t .
Reference t o compendia should read " as found i n a t l e a s t
one o f t h e t h r e e n a t i o n a l compendia which are t h e American
M e d i c a l A s s o c i a t i o n Drug E v a l u a t i o n s , t h e American H o s p i t a l
Formulary S e r v i c e , and t h e U n i t e d States Pharmacopeia, o r
o t h e r a u t h o r i t a t i v e compendia i d e n t i f i e d by t h e S e c r e t a r y .
The Medicare drug b e n e f i t does n o t cover a drug i f i t s use
�i s u n f a v o r a b l y r e p o r t e d i n one o r more compendia o r t h e
S e c r e t a r y determines t h a t t h e drug i s n o t m e d i c a l l y
appropriate."
R a t i o n a l e : C u r r e n t language r e q u i r e s t h a t t h e m e d i c a l l y
accepted i n d i c a t i o n f o r a drug o r b i o l o g i c a l be l i s t e d i n
a l l t h r e e compendia. New p r o v i s i o n s would g i v e t h e
S e c r e t a r y t h e a u t h o r i t y t o c o n s i d e r new compendia developed
as w e l l as n o t cover o f f - l a b e l uses t h a t a r e u n f a v o r a b l y
l i s t e d i n one o r more compendia. These new p r o v i s i o n s a r e
s i m i l a r t o those passed i n t h e o r a l cancer drug p r o v i s i o n s
of OBRA 93.
2.
Proposed change:
benefit.
I n s u l i n should be covered under t h e new
R a t i o n a l e : I n s u l i n needs t o be e x p l i c i t l y l i s t e d s i n c e i t
i s n e i t h e r a drug o r b i o l o g i c a l .
Including insulin i s
c o n s i s t e n t w i t h t h e Medicare C a t a s t r o p h i c Coverage A c t o f
1988 (MCCA).
3.
Proposed change: A home IV t h e r a p y b e n e f i t should be
covered under t h e new drug b e n e f i t . Drugs p r o v i d e d t h r o u g h
the home IV b e n e f i t would be s u b j e c t t o t h e new b e n e f i t ' s
d e d u c t i b l e and co-payment. C u r r e n t l i m i t e d coverage o f home
IV t h e r a p y under t h e DME b e n e f i t would be e l i m i n a t e d .
Rationale:
I n c l u d i n g home IV t h e r a p y i s c o n s i s t e n t w i t h t h e
MCCA and e l i m i n a t e s q u a l i t y assurance concerns under t h e DME
program. A c c o r d i n g t o HCFA a c t u a r i e s , t h e c o s t o f t h e home
IV b e n e f i t w i l l t o t a l $263 m i l l i o n f o r CY 1995.
4.
Proposed change: C u r r e n t coverage o f immunosuppressive
drugs, b l o o d c l o t t i n g f a c t o r s and o s t e o p o r o s i s drugs should
be covered under t h i s new b e n e f i t .
R a t i o n a l e : Medicare c u r r e n t l y covers immunosuppressive
drugs f o r t h e f i r s t year a f t e r a covered t r a n s p l a n t .
After
the f i r s t year o f immunosuppressive t h e r a p y , t h e b e n e f i c i a r y
would t h e n be covered under t h e new drug b e n e f i t .
Covering
the b e n e f i c i a r y under t h e new b e n e f i t from t h e o u t s e t would
be a d m i n i s t r a t i v e l y s i m p l e r . Medicare a l s o c u r r e n t l y covers
b l o o d c l o t t i n g drugs f o r hemophiliacs and o s t e o p o r o s i s
drugs.
5.
Proposed change: S t r i k e t h e e n t i r e paragraph b e g i n n i n g
" C e r t a i n p h a r m a c e u t i c a l p r o d u c t s a r e n o t covered by t h e
Medicaid program..." and ending "Exceptions t o c u r r e n t
M e d i c a i d e x c l u s i o n s i n c l u d e b a r b i t u r a t e s and
benzodiazepines."
The S e c r e t a r y would have t h e d i s c r e t i o n
t o exclude from coverage drugs l i s t e d i n S e c t i o n 1927(d) o f
the S o c i a l S e c u r i t y A c t , except f o r benzodiazepines and
barbiturates.
�R a t i o n a l e : The paragraph as r e w r i t t e n i s f a c t u a l l y
i n c o r r e c t . Under Medicaid, t h e s t a t u t o r y e x c l u s i o n s a r e
p e r m i s s i v e ; s t a t e s may o r may not cover t h e drugs l i s t e d i n
t h e c a t e g o r i e s . A p p l y i n g the s t a t u t o r y e x c l u s i o n t o
Medicare i m p l i e s mandatory e x c l u s i o n o f the l i s t e d drugs.
Furthermore, t h i s paragraph i s l a t e r repeated i n t h e f i r s t
paragraph o f page 202 — t h i s i s most l i k e l y a p r o o f r e a d i n g
error.
6.
Proposed change: E i t h e r p h y s i c i a n s and PHARMACISTS may be
r e q u i r e d t o o b t a i n a p p r o v a l b e f o r e p r e s c r i b i n g and/or
dispensing
a p a r t i c u l a r medication.
Rationale:
I n t h e Medicaid program, pharmacists r a t h e r than
p h y s i c i a n s g e n e r a l l y request p r i o r a p p r o v a l b e f o r e
dispensing a pharmaceutical product.
7.
Proposed change: S t r i k e two sentences b e g i n n i n g "However,
t h e S e c r e t a r y has t h e a u t h o r i t y t o n e g o t i a t e p r i c e s . . . b y any
f e d e r a l program and h e a l t h a l l i a n c e . "
R a t i o n a l e : The r e v i s e d p r o v i s i o n s f o r new drug p r i c e s a r e
r e s t a t e d below i n t h e next paragraph. This i s most l i k e l y
another p r o o f r e a d i n g e r r o r .
8.
Proposed change: The r e f e r e n c e s t o t h e n e g o t i a t e d rebates
f o r new drugs i s moved t o t h e c o s t containment s e c t i o n
r a t h e r than coverage. See a t t a c h e d d r a f t .
R a t i o n a l e : These p r o v i s i o n s r e f e r t o rebates which i s a
c o s t containment mechanism.
COST CONTAINMENT
1.
Proposed change:
agreements."
I n s e r t "must" b e f o r e " s i g n r e b a t e
Rationale:
S i g n i n g rebates agreements i s a mandatory i f
drugs a r e t o be covered by Medicare.
2.
Proposed change: I n s e r t "or 15 p e r c e n t o f t h e AMP,
whichever i s g r e a t e r " a f t e r "the weighted average o f t h e
drug i n t h e n o n - r e t a i l market."
Rationale:
I n a d v e r t e n t admission o f complete r e b a t e
f o r m u l a . This f o r m u l a i s p a r a l l e l s t h a t used i n t h e
Medicaid drug r e b a t e program.
3.
Proposed change: S t r i k e "on p a r t i c u l a r drugs"
i t s p l a c e "on a drug-by-drug b a s i s . "
and i n s e r t i n
R a t i o n a l e : The use o f phrase "on p a r t i c u l a r drugs" i m p l i e s
t h a t o n l y c e r t a i n drugs w i l l be s u b j e c t t o the a d d i t i o n a l
rebate p r o v i s i o n s .
�4.
Proposed change: I n c l u d e a p r o v i s i o n f o r d u a l e l i g i b l e s
must be i n c l u d e d w i t h Medicare s e r v i n g as r e c i p i e n t o f t h e
r e b a t e when Medicare i s t h e p r i m a r y payor.
R a t i o n a l e : Avoids s i t u a t i o n s i n which drug
would pay double r e b a t e s .
5.
manufacturers
Proposed change: A manufacturer i s c o n s i d e r e d t h e e n t i t y
h o l d i n g l e g a l t i t l e t o o r possession o f t h e new drug number
(NDC) number f o r t h e covered o u t p a t i e n t drug.
R a t i o n a l e : This p r o v i s i o n c l a r i f i e s t h e r e s p o n s i b l e
manufacturer.
This d e f i n i t i o n i s c o n s i s t e n t w i t h t h e
M e d i c a i d r e b a t e agreement.
6.
Proposed change:
insert "verify."
S t r i k e "conduct v e r i f i c a t i o n surveys" and
R a t i o n a l e : The S e c r e t a r y has t h e a u t h o r i t y t o v e r i f y t h e
AMP, b u t may n o t n e c e s s a r i l y conduct a survey o f t h e AMP.
REIMBURSEMENT
1.
Proposed change: Separate d i s c u s s i o n o f d i s p e n s i n g fees
from c o s t s o f drugs.
See t e x t i n a t t a c h e d document.
Rationale:
Clarity.
CHANGES IN PRIVATE INSURANCE REQUIREMENT
1.
Proposed change: References t o p r i v a t e i n s u r a n c e p o l i c i e s
p r o v i d e d by former employers.
R a t i o n a l e : This i s t h e p r o v i s i o n i s from MCCA's S e c t i o n 421
(Maintenance o f E f f o r t ) .
This p r o v i s i o n r e q u i r e d any
employer who p r o v i d e s h e a l t h b e n e f i t s t h a t d u p l i c a t e
Medicare b e n e f i t s as a r e s u l t o f t h e c a t a s t r o p h i c
l e g i s l a t i o n ( e x c l u d i n g o u t p a t i e n t drugs) by a t l e a s t 50
percent of t h e n a t i o n a l a c t u a r i a l value of t h e c a t a s t r o p h i c
b e n e f i t , t o provide a d d i t i o n a l b e n e f i t s o r refunds a t l e a s t
equal t o t h e a c t u a r i a l v a l u e o f t h e d u p l i c a t i v e b e n e f i t s f o r
one year o n l y . This p r o v i s i o n was i n c l u d e d i n MCCA s i n c e
t h e t i m e between enactment and t h e e f f e c t i v e date f o r t h e
s t a t u t e was o n l y about s i x months. The time between
enactment and t h e e f f e c t i v e date f o r t h e new drug b e n e f i t
s h o u l d be s u f f i c i e n t t o a l l o w the a p p r o p r i a t e p a r t i e s t o
n e g o t i a t e reduced premiums f o r r e t i r e e group coverage t h a t
takes i n t o account t h e new drug b e n e f i t .
2.
Proposed change: I n c l u d e a p r o v i s i o n which i n s t r u c t s NAIC
t o make t h e necessary adjustments t o Medigap p o l i c i e s t o
r e f l e c t p r e s c r i p t i o n drug coverage under Medicare.
�REVIEWS
1.
Proposed change:
2.
Rationale:
S t r i k e "and" a f t e r " p a t i e n t ' s drug."
Typographical e r r o r .
�DRUG BENEFIT MARK-UP FROM PREVIOUS VERSION
B e g i n n i n g i n January 1996, Two years from t h e date o f enactment
of t h e Plan, b e n e f i t s o f f e r e d under t h e Medicare program expand
t o cover o u t p a t i e n t p r e s c r i p t i o n drugs. Thus, assuming enactment
i n December 1993, t h e new drug b e n e f i t would be i n e f f e c t
b e g i n n i n g i n January 1996.
Any Medicare b e n e f i c i a r y who e l e c t s t o e n r o l l i n t h e P a r t B
program (97 p e r c e n t o f t h e Medicare p o p u l a t i o n ) a u t o m a t i c a l l y
e n r o l l s i n t h e new p r e s c r i p t i o n drug b e n e f i t .
As w i t h o t h e r P a r t B b e n e f i t s , t h e Medicare p r e s c r i p t i o n drug
b e n e f i t i s funded by b o t h g e n e r a l revenues and b e n e f i c i a r y
premiums. The P a r t B premium i n c r e a s e s t o cover t h e new b e n e f i t .
Premiums c u r r e n t l y f i n a n c e 25 p e r c e n t o f t h e c o s t o f P a r t B
coverage.
Thus, b e n e f i c i a r i e s would pay 25 p e r c e n t o f the c o s t
o f t h e new drug b e n e f i t . Other r u l e s r e l a t e d t o e n r o l l m e n t i n
Medicare P a r t B a l s o apply t o the p r e s c r i p t i o n drug b e n e f i t .
CO-PAYMENTS COINSURANCE, DEDUCTIBLES AND CAPS
The new drug b e n e f i t c a r r i e s a $250 annual d e d u c t i b l e .
Once
t h e d e d u c t i b l e has been met, b e n e f i c i a r i e s pay 20 p e r c e n t o f t h e
c o s t o f each p r e s c r i p t i o n w i t h an annual l i m i t on o u t - o f - p o c k e t
e x p e n d i t u r e s o f $1000.
Tho amount o f t h e d o d u c t i b l o i s s o t a t a v a r i a b l e r a t e t o assure
t h a t t h o aamo number o f b c n c f i c i a r i c a moot t h e d e d u c t i b l e each
year aa d u r i n g t h o f i r o t year o f coverage.
