Alicia Ault

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program. The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005. It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, Dr. Mathews said.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, he said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market. From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, Dr. Mathews said. There were a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, Dr. Mathews said.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” said Dr. Reischauer, who is also president of the Urban Institute in Washington.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is getting more data on the hospice sector. CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program. The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005. It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, Dr. Mathews said.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, he said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market. From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, Dr. Mathews said. There were a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, Dr. Mathews said.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” said Dr. Reischauer, who is also president of the Urban Institute in Washington.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is getting more data on the hospice sector. CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program. The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005. It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, Dr. Mathews said.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, he said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market. From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, Dr. Mathews said. There were a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, Dr. Mathews said.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” said Dr. Reischauer, who is also president of the Urban Institute in Washington.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is getting more data on the hospice sector. CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

AAD Fires Back on Indoor Tanning

The American Academy of Dermatology is launching a public service campaign to communicate the risks of indoor tanning. The target audience is 16- to 29-year-old women, according to the AAD. This group is being chosen because the data show that 70% of indoor tanners are women in that age group, and melanoma is increasing faster among women than men in that age range. The "Indoor Tanning Is Out" campaign includes print, television, and radio ads. The campaign comes on the heels of an ad blitz in New York, Boston, Washington, Chicago, San Francisco, Seattle, and Pittsburgh sponsored by the Indoor Tanning Association. That campaign claimed there is no compelling scientific evidence linking tanning to melanoma.

Tanning Industry Ties Cited

The Indoor Tanning Association also recently found its ties to a Boston University researcher, Dr. Michael F. Holick, scrutinized by the Wall Street Journal. Dr. Holick has published numerous articles on vitamin D deficiency, including a review in the New England Journal of Medicine in 2007 (N. Engl. J. Med. 2007;357:266–81), in which he suggested using tanning beds "in moderation" as a source of replenishment. The article was supported by grants from the National Institutes of Health and also the UV Foundation, which is a nonprofit arm of the Indoor Tanning Association. Dr. Holick and his research are prominently featured on the UV Foundation's Web site. In a video on the site, he again suggests the use of tanning beds in moderation. The Wall Street Journal reported that the New England Journal said that Dr. Holick properly disclosed his funding source and his potential conflicts.

Stiefel Buys Atlean Maker

Stiefel Laboratories Inc. has acquired ABR Invent and ABR Development, two French companies that developed Atlean, an injectable dermal filler. Atlean is made up of tricalcium phosphate particles suspended in a hyaluronic acid gel. The product was granted a CE marking in 2006, and is currently sold in France and Italy. The Coral Gables, Fla.-based Stiefel said it plans to launch Atlean in other European nations, Asia, Latin America, and the Caribbean in the next 18 months. The company will also eventually seek Food and Drug Administration approval, the company reported in a press release.

Generic Fluorouracil Cream Halted

Spear Pharmaceuticals Inc. has agreed to at least temporarily cease sales, marketing, and shipment of a generic fluorouracil cream 5%. Valeant Pharmaceuticals International, which makes the brand Efudex cream 5%, sued the FDA to challenge the agency's denial of Valeant's citizen's petition. The petition challenged the agency's approval of the generic. The company said that the FDA should not approve a generic that had not been tested head to head against Efudex in patients with superficial basal cell carcinoma. The agency said that generics needed to be tested only against actinic or solar keratoses. The FDA requested a 2-week stay of Valeant's lawsuit, which was granted.

Low Postmarketing FDACompliance

The FDA has issued its annual summary report of how pharmaceutical and biologic manufacturers are doing on meeting their commitments to conduct postmarketing studies. According to the agency, 76% of drug makers and 81% of biologic makers had met their commitment as of September 30, 2007. There were 136 drug makers and 54 biologic manufacturers with open postmarketing commitments as of that date. A closer look at the FDA data shows that only 12% of drug studies were completed or terminated with a final report submitted to the FDA that year. In all, 20% of biologics met that goal. Manufacturers are required to report annually on the status of safety, efficacy, pharmacology, and nonclinical toxicology studies required by the FDA, or to report that they have committed to conduct at the time of approval or after approval.

Disciplinary Actions Decline

The number and rate of serious disciplinary actions against physicians have decreased for the third consecutive year, according to Public Citizen's annual ranking of state medical boards. The advocacy group said the analysis indicates that many states are not living up to their obligations to protect patients from bad doctors. Since 2004, the number of serious disciplinary actions against doctors has decreased 17%, resulting in 553 fewer serious actions in 2007 than in 2004. Taking into account the increasing number of U.S. physicians since 2004, the rate of serious actions has fallen 22% since then, when calculated per 1,000 physicians, according to Public Citizen. The annual rankings are based on data from the Federation of State Medical Boards.

Half of Health Spending Wasted

Wasteful spending in the U.S. health system could amount to as much as $1.2 trillion of the $2.2 trillion spent annually, according to a report from the PricewaterhouseCoopers' Health Research Institute. Defensive medicine was identified as the biggest area of excess, followed by inefficient administration and the cost of care necessitated by preventable conditions, such as obesity, according to the report. The impact of issues such as nonadherence to medical advice and prescriptions, alcohol abuse, smoking, and obesity "are exponential," according to the report.

