U.S. healthcare spending grew 7.4% in 2005 to surpass $2 trillion and is expected to grow 7.3% in 2006, the CMS said in an annual report. Thats down from a recent peak of 9.1% growth in 2002. The increase in spending on hospital services, 7.9%, outpaced overall healthcare spending growth for the second year in a row. The CMS said Medicare spending will exceed $790 billion in 2015, up from $309 billion in 2004. Medicaid spending, meanwhile, will hit $670 billion in 2015, up from $293 billion in 2004.

MODERN HEALTHCARE

Proposed a modest $36 billion reduction in the growth of the Medicare budget over 5 years. Medicare spending is projected to be $395 billing in 2007 and grow to $504.4 billing in 2011.

Reduction in the increase is primarily achieved by:

• Administrative and regulatory changes in the way payments are made to medical providers, particularly hospitals, nursing homes, and home health agencies.
• “Quality initiatives” to ensure that patients receive medically appropriate and cost-effective care.
• “Competitive bidding” for clinical laboratory services and certain physician-administered drugs, medical supplies, and equipment. “
• Adjustments to Medicare’s complex pricing system for doctors, hospitals, and other medical providers.
• Stronger cost control provisions.

READ the Entire Article from Dr. Moffit HERE.

The Wall Street Journal on Friday examined how the “significance” the fiscal year 2007 budget proposal that Bush plans to announce on Monday is “dwarfed by one daunting fact”: 84% of the federal budget is “essentially committed” to interest on the federal deficit, defense and homeland security and entitlement programs such as Medicare, Medicaid and Social Security.

Spending on entitlement programs has increased by about 8% annually in recent years, “far faster than either inflation or the economy,” and spending on Medicare — about $391 billion in the current fiscal year — “is close to equaling the entire domestic discretionary slice of the budget,” the Journal reports.

Bush on Tuesday in his State of the Union address proposed to eliminate or reduce spending for 140 federal programs to save $14 billion in FY 2007, but those proposed spending reductions would account for only 0.005% of the federal budget, the Journal reports.

According to the Journal, “By all accounts, a solution to the entitlements spending problem must be bipartisan so that the parties jointly convey the need for sacrifice and share political fallout.” However, “the political calendar works against … Bush achieving” major reforms to entitlement programs, and, in his state of the Union address, he proposed only to establish a bipartisan commission to address the issue, the Journal reports.

Rep. Jim Kolbe (R-Ariz.) said, “This will not get done in this president’s term,” adding, “Congress is never going to be willing to deal with this, because the members are always up for re-election, every two years.”

Meanwhile, Bush has shifted his focus to health care for individuals younger than age 65. In addition, Bush has sought to encourage Medicare beneficiaries to select private health plans for physician, hospital and prescription drug coverage; establish pay-for-performance standards for health care providers who participate in Medicare; and allow states to have more flexibility to administer their Medicaid programs (Calmes, Wall Street Journal, 2/3).

Reprinted from California Healthline

In the 4th quarter enrollment in Humana’s Medicare Advantage plans rose 48% to 557,000 members. Membership growth and higher premiums drove the increase in revenue up 54% to $1.22 billion.

Cigna, Aetna and Coventry Health are scheduled to report quarterly results this week, rounding the earning season for plans.

Yahoo Finance Story here

 WSJ Article 

Over the weekend the Bush Administration directed all health plans contracted under Medicare to “provide a 30-day supply of any drug a beneficiary was previously taking after tens of thousands of people were unable to get medicines promised by Medicare, the New York Times reported on Monday.” The directive further stated all plans must take immediate steps to ensure that low-income beneficiaries were not charged more than $2 for a generic drug and $5 for a brand-name drug, according to the Times.

This directive comes after many states have declared public health emergencies, and many states announced that they would step in to pay for prescriptions that should have been covered by Medicare’s new prescription drug program, which started on Jan. 1, the Times said.

Despite all of the challenges with implementing the new drug program the program is covering over 1,000,000 prescriptions a day.

Source Story…

• Outpatient dialysis facilities: Composite rate payments should be increased by the market basket increase for the sector, or 3.1%, minus 0.45% to account for productivity gains. In addition, MedPAC said Congress should direct the secretary of HHS to eliminate disparities in payments to hospital-based and freestanding dialysis facilities under the composite payment rate and combine the composite rate and add-on adjustment for dialysis medications into a single payment.
• Doctors: Payments to doctors should be increased by the expected change in “input prices” for doctor care minus an adjustment for productivity gains, resulting in an overall increase of 2.8%. The cost of the increase would be $1.5 billion in the first year and $5 billion to $10 billion over five years.
• Payment codes: The HHS secretary should establish a new procedure for reviewing payment codes that accompany the tests and services for which doctors bill Medicare to help identify services that are “overvalued.” A new permanent panel of experts should be appointed to review recommendations by the Resource Utilization Committee. The panel also recommended no payment increase for FY 2007 for home health agencies, inpatient rehabilitation facilities, long-term care hospitals and skilled nursing facilities. In addition, MedPAC decided that it will postpone for now a recommendation to address the “relatively poor performance of rural hospitals” under the existing outpatient Medicare payment system, CQ HealthBeat reports.

Reaction

The American Hospital Association said it was “dismayed” with MedPAC’s recommendation to reduce the Medicare payment increases called for under law. AHA Executive Vice President Rick Pollack said, “This poor decision ignores data detailing the pressures facing hospitals and fails to take into consideration the very serious impact any reduction in payment would have on hospitals and the patients we serve.” He added that hospitals’ Medicare margins have fallen continually since 1997, and in 2004, 68% of hospitals lost money treating Medicare beneficiaries. “With this evidence at hand, MedPAC’s recommendation for less than a full market basket update is very troubling and threatens hospitals’ ability to continue to provide vital health care services,” Pollack said. Larry Minnix, president of the American Association of Homes and Services for the Aging, said, “We are disappointed that MedPAC recommended no inflation adjustment for SNFs in 2007, especially since the Commission reported last month that profit margins at non-profit SNFs are nearly zero.” Minnix added, “This recommendation only amplifies the need for our country to take a comprehensive look at how to overhaul long-term care financing to meet the needs of our aging population” (Reichard, CQ HealthBeat, 1/10).

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