Both t h e annual
d e d u c t i b l e and o u t - o f - p o c k e t cap are indexed each year t o assure
t h a t t h e same percentage o f b e n e f i c i a r i e s c o n t i n u e t o r e c e i v e
b e n e f i t s as d i d w i t h t h e i n i t i a l $250 d e d u c t i b l e and $1000 o u t o f - p o c k e t cap.
COVERAGE
The Medicare drug b e n e f i t covers a l l drugs, b i o l o g i c a l p r o d u c t s
and i n s u l i n approved by t h e Food and Drug A d m i n i s t r a t i o n (FDA)
f o r t h e i r m e d i c a l l y accepted i n d i c a t i o n s as d e f i n e d i n t h e a t
l e a s t one o f t h e t h r e e n a t i o n a l compendia which are t h e American
M e d i c a l A s s o c i a t i o n Drug E v a l u a t i o n s , t h e American H o s p i t a l
Formulary S e r v i c e , and t h e U n i t e d S t a t e s Pharmacopeia, o r o t h e r
a u t h o r i t a t i v e compendia i d e n t i f i e d by the S e c r e t a r y o r as
determined by t h e c a r r i e r based on evidence presented i n peer
reviewed m e d i c a l l i t e r a t u r e .
The Medicare drug b e n e f i t i n c l u d e s coverage o f home IV drugs. I n
a d d i t i o n , t h e c u r r e n t l i m i t e d coverage o f o u t p a t i e n t drugs under
Medicare such as immunosuppressive drugs a r e i n c o r p o r a t e d i n t o
t h e drug b e n e f i t .
�C e r t a i n p h a r m a c e u t i c a l p r o d u c t s n o t covorod by t h e Modicaid
program under S e c t i o n 1927(d) o f t h o S o c i a l S e c u r i t y A c t ,
i n c l u d i n g druga—for the treatment o f — i n f e r t i l i t y , — m c d i c a t i o n a
uacd t o t r e a t a n o r e x i a and druga p r e s c r i b e d f o r coamotic
purpooos ,—arc n o t covered. Excoptiona t o c u r r e n t Medicaid
e x c l u s i o n s i n c l u d e b a r b i t u r a t e s and benzodiazopinca. The
S e c r e t a r y o f H e a l t h and Human Services has t h e d i s c r e t i o n n o t t o
cover c e r t a i n p h a r m a c e u t i c a l p r o d u c t s l i s t e d i n S e c t i o n 1927(d)
of t h e S o c i a l S e c u r i t y A c t . Examples i n c l u d e f e r t i l i t y drugs,
m e d i c a t i o n s used t o t r e a t a n o r e x i a and drugs used f o r cosmetic
purposes.
However, benzodiazepines and b a r b i t u r a t e s would be
covered under t h e Medicare drug b e n e f i t . F u r t h e r , t h e S e c r e t a r y
has t h e a u t h o r i t y t o e s t a b l i s h maximum q u a n t i t i e s p e r
p r e s c r i p t i o n o r l i m i t t h e number o f r e f i l l s i n o r d e r t o
d i s c o u r a g e waste.
The S e c r e t a r y may r e q u i r e p h y s i c i a n s o r pharmacists t o o b t a i n
p r i o r approval before p r e s c r i b i n g or dispensing c e r t a i n
m e d i c a t i o n s based on evidence t h a t they a r e s u b j e c t t o c l i n i c a l
misuse o r i n a p p r o p r i a t e use o r because t h e S e c r e t a r y determines
t h a t they are not cost e f f e c t i v e .
A l l now drugs approved by t h e FDA a r e covered under t h e b e n e f i t .
Howcvor,—tho S e c r e t a r y has t h o a u t h o r i t y t o n e g o t i a t e p r i c e s w i t h
m a n u f a c t u r e r s o f new p h a r m a c e u t i c a l p r o d u c t s i f t h e S e c r e t a r y
concludco t h a t c e r t a i n p r o d u c t s a r c e x c e s s i v e l y o r
i n a p p r o p r i a t e l y p r i c e d . Manufacturers t h a t r e f u s e t o n e g o t i a t e
l o s e e l i g i b i l i t y f o r reimbursement o f any drug p r o d u c t by any
f e d e r a l program o r h e a l t h a l l i a n c e c e r t i f i e d by t h e states.—rPhe
S e c r e t a r y a l s o has t h e d i s c r e t i o n t o exclude from coverago drugs
l i s t e d i n S e c t i o n 1927—(d) o f t h e S o c i a l S e c u r i t y A c t , — e x c e p t
benzodiazepines and b a r b i t u r a t e s .
COST CONTAINMENT
As a c o n d i t i o n o f p a r t i c i p a t i o n i n Medicare and Medicaid, drug
m a n u f a c t u r e r s must s i g n r e b a t e agreements w i t h t h e S e c r e t a r y .
Rebates a r e p a i d t o t h e S e c r e t a r y on a q u a r t e r l y b a s i s .
For s i n g l e source and i n n o v a t o r m u l t i p l e source drugs,
m a n u f a c t u r e r s pay a r e b a t e t o Medicare f o r each drug based on t h e
d i f f e r e n c e between t h e average manufacturer p r i c e (AMP) t o t h e
r e t a i l c l a s s o f t r a d e and t h e weighted average o f t h e p r i c e s o f
the drug i n t h e n o n - r e t a i l marketplace, o r 15 p e r c e n t o f t h e AMP,
whichever i s g r e a t e r . The S e c r e t a r y has t h e a u t h o r i t y t o conduct
v e r i f i c a t i o n surveys o f v e r i f y t h e AMP.
M a n u f a c t u r e r s t h a t i n c r e a s e p r i c e s a t a r a t e h i g h e r than
i n f l a t i o n on a s i n g l e source drug and i n n o v a t o r m u l t i p l e source
drugs pay an a d d i t i o n a l r e b a t e on p a r t i c u l a r drugs. For s i n g l e
source and i n n o v a t o r m u l t i p l e source drugs, an a d d i t i o n a l , r e b a t e
i s r e q u i r e d on a drug-by-drug b a s i s f o r manufacturers who
i n c r e a s e p r i c e s a t a h i g h e r r a t e than i n f l a t i o n .
The b a s e l i n e
�indexed p r i c e i s t h e average manufacturers p r i c e from A p r i l
t h r o u g h June 1993.
I n t h e case o f new drugs t h a t t h e S e c r e t a r y determines a r e
e x c e s s i v e l y o r i n a p p r o p r i a t e l y p r i c e d , t h e S e c r e t a r y has t h e
a u t h o r i t y t o n e g o t i a t e a s p e c i a l r e b a t e w i t h t h e manufacturer.
Such a d e t e r m i n a t i o n by t h e S e c r e t a r y would be based on such
f a c t o r s as t h e p r i c e s o f o t h e r drugs i n t h e same t h e r a p e u t i c
c l a s s , c o s t i n f o r m a t i o n s u p p l i e d by t h e manufacturer t o t h e
S e c r e t a r y , p r i c e s o f t h e drug i n o t h e r comparable c o u n t r i e s , and
other relevant factors.
I f a manufacturer r e f u s e s t o n e g o t i a t e
o r t h e S e c r e t a r y i s unable t o n e g o t i a t e a p r i c e t h a t t h e
S e c r e t a r y determines t o be reasonable, t h e S e c r e t a r y may exclude
t h e new drug and any o t h e r drug p r o d u c t produced by t h e
m a n u f a c t u r e r from coverage under Medicare.
I n t h e case o f d u a l e l i g i b l e s , t o p r e v e n t manufacturers from
p a y i n g r e b a t e s t o Medicare and Medicaid, Medicare be t h e
r e c i p i e n t of the rebate.
A manufacturer i s considered the e n t i t y holding l e g a l t i t l e t o or
possession o f t h e new drug code (NDC) f o r t h e covered o u t p a t i e n t
drug.
The new program p r o v i d e s i n c e n t i v e s t o encourage t h e use o f
g e n e r i c drugs. The b e n e f i t o n l y covers g e n e r i c drugs unless t h e
p h y s i c i a n i n d i c a t e s t h a t a brand name m e d i c a t i o n i s r e q u i r e d .
The S e c r e t a r y may r e q u i r e t h a t p h y s i c i a n s o b t a i n p r i o r a p p r o v a l
b e f o r e p r e s c r i b i n g s p e c i f i c brand-name drugs i f a g e n e r i c
substitute i s available.
REIMBURSEMENT
For brand name drugs, reimbursement i s t h e lower o f t h e 90th
p e r c e n t i l e o f u s u a l and customary
a c t u a l charges i n a p r e v i o u s
p e r i o d , o r t h e e s t i m a t e d a c q u i s i t i o n c o s t (EAC) p l u s a
p r o f e s s i o n a l d i s p e n s i n g f e e o f $5 f o r p a r t i c i p a t i n g pharmacies,
indexed t o t h e Consumer T r i c e Index.
For g e n e r i c drugs, Medicare pays t h e lower o f t h e pharmacist's
u s u a l and customary charge a c t u a l charge o r t h e median o f a l l
g e n e r i c p r i c e s ( t i m e s t h e number o f u n i t s dispensed) p l u s a $5
per p r o s c r i p t i o n d i s p e n s i n g f e e , — i n d e x e d t o t h e Consumer P r i c e
Index a d i s p e n s i n g f e e .
For p a r t i c i p a t i n g pharmacies, t h e d i s p e n s i n g f e e i s $5, indexed
t o t h e Consumer P r i c e Index (CPI). P a r t i c i p a t i n g pharmacies a r e
r e q u i r e d t o accept assignment on a l l p r e s c r i p t i o n s . Nonp a r t i c i p a t i n g pharmacists r e c e i v e $2 l e s s p e r p r e s c r i p t i o n .
�CHANGES IN PRIVATE INSURANCE REQUIREMENTS
When t h e Modicaro drug b e n e f i t takes i n t o o f f o o t , — p r i v a t e
i n s u r a n c e p o l i c i o s p r o v i d e d by former employers c i t h e r reduce t h e
premium charged t o Medicare b e n e f i c i a r i e s t o account f o r t h e
change i n coverage o r i n c r e a s e coverage f o r o t h e r h e a l t h s e r v i c e s
by an amount equal t o t h o a c t u a r i a l v a l u o o f t h e drug b e n e f i t .
The N a t i o n a l A s s o c i a t i o n o f Insurance Commissioners (NAIC) w i l l
be i n s t r u c t e d t o make t h e necessary adjustments t o Medigap
p o l i c e s t o r e f l e c t t h e p r e s c r i p t i o n drug coverage under Medicare.
P r i v a t e i n s u r a n c e plans may cover Medicare d e d u c t i b l e s and copayments f o r p r e s c r i p t i o n drugs.
SUBSIDIES
Low-income Medicare b e n e f i c i a r i e s r e c e i v e t h e same f i n a n c i a l
a s s i s t a n c e f o r o u t - o f - p o c k e t c o s t s a s s o c i a t e d w i t h t h e drug
b e n e f i t as p r o v i d e d f o r o t h e r c o s t - s h a r i n g amounts.
REVIEWS
The Medicare DUR program p a r a l l e l s t h e program e s t a b l i s h e d i n
OBRA 1990 f o r M e d i c a i d . P a r t i c i p a t i n g pharmacists a r e r e q u i r e d
t o o f f e r c o u n s e l i n g t o Medicare customers on t h e use o f
medications.
The S e c r e t a r y e s t a b l i s h e s a n a t i o n a l system o f E l e c t r o n i c Claims
Management as t h e p r i m a r y method f o r d e t e r m i n i n g e l i g i b i l i t y ,
p r o c e s s i n g and a d j u d i c a t i n g c l a i m s , and p r o v i d i n g i n f o r m a t i o n t o
the p h a r m a c i s t about t h e p a t i e n t ' s drug use under t h e Medicare
drug program.
�TAB B
MEDICAID IMPLEMENTATION INCENTIVES
The White House D r a f t e s t a b l i s h e s / a t e n p e r c e n t r e d u c t i o n i n
s t a t e s M e d i c a i d maintenance o f e f f o r t requirement i f i t
implements a t t h e f i r s t o p p o r t u n e l y (Ja\iuapy 1995).
We recommend a g a i n s t t h i s r e d u c t i o n f o r s e v e r a l reasons:
1)
I t i s l i k e l y t o be expensive and t hmoney c o u l d be b e t t e r
spent elsewhere. The Cost E s t i m a t i i t g group has n o t i n c l u d e d
such a r e d u c t i o n i n t h e c o s t estimates
2)
I t may generate i n a p p r o p r i a t e i n c en-; i v e s f o r s t a t e s t o
implement p r e m a t u r e l y when they a r e not ready.