AAD Fires Back on Indoor Tanning

The American Academy of Dermatology is launching a public service campaign to communicate the risks of indoor tanning. The target audience is 16- to 29-year-old women, according to the AAD. This group is being chosen because the data show that 70% of indoor tanners are women in that age group, and melanoma is increasing faster among women than men in that age range. The "Indoor Tanning Is Out" campaign includes print, television, and radio ads. The campaign comes on the heels of an ad blitz in New York, Boston, Washington, Chicago, San Francisco, Seattle, and Pittsburgh sponsored by the Indoor Tanning Association. That campaign claimed there is no compelling scientific evidence linking tanning to melanoma.

Tanning Industry Ties Cited

The Indoor Tanning Association also recently found its ties to a Boston University researcher, Dr. Michael F. Holick, scrutinized by the Wall Street Journal. Dr. Holick has published numerous articles on vitamin D deficiency, including a review in the New England Journal of Medicine in 2007 (N. Engl. J. Med. 2007;357:266–81), in which he suggested using tanning beds "in moderation" as a source of replenishment. The article was supported by grants from the National Institutes of Health and also the UV Foundation, which is a nonprofit arm of the Indoor Tanning Association. Dr. Holick and his research are prominently featured on the UV Foundation's Web site. In a video on the site, he again suggests the use of tanning beds in moderation. The Wall Street Journal reported that the New England Journal said that Dr. Holick properly disclosed his funding source and his potential conflicts.

Stiefel Buys Atlean Maker

Stiefel Laboratories Inc. has acquired ABR Invent and ABR Development, two French companies that developed Atlean, an injectable dermal filler. Atlean is made up of tricalcium phosphate particles suspended in a hyaluronic acid gel. The product was granted a CE marking in 2006, and is currently sold in France and Italy. The Coral Gables, Fla.-based Stiefel said it plans to launch Atlean in other European nations, Asia, Latin America, and the Caribbean in the next 18 months. The company will also eventually seek Food and Drug Administration approval, the company reported in a press release.

Generic Fluorouracil Cream Halted

Spear Pharmaceuticals Inc. has agreed to at least temporarily cease sales, marketing, and shipment of a generic fluorouracil cream 5%. Valeant Pharmaceuticals International, which makes the brand Efudex cream 5%, sued the FDA to challenge the agency's denial of Valeant's citizen's petition. The petition challenged the agency's approval of the generic. The company said that the FDA should not approve a generic that had not been tested head to head against Efudex in patients with superficial basal cell carcinoma. The agency said that generics needed to be tested only against actinic or solar keratoses. The FDA requested a 2-week stay of Valeant's lawsuit, which was granted.

Low Postmarketing FDACompliance

The FDA has issued its annual summary report of how pharmaceutical and biologic manufacturers are doing on meeting their commitments to conduct postmarketing studies. According to the agency, 76% of drug makers and 81% of biologic makers had met their commitment as of September 30, 2007. There were 136 drug makers and 54 biologic manufacturers with open postmarketing commitments as of that date. A closer look at the FDA data shows that only 12% of drug studies were completed or terminated with a final report submitted to the FDA that year. In all, 20% of biologics met that goal. Manufacturers are required to report annually on the status of safety, efficacy, pharmacology, and nonclinical toxicology studies required by the FDA, or to report that they have committed to conduct at the time of approval or after approval.

Disciplinary Actions Decline

The number and rate of serious disciplinary actions against physicians have decreased for the third consecutive year, according to Public Citizen's annual ranking of state medical boards. The advocacy group said the analysis indicates that many states are not living up to their obligations to protect patients from bad doctors. Since 2004, the number of serious disciplinary actions against doctors has decreased 17%, resulting in 553 fewer serious actions in 2007 than in 2004. Taking into account the increasing number of U.S. physicians since 2004, the rate of serious actions has fallen 22% since then, when calculated per 1,000 physicians, according to Public Citizen. The annual rankings are based on data from the Federation of State Medical Boards.

Half of Health Spending Wasted

Wasteful spending in the U.S. health system could amount to as much as $1.2 trillion of the $2.2 trillion spent annually, according to a report from the PricewaterhouseCoopers' Health Research Institute. Defensive medicine was identified as the biggest area of excess, followed by inefficient administration and the cost of care necessitated by preventable conditions, such as obesity, according to the report. The impact of issues such as nonadherence to medical advice and prescriptions, alcohol abuse, smoking, and obesity "are exponential," according to the report.

AAD Fires Back on Indoor Tanning

The American Academy of Dermatology is launching a public service campaign to communicate the risks of indoor tanning. The target audience is 16- to 29-year-old women, according to the AAD. This group is being chosen because the data show that 70% of indoor tanners are women in that age group, and melanoma is increasing faster among women than men in that age range. The "Indoor Tanning Is Out" campaign includes print, television, and radio ads. The campaign comes on the heels of an ad blitz in New York, Boston, Washington, Chicago, San Francisco, Seattle, and Pittsburgh sponsored by the Indoor Tanning Association. That campaign claimed there is no compelling scientific evidence linking tanning to melanoma.

