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Wrangling over Medicare Incentives for ePrescribing

Digital Healthcare & Productivity, December 11, 2007

December 11, 2007 | The last-minute Medicare fee bill expected to be passed by Congress before it leaves Washington in mid-December may include a major incentive for physicians to adopt ePrescribing.

The Bush administration has proposed a 10 percent reduction in Medicare fees for physicians in calendar 2008, a serious reduction which would be slightly ameliorated for physicians who write electronic prescriptions. Congress is likely to pass legislation, as it has in past Congresses, eliminating that reduction. That bill may well include an amendment introduced on December 5 by House and Senate Democrats and Republicans providing a permanent Medicare bonus of 1 percent for every electronic prescription a physician writes.

It is not clear whether those bonuses in 2008 would amount to more than the $1.35 billion physicians will have access to in 2008 under the initiative which requires physicians to adhere to the terms of Medicare’s Physician Quality Reporting Initiative (PQRI). However, the PQRI is a temporary, one-year program. The Medicare Electronic Medication and Safety Protection (E-MEDS) Act of 2007 introduced on December 5 by Sens. John Kerry (D-Mass.) and John Ensign (R-Nev.) and Reps. Allyson Schwartz (D-Penn.) and Jon Porter (R-Nev.) would provide permanent Medicare funding for 1 percent bonuses to physicians for every electronic prescription they write.

The bill also contains a huge sledgehammer: physicians who are not writing electronic prescriptions as of January 2011 would see their Medicare payments drop 10 percent automatically. The American Medical Association, which has been working hard to avert President Bush’s proposed 10 percent negative update in 2008, is unhappy with the Kerry/Ensign bill for two reasons.

“The American Medical Association is deeply committed to the adoption of ePrescribing, but steps must be taken to implement standards and address other barriers before this technology can fully benefit the health care system,” says Edward Langston, AMA Board Chair. “We look forward to working with the Senate and the House to encourage adoption of ePrescribing without placing an undue burden on physicians.” The AMA also doesn’t like the bill’s provision for a 10 percent cut in the Medicare fees in 2011.

The E-MEDS Act is being considered as an amendment to the larger Medicare fee bill because use of ePrescribing is expected to save Medicare substantial money based on savings from adverse drug reactions prevented, increased formulary compliance, and increased use of generic drugs. Those savings would balance the revenue loss from paying physicians 10 percent more than expected, because of cancellation of the negative update in 2008.

The Congressional Budget Office (CBO) has not made an estimate yet of the Kerry/Ensign bill financial impact on Medicare. But a Senate staffer says that CBO will show Medicare making a net gain from the ePrescribing incentive.

The Senate staffer says that Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, of which Kerry is a member, will probably include some version of the Kerry/Ensign bill in the end-of-year Medicare fee legislation Baucus is currently negotiating with Rep. Pete Stark (D-Calif.). Stark is chairman of the House Ways & Means health subcommittee, which makes Medicare payment policy.

Mike Leavitt, the secretary of health and human services (HHS), the department which includes the CMS, said on December 3 in a letter to the Senate Finance Committee, “In my view, any new bill should require physicians to implement health information technology that meets department standards in order to be eligible for higher payments from Medicare. Such a requirement would accelerate adoption of this technology considerably, and help to drive improvements in health care quality as well as reductions in medical costs and errors.”

U.S. Makes Progress in Preparing for Pandemic Influenza...But Drug Distribution and Effectivess are Debatable

P&T Journal, November 2007

The avian flu scare of a few years ago
has long since disappeared from
the headlines in the U.S., but its
legacy is still being felt in efforts at local,
state, and federal levels to put the country
on secure footing in case of a pandemic
influenza epidemic. No one is complacent,
especially since the deadly H5N1
strain of bird flu is apparently alive and
well in the Far East. China closed off one
village near Hong Kong in October after
10,000 ducks in the village died.
A question persists: How much prog -
ress have the Department of Homeland
Security (DHS) and the Department of
Health and Human Services (DHHS)
made in implementing an emergency
strategy and helping states, cities, and
counties develop an emergency response
capability? Not surprisingly, the answer is
mixed, according to hearings held in the
Senate Homeland Security and Governmental
Affairs Committee in October.
Homeland Security issued a plan in
March 2006, and the DHHS has been
busy implementing its overwhelming
share of the action items; at last count,
200 of them had been completed. Worried
about federal planning, Congress created
the position of Assistant Secretary for
Preparedness and Response in the Pandemic
and All-Hazards Preparedness Act
in December 2006, now filled by Rear Admiral
William Craig Vanderwagen, MD.
However, the federal lines of authority,
with respect to a pandemic influenza
emergency, are still unclear. Homeland
Security is responsible for the National
Response Plan (NRP), which is supposed
to be used as guidance at the local level for
response to all emergencies, whether it be
a Hurricane Katrina, a nuclear accident, or
an influenza outbreak. The department is revising and renaming the NRP, to be
called the National Response Framework.
The first draft of this plan, published this
past spring, was heavily panned.
In October, Yvonne Madlock, a Tennessee
public health official, stated:1
… we share the frustration of many local
and state officials about their lack of representation
in the revision process for the
National Response Plan, which will govern
response to pandemic influenza.
That lack of local input is evident in confusing
federal guidelines. In the same
presentation, she explained:1
For instance, recently released HHS/CDC
guidance for state and local preparedness
lists eight required critical tasks to prepare
for isolation and quarantine and [D]HHS is
working on performance metrics. DHS has
a published a Target Capabilities List for
Isolation and Quarantine that includes over
60 critical tasks, with associated performance
measures. The result is a mixed message
to local planners.
Beyond these kinds of guidance conflicts,
there are operational uncertainties
as well, foremost among them whether
localities will have enough of the right
anti viral agents on hand if an emergency
strikes and whether they will be able to
get them quickly enough to people who
need them.
Paul K. Halverson, Director and State
Health Officer of the Arkansas Department
of Health, said that even when a
state purchases antiviral drugs and stockpiles
them, it is still unknown whether
they will work. Moreover, millions of dollars
have been spent to purchase those
drugs, but the drugs cannot be used in
non-pandemic situations. If the drugs
have not been utilized at the end of five
years—at the end of their shelf life—they
are useless.
“There is no alternative offered to us
for rotation of this stockpile,” Mr. Halverson
added.The good news is that an adequate
stockpile (adequate treatment for 25% of
the U.S. population) of two neuram in -
idase inhibitors is nearly in place: osel -
tamivir phosphate (Tamiflu, Roche) and
zana mivir (Relenza, GlaxoSmithKline).
The federal stockpile provides 37.5 million
treatment courses, and the government
expects to purchase the remaining
12.5 million courses soon, after Congress
forks over the money, to achieve the goal
of 50 million—the 25%—by July 2008.
The states have bought about half of their
goal of 30 million courses of treatment,
and the DHHS is subsidizing those purchases
to the tune of $170 million.
Whether Tamiflu and Relenza will
work remains to be seen. Of course, it is
always possible that clinical resistance
to those two drugs will develop—hence
the efforts by the DHHS to develop a
third drug, peramivir, which is also a neuraminidase
inhibitor. Peramivir is in midstage
clinical evaluation.
“We need new antiviral candidates,
should the viruses become resistant to
the currently available antivirals,” admits
Dr. Vanderwagen.
Christopher Pope, Director of Home -
land Security and Emergency Management
in New Hampshire, offered the
clearest picture of our nation’s preparedness
for a pandemic influenza outbreak:2
Local governments, states, and the private
sector have made great strides in their preparedness
and response capabilities in public
health crisis. However, we are still not at
the acceptable level of readiness that our
citize ns expect and deserve. States and local
governments continue to need funding and
leadership from the federal government as
we continue to build these capabilities.