3)
I f a s t a t e c a l c u l a t e s i t i s t o i t s budgetary advantage n o t
t o implement a t a l l , t h e i n c e n t i v e w i l l be i n e f f e c t i v e and
t h e r e f o r e unnecessary. ConverselY a s t a t e t h a t t h i n k s i t
i s t o i t s f i n a n c i a l and p o l i t i c a l "advantage t o implement
e a r l y won't r e q u i r e t h e i n c e n t i v e
�V ^ k ^
WORKING GROUP DRAFT
DETERMINED TO BE AN ADMINISTRATIVE
958
^
^ - ^ ^ - '2958asameiylediSe;.3^(c)
Dat
initials: U . ^ V
Date:
M
R
K
I
PRIVILEGED AND r m T n m i r m r
BUDGET DEVELOPMENT AND ENFORCEMENT
The Health Security Act organizes the market for health care and creates mechanisms
to control costs through enhanced competition, consumer choice, administrative simplification,
and increased negotiating power through health alliances. A national health care budget
serves as a backstop to that system of incentives and organized market power. The budget
ensures that health care costs do not rise faster than other sectors of the economy.
The national health care budget centers on the weighted average premium for the
nationally-guaranteed benefits package in regional health alliances, establishing a target for
how much that average premium may increase each year. The federal government assumes
responsibility for enforcing alliance budgetyn the-firot throo ycatfr of implementation and
COVERED EXPENDITURES
Health care expenditures covered by the budget include premiums paid to cover the
guaranteed comprehensive benefit package whether paid by employers, employees, or
individuals. Medicare and Medicaid expenditures are included under separate budgets.
Supplemental benefits beyond the comprehensive benefit package, as well as workers'
compensation and auto insurance benefits, are not included in the budget. Premiums for
insurance policies providing coverage for cost sharing are not included.
(9/1/93)
95
�PRIVILEQED AND LUl IHUhj 11 I M
WORKING GROUP DRAFT
ANNUAL INCREASES
Medicare, Medicaid and ^^^^^^"p^emiums^^hat cover services under the nationally/
defined benefit package may not increase at a rate higher than projected growth in the
(^
Consumer Price Index gtftq^fttUgicpi between September, 1993 and December 31, 2000.
I Medicare, Medicaid and premiums to cover the guaranteed benefit package may not rise
|jaster than j ^ i e ^ i l e ^ " '
^
The National Health Board adjusts the inflation factor /^eariratatea^QBslwyeach
alliance during tihtffififtfal peiiod-of fiderafr^nfereesBsiffi'to reflect unusual changes in the
demographic and socio-economic characteristics of the population covered l^Slliance^lStet
The National Health Board develops a methodology for making such adjustments using
commonly accepted actuarial principles. Demographic changes considered include, at a
minimum, age and gender.
.
.,.
The Board consults with ea^^-at^l^tRfHTOBee^dttringffedefd-fmfoK
iforcemeH^. prior to
the establishment of the annual inflation factor.
NATIONAL PER CAPITA BASELINE TARGET
The National Health Board calculates a national per capita premium target based on:
•
Projected per capita health expenditures for the guaranteed benefits package in
the first year of the new system.
•
With adjustments for expected increases in utilization by the uninsured and
under-insured and to recapture currently uncompensated care.
(9/1/93)
96
�WORKING GROUP DRAFT
PRIVILEGED AND CDSPfflB
FIRST YEAR BIDDING AND NEGOTIATION PROCESS
In the year prior to implementation, each alliance conducts a bidding and negotiation
process with health plans. The Board provides alliances with information and technical
assistance to aid in the bidding process. The bidding is conducted either by providing plans
with the alliance's budget target prior to bidding, or by inviting blind bids followed by
negotiations and re-bidding.
Once an alliance is satisfied with the negotiated health plan premiums, it submits them
to the National Health Board for review. The first-year bidding process occurs earlier than in
subsequent years to allow time for a more thorough review by the National Health Board and
possible re-negotiation of premiums.
NATIONAL BOARD REVIEW
The Board calculates for each alliance a per capita premium target, using the national
per capita baseline target as a reference point. For each alliance, the Board adjusts the
national target for current regional variations in health care spending and for rates of underinsurance and underinsurance. To measure regional variations in health care spending, the
Board uses such factors as:
•
Variations in premiums across states based on surveys and other data.
•
Variations in per capita health spending by state, as measured by the Health
Care Financing Administration.
•
Variations across states in per capita spending under the Medicare program.
•
Area rating factors commonly used by actuaries.
The Board establishes the premium targets for alliances so that the weighted average
of the alliance targets equals the national per capita baseline target.
(9/1/93)
97
�WORKING GROUP DRAFT
it
PRIVILEQED AND
4-
IThe Board calculates an estimated weighted-average premium for each alliance, using
the proposed premiums submitted by the alliance and a projection of the distribution of
enrollment across plans. If the estimated weighted average premium for an alliance is greater
than the alliance's premium target, then the Board notifies the alliance and allows it to renegotiate premiums. If an alliance chooses to re-negotiate premiums, it submits the revised
premiums to the Board and proceeds with enrollment.
|
o ^
v!
\
FIRST YEAR BUDGET ENFORCEMENT /
The Board calculates an estimated weighted-average premium based on the final bids
submitted by the alliance. If the estimated weighted-average premium for the alliance
exceeds the alliance's premium target, an assessment is imposed on each plan whose bid
exceeds the target, and/on the providers receiving payment from that plan. The assessment
on the plan is equal to'the percentage amount by which the alliance target is below the b i d . ^
Payments to providers by that plan are assessed at the same percentage. AltemativoE
foscssii]uits "qn plams-^^
• sufficient to • reducenhE^ri^
-alteraative-K^
:
c
£
^
-
/£ ^
"^ ^ .
£ ' £"<fe"
J -^ ^*
5
xj, *
0
V- I
ESTABLISHING A BASELINE BUDGET FOR EACH ALLIANCE
f V
Following the first open enrollment period, the Board calculates for each alliance the
weighted average premium, using actual premiums and enrollment figures. The first year
weighted average premium becomes the baseline per capita-budget for the alliance.
&
In each subsequent year, an alliance's per capita budget equals its budget for the
previous year, increased by the inflation factor.
v
j
ADJUSTING THE W4BGE-T INFLATION FACTOR
In general, as described above, thcbudget inflation factor is the increase in the
Consumer Price Indej^pkis-f^pulation. If, however, an alliance's actual weighted-average
premium in a given year exceeds its premium target, then the inflation factor for that alliance
is reduced for the following two years to recover excess spending.
(9/1/93)
98
^
�WORKING GROUP DRAFT
PRIVILEGED AND CUffl lULW I W ^
PROCESS FOR MAKING ADJUSTMENTS IN TARGETS OVER TIME
The National Health Board appoints an advisory commission to recommend
adjustments to the methodology for calculating premium targets. The Board provides states
and alliances with information about regional differences in health care costs and practice
patterns. The commission explores methods to reduce variations in budget targets across
states due to differences in practice patterns, physician supply, population characteristics, and
other appropriate factors. Adjustments to targets may not be made without Congressional
action.
FEDER&B ENFORCEMENT OF THE BUDGET
For the firot three ytais of fafeamptemfntrttion^lftSfe^^g^^e federal government
- l y ^ j J A o accumcc reaponslWtlty for enforcing the health care budget. By October 1 of each year —
beginning in 199$,— alliances submit to the National Health Board for approval their
proposed health plan premiums aad fee schedulea for piovidm uudei fee^fui^seivice
^arrangcinenrST
Based on proposed premiums, the Board calculates the anticipated weighted average
premium for each alliance. The anticipated weighted average premium is the average of the
proposed premiums weighted by current enrollment in each plan, with special rules in cases
of plans entering or leaving the alliance.
^ ^^^/A^.
If an alliance's anticipated weighted-average premium exceeds its per capita budget
target, an assessment is imposed on each plan whose premium increase (adjusted upward to
reflect the previous year's assessment) exceeds the alliance's bwaget-inflation factor. The
same assessment is imposed on providers receiving payment from that plan. The assessment
on the plan is equal to, the peWMttSge difference between the plan's premium increase and the
alliance's budget inflation factor (adjusted upward to reflect the previous year's assessment).
Payments to prov^e^byjthat plan are assessed at the same percentage.
(9/1/93)
99
'V
�WORKING GROUP DRAFT
PRIVILEGED AND etMIHMlUlBBs
ENFORCEMENT WHEN A STATE IS RESPONSIBLE
States may assumel^sponsibility foi-thtmidget any time after universal health
insurance coverage through i^ion^l-aifiances is begins. States must assume budget
responsibility by the year l j
Whena-sfate assumes responsibimy>for the budget, its budget target equals the
weighte<Latferage of the targets for all allianceNn the state.
BUDGET INCENTIVES
States retain 50 percent of federal revenue savings on subsidies for low-income
individuals if its weighted-average premiums across all health plans total less than the budget
allowed. Subsidy sayings equal the percentage by which alliance health spending fell below
budgeted amounts multiplied by total federal subsidies in the state. States retain half of that
amount.
If health alliances within a state control spending: within the parameters established by
the budget, the budget for the following year is calculated based on the original target, not the
lesser amount.
\ ^
^ /
A state's alliances are in compliance wijh national cost containment goals if:
•
The increase in the weightedraverage premium falls within a 1 percentage
point above the inflation factor; and
•
The actual weighted-average premium is no more than 10 percent higher than
the per capita budget/target for\he state.
The annual allowed increase for spending on health care in alliances is the established
inflation factor. If spending^is below the established^inflation factor, a state may roll over up
to 50 percent of the unused amount to the next budget^year, accumulating up to a maximum
of 5 percent. If spending exceeds the inflation factor, the state must recover the excess in the
following year, creating a two-year budget enforcement cycle.
(9/1/93)
100
�PRIVILEGED AND L U M
WORKING GROUP DRAFT
IUHIIILIL
If a state exc&Dd§^the_inflation factor, federal enforcement actionj^es-ef-fec! the
following year. If bids for^the4ollowing year d2,not-ensure~compliance with the inflation
factor plus the band, as well as MBHeeoizeTexcess spending, then an assessment on plans and
providerejsjmpesedlls'described under "FederaTEnfMcgment of the Budget."
TOOLS TO MEET PREMIUM TARGETS
In addition to creating a well-structured marketplace for health coverage, alliances
have the ability to control costs through premium negotiations and the authority to refuse
contracts with health plans whose premiums are too high. Tools available to states to contain
costs include:
•
Premium negotiation and regulation.
•
Limiting enrollment in high-cost plans by:
•
Freezing new enrollment in high-cost plans.
•
Surcharging high-cost plans or paying rebates to consumers who enroll
in low-cost plans.
•
Setting rates for health providers.
•
Controlling health care investments through planning.
BUDGETS FOR CORPORATE ALLIANCES
A large employer may operate a corporate alliance rather than purchasing health
coverage through a regional alliance, provided it complies with cost-containment goals.
Large employers whose health plans do not meet national spending goals are required to
purchase coverage through regional alliances.
During the first two years of implementati0JVthe-4nflati©n_factor equals the-tliHWPjWai nvrrii^r nf thr inrrn-r in the m,i uipita^^ybTpoiULatic Product (GD^).'^Kreafte.r, theinBation fartr
vpercentage-pemt
(9/1/93)
jnnln l l i . l l n W ^ y p a r avpragp nt thp inrrpasp i n rhq p f ' T ^ p i f a T T l l p ' ^ r i
v
11
I mn
�WORKING GROUP DRAFT
PRIVILEGED ANDfeJUNlIDLUllAl!
1
The National Health Board develops a methodology for calculating an annual premium
equivalent within a corporate alliance. Beginning after the third year of implementation of
health reform, each corporate alliance annually reports its average premium equivalent for the
previous three years to the Department of Labor.
If the increase in the premium equivalent exceeds the allowed rate of growth during
two of any three years, the Department of Labor maysrequire the employer to purchase health
coverage through a regional alliance.
AjLdix
(9/1/93)
102
�WORKING GROUP DRAFT
PRIVILEGED AND rrmTFTrinTTT IT A
MEDICARE OUTPATIENT PRESCRIPnOBTDRUG BENEFIT
Two years from the date of enactment of the Plan,/penefits offered under the Medicare
program expand to cover outpatient prescription drugs. Thus, assuming enactment in
December 1993, the new drug benefit would be in effect beginning in January 1996.
Any Medicare beneficiary who elects to enroll in the Part B program (97 percent of
the Medicare population) automatically enrolls in the new prescription drug benefit.
As with other Part B benefits, the Medicare prescription drug benefit is funded by both
general revenues and beneficiary premiums. The Part B premium increases to cover the new
benefit. Premiums currently finance 25 percent of the cost for Part B coverage. Thus,
beneficiaries would pay 25 percent of the cost of the new drug benefit. Other rules related to
enrollment in Medicare Part B also apply to the prescription drug benefit.
COINSURANCE, DEDUCTIBLES AND CAPS
The new drug benefit carries a $250 annual deductible. Once the deductible has been
met, beneficiaries pay 20 percent of the cost of each prescription with an annual limit on outof-pocket expenditures of $1,000.
Both the annual deductible and out-of-pocket cap are indexed each year to assure that
the same percentage of beneficiaries continue to receive benefits as did with the initial $250
deductible and $1000 out-of-pocket cap.