Tanning Industry Ties Cited

The Indoor Tanning Association also recently found its ties to a Boston University researcher, Dr. Michael F. Holick, scrutinized by the Wall Street Journal. Dr. Holick has published numerous articles on vitamin D deficiency, including a review in the New England Journal of Medicine in 2007 (N. Engl. J. Med. 2007;357:266–81), in which he suggested using tanning beds "in moderation" as a source of replenishment. The article was supported by grants from the National Institutes of Health and also the UV Foundation, which is a nonprofit arm of the Indoor Tanning Association. Dr. Holick and his research are prominently featured on the UV Foundation's Web site. In a video on the site, he again suggests the use of tanning beds in moderation. The Wall Street Journal reported that the New England Journal said that Dr. Holick properly disclosed his funding source and his potential conflicts.

Stiefel Buys Atlean Maker

Stiefel Laboratories Inc. has acquired ABR Invent and ABR Development, two French companies that developed Atlean, an injectable dermal filler. Atlean is made up of tricalcium phosphate particles suspended in a hyaluronic acid gel. The product was granted a CE marking in 2006, and is currently sold in France and Italy. The Coral Gables, Fla.-based Stiefel said it plans to launch Atlean in other European nations, Asia, Latin America, and the Caribbean in the next 18 months. The company will also eventually seek Food and Drug Administration approval, the company reported in a press release.

Generic Fluorouracil Cream Halted

Spear Pharmaceuticals Inc. has agreed to at least temporarily cease sales, marketing, and shipment of a generic fluorouracil cream 5%. Valeant Pharmaceuticals International, which makes the brand Efudex cream 5%, sued the FDA to challenge the agency's denial of Valeant's citizen's petition. The petition challenged the agency's approval of the generic. The company said that the FDA should not approve a generic that had not been tested head to head against Efudex in patients with superficial basal cell carcinoma. The agency said that generics needed to be tested only against actinic or solar keratoses. The FDA requested a 2-week stay of Valeant's lawsuit, which was granted.

Low Postmarketing FDACompliance

The FDA has issued its annual summary report of how pharmaceutical and biologic manufacturers are doing on meeting their commitments to conduct postmarketing studies. According to the agency, 76% of drug makers and 81% of biologic makers had met their commitment as of September 30, 2007. There were 136 drug makers and 54 biologic manufacturers with open postmarketing commitments as of that date. A closer look at the FDA data shows that only 12% of drug studies were completed or terminated with a final report submitted to the FDA that year. In all, 20% of biologics met that goal. Manufacturers are required to report annually on the status of safety, efficacy, pharmacology, and nonclinical toxicology studies required by the FDA, or to report that they have committed to conduct at the time of approval or after approval.

Disciplinary Actions Decline

The number and rate of serious disciplinary actions against physicians have decreased for the third consecutive year, according to Public Citizen's annual ranking of state medical boards. The advocacy group said the analysis indicates that many states are not living up to their obligations to protect patients from bad doctors. Since 2004, the number of serious disciplinary actions against doctors has decreased 17%, resulting in 553 fewer serious actions in 2007 than in 2004. Taking into account the increasing number of U.S. physicians since 2004, the rate of serious actions has fallen 22% since then, when calculated per 1,000 physicians, according to Public Citizen. The annual rankings are based on data from the Federation of State Medical Boards.

Half of Health Spending Wasted

Wasteful spending in the U.S. health system could amount to as much as $1.2 trillion of the $2.2 trillion spent annually, according to a report from the PricewaterhouseCoopers' Health Research Institute. Defensive medicine was identified as the biggest area of excess, followed by inefficient administration and the cost of care necessitated by preventable conditions, such as obesity, according to the report. The impact of issues such as nonadherence to medical advice and prescriptions, alcohol abuse, smoking, and obesity "are exponential," according to the report.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but should be made public by the third year, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians.

The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling. With virtual bundling, the payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, said MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The data collection and adjusting payment based on readmission are interim steps aimed at getting providers to collaborate to improve care and cut costs, said Mr. Hackbarth.

Commissioner Ronald Castellanos, a urologist in private practice in Fort Myers, Fla., said he thought it would take 5 or 10 years to make collaboration work, but that he agreed that it was the ultimate end point.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but should be made public by the third year, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians.

The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling. With virtual bundling, the payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, said MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The data collection and adjusting payment based on readmission are interim steps aimed at getting providers to collaborate to improve care and cut costs, said Mr. Hackbarth.

Commissioner Ronald Castellanos, a urologist in private practice in Fort Myers, Fla., said he thought it would take 5 or 10 years to make collaboration work, but that he agreed that it was the ultimate end point.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but should be made public by the third year, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians.

The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling. With virtual bundling, the payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, said MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The data collection and adjusting payment based on readmission are interim steps aimed at getting providers to collaborate to improve care and cut costs, said Mr. Hackbarth.