FERC Ignores Pipelines, Proceeds With Rule to Make Challenges Easier

Pipeline & Gas Journal, November 2007

The Federal Energy Regulatory Commission (FERC) ignored
pleas from interstate pipelines and proceeded with a rulemaking
which, if finalized, will require transmission companies to report
more financial data to the commission on Form 2, which shippers
use as the basis of complaints about unfair pipeline rates.
The shipper community has argued that Form 2 information is
insufficient and now FERC has agreed with them.
The commissioners believe that the lack of data is preventing
some shippers from challenging pipeline rates, some of which have
not been reviewed in a decade. INGAA has pushed back, arguing
in its comments to a February notice of inquiry that shippers have
plenty of information available elsewhere outside Form 2. FERC
did not buy that argument. In its proposed rule issued in September,
FERC said, “We do not believe that users should have to piece
together and interpret from myriad sources information that is readily
available to the pipeline and can, without a substantial increase
in burden, be incorporated into Forms 2 and 2-A. Also, much of the
information cited by INGAA is not coterminous with Form 2 data
and cannot be used for purposes of comparison.”
The proposed rule would require, among other things, natural
gas companies to (1) submit additional revenue information,
including reporting revenue from shipper-supplied gas, (2) identify
the costs associated with affiliate transactions, and (3) provide
additional information on incremental facilities and discounted
and negotiated rates. The changes would be effective Jan. 1, 2008.
Accordingly, companies subject to the new requirements would
file their new Forms 2 and 2-A in 2009 for calendar year 2008.
“In my view, it is essential that public information suffice as
a foundation for a section 5 complaint,” said FERC Chairman
Joseph Kelliher on Sept. 20 in announcing the proposed rule.
However, FERC did not go nearly as far as some shippers
wanted it to go. The Commission rejected a request that
pipelines not using the rate of return on equity approved in the
pipeline’s last rate case provide the calculation and derivation
of the return used at present, as well as additional information
on capital structure used for ratemaking purposes.
But that may have been the only silver lining in the proposal
as far as the interstate pipelines are concerned. Elsewhere in the
proposed rule, FERC rubbed additional salt into their wounds
by deciding to open up a separate rulemaking designed to
explore a separate but related issue: the adequacy of information
reported in the Form No. 2 concerning gas retained, used
for compression, and lost and unaccounted-for.
Pipeline companies now have two options for recovering
these costs. The first is to establish a fixed-fuel retention percentage
in a general section 4 rate case and leave that percentage
unchanged until the pipeline files its next general section 4
rate case. The second allows the pipeline to include in its tariff
a mechanism permitting periodic changes in its fuel retention
percentage outside of a general section 4 rate case.
Pipeline customers have expressed concerns that in-kind gas
retained by pipelines for fuel and unaccounted-for gas requirements
is excessive and provides pipelines with significant profits. The
Commission’s review of information filed by pipelines in their 2005
Form 2 filings indicates that major pipelines appear to have retained
or carried over in their accounts a net sum of over 97 Bcf in fuel
beyond what was consumed, lost, or unaccounted-for. At average
2005 prices, this represents over $711 million in value.
The FERC seems to think that option one — the fixed fuel percentage
which accounted for the lion’s share of that $711 million
— is the potential problem. Moreover, it implied that pipelines are
claiming those excessive fuel costs when they could be reducing
their use of fuel by building new or revamping existing compressor
stations by taking actions such as minimizing pressure drops
and changing motors. The Commission floated the idea that if it
were to adopt incentive provisions to encourage pipelines to reduce
fuel use and lost and unaccounted-for gas, one option would be a mechanism for sharing between the pipeline and its shippers any
fuel cost recoveries and /or under-recoveries.