COVERAGE
( 0A)
F
-C
f t r
^
r
The Medicare drug benefit covers all dmgsJiHKpbiological products and insulin
approved by the Food and Drug Administration prodprihod unrirr medically accepted
indications as defined in at least one of the three compendia which are the American Medical
Association Drug Evaluations, the American Hospital Formulary Service and the
States Pharmacopeia, or other authoritative compendia identified by the Secretary
determined by the carrier based on(Mf)evidence presented in peer reviewed medicd^litejafure.
The Medicare drug benefit includes coverage of home IV drugs. In addition, the
current limited coverage of outpatient drugs under Medicare such as immunosuppressive
DETERMINED TO BE AN ADMINISTRATIVE
KIN£-Pcr
MARKJI
Initials:
9
93
( /i/ )
193
^ ^ V a "
a /
�WORKING GROUP DRAFT
PRIVILEGED AND ^OT'iriDCIiITLML i
drugs are incorporated into the drug benefit.
The Secretary o f ^ e ^ S ^ r t m o a U ^ Health and Human Services has the discretion not
to cover certain pharmaceutical products listed in Section 1927(d) of the Social Security Act.
Examples include fertility drugs, medications used to treat anorexia and drugs used for
cosmetic purposes. However, benzodiazepines and barbiturates would be covered under the
Medicare drug benefit. Further, the Secretary has the authority to establish maximum
quantities per prescription or limit the number of refills in order to discourage waste.
The Secretary o£4he-Dcpartm&nt=ef-HealHrand_Human-Services-may require
physicians or pharmacists to obtain approval before prescribjng or dispensing certain
medications based on evidence that they are subject toOffifsuse or inappropriate use or because
the Secretary determines that they are not cost effective.
COST CONTAINMENT
As a condition of participation in Medicare and Medicaid, drug manufacturers must
sign rebate agreements with the Secretary. Rebates are paid to the Secretary on a quarterly
basis.
(|or^mghpjjource jand innovator multiple source drugs, manufacturers pay a rebate to
Medicare Abased onlfhe^difference betweejrtljje average manufacturer price (AMP) to the retail
class of trade andjhe weighted+/avera^kprices of the drug in the non-retail market, or 15
percent of the AMP, whichever is greater. The Secretary has the authority to verify the AMP.
x
(9/1/93)
194
�WORKING GROUP DRAFT
PRIVILEGED AND
?er single source and innovator multiple source drugs, an additional rebate is required
on a driifeJ-by-drug basis for manufacturers who increase prices at a higher rate than inflation.
The bas^npe indexed price is the average manufacturers price from April through June 1993.
x
In the case of new drugs that the Secretary determines are excessively or
inappropriately priced, the Secretary has the authority to negotiate a special rebate with the
manufacturer. Such a determination by the Secretary would be based on such factors as the
prices of other drugs in the same therapeutic class, cost information supplied by the
manufacturer to the Secretary, prices of the drug in other comparable countries, and other
relevant factors. If a manufacturer refuses to negotiate or the Secretary is unable to negotiate
a price that the Secretary determines to be reasonable, the Secretary may exclude the new
drug from coverage under Medicare.
In the case of dual eligibles, to prevent manufacturers from paying rebates to Medicare
and Medicaid, Medicare will be the recipient of the rebate.
A manufacturer is the entity holding legal title to or possession of the new drug code
(NDC) for the covered outpatient drug.
The new program provides incentives to encourage the use of generic drugs. The
benefit only covers generic drugs unless the physician indicates that a brand name medication
is required. The Secretary may require that physicians obtain prior approval before
prescribing specific brand-name products if a generic substitute is available.
REIMBURSEMENT
For branc -^ame drugs, reimbursement is the lower of the 90th percentile of actual
charges in a previous period, or the estimated acquisition cost (EAC) plus a dispensing fee.
For generic drugs, Medicare pays the lower of the pharmacist's actual charge or the
median of all generic prices (times the number of units dispensed) plus a dispensing fee.
For participating pharmacies, the dispensing fee is $5, indexed to the Consumer Price
Index (CPI). Participating pharmracies are required to accept assignment on all prescriptions.
Non-participating pharmacists receive $2 less per prescription.
(9/1/93)
195
�WORKING GROUP DRAFT
PRIVILEGED AND
CHANGES IN PRIVATE INSURANCE REQUIREMENTS
The National Association of Insurance Commissioners (NAIC) will be instructed to
make the necessary adjustments to Medigap policies to reflect the prescription drug coverage
under Medicare. Private insurance plans may cover Medicare deductibles and co-payments
for prescription drugs.
SUBSIDIES
Low-income Medicare beneficiaries receive the same financial assistance for out-ofpocket costs associated with the drug benefit as provided for other cost-sharing amounts.
REVIEWS
The Medicare 5njg^ljise~Review-program parallels the program established in OBRA
1990 for Medicaid. Participating pharmacists are required to offer counseling to Medicare
customers on the use of medications.
The Secretary of the Department- ef-He^hbmdrHBman-SeTviees establishes a national
system of Electronic Claims Management as the primary method for determining eligibility,
processing and adjudicating claims, and providing information to the pharmacist about the
patient's drug use under the Medicare drug program.
IS/proposesxThc Secretary contj^ets with ofje or morcjpgronal carriers using
alternjative^thods, incmding-fiSlcT]
(9/1/93)
196
�September 2, 1993
TO:
FROM:
^ Greg Lawler
Carolyn Gatz
Chris Jennings
SUBJECT: Medicare Drug Benefit Modifications
Attached are the modifications to the Medicare benefits that I mentioned
to you yesterday. They are presented In three formats: with deletions and
additions, clean text, and as a summary of the changes.
I have talked with both Mrs. Clinton and Ira Magaziner about these
changes which are based on ongoing discussions with the Department of
Health and Human Services and were prepared by the Office of Legislation and
Policy of the Health Care Financing Administration. Bruce Vladeck is fine with
these changes. Although I am not absolutely certain that these are "finalfinal" — but what is around here — the changes come very close to being final
as it relates to Medicare.
If you have any questions or concerns, we need to discuss them as soon
as possible. Lastly, there are a number of other pharmaceutical issues that I
need to talk with you about. These include the pharmacy class of trade issue,
the voluntary price constraints, and the role and responsibility of the National
Health Board as it relates to pharmaceuticals. Perhaps we can discuss these
issues sometime tomorrow or Saturday.
�riQ-fil-^
rifi:?fi FM
FROM OLF
——Pflf/tfl-
•>:-.TF.RMlNEbTOBEANADMIMSTR.ATIVF.
/
^ II C h j l ^ ^
j I
-.KKING:
WORKING
OROUP
DRAFT
PRIVILEGED
AND
L LIN H I DH.W'IJJIU,
WD I CARE OUTPATIENT PRESCRIPTION DRUG BENXFZT
BgglnwiM in January 1SQ6, Two vears from the date of enflCtm«at ( )
nf the Plan, banofits offered under the Medicare program expand
to covar outpatient prescription drugs. Thus, aaaumlno enactroent
in December 1993, the new drug benefit WPUld be In gffefit
beyinnlno in January 1996.
V
Any Medicare beneficiary who elects to enroll in the Part B
program (97 percent of the Meflicare population) automatically
enrolls in the new prescription drug benefit.
As with other Part B benefits, the Medicare prescription drug
benefit i s funded by both general revenues and beneficiary
premiuma. The Part B premium increases to cover the new benefit.
Premiums currently finance 25 percent of the cost of Part B
coverage. Thus, benetlclaries would pay 25 percent of the cost
of the new drug benefit. Other rules related to enrollment in
Medicare Part B also apply to the prescription drug benefit.
oo rwtairpe
COINSURANCC, DEDUCTIBLES AND CAPS
The new drug benefit carries a 9250 annual deductible.
Qn££
th« deductible has been met, beneficiaries pay 20 percent of the
cost of each prescription with an annual limit on out-of-pocket ,
expenditures of $1000.
0
The aneent of tho doductiblo lo oot at o varlablo gato to
asewjofchafa»ho oamo'number ef benefioiariee-moot tho dodwetible
oaoh year aa during the iAest yoar of oovorago. Both the annual
dedugtlbla and out-of-pocket cap are indexed each year to aaeura
that the same percentage of benefioiariee continue to receive
benefits as did with tha initial saso deductible and 11000 out-
pt-pocm CAP,
COVXRJUSX
The Medicare drug benefit covers a l l drugs, biological
products «nd inwuiin approved by the Food and Drug Administration
(FDA) for their medically accepted indications ae defined in the
at l a«t one of the three national compendia which are tha
American Medical Association Drug Evaluations, the American
/
Hospital Formulary Service, and the United Statee Pharmacopeia, /
gr other authoritative compendia Identified bv the Secretary or \
as qetarmlned bv the carrier based on evidence presented in peer
reviewed medical literature.
f
The Medlcara druo benefit includes coverage of home IV d r u g s
In addition, the current limited coverage of outpatient druga
' '
under Medicare such as InmiunosuppreBBlve drugs are incorporated
into the druo benefit.
/ A
September 1, 1993
fi:05pm
1
�(19-01-93 rifi:?fi PM FFO
. M OLP
PM/I
G90*mLT\ phawnaaawtlaal produote not oovorod by tha Me^laairi
prmfmam w»as» Boofcion 1937(d) of tho Bootol 6aau»i»y hat,
iK9lmUn§ dfufo fog thefcreabwonfaof iftfortlllty, modloo%t»iw
w d %» »r»ai anopouta and druga proooribod for ooo»»»ia
,
puryoaaaf arc not oovorod•—EMooptlano to aurront Modioald /")'
owaluo^enB include bapbi^uratoe and bonBodiaaopXnooi The
Secretary of Health and Human Servleea hqe the dlaeretion not to
cover certain pharmaceutical oroducta Hated in section 1927rd^
of the Social Security Act. Examples include f e r t i l i t y druoa.
medications used to treat anorexia and druos used for cosmetic
purppBBB, Hgyever, benaodUagplnes andfrarbUurflteBwould be
covered under the Medicqre druo benefit. Further, the Secretary
has the authority to establish maximum quantities per
prescription or limit the number of r e f i l l s in order to
discourage waste.
The Secretary may require physicians or Pharmacists to obtain
prior approval before prescribing or dispenaina certain
medications based on evidence that they are subject to clinical
misuse or inappropriate use or because the Secretary determines
that they are not cost effective.
6^
All nev dpwgB approved by the PDA aro oovorod under the
bonofit.—Howovoj, tho Soepotagy has the authetity to nogotiato
priooo with wanufooturors of now pharmoocutioai produoto i f tho
Soopoiagy oonoludoo that oortain peeduefee ape eMeeeBl»ely oa
inappjppgiafcoly ppiood. Manufaoturoro that setuso te ftogotiate
loeo eligibility for rcimburoomont of any drug prodnot by any
fodopal ppogram or hoalth allianoo ooptified by the stetes. Tho
Boopofcaey also has the dioorotlon to owoludo isea> oeve»age djugo
listed tn Seotion 1937 (d) ef the Social soourlty Aot, OHOopt
bonsodi»Boplnoo and barbituratoo•
COST COMTAXNNZNT
KB a condition of participation in Medicare and Medicaid, drug
manufacturers must sign rebate agreements with the Secretary.
Rebates are paid to the Secretary on a quarterly basis.
For single source and innovator multiple source drugs,
manufacturers pay a rebate to Medicare for each drug based on the
difference between the average manufacturer price (AMP) to the
retail class of trade and the weighted average of the prices of
the drug in the non-retail marketplace, or 15 percent of the AMP.
whichever i s greater. The Secretary has the authority to oonduot.
voii<iea*ion surveyo of verify the AMP.
Marmgaetupotfe
a rato
wanunawpuje— that
*na< insgoaoo
tnepoaoo priooo
prioce at
at a
rato highop
highop tthan
Inflation en a slnqlo oouroo drug ana innovator multiplo
iioulop druqoi For single
flouree
and innovator
Innovator mmultiple
source drugg. an additional rebate
Bouree and
uT
September 1, 1993 6•05pm
�flH-ni-93 nfi:?R PM FROM OLP
pnd/m
Is rsquirsd on a drug-by-drug basis tor manufacturers who
increase prices at a higher rate than inflation. The baseline
indexed price i s the average manufacturers price from April
through June 1993.
in tha case of new drugs that the Secretary determines are
exooasivolv or inapproorlately Priced, the Secretary has the
authority to negotiate a special rebate with the manufacturer
Such a determination bv the Secrotarv would be based on auch
factors aa the prices of other druos in the same therapeutic
class, cost information supplied bv the manufacturer to the
Secretary, prices of the druo in other comparable countries, and
othar relevant factors. I f q aMMfAffUET S9f^99 %° nMPUn<
or the Secretary ia unable to negotiate a price that the
Secretary determines to be reasonable. 'The Secretary mav exclude
the new drnnrfninl Till I IH! 111 a aamiietjpgaduead b«
Ijrom coverage under Medic
in the case of dual elloiblea. to prevent manufacturars from
paving rebates to Medicare and »frdlcald. Medlcare^be thfr }
rfigipltnt of thft reBflte.
/ 'A , .