Commissioner Ronald Castellanos, a urologist in private practice in Fort Myers, Fla., said he thought it would take 5 or 10 years to make collaboration work, but that he agreed that it was the ultimate end point.

The federal government's portrayal of enrollment growth in the State Children's Health Insurance Program in 2007 is disingenuous and somewhat misleading, advocates for children's programs said.

According to the Centers for Medicare and Medicaid Services, 7.1 million children were enrolled in the program (SCHIP) in 2007, up from 6.7 million in 2006.

“While we are pleased that SCHIP continues to grow, we must do more to reach those at the lowest income levels who still need this coverage,” Mike Leavitt, Health and Human Services secretary, said in a statement.

“Toward that end, we will continue to work with Congress on the reauthorization of this vital program,” he added.

That comment is “disingenuous,” Dr. Steve Wegner, chairman of the child health funding committee at the American Academy of Pediatrics, said in an interview.

He noted that President Bush vetoed a compromise agreement to re-authorize SCHIP not once, but twice, in 2007.

“The administration did everything possible to stand in the way of the reauthorization,” Jenny Sullivan, a health policy analyst with Families USA, said in an interview.

SCHIP was finally given a reprieve, with Congress passing, and the president signing, a funding extension through March 2009.

But the program still has not been formally reauthorized.

And, said Ms. Sullivan and Dr. Wegner, many millions more children would have been covered in 2007 if the reauthorization had been approved when it was first taken up early in the year.

Centers for Medicare and Medicaid Services (CMS) spokeswoman Mary Kahn said that it was not accurate to imply that the Bush administration did not want to continue the SCHIP program. The administration did, however, want to fund SCHIP at a lower level, she said in an interview.

Also in the HHS statement, Kerry Weems, CMS acting administrator, said, “We continue to work with states to [ensure] that as many eligible, uninsured children as possible are enrolled in SCHIP and Medicaid.”

Dr. Wegner took exception to that statement as well, noting that a CMS directive issued in August 2007 has effectively prevented states from expanding eligibility. CMS said it would limit states' ability to expand coverage to children in families that had incomes at 250% of the poverty level or above.

Ms. Sullivan said that the directive had, in many cases, reversed expansion plans previously approved by CMS.

Twenty-three states are expected to be affected by the directive, according to the Kaiser Family Foundation. Nine states already cover children in families with incomes above 250%, and 13 states had received approval to expand eligibility at or above that level.

In addition, Washington was covering children at the 250% level and had gotten approval to raise that cap.

The directive is consistent with the administration's belief that every effort should be made to enroll 95% of children eligible at the lowest income levels before expanding it to those who are in higher-income families, Ms. Kahn said.

The increase in SCHIP enrollment was not unusually high for the program, Ms. Sullivan said.

And, she said, U.S. Census Bureau figures indicate that the overall number of uninsured children actually increased in the last 2 years.

There are approximately 9 million uninsured children in the United States, according to a Families USA analysis.

Both Ms. Sullivan and Dr. Wegner said they expect that number to grow in the current year, as states face harsh budget realities.

A much larger number of children are covered under traditional Medicaid programs—about 28 million in 2005, according to Kaiser—but their coverage is also being threatened because of a series of CMS regulations taking effect this year.

Rep. John Dingell (D-Mich.) and Rep. Tim Murphy (R-Penn.) introduced a bill in March (H.R. 5613) that would place a 1-year moratorium on seven of those regulations. According to estimates they cite from the Congressional Budget Office, the regulations could translate to $20 billion in cuts to Medicaid over the next 5 years.

The National Governors Association, the National Association of State Medicaid Directors, and the American Public Human Services Association have all expressed their opposition to the regulations in letters to HHS.

The picture grows even dimmer when next year considered.

For fiscal 2009, President Bush proposed increasing SCHIP funding by $19.7 billion (added to the current baseline of $25 billion) through 2013. That is a far cry from the $35 billion that was authorized in the two legislative packages vetoed by the President last year.

The budget also seeks to formalize the CMS directive that limited states' expansion plans by proposing to cap SCHIP eligibility at 250% of the poverty level.

'We must do more to reach those at the lowest income levels who still need this coverage.' MR. LEAVITT

The federal government's portrayal of enrollment growth in the State Children's Health Insurance Program in 2007 is disingenuous and somewhat misleading, advocates for children's programs said.

According to the Centers for Medicare and Medicaid Services, 7.1 million children were enrolled in the program (SCHIP) in 2007, up from 6.7 million in 2006.

“While we are pleased that SCHIP continues to grow, we must do more to reach those at the lowest income levels who still need this coverage,” Mike Leavitt, Health and Human Services secretary, said in a statement.

“Toward that end, we will continue to work with Congress on the reauthorization of this vital program,” he added.

That comment is “disingenuous,” Dr. Steve Wegner, chairman of the child health funding committee at the American Academy of Pediatrics, said in an interview.

He noted that President Bush vetoed a compromise agreement to re-authorize SCHIP not once, but twice, in 2007.

“The administration did everything possible to stand in the way of the reauthorization,” Jenny Sullivan, a health policy analyst with Families USA, said in an interview.

SCHIP was finally given a reprieve, with Congress passing, and the president signing, a funding extension through March 2009.

But the program still has not been formally reauthorized.

And, said Ms. Sullivan and Dr. Wegner, many millions more children would have been covered in 2007 if the reauthorization had been approved when it was first taken up early in the year.

Centers for Medicare and Medicaid Services (CMS) spokeswoman Mary Kahn said that it was not accurate to imply that the Bush administration did not want to continue the SCHIP program. The administration did, however, want to fund SCHIP at a lower level, she said in an interview.

Also in the HHS statement, Kerry Weems, CMS acting administrator, said, “We continue to work with states to [ensure] that as many eligible, uninsured children as possible are enrolled in SCHIP and Medicaid.”

Dr. Wegner took exception to that statement as well, noting that a CMS directive issued in August 2007 has effectively prevented states from expanding eligibility. CMS said it would limit states' ability to expand coverage to children in families that had incomes at 250% of the poverty level or above.

Ms. Sullivan said that the directive had, in many cases, reversed expansion plans previously approved by CMS.

Twenty-three states are expected to be affected by the directive, according to the Kaiser Family Foundation. Nine states already cover children in families with incomes above 250%, and 13 states had received approval to expand eligibility at or above that level.

In addition, Washington was covering children at the 250% level and had gotten approval to raise that cap.

The directive is consistent with the administration's belief that every effort should be made to enroll 95% of children eligible at the lowest income levels before expanding it to those who are in higher-income families, Ms. Kahn said.

The increase in SCHIP enrollment was not unusually high for the program, Ms. Sullivan said.

And, she said, U.S. Census Bureau figures indicate that the overall number of uninsured children actually increased in the last 2 years.

There are approximately 9 million uninsured children in the United States, according to a Families USA analysis.

Both Ms. Sullivan and Dr. Wegner said they expect that number to grow in the current year, as states face harsh budget realities.

A much larger number of children are covered under traditional Medicaid programs—about 28 million in 2005, according to Kaiser—but their coverage is also being threatened because of a series of CMS regulations taking effect this year.

Rep. John Dingell (D-Mich.) and Rep. Tim Murphy (R-Penn.) introduced a bill in March (H.R. 5613) that would place a 1-year moratorium on seven of those regulations. According to estimates they cite from the Congressional Budget Office, the regulations could translate to $20 billion in cuts to Medicaid over the next 5 years.

The National Governors Association, the National Association of State Medicaid Directors, and the American Public Human Services Association have all expressed their opposition to the regulations in letters to HHS.

The picture grows even dimmer when next year considered.

For fiscal 2009, President Bush proposed increasing SCHIP funding by $19.7 billion (added to the current baseline of $25 billion) through 2013. That is a far cry from the $35 billion that was authorized in the two legislative packages vetoed by the President last year.

The budget also seeks to formalize the CMS directive that limited states' expansion plans by proposing to cap SCHIP eligibility at 250% of the poverty level.

'We must do more to reach those at the lowest income levels who still need this coverage.' MR. LEAVITT

The federal government's portrayal of enrollment growth in the State Children's Health Insurance Program in 2007 is disingenuous and somewhat misleading, advocates for children's programs said.

According to the Centers for Medicare and Medicaid Services, 7.1 million children were enrolled in the program (SCHIP) in 2007, up from 6.7 million in 2006.

“While we are pleased that SCHIP continues to grow, we must do more to reach those at the lowest income levels who still need this coverage,” Mike Leavitt, Health and Human Services secretary, said in a statement.

“Toward that end, we will continue to work with Congress on the reauthorization of this vital program,” he added.

That comment is “disingenuous,” Dr. Steve Wegner, chairman of the child health funding committee at the American Academy of Pediatrics, said in an interview.

He noted that President Bush vetoed a compromise agreement to re-authorize SCHIP not once, but twice, in 2007.

“The administration did everything possible to stand in the way of the reauthorization,” Jenny Sullivan, a health policy analyst with Families USA, said in an interview.

SCHIP was finally given a reprieve, with Congress passing, and the president signing, a funding extension through March 2009.

But the program still has not been formally reauthorized.

And, said Ms. Sullivan and Dr. Wegner, many millions more children would have been covered in 2007 if the reauthorization had been approved when it was first taken up early in the year.

Centers for Medicare and Medicaid Services (CMS) spokeswoman Mary Kahn said that it was not accurate to imply that the Bush administration did not want to continue the SCHIP program. The administration did, however, want to fund SCHIP at a lower level, she said in an interview.

Also in the HHS statement, Kerry Weems, CMS acting administrator, said, “We continue to work with states to [ensure] that as many eligible, uninsured children as possible are enrolled in SCHIP and Medicaid.”

Dr. Wegner took exception to that statement as well, noting that a CMS directive issued in August 2007 has effectively prevented states from expanding eligibility. CMS said it would limit states' ability to expand coverage to children in families that had incomes at 250% of the poverty level or above.