^
^
(
A manufacturer Is CQMttdBrBar'the entity holding-led^l t i t l e to
or possession of therfew-druo^codefNDC) for the covered
putMt^tnt drug,
The new program provides incentives to encourage the use Of
generic drugs. The benefit only covers generic drugs unless the
physician indicates that a brand name medication i s required.
The Secretary may require that physicians obtain prior approval
before prescribing specific brand-name drugs i f a generic
substitute i s available.
RSXNSURIXMENT
For brand name drugs, reimbursement i s the lower of the 90th
percentile of uoual and ouotomary actual charges in a previous
period, or the estimated acquisition cost (EAC) plus a
pgefoesienal dispensing fee of »5 for partiaipotlng pharmaoioo,
Indane* to the coneumer Prloo Indon.
For generic drugs. Medicare pays the lower of the pharmacist's
usifcBl aftd eugtomary ehargo actual charge or the median of a l l
generic prices (times the number of units dispensed) plus a <S
per preaerlption 4j.oponalng too, indOMOd to tho Conoumor Prloo
•tfttfM a dispensing fee.
For PflrtlciPfltlno pharmacies, the dispensino f«« i s ss.
Indexed to the Consumer Price Index (CPI). Participating
pharmacies are required to accept assignment on a l l
prescriptions. Non-participating pharmacists receive $2 less per
September 1, 1993 6t05pm
3
�19-01-93 nf,:??; FM FROM OLP
PM/in
praicrlptlon.
CHAMQBfi IN PRIVATE INSURANCE REQUIREMENTS
Whmm tha Hodioaro drug bonofit takoo Into offoot, pcivato
inawranaa palloiao.provided by lormor omployoro atihor poduoo tho
yremiuw ohargod to Modioaro bonofloiarioe to aooount for tho
ohange In oevorago er iBoroaoo ooverage for other hoalth oorvioos
by an amount oqual to tho aotuarial valuo of tho drug bonofit•
Tht HiUonal AiBPClfltlon of Insurangi Cgrnnlnlontri (WAKI
yt\lX be inatructed to make the necessary adjustments to Medigap
polices to reflect the prescription druo coveraoe under Medicare.
Private insurance plans may cover Medicare deductibles and copayments for prescription drugs.
SUBSIDIES
Low-income Medicare beneficiaries receive the same financial
assistance for out-of-pocket costs associated with the drug
benefit as provided for other cost-sharing amounts.
RIVIKWB
The Medicare DUR program parallels the program established in
OBRA 1990 for Medicaid. Participating pharmacists are required
to offer counseling to Medicare customers on the use of
medications.
The Secretary establishes a national system of Electronic
Claima Management as the primary method for determining
eligibility, processing and adjudicating claims, and providing
information to the pharmacist about the patient's drug use under
the Medicare drug program.
September 1, 1993 6:05pm
^ {
�nq-m-q.^ nF,:?R
pnfi/in
FM FROM OLP
WORKIHO OROUP DRAFT
PRIVILEGED AND WNl'lUUlll lAJl
MEDICARE OUTPATIENT PRESCRIPTION DRUO BENEFIT
Two years from the date of
offered under the Medicare
prescription drugs. Thus,
the new drug benefit would
1996.
enactment of the Plan, benefits
program expand to cover outpatient
assuminc enactment in December 1993,
be in effect beginning in January
Any Medicare beneficiary who elects to enroll in the Part B
program (97 percent of the Medicare population) automatically
enrolls in the new prescription drug benefit.
As with other Part B benefits, the Medicare prescription drug
benefit is funded by both general revenues and beneficiary
premiums. The Part B premium increases to cover the new benefit.
Premiums currently finance 25 pereent of the cost of Part B
coverage. Thus, beneficiaries would pay 25 percent of the cost
of the new drug benefit. Other rules related to enrollment in
Medicare Part B also apply to the prescription drug benefit.
COINIUTUNCI, DEDUCTIBLES AND CAPS
The new drug benefit carries a $250 annual deductible. Once
the deductible has been met, beneficiaries pay 20 percent of the
cost of each prescription with an annual limit on out-of-pocket
expenditures of $1000.
The amount of the deductible is set at a variable rate to
assure that the same number of benefioiariee meet the deductible
each year as during the first year of coverage. Both the annual
deductible and out-of-pocket cap are indexed each year to assure
that the same percentage of beneficiaries continue to receive
benefits as did with the initial $250 deductible and $1000 outof-pocket cap.
COVERAGE
The Medicare drug benefit covers a l l drugs, biological
products and insulin approved by the Food and Drug Administration
(FDA) for their medically accepted indications as defined in at
least one of the three national compendia which are the American
Medical Association Drug Evaluations, the American Hospital
Formulary Service, and the United States Pharmacopeia, or other
authoritative compendia identified by the secretary or as
determined by the carrier based on evidence presented in peer
reviewed medical literature.
The Medicare drug benefit includes coverage of home IV drugs.
In addition, the current limited coverage of outpatient drugs
under Medicare such as immunosuppressive drugs are incorporated
into the drug benefit.
September 1, 1993 6:04pm
l
�19-01-93 rifi:?fi PM
FROM OLP
PHV
Tha Sacratary of Health and Human Services has the discretion
not to cover certain pharmaceutical products listed in Section
1927(d) of the Social Security Act. Examples include f e r t i l i t y
drugs, medications used to treat anorexia and drugs used for
cosmetic purposes. However, benzodiazepines and barbiturates
would be covered under the Medicare drug benefit. Further, the
secretary has the authority to establish maximum quantities per
prescription or limit the number of r e f i l l s in order to
discourage waste.
The Secretary may require physiciane or pharmacists to obtain
prior approval before prescribing or dispensing certain
medications based on evidence that they are subject to clinical
misuse or Inappropriate use or because the Secretary determines
that they are not cost effective.
COST CONTAINMENT
As a condition of participation in Medicare and Medicaid, drug
manufacturers must sign rebate agreements with the secretary.
Rebates are paid to the Secretary on a quarterly basis.
For single source end innovator multiple source drugs,
manufacturers pay a rebate to Medicare for each drug based on the
difference between the average manufacturer price (AMP) to the
retail class of trade and the weighted average of the prices of
the drug in the non-retail marketplace, or 15 percent of the AMP,
whichever ie greater. The secretary has the authority to verity
the AMP.
For single source and innovator multiple source drugs, an
additional rebate i s required on a drug-by-drug basis for
manufacturers who increase prices at a higher rate than
inflation. The baseline indexed price Is the average
manufacturers price from April through June 1993.
In the case of new drugs that the Secretary determines are
excessively or inappropriately priced, the Secretary has the
authority to negotiate a special rebate with the manufacturer.
Such a determination by the Secretary would be based on such
factors as the prices of other drugs in the same therapeutic
class, cost information supplied by the manufacturer to the
Secretary, prices of the drug in other comparable countries/ and
other relevant factors. I f a manufacturer refuses to negotiate
or tha secretary i s unable to negotiate a price that the
Secretary determines to be reasonable, the Secretary may exclude
the new drug and any other drug product produced by the
manufacturer from coverage under Medicare.
In the case of dual eligibles, to prevent manufacturers from
paying rebates to Medicare and Medicaid, Medicare be the
September 1, 1993 6:04pm
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recipient of the rebate.
A manufacturer i s conaidered the entity holding legal t i t l e to
or poaaeaaion of the new drug code (NDC) for the covered
outpatient drug.
The new program providee incentives to encourage the uee of
generic drugs. The benefit only covers generic drugs unless the
physician indicates that a brand name medication i s required.
The Secretary may require that physicians obtain prior approval
before prescribing specific brand-name drugs i f a generic
substitute i s available.
RIZK9UMXHINT
For brand name drugs, reimbursement i s the lower of the 90th
percentile of actual charges in a previous period, or the
estimated acquisition cost (EAC) plus a dispensing fee.
For generic drugs, Medicare pays the lower of the pharmacist's
actual charge or the median of a l l generic prices (times the
number of units dispensed) plus
For participating pharmacies, the dispensing fee i s $5,
indexed to the Consumer Price Index (CPI). Participating
pharmacies are required to accept assignment on a l l
prescriptions. Non-participating pharmacists receive $2 less per
prescription.
CHAMSIB IN PRIVATE INSURANCE REQUIREMENTS
The National Association of Insurance commissioners (NAIC)
will be instructed to make the necessary adjustments to Medigap
polices to reflect the prescription drug coverage under Medicare.
Private insurance plans may cover Medicare deductibles and copayments for prescription drugs.
SUBBIDIIS
Low-income Medicare beneficiaries receive the same financial
assistance for out-of-pocket costs associated with the drug
benefit as provided for other cost-sharing amounts.
RZVIEVI
The Medicare DUR program parallels the program established in
OBRA 1990 for Medicaid. Participating pharmacists are required
to offer counseling to Medicare customers on the use of
medications.
The Secretary establishes a national system of Electronic
Claims Management as the primary method for determining
September 1, 1993 6:04pm
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•ligibility, processing and adjudicating claims, and providing
information to the pharmacist about the patient's drug use under
the Medicare drug program.
September 1, 1993 6:04pm
pnq/m
�nq-m-fn M•.;>?, PM FPOM OLP
pin/in
MIDICARC OUTPATIENT PRESCRIPTION DRUQ BENEFIT
1. Prppotad change: The effective date should be at least two years from the date
of enactment.
Rationale: The timeline for the administration of the new benefit was determined
by the HCFA's Bureau of Program Operations (BPO) to be at least 24 months
after enactment, The original January 1,1996 affective date assumed mat
•naotment would occur late in 1993. With enactment more likely to occur mid
1994 or early 1994, the effective date should be changed accordingly.
DgDUCTHLEfi. CO-PAYMENTS AND CAPS
1. Proposed chanoe: Change the same NUMBER of benefidaries" to the aame
PERCENTAGE of beneficiaries."
Rationale: Use of "number" would lead to benefit reaching a smaller percentage
of beneifioiaries over time.
2. Proposed change: Strike "co-payment" and insert "coinsurance."
Rationale: Copayment usually refers to a fixed amount while coinsurance refers
to a fixed percentage.
3. Proposed change: Index the $1000 out-of-pocket cap In the aame manner as the
$250 annual deductible. See revised language in attached draft.
Rational^: Assures the same percentage of beneficiaries over time.
4. Proposecl change: Insert "Once the deductible is met" before "benefidaries also
pay 90 percent of the cost of each prescription...".
Rationale: Benefidaries only pay the 20 percent coinsurance after the deductible
has been reached.
1. Proposed chance: References to medically accepted indications for drugs
should parallel the antl-cencer drug provisions In OBRA 93 which reference the
drug compendia as well as peer reviewed literature. See attached draft.
Reference to compendia should read " as found in at least one of the three
national compendia which are the American Medical Assodation Drug
Evaluations, the American Hospital Formulary ServicB, and tne united States
September 1, 1993 5:44pm
i
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Ifl-ni-ftf nfi:3 , PM FPOM OLP
PM/fU
MEDICARE OUTPATIENT PRESCRIPTION DRUQ BENEFIT
Seorttary would have the dlscreilon to exclude from coverage drugs listed in
Section 1927(d) of the Social Security Act, except for benzodiazepines and
barbiturates,
flgtlpnale: The paragraph as rewritten Is factually incorrect, Under Medicaid, the
statutory exolusions are permissive: states may or may not cover the drugs listed
In the categories. Applying the statutory exclusion to Medicare implies
mandatory exclusion of the listed drugs. Furthermore, this paragraph le later
repeated In the first paragraph of page 202 -- this ie most likely a proofreading
error.
6, Proposed change: Either physicians and PHARMACISTS may be required to
obtain approval before prescribing and/or dispensing a particular medication.
Rationale: In the Medicaid program, pharmacists rather than physicians generally
request prior approval before dispensing a pharmaceutical product.
7, Proooeed change: Strike two sentences beginning "However, the Secretary has
the authority to negotiate prices...by any federal program and health alliance."
RailonaJe: The revised provisions for new drug prices are restated below in the
next paragraph. This is most likely another proofreading error.
6. Prpposed change: The references to the negotiated rebates for new drugs is
moved to the cost containment section rather than coverage. See attached draft.
EailflM* These provisions refer to rebates which Is a cost containment
meohanism.
CQiT QflNTAINMSNT
1. Proooaad changa- insert "must" before 'sign rebate agreements.'
R^lonale: Signing rebates agreements is a mandatory if drugs are to be
covered by Medicare.
2. Proposed change: Insert "or 15 percent of the AMP, whichever Is greater" after
"the weighted average of the drug In the non-retail market."
BtfifiDlIt: Inadvertent admission of complete rebate formula. This formula Is
September 1, 1993 5:44pm
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MEDICARE OUTPATIENT PRESCRIPTION DRUQ BENEFIT
parollftle that used in the Medicaid drug rebate program.
3. proposed change: Strike "on particular drugs" and Insert in its place "on a drugby-drug basis."
Rationale: The use of phrase "on particular drugs" implies that only certain drugs
will be subject to the additional rebate provisions.