Ms. Sullivan said that the directive had, in many cases, reversed expansion plans previously approved by CMS.

Twenty-three states are expected to be affected by the directive, according to the Kaiser Family Foundation. Nine states already cover children in families with incomes above 250%, and 13 states had received approval to expand eligibility at or above that level.

In addition, Washington was covering children at the 250% level and had gotten approval to raise that cap.

The directive is consistent with the administration's belief that every effort should be made to enroll 95% of children eligible at the lowest income levels before expanding it to those who are in higher-income families, Ms. Kahn said.

The increase in SCHIP enrollment was not unusually high for the program, Ms. Sullivan said.

And, she said, U.S. Census Bureau figures indicate that the overall number of uninsured children actually increased in the last 2 years.

There are approximately 9 million uninsured children in the United States, according to a Families USA analysis.

Both Ms. Sullivan and Dr. Wegner said they expect that number to grow in the current year, as states face harsh budget realities.

A much larger number of children are covered under traditional Medicaid programs—about 28 million in 2005, according to Kaiser—but their coverage is also being threatened because of a series of CMS regulations taking effect this year.

Rep. John Dingell (D-Mich.) and Rep. Tim Murphy (R-Penn.) introduced a bill in March (H.R. 5613) that would place a 1-year moratorium on seven of those regulations. According to estimates they cite from the Congressional Budget Office, the regulations could translate to $20 billion in cuts to Medicaid over the next 5 years.

The National Governors Association, the National Association of State Medicaid Directors, and the American Public Human Services Association have all expressed their opposition to the regulations in letters to HHS.

The picture grows even dimmer when next year considered.

For fiscal 2009, President Bush proposed increasing SCHIP funding by $19.7 billion (added to the current baseline of $25 billion) through 2013. That is a far cry from the $35 billion that was authorized in the two legislative packages vetoed by the President last year.

The budget also seeks to formalize the CMS directive that limited states' expansion plans by proposing to cap SCHIP eligibility at 250% of the poverty level.

'We must do more to reach those at the lowest income levels who still need this coverage.' MR. LEAVITT

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program. The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005. It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, said Dr. Mathews.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, Dr. Mathews said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market.

From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, Dr. Mathews said. There were a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, said Dr. Mathews.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested that Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” said Dr. Reischauer, who is also president of the Urban Institute.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is collecting more data on the hospice sector.

CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program. The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005. It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, said Dr. Mathews.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, Dr. Mathews said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market.

From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, Dr. Mathews said. There were a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, said Dr. Mathews.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested that Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” said Dr. Reischauer, who is also president of the Urban Institute.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is collecting more data on the hospice sector.

CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program. The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005. It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, said Dr. Mathews.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, Dr. Mathews said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market.

From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, Dr. Mathews said. There were a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, said Dr. Mathews.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested that Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” said Dr. Reischauer, who is also president of the Urban Institute.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is collecting more data on the hospice sector.

CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but by the 3rd year, should be made public, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians. The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling under which payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, according to MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The data collection and adjusting payment based on readmission are interim steps aimed at getting providers to collaborate to improve care and cut costs, said Mr. Hackbarth.

Commissioner Ronald Castellanos, a urologist in private practice in Fort Myers, Fla., reported that he thought it would take 5 or 10 years to make collaboration work, but that he agreed that it was the ultimate end point.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but by the 3rd year, should be made public, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians. The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling under which payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, according to MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The data collection and adjusting payment based on readmission are interim steps aimed at getting providers to collaborate to improve care and cut costs, said Mr. Hackbarth.

Commissioner Ronald Castellanos, a urologist in private practice in Fort Myers, Fla., reported that he thought it would take 5 or 10 years to make collaboration work, but that he agreed that it was the ultimate end point.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but by the 3rd year, should be made public, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians. The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling under which payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, according to MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The data collection and adjusting payment based on readmission are interim steps aimed at getting providers to collaborate to improve care and cut costs, said Mr. Hackbarth.

Commissioner Ronald Castellanos, a urologist in private practice in Fort Myers, Fla., reported that he thought it would take 5 or 10 years to make collaboration work, but that he agreed that it was the ultimate end point.

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program.

The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005.

It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, according to Dr. Mathews.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, he said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market.

From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, according to Dr. Mathews.

There were just a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, said Dr. Mathews.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested that Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” according to Dr. Reischauer, who is also president of the Urban Institute.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is getting more data on the hospice sector. CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program.

The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005.

It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, according to Dr. Mathews.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, he said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market.

From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, according to Dr. Mathews.

There were just a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, said Dr. Mathews.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested that Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” according to Dr. Reischauer, who is also president of the Urban Institute.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is getting more data on the hospice sector. CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

WASHINGTON — Staggering growth in the popularity of hospice services—and in the rise of for-profit hospice providers—has caught the attention of the Medicare Payment Assessment Commission.

At their recent meeting, MedPAC commissioners debated the potential impact of rising hospice costs on the Medicare program.

The hospice benefit began in 1983 with the idea that it would cost Medicare less to provide hospice than conventional end-of-life treatment, which is usually delivered in the hospital, said MedPAC staff member James Mathews, Ph.D.