4. Praopyad chanoe: Include a provision for dual eligibles must be included with
Medicare serving as recipient of the rebate when Medicare is the primary payor.
Ratlprnlfr Avoids situations In which drug manufacturers would pay double
rebates.
6. Propoeed chanoe: A manufacturer is considered the entity holding legal title to
or possession of the new drug number (NDC) number for the covered outpatient
drug.
Rationale: This provision clarifies the responsible manufacturer. This definition Is
contiatent with the Medicaid rebate agreement.
6. Propflfed change: Strike "conduct verification surveys" and insert Verify."
Rationale: The Secretary has the authority to verify the AMP, but may not
neoeesarlly conduct a survey of the AMP.
RfilMIUflllMENT
1. Proposed change: Separate discussion of dispensing fees from costs of drugs.
See text in attached document.
Ration aia: Clarity
CHANQM IN PRIVATE INSURANCE REQUIREMENT
1. Proooaed ohanoe: References to private Insurance policies provided by former
employers,
BflUfiMlfi: This is the provision is from MCCA's Section 421 (Maintenance of
Effort). This provision required any employer who provides health benefits that
September 1, 1993 5:44pm
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fiR:
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FROM OLF
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MEDICARE OUTPATIENT PRESCRIPTION DRUQ BENEFIT
duplicate Medicare benefits as a result of the catastrophic legislation (excluding
outpatient drugs) by at least 50 percent of the national actuarial value of the
catastrophic benefit, to provide additional benefits or refunds at least equal to the
aotuarial value of the duplicative benefits for one year only. This provision was
Included in MCCA since the time between enactment and the effective date for
the statute was only about six months. The time between enactment and the
effective date for the new drug benefit should be sufficient to allow the
appropriate parties to negotiate reduced premiums for retiree group coverage
that takes Into account the new drug benefit.
2. Proggaad changp: Include a provision which instructs NAIC to make the
neoeeeary adjustments to Medigap policies to reflect prescription drug coverage
under Medicare.
REVIEWS
1. Proposed ohanpe: Strike "and" after "patient's drug."
2. Rationale: Typographical error.
September 1, 1993 6:*4pm
��DETERMINED TO BE AN ADMINISTRATIVE
MARKINGPer EtO. 12958 as pjended.Secl 3.ijW
WORKING GROUP DRAFT
PRIVILEGED AND
HEALTH CARE ACCESS INITIATIVES
In the existing health care system, majorfinancialand non-financial barriers reduce
access for a number of population groups in American society. Population groups that
particularly confront barriers to care include:
Low-income groups and individuals who^ittle education.
Members of certain racial, cultural and ethnic groups and those
who speak languages other than English.
Residents of central cities, rural andfrontiercommunities.
Individuals who lack a stable residence, such as migrant workers
and homeless individuals or families.
Adolescents.
Individuals with certain severe health problems, such as HFV
infection, AIDS, chronic mental illness, substance abuse or
serious disability.
As a result, members of those population groups often experience reduced health status
and quality of life. Health care reform will significantly improve access to care by providing
all Americans with comprehensive coverage for treatment services, clinical preventive
services, mental health and substance abuse services.
However, universal insurance coverage and market reforms alone will not eliminate all
barriers to care or ensure quality. In order to meet their obligations to provide comprehensive
health care benefits, health plans will require assistance and financial incentives to expand
into low-population areas and to ensure that hard-to-reach populations have access to quality
care.
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In order to fulfill the promise of health reform, other inadequacies requiring attention
include: the supply of providers and health plans in both rural and low-income urban areas;
poor integration and coordination of care between primary care and specialized services;
cultural and linguistic barriers; transportation and hours of service; lack of understanding
among consumers about the avail^biUiy^f^ervices; and resistance to the use of services.
Many health care providers who(are-»«it skjlled and committed to serving populations most
affected by access barriers also wtll itquifespecial assistance to prepare for and ensure their
effective participation in the reformed system.
GOALS AND STRATEGY OF THE PUBLIC HEALTH SERVICE ACCESS
INITIATIVES
The programs described in the following section are designed to reduce disparities in
health status by ensuring access to needed services for low-income, underserved, hard-toreach, and otherwise vulnerable populations. They build on the strengths of the reformed
delivery system, the expertise and experience of current public health providers, and the
enhanced capacities of state and local public health agencies.
The Public Health Service access initiatives are designed to:
•
Expand capacity by increasing the supply of practitioners, practice
networks, clinics, and health plans in underserved areas.
•
Assist alliances and health plans to deliver culturally-sensitive care to
vulnerable segments of their populations.
•
Achieve accountabilm by assuring that health plans enroll vulnerable
populations and jfieet^&thdr personal health care needs.
•
Assist organizations and professionals supported by public funding
to adapt to the reformed system.\lntegration of these providers into
practice networks or health plans will ensure that they receive payment
for covered services from plans.^It will provide critical support services
(administration, information systems, telecommunications, specialty
services) to improve the delivery and coordination of care.
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Shift the emphasis of existing public funding awayfromthe delivery
of services covered in the standard benefit package and toward:
Activities designed to enable, enhance and ensure access to care
by addressing persistent barriers, especially hard-to-reach
populations.
Services not covered in the benefit package but essential to
prevent morbidity and mortality among certain populations;
Integrate and coordinate current programs to provide the federal
government, states, health departments and community-based
organizations flexibility to tailor their activities to the varied health
needs and problems of different populations and geographic regions.
Reduce the current administrative burden of multiple grant
application procedures, management structures, funding
requirements, and reporting systems.
ACCESS INITIATIVE PROGRAMS
The National Health Service Corps expands to reduce the
shortage of primary care practitioners in underserved areas.
Categorical Programs and Formula Grants continue to pay
for personal health services for specific populations that confront
barriers to care (such as community and migrant health centers,
family planning clinics, health care for the homeless program,
and portions of the maternal and child health block grant)
continue.
ver, Preform is implemented, with the exception of the
Ryan White HIWAIDS program, funding shiftsfromclinical
seryice&to expansion of health care capacity in underserved
areas aa^W'ensure Recess for vulnerable populations (see
discussion below).
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•;MUbMT;
New Grants and Loans support capacity expansion undertaken by a
new federal authority with the mission of ensuring adequate choice of
providers and health plans in underserved areas, supporting the
development of networks of care providers, and overseeing the
integration of federally funded providers into the new system.
Flexible grants provide start-up and operating funds and
guaranteed loans to community-based providers and public and
JiFprofit health care institutions. Funds also provide capital
infrastnlicture development to expand access in underserved areas
(^5 for low-income, hard-to-reach, or otherwise vulnerable
poptrtations.
New funds allocated for this purpose are supplemented by
development and expansion funds transferred from existing
programs. The federal government determines the allocation of
funding among states and types of programs.\A specific portion
i .
supports initiatives such as school-based clinics. St/tes have ew.t>c»-J<ej[
input into the decision-making process.
New Formula Grants to states provide funds to ensure access to health
care for low-income, underserved, hard-to-reach, and otherwise
vulnerable populations. Grants cover:
Outreach and enabling services (e.g. transportation,
translation/interpretation, child care).
Supplemental services.
The development of linkages
ges between health plans and »
]
providers (*>.g. uuulhiiuil,-, inmrmailun and retefraff: ' Y ^ ^ ^ y ^
-
Integration of health services with community
health and social services.
Advocacy and follow-up services.
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PRIVILEGED AND
for formula grants as they implement
reduce disparities in access and health
Ing population groups and monitor access for
(Programs designed to build state
Scribed in the section on public health initiatives.)
To assure accountability, state and local public health agencies
follow local indicators measuring access as well as health status
measures closely linked to access. To participate in the
formula-grant program, states must demonstrate improvement
over time.
State allocations are basedrademographic and need factors. To
encourage states to imnl^mentrefiarm and encourage enrollment
of vulnerable populations, the program will not include a
matching requirement othe^fiaintejiance of effort in state and
local funding for services to vijlnerable populations. After
reform is fully implementeaTa state matching formula will be
developed.
Designation of Essential Community Providers assures access
and continuity of care during the f i j ^ f i v e Vears of reform by
requiring health plans to cc ntract^hd reimburse established
community-based provider^. Indepepd€nt health professionals
and health care institutions opSTafmg in underserved areas may
apply to the Department of Health and Human Services for
designation as essential providers.
Plans are required either to contract with essential providers at a
capitated rate no less than that paid to other providers for the
same services or to reimburse them at rates based on Medicare
payment principles.
By the end of five years, providers either become integrated into
health plans or join together to create new, community-based
health plans. At that time, health plans must either demonstrate
their capacity to provide access for all participants or continue
contracting arrangements with essential providers.
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WORKING GROUP DRAFT
PRIVILEGED ANLULUl'II IUL1 11IML
Adolescent and School-Aged Youth Initiative supports the delivery of
clinical services through school-based or school-linked sites and
comprehensive health education in high-risk schools.
Dedicated funds in the capacity expansion program (see above)
supppifsctwol-based clinics targeted at middle schools and high
schools. Clinics provide physical and mental health services and
counselnng in disease prevention and health promotion as well
as m indivjdualized risk behavior reduction.
School-based clinics established under the program are
automatically designated as essential community providers.
Authorized as a formula grant to states funded jointly by the
Department of Health and Human Services and the Department
of Education, health education focuses on the reduction of risk
behaviors among adolescents and adults. The curriculum is
linked to Healthy People 2000 objectives.
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PRIVILEGED AND CCMl'IDilRflgS'
MENTAL HEALTH AND SUBSTANCE ABUSE SERVICES
Mental health and substance abuse initiatives refocus existing formula grants to
encourage development of community-based programs by:
•
Restructuring Existing Formula Grants
As states implement reform, funding through Community Mental
Health and the Substance Abuse Prevention and Treatment
Formula Grant is required only for treatment in excess of the
comprehensive benefit. Funds shift fromsypport for direct
treatment to service system devetopment, supplbpental services,
and population-based mrmition services.
State Systems Dev^lopmplft Program and Mgfital Health Systems
Improvement Proglam/funded with the^fi^percent, technical
assistance set aside^from formuk
Maintenance of Effort
States are required to maintain support for mental health and
substance abuse treatment activities, although they may obtain a
waiver to assist in the development of community-based systems
of care to promote the eventual integration of the public and
private systems for the treatment of mental and addictive
disorders.
Distribution of Funds
A revision of the current formula grant program gives states
more flexibility to use funds to support priority needs as defined
by states. States are required to set aside at least the same
amount for primary and secondary prevention of substance abuse
as required spending for primary prevention in FY-1994. For
mental health services, states are required to spend 10 percent of
funds on primary and secondary prevention. States may spend
up to 15 percent of grant funds for systems development.
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PRIVILEGED AND
States are free to use the remainder of available block grant
funds for supplemental services and treatment services not
covered by health insurance.
Block grant funds cover activities critical to the success of
refonn:
System Development to create cost-effective
community-based services.
Funding for support services for substance abuse patients,
adults with serious mental illness, and for seriously
emotionally disturbed children, including outreach
services, translation, child care, shelter, transportation,
case management, supervision through the justice system,
and monitoring of substance abuse patients.
Special Initiatives
Competitive project grants to states support pilot projects related
to integrating the priyate-and-puWic mental health and substance
abuse systgmsr^Funds support linkage of treatment and
prevejrtfon for substance abuse with a broad array of health
servyfces and|dwdopment oj systems management for seriously
emotionally disturbed childrer
ResearciLandJiemofistration Projects
Funds support the development of improved outreach strategies
for AIDS and HIV-infected drug abusers, the homeless,
individuals involved in the criminal justice system, and
populations with co-morbidity, including mechanisms for
sharing information about the applicability of promising
approaches to prevention within specific populations and
service-delivery settings and the effectiveness of prevention and
early intervention services in reducing health costs.
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PRIVILEGED AND COS
Funds also support development of systems that link substance abuse
and mental health treatment with primary care, target rural and remote
areas and culturally distinct populations, and facilitate the transfer of
knowledge.
Training and Staff Development
The Department of Health and Human Services expands its
curriculum development and health education efforts in clinical
prevention within schools of medicine, nursing, and social work
as well as its information services for current health
professionals and provides primary care professionals with
information and training to screen and identify mental health and
substance abuse problems and risk factors.
Capital Assistance
Direct loan and loan-guarantee pibgrarr^sunjsbrt the
development of additional non-acott^cssidential treatment
centers and community-based ambulatory clinics, particularly in
medically underserved areas.
AMERICAN INDIANS AND ALASKA NATIVES
Supplemental financing and services provide access to health care for American
Indians and Alaskan Natives populations with diverse language and cultural needs, many of
whom live in remote and underserved reservation areas. Supplemental services include
transportation, outreach and follow-up, community health representatives, public health
nurses, non-medical case management, child care during clinic visits, health education,
nutrition, home visiting, and supplemental mental health and substance abuse prevention and
treatment services.
The Indian Health Service also expands population-based public health and prevention
activities. Under new authority, it covers all residents, Indian and non-Indian, living on
reservations in addition to populations living near reservations.