But there is some evidence indicating that hospice use may actually result in higher spending, said Dr. Mathews.

According to MedPAC's analysis of Medicare claims data, hospice spending tripled from 2000 to 2007, when Medicare spent $10 billion on hospice services. The mean length of hospice stay increased 30% from 2000 to 2005.

It's not clear why length of stay is increasing, although data have shown that some illnesses—such as Alzheimer's disease and ischemic heart disease—tend to result in longer stays, according to Dr. Mathews.

One explanation may be that hospice care tends to be more expensive at the beginning and the end of the service; interim days are more profitable, so there is an incentive to lengthen stay, he said.

But it appears that much of the growth in costs and length of stay is due to the huge increase in for-profit hospice facilities in the market.

From 2000 to 2007, very few nonprofit hospices entered the market, while the for-profit sector grew 12% a year, according to Dr. Mathews.

There were just a little more than 1,600 for-profit hospices in 2007, compared with about 1,200 nonprofit and 400 government-run facilities, according to the MedPAC analysis.

In addition, the analysis determined that profit margins are also much higher at for-profit hospice facilities. In 2005, the last year in the analysis, for-profit margins were about 12%, while nonprofits had negative margins. MedPAC also found that hospices that entered the market since 2000 had higher margins—and these were mostly for-profit operations.

Some hospices, only about 9%, are subject to a cap that limits the length of stay, but even those facilities have found a way to profit from Medicare, said Dr. Mathews.

“Clearly, people see an opportunity—a financial opportunity—here,” commented MedPAC chairman Glenn Hackbarth, a health care consultant based in Bend, Ore. He said that the commission needed to find a way to keep the hospice program from spiraling out of control.

Commissioner Jack Ebeler suggested that Medicare “may need blunter instruments for slowing the growth,” but also added that the health program should not do anything to lose “an extraordinarily valuable benefit.”

MedPAC vice chairman Robert Reischauer, Ph.D., suggested that Medicare payment could be refined to buy more appropriate care.

“It strikes me that there's probably an easy way to do this,” according to Dr. Reischauer, who is also president of the Urban Institute.

J. Donald Schumacher, Psy.D., president and CEO of the National Hospice and Palliative Care Association, acknowledged that there has been a “huge growth spurt” in the hospice field. Facilities are worried that the Centers for Medicare and Medicaid Services or Congress might clamp down, using a “blunt instrument,” Dr. Schumacher said at the meeting.

The commissioners and Dr. Schumacher agreed that a first step to a solution is getting more data on the hospice sector. CMS has already started down that path. In July, hospices will begin submitting data to CMS on the types of services they provide and which practitioners are delivering them.

Home Test Coverage Expanded

The Centers for Medicare and Medicaid Services issued a final decision to expand coverage of home prothrombin time (or International Normalized Ratio) testing for patients taking anticoagulation therapy for chronic atrial fibrillation and venous thromboembolism. Patients have to meet certain other criteria, and the home tests can't be used more than once a week. Medicare has covered home testing since 2002, but only for patients with mechanical heart valves.

The request for expanded coverage was made in June 2007 by the three main manufacturers of home testing devices (Roche Diagnostics, International Technidyne Corp., and HemoSense Inc.). The companies said there was plenty of new evidence to support home testing for the two other conditions. The CMS agreed. “Medicare's coverage extension of home blood testing of prothrombin time… is based on current evidence for these two conditions,” CMS Acting Administrator Kerry Weems said in a statement. Currently, PT testing is conducted about every 4–6 weeks, primarily in physicians' offices, according to the CMS. Fewer than 5% of patients on anticoagulation therapy monitor PT at home.

“Those Medicare beneficiaries and their physicians managing conditions related to chronic atrial fibrillation or venous thromboembolism will benefit greatly through the use of the home test,” Mr. Weems said. In a statement, Roche estimated that Medicare beneficiaries would pay $35 for training in use of at-home devices, and about $30 a month for test strips. Patients who have supplemental insurance might not have any out-of-pocket costs, the company said.

Inquiry Request on Stolen NIH Data

A National Heart, Lung, and Blood Institute researcher had the misfortune of having his laptop stolen out of the trunk of his car in late February. More unfortunately, the laptop held confidential information from ongoing cardiac studies of about 3,200 patients, including unsecured Social Security numbers for about 1,200 patients. Most unfortunately, among those whose data are at risk is Rep. Joe Barton (R-Tex.), ranking minority member of the House Energy and Commerce Committee.

Rep. Barton was informed of the breach on March 28 and quickly wrote to the Department of Health and Human Services' Inspector General seeking an inquiry into why the data were not secure and why the NHLBI took almost a month to inform patients of the breach.

The data in the researcher's computer were from ongoing studies of MRI's potential to quickly determine the source of chest pain in the emergency department, and to determine the impact of myocardial infarction on heart structure and function, according to the NHLBI. A spokesman said in an interview that for now, it appears no data were lost, as they were backed up shortly before the theft on an institute server. Also, the NHLBI has offered free credit monitoring and up to $20,000 in identity theft insurance to those whose Social Security numbers were on the laptop.