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�WORKING GROUP DRAFT
PRIVILEGED AND QeHEEBfiiffbi*,
Population-based public health and prevention activities include surveillance and
monitoring of health status, medical outcomes, threats to public health, public health
laboratories, community- based control programs, community health protection and public
health information.
HEALTH WORKFORCE
To increase the recruitment, preparation, and retention of American Indians and Alaska
Natives into medical, nursing, public health and other health profession* existing programs are
expanded.
The Indian Health Scholarship Program and Loan Repayment Program expands to
fund all eligible applicants under the current authorities of sections 104 and 108 of P.L. 94437. Additional financial assistance increases the number of American Indians and Alaska
Natives entering training programs under current authorities of sections 103 and 105 of P.L.
94-437.
SANITATION AND ENVIRONMENTAL HEALTH
Additional funding expands construction of water, sewer, and other sanitation and
environmental health facilities, as well as provide for training and technical assistance to
tribes that wish to operate tribal facilities under P.L. 86-121 and Section 302 of P.L. 94-437.
FUNDING REQUIREMENTS
Additional investments in FY-1996 total $2.4 billion, distributed as follows:
PHS Access Initiatives
Mental Health/Substance Abuse
$1.7 billion
$0.4 billion
American Indians/Alaskan Natives $0.3 billion
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��DETERMINED TO BE AN ADMINISTRATIVE
MARKINGPer £^12958
JPL12958asjipen^ed.lec..
as amended, Sec. 2p WL
Initials: *_
WORKING GROUP DRAFT
PRIVILEGED AND ft'UlMHUfeMlAyu
INFORMATION SYSTEMS
Timely and reliable information represents a critical element in efforts to reform the
health care system and to protect and improve the health of the nation.
Health care reform establishes a new framework for health information. Using
standard forms, uniform health data sets, electronic networks and national standards for
electronic data transmission, the information framework supports:
•
The development of clear and useful information for consumers.
•
Measurement of health status.
•
Monitoring and evaluation of the health care system.
•
Issuance of Health Security Cards.
•
Development of links among health care records to improve patient care.
•
Analysis of patterns of health care.
•
Streamlined and simplified administration with associated cost savings.
•
Identification of fraudulent activities.
The new information system features:
•
Strong privacy, confidentiality and security protection.
•
The formation of partnerships between the public and private sectors.
•
National standards for clinical and administrative data.
•
Appropriate links to the National Information Infrastructure programs.
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�WORKING GROUP DRAFT
PRIVILEGED AND F n N n n i i M T W
Electronic network to ensure the timely availability of reliable
information.
DATA AND INFORMATION FRAMEWORK
Every American receives a national health security card to assure access to needed
health services throughout the United States. Much like ATM cards, the health security card
allows access to information about health coverage through an integrated national network.
The card itself contains a minimal amount of information.
The National Health Board [See HHS position arguing for the Department to assume
this responsibility. Position is articulated at the end of section on National Health
Board/National Administration, Tab 5], in consultation with state and private entities and
other relevant organizations, develops and implements uniform national standards for
administrative, clinical, financial and other health care related information. Standards include:
•
Uniform minimum health data sets with standard data items and definitions.
•
Electronic data interchange standards for transfer of information.
A comprehensive health care information privacy framework is established based on
federal legislation, applicable to all states, alliances, health plans and providers. Provisions
include mechanisms for management and oversight of privacy and security. Principles of the
framework include:
•
Uniform privacy and confidentiality rights with special emphasis on protection
of highly sensitive data.
•
Appropriate security measures and technology.
(9/1/93)
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�WORKING GROUP DRAFT
PRIVILEGED AND eUIMHUblVItiSfe-
•
Enforcement mechanisms and penalties.
•
Coordination with policies established under the National
Information Infrastructure.
•
Creation of a national privacy panel focusing on privacy
protection as applied to health care information (see discussion
below).
The Board [See HHS position arguing for the Department to assume this
responsibility. Position is articulated at the end of section on National Health Board/National
Administration, Tab 5] establishes national, unique identifier numbers for plans, providers and
patients, selecting an identification number system at the conclusion of a process that include
public hearings and formal notice and comment procedures.
INFORMATION SYSTEMS
Health plans implement and maintain core discrete electronic documentation of all
clinical encounters with health providers using current information system technology as the
foundation for the system. Encounter records are captured, retained and transmitted as a
byproduct of the routine provision of care.
•
Records may be based on insurance claims or clinical encounters (depending
on the type of health delivery system).
•
The record may be plan or community based or shared among several plans.
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�WORKING GROUP DRAFT
PRIVILEGED ANOI
Encounter records conform to the uniform minimum
administrative and clinical data sets developed by the board
[HHS Position: HHS is responsible for this] and transmitted as
appropriate to the national network (see discussion below).
Emphasis is placed on the goal of electronic records and
electronic data interchange with associated economic efficiencies.
A phase-in period, with incentives, is planned to achieve this
goal. During the phase-in period, standard forms may be used.
Current information systems technology readily supports the capture, retention
and electronic data interchange of encounter records as a byproduct of the
provision of care and with favorable benefit cost efficiencies.
Development of regional encounter data systems in this fashion will also
support analysis of utilization and treatment patterns, as well as quality and
outcome monitoring and research as a basis for improving health care.
Within this framework, plans are encouraged to make innovations:
•
It is not the intent of health care reform to mandate explicit approaches to this ' \
requirement. Rather, flexible, local solutions to local needs and conditions will
be fostered, lo,^,^.
-Hv^ kr-oAtt f^vd^uxf^l*.
J] ^AHD^AJ ^njfo^
skt*^"'*?/
•
This requirement does not call for implementation of a costly, full-scale
computerized patient record. It calls for using today's technology to provide
information to providers.
The framework promotes the formation of community based health information
systems that improve the quality of care and reduce cost by minimizing
duplicate procedures, tests and adverse drug interactions.
Plans, providers, states and health alliances receive federal technical assistance
to enable timely conformance with these requirements and to select cost
effective technical solutions.
' 3
o
r
5
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WORKING GROUP DRAFT
Federal assistance is focused on long-term goal of developing a Point-ofService system.
A POINT-OF-SERVICE INFORMATION SYSTEM
The long-term strategy for health care information envisions creation of a Point-ofService information system that brings valuable information to consumers, health providers,
payers and policy makers. The envisioned system offers significant potential for more
effective, continuing quality improvement. In such a system, clinical, administrative and
payment data move electronically among employers, health plans, physicians' offices,
hospitals, laboratories, pharmacies and other providers. The system:
•
Collects information as a by-product of the delivery of care.
•
Protects the privacy, confidentiality and security of information.
•
Provides ready access to information for appropriate uses.
The national system will evolve from information systems established by health plans,
alliances and regional centers. Accelerating its development requires additional funding from
the federal government to support technology development and regional demonstration
projects in health plans, communities, alliances and federal health centers.
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WORKING GROUP DRAFT
ANDJUUIM
IDLIHIUL
FEDERAL, STATE, ALLIANCE AND HEALTH PLAN DATA NETWORK
An electronic network of regional centers containing enrollment, financial, and
utilization data is created. The network receives standardized enrollment, encounter, and
related data from plans for aggregation, analysis and feedback to plans, alliances, states and
the Federal Government. The network will be pilot tested before full scale implementation.
•
The network supports analytic needs, such as monitoring of budgets, measuring
access and state accountability, assessing quality, among states, health plans,
health alliances and the federal government.
•
States and alliances could operate their own regional centers and serve the
switch function as part of the national network.
•
Federal funds will assist in financing the network, which is built in
collaboration with private sector, state and existing federal programs.
•
Required data is entered once and is a by-product of routine
administration and provision of care by health plans and
alliances.
•
Health plans maintain uniform electronic records of encounters or claims.
•
Plans transmit encounter data, in the form of a uniform
minimum data set, to the network on a regular basis. The
uniform encounter data set is designed to meet a variety of data
needs.
•
The network records national enrollment information. Health alliances and
plans maintain detailed local enrollment files and submit at least a portion of
those files to the network on a regular basis.
Creation of the network does not inhibit plans and health and health alliances from
being innovative in meeting the information needs discussed above.
(9/1/93)
117
�WORKING GROUP DRAFT
PRIVILEGED AND
CONSUMER SURVEYS AND PUBLIC HEALTH SURVEILLANCE
4
Consumer surveys of satisfaction, access to care and related measures are conducted
on a plan-by-plan and state-by-state basis.
\
X
•
HHS carries out the consumer surveys in accordance with the overall quality
measures and standard survey questionnaires developed by the Advisory
Council to the National Quality Management Program.
•
In addition to economic efficiencies, centralized administration of the consumer
surveys assures the uniformity and comparability of survey information and
provides the basis for objective national, state and regional norms and
comparisons.
^ ^
..
^
'J
1
y
National population based surveys are conducted by HHS to monitor the ^ \A.^
implementation of health care reform and assess its impact on the general \ \
population, potentially vulnerable populations, states and the health care
1
System. " r k < \ ^^ec^voJxo^ a ^ s a r o e ^ eJLt^ti" i*Jit~{ ^ L ^ ^ - ^ ^ t ^ ^ - f
k e a l ^
J-O-lu
S^l-e^S
Will
<2^~<& public
prcrJi
Certain public health surveillance and data systems will continue to be needed
to monitor the health status of the population and to identify and address
emerging threats to the public health. Public health data systems involving the
federal government, states, and local governments are strengthened and more
closely integrated within the overall information systems framework.
GOVERNANCE
A National Health Data Advisory Council is established. The Council, reports to the
Board [HHS Position: The Secretary of HHS does this] and oversees the information and data
activities, including standard setting and privacy protections, of the federal government under
health care reform. Membership includes consumers, users and providers of data developed
by plans, alliances, states, and the federal government.
BUDGET
The consumer survey program requires an investment of $200 million included under
(9/1/93)
118
X
<^ .• *
\ |
^ ^
�WORKING GROUP DRAFT
PRIVILEGED AND CONFIDENTIAL
the Public Health Service budget for health care infrastructure. Funds to establish and operate
the information system and regional networks are included in the operating costs of the new
health care system.
(9/1/93)
119
�OflSD(Hfl)
TEL:703-614-3537
Sep 03'93
18 = 39 No.020 P.02
DRAFT
•V
THE SECRETARY OF DEFENSE
W A S H I N G T O N . T H E DISTRICT O F C O L U M B I A
Mr. IraMsgulafir
Senior Advisor to the President
for Polioy Devebpment
Thi White House
Washington, D.C 20500
Dear Mr. Msgazinsr
I appreciate the opportunity to review the draft health care plan. I do have some
suggestions for improving the Department of Defense's section, and have provided
specific changes (TAB A). We anticipate sending you revised legislative language that
conforms with these changes.
In general, the draft health care plan appears to be consistent with the five
provisions that the Department must have as preconditions: (1) Paymentsfromprivate
employers; (2) Payments from Medicare; (3) Enrollment; (4) Health care benefit
protection; and (5) Flexibility in implementation.
These provisions are imperative if the military health care system is to control
costs, maintain quality, and improve access to health care services. I assume that the
simplifiedfinancingmodel for dual-earner families, which is still under formulation, will
conform with the first precondition. Under the final plan, private employers must be
responsible for paying a standard share of costs for DoD beneficiaries who are their
employees. In the case of beneficiaries who are retired from the military or spouses of
military retirees, and therefore not tied by employment to the Department, the standard
share for private employers should be 80 percent of the average family rate premium.
With thesefiveprovisions, the Department can carry out a strategy for
harmonizing with the President's heallh care plan, without compromising the unique
readiness responsibilities of military medicine and without breaking health care
commitmems to our beneficiaries.
DRAFT
�MEMORANDUM
TO:
HRC
FROM:
S k i l a Harris
Dr. Bernie Arons
SUBJECT:
Status Report On Mental Health Benefit
DATE:
August 3, 1993
There continues t o be a range of mental health b e n e f i t schemes i n
play o f f e r i n g varying degrees of coverage. The Mental Health
Working Group's recommendation o f f e r s the most comprehensive and
f l e x i b l e coverage.
The three options (High Cost/Low/Combination Cost Sharing)
contained i n the Plan Book provided t o you by I r a appear t o be
d e r i v a t i v e s o f the Mental Health Working Group's recommendations.
I t i s important t o note that none of the options presented i n
your Plan Book move toward f u l l comparability o f b e n e f i t s by the
year 2000. There are l i m i t s of some type on mental health
coverage under the High, Low and Combination Cost Sharing
scenarios.
Three key f a c t o r s t o the success of s e l l i n g the mental health
b e n e f i t package t o supporters are:
1) I t must c l e a r l y be stated t h a t the i n i t i a l mental health
b e n e f i t package f o r 1996 i s simply an i n t e r i m measure while the
mental h e a l t h care system evolves i n t o a managed care system.
2) A year 2000 b e n e f i t package must be spelled out demonstrating
mental h e a l t h coverage w i l l be same as other coverage. Having
t h i s defined t a r g e t also w i l l guide states as they modify t h e i r
programs and i n s t i t u t i o n s .
3) States must be provided w i t h incentives t o accelerate
i n t e g r a t i o n o f the e x i s t i n g p u b l i c mental health care system i n t o
the more comprehensive, f l e x i b l e system envisioned f o r the year
2000.
You should ask Ken but i t i s my understanding the mental health
b e n e f i t being "costed out" by HHS i s as follows:
H o s p i t a l i z a t i o n : 30 days h o s p i t a l i z a t i o n or any other
r e s i d e n t i a l care per episode w i t h an annual l i m i t of 60 days
w i t h a one day deductible
A l t e r n a t i v e Treatments: 120 days of i n t e n s i v e treatment
alternatives to hospitalization;
�Page 2
Diagnostic Services and Emergency Services:
No l i m i t s
Psychotherapy: 30 v i s i t s at 50% copayment
Prescription Drugs: same as other i l l n e s s e s
This i s not i d e n t i c a l t o any o f the b e n e f i t scenarios l i s t e d i n
your Plan Book. This b e n e f i t i s an improvement over some e x i s t i n g
b e n e f i t packages but presents the f o l l o w i n g problems:
-- i t c l e a r l y continues l i m i t s on mental health coverage
d i f f e r e n t than those f o r other i l l n e s s e s (one day deductible
f o r h o s p i t a l i z a t i o n and 50% co-pay f o r long doctor's o f f i c e
v i s i t s w i t h a l i m i t on the number of v i s i t s )
-- the p u b l i c h o s p i t a l system i s maintained i n order t o care
f o r i n d i v i d u a l s w i t h long-term h o s p i t a l i z a t i o n needs.
i t does not meet the psychotherapy needs of the
s e r i o u s l y mental i l l who might require over the 30 v i s i t
l i m i t i n c l u d i n g those championed by Senator Domenici
The good news i s t h a t a l l of the options being considered make
the f o l l o w i n g p o s i t i v e changes:
-- eliminates exclusion f o r p r e - e x i s t i n g conditions
— covers medical management the same as a l l other medical
care (some co-payments but no l i m i t s )
— i n c l u d e s some i n t e n s i v e , non-residential coverage,
day treatment
like
-- covers substance abuse outpatient counseling
—
provides acute i n p a t i e n t care f o r most needs
-- provides a clear d i r e c t i o n toward comprehensive, f l e x i b l e
coverage w i t h no a r b i t r a r y l i m i t s set at the Federal l e v e l .
�MEMORANDUM
TO:
I r a Magaziner
FROM:
Skila Harris
SUBJECT:
Comments On Draft Plan
DATE:
September 3, 1993
^
I have reviewed only the b e n e f i t section of the d r a f t plan. The
f o l l o w i n g are my comments:
GENERAL....
There are two areas of departure from my understanding of the
scope of the mental health/substance abuse b e n e f i t :
o The i n c l u s i o n of v i s i t l i m i t s plus higher co-insurance
payments than f o r physical disorders i s t r o u b l i n g . Access
and a f f o r d a b i l i t y are both important considerations when
p r o v i d i n g mental health coverage. Since most i n d i v i d u a l s
need f a r fewer than 30 psychotherapy sessions per year, i t
i s important that the early session are a f f o r d a b l e .
o The b e n e f i t s described f o r the year 2000 f a l l short of my
understanding of what they would be and are unacceptable.
I would l i k e the o p p o r t u n i t y t o discuss these p o i n t s and other
questions w i t h the appropriate person or persons.
PAGE 24..
Reference t o " i n p a t i e n t h o s p i t a l " i n the f i r s t b u l l e t should be
i n c l u s i v e enough t o encompass p s y c h i a t r i c wards i n general
hospitals.
The f i r s t b u l l e t should read:
o I n p a t i e n t h o s p i t a l therapeutic family or group homes or
other types of r e s i d e n t i a l treatment centers, community
r e s i d e n t i a l treatment and recovery f o r substance abuse,
r e s i d e n t i a l d e t o x i f i c a t i o n services and other r e s i d e n t i a l
treatment services.
The f i r s t b u l l e t under " L i m i t a t i o n s " should read:
�Page 2
o/For adults^) a maximum of 30 days per episode, 60 days
ammaity—ft3r a l l s e t t i n g s i n t h i s category. Health plans
upon special appeal may grant an exception waiver of only
the episode maximum f o r the l i m i t e d number of cases i n which
h o s p i t a l i z a t i o n or continued r e s i d e n t i a l care i s medically
necessary.
In the next b u l l e t under " L i m i t a t i o n s " , the word neuropsychiatric
should be changed t o p s y c h i a t r i c .
PAGE 26...
In the second b u l l e t under " L i m i t a t i o n s " , at the end of the
f o u r t h l i n e , the word "serious" should be deleted.
PAGE 34...
'me 11rslr'TTTree b u l l e t s under Mental Health and Substance Abuse
should revised as follows:
o F u l l i n p a t i e n t coverage.
o (Delete 2nd b u l l e t )
o E l i m i n a t i o n of l i m i t s on o u t p a t i e n t treatment services. In
plans w i t h high cost sharing, reduction of cost sharing
requirement t o 20 percent. I n plans w i t h low cost sharing,
reduction of cost sharing requirement t o $10 per v i s i t .
PAGE 37...
Two d e f i n i t i o n questions, what i s meant by "Hospital
a l t e r n a t i v e s " and "oop max applies"?
Under the "Low Cost Sharing" Scenario, the Mental
Health/Substance Abuse section should read:
Initial
I n p a t i e n t Services:
F u l l Coverage
30 day/episode; 60
day/year maximum
H o s p i t a l a l t e r n a t i v e s ? F u l l Coverage
120 days maximum
Srief o f f i c e v i s i t s f o r
medical management
^$10 per v i s i t
no l i m i t s
V
�Page 3
$10 per v i s i t
30 v i s i t
F u l l Coverage
no
limit
H o s p i t a l a l t e r n a t i v e s ? F u l l Coverage
no
limit
Outpatient, i n c l
psychotherapy
no
limit
Other o u t p a t i e n t
treatment services
limit
2000
I n p a t i e n t Services
$10 p e r v i s i t
PAGE 40...
Under t h e "High Cost Sharing" Scenario, the Mental
Health/Substance Abuse s e c t i o n should read:
Initial
Inpatient
Services:
20%
co-ins
30 day/episode; 60
day/year maximum
H o s p i t a l a l t e r n a t i v e s ? 20% c o - i n s
120 days maximum
Brief office visits
medical management
Other o u t p a t i e n t
treatment services
for
20%
co-ins
no
limits
20%
co-ins
30 v i s i t
limit
2000
I n p a t i e n t Services
20% c o - i n s
no
limit
H o s p i t a l a l t e r n a t i v e s ? 20% c o - i n s
no
limit
Outpatient, i n c l
psychotherapy
no
limit
20% c o - i n s
PAGE 43...
Under t h e "Combination Cost Sharing" Scenario,
Health/Substance Abuse s e c t i o n should read:
the Mental
�Page 4
Initial
I n p a t i e n t Services:
F u l l Coverage
20%
co-ins
Hospital
F u l l Coverage
20%
co-ins
Brief office visits
f o r medical management $10 per v i s i t
20%
co-ins
Other o u t p a t i e n t
treatment services
30 v i s i t
alternatives
$10 per v i s i t
limit
2000
I n p a t i e n t Services
F t i l l Coverage
20%
co-ins
Hospital
F u l l Coverage
20%
co-ins
$10 per v i s i t
20% c o - i n s
no l i m i t
alternatives
Outpatient, i n c l
psychotherapy
cc:
Vice P r e s i d e n t Gore
Tipper Gore
�
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Health Care Task Force Records
Creator
An entity primarily responsible for making the resource
White House Health Care Task Force
Is Part Of
A related resource in which the described resource is physically or logically included.
<a href="https://catalog.archives.gov/id/10443060" target="_blank">National Archives Catalog Description</a>
Description
An account of the resource
<p>This collection contains records on President Clinton’s efforts to overhaul the health care system in the United States. In 1993 he appointed First Lady Hillary Rodham Clinton to be the head of the Health Care Task Force (HCTF). She traveled across the country holding hearings, conferred with Senators and Representatives, and sought advice from sources outside the government in an attempt to repair the health care system in the United States. However, the administration’s health care plan, introduced to Congress as the Health Security Act, failed to pass in 1994.</p>
<p>Due to the vast amount of records from the Health Care Task Force the collection has been divided into segments. Segments will be made available as they are digitized.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+1"><strong>Segment One</strong></a><br /> This collection consists of Ira Magaziner’s Health Care Task Force files including: correspondence, reports, news clippings, press releases, and publications. Ira Magaziner a Senior Advisor to President Clinton for Policy Development was heavily involved in health care reform. Magaziner assisted the Task Force by coordinating health care policy development through numerous working groups. Magaziner and the First Lady were the President’s primary advisors on health care. The Health Care Task Force eventually produced the administration’s health care plan, introduced to Congress as the Health Security Act. This bill failed to pass in 1994.<br /> Contains 1065 files from 109 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+2"><strong>Segment Two</strong></a><br /> This segment consists of records describing the efforts of First Lady Hillary Rodham Clinton to get health care reform through Congress. This collection consists of correspondence, newspaper and magazine articles, memos, papers, and reports. A significant feature of the records are letters from constituents describing their feelings about health care reform and disastrous financial situations they found themselves in as the result of inadequate or inappropriate health insurance coverage. The collection also contains records created by Robert Boorstin, Roger Goldblatt, Steven Edelstein, Christine Heenan, Lynn Margherio, Simone Rueschemeyer, Meeghan Prunty, Marjorie Tarmey, and others.<br /> Contains 697 files from 47 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+3"><strong>Segment Three</strong></a><br /> The majority of the records in this collection consist of reports, polls, and surveys concerning nearly all aspects of health care; many letters from the public, medical professionals and organizations, and legislators to the Task Force concerning its mission; as well as the telephone message logs of the Task Force.<br /> Contains 592 files from 44 boxes.</p>
<p><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+4"><strong>Segment Four</strong></a><br /> This collection consists of records describing the efforts of the Clinton Administration to pass the Health Security Act, which would have reformed the health care system of the United States. This collection contains memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, newspaper articles, and faxes. The collection contains lists of experts from the field of medicine willing to testify to the viability of the Health Security Act. Much of the remaining material duplicates records from the previous segments.<br /> Contains 590 files from 52 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+5">Segment Five</a></strong><br /> This collection of the Health Care Task Force records consists of materials from the files of Robert Boorstin, Alice Dunscomb, Richard Veloz and Walter Zelman. The files contain memoranda, correspondence, handwritten notes, reports, charts, graphs, bills, drafts, booklets, pamphlets, lists, press releases, schedules, statements, surveys, newspaper articles, and faxes. Much of the material in this segment duplicates records from the previous segments.<br /> Contains 435 files from 47 boxes.</p>
<p><strong><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0885-F+Segment+6">Segment Six</a></strong><br /> This collection consists of the files of the Health Care Task Force, focusing on material from Jack Lew and Lynn Margherio. Lew’s records reflect a preoccupation with figures, statistics, and calculations of all sorts. Graphs and charts abound on the effect reform of the health care system would have on the federal budget. Margherio, a Senior Policy Analyst on the Domestic Policy Council, has documents such as: memoranda, notes, summaries, and articles on individuals (largely doctors) deemed to be experts on the Health Security Act of 1993 qualified to travel across the country and speak to groups in glowing terms about the groundbreaking initiative put forward by President Clinton in his first year in the White House. <br /> Contains 804 files from 40 boxes.</p>
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F
Text
A resource consisting primarily of words for reading. Examples include books, letters, dissertations, poems, newspapers, articles, archives of mailing lists. Note that facsimiles or images of texts are still of the genre Text.
Original Format
The type of object, such as painting, sculpture, paper, photo, and additional data
Paper
Dublin Core
The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/.
Title
A name given to the resource
Staff Working Papers/Working Group Drafts [2]
Creator
An entity primarily responsible for making the resource
Task Force on National Health Care
White House Health Care Task Force
Simone Rueschemeyer
Identifier
An unambiguous reference to the resource within a given context
2006-0885-F Segment 2
Is Part Of
A related resource in which the described resource is physically or logically included.
Box 36
<a href="http://clintonlibrary.gov/assets/Documents/Finding-Aids/2006/2006-0885-F-2.pdf" target="_blank">Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/12092987" target="_blank">National Archives Catalog Description</a>
Provenance
A statement of any changes in ownership and custody of the resource since its creation that are significant for its authenticity, integrity, and interpretation. The statement may include a description of any changes successive custodians made to the resource.
Clinton Presidential Records: White House Staff and Office Files
Publisher
An entity responsible for making the resource available
William J. Clinton Presidential Library & Museum
Format
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Adobe Acrobat Document
Medium
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Preservation-Reproduction-Reference
Date Created
Date of creation of the resource.
2/6/2015
Source
A related resource from which the described resource is derived
42-t-12092987-20060885F-Seg2-036-009-2015
12092987