The National Institutes of Health is now taking steps to ensure encryption of all data storage devices, said the spokesman. The theft and the NHLBI response are being investigated by the Energy and Commerce Committee and the panel's Oversight and Investigations Subcommittee.

Gene Group to Look at Long QT

A new global collaboration led by the NIH and Japan's Center for Genomic Medicine will explore how genes may play a role in drug-induced long QT syndrome, among its first projects. The Global Alliance for Pharmacogenomics will identify genetic factors that influence individuals' responses to pharmaceuticals. The collaborative will also work with the International Warfarin Consortium to develop dosing recommendations based on patients' genetic profiles. Other initial projects include looking at how genes influence the effectiveness of aromatase inhibitors for breast cancer, and side effects from gemcitabine and bevacizumab.

“We expect this international agreement to speed scientific discovery and the translation of results into improved treatments for cancer, heart disease, and other serious conditions,” Dr. Elias Zerhouni, NIH director, said in a statement. The alliance is supported by public funds.

Health Sector Biggest Lobby

The health care industry was the biggest spender when it came to lobbying Congress in 2007. Pharmaceutical, medical device, physician, and hospital groups spent $227 million, a larger tally than for any other sector, according to the Center for Responsive Politics, a Washington-based watchdog group.

Of individual lobbying concerns, the U.S. Chamber of Commerce was number one, spending $53 million on in-house and external personnel, the center reported. Close behind was General Electric ($24 million), followed by the Pharmaceutical Research and Manufacturers of America ($23 million), the American Medical Association ($22 million), and the American Hospital Association ($20 million).

Broken out by industries, the pharmaceutical sector has spent more than any other industry in the last decade, laying out an accumulated $1.3 billion since 1997, said the center.

The data are taken from official lobbying reports that are submitted to the Senate Office of Public Records. The figures do not include other spending that is still aimed at influencing policy, according to the center.

Home Test Coverage Expanded

The Centers for Medicare and Medicaid Services issued a final decision to expand coverage of home prothrombin time (or International Normalized Ratio) testing for patients taking anticoagulation therapy for chronic atrial fibrillation and venous thromboembolism. Patients have to meet certain other criteria, and the home tests can't be used more than once a week. Medicare has covered home testing since 2002, but only for patients with mechanical heart valves.

The request for expanded coverage was made in June 2007 by the three main manufacturers of home testing devices (Roche Diagnostics, International Technidyne Corp., and HemoSense Inc.). The companies said there was plenty of new evidence to support home testing for the two other conditions. The CMS agreed. “Medicare's coverage extension of home blood testing of prothrombin time… is based on current evidence for these two conditions,” CMS Acting Administrator Kerry Weems said in a statement. Currently, PT testing is conducted about every 4–6 weeks, primarily in physicians' offices, according to the CMS. Fewer than 5% of patients on anticoagulation therapy monitor PT at home.

“Those Medicare beneficiaries and their physicians managing conditions related to chronic atrial fibrillation or venous thromboembolism will benefit greatly through the use of the home test,” Mr. Weems said. In a statement, Roche estimated that Medicare beneficiaries would pay $35 for training in use of at-home devices, and about $30 a month for test strips. Patients who have supplemental insurance might not have any out-of-pocket costs, the company said.

Inquiry Request on Stolen NIH Data

A National Heart, Lung, and Blood Institute researcher had the misfortune of having his laptop stolen out of the trunk of his car in late February. More unfortunately, the laptop held confidential information from ongoing cardiac studies of about 3,200 patients, including unsecured Social Security numbers for about 1,200 patients. Most unfortunately, among those whose data are at risk is Rep. Joe Barton (R-Tex.), ranking minority member of the House Energy and Commerce Committee.

Rep. Barton was informed of the breach on March 28 and quickly wrote to the Department of Health and Human Services' Inspector General seeking an inquiry into why the data were not secure and why the NHLBI took almost a month to inform patients of the breach.

The data in the researcher's computer were from ongoing studies of MRI's potential to quickly determine the source of chest pain in the emergency department, and to determine the impact of myocardial infarction on heart structure and function, according to the NHLBI. A spokesman said in an interview that for now, it appears no data were lost, as they were backed up shortly before the theft on an institute server. Also, the NHLBI has offered free credit monitoring and up to $20,000 in identity theft insurance to those whose Social Security numbers were on the laptop.

The National Institutes of Health is now taking steps to ensure encryption of all data storage devices, said the spokesman. The theft and the NHLBI response are being investigated by the Energy and Commerce Committee and the panel's Oversight and Investigations Subcommittee.

Gene Group to Look at Long QT

A new global collaboration led by the NIH and Japan's Center for Genomic Medicine will explore how genes may play a role in drug-induced long QT syndrome, among its first projects. The Global Alliance for Pharmacogenomics will identify genetic factors that influence individuals' responses to pharmaceuticals. The collaborative will also work with the International Warfarin Consortium to develop dosing recommendations based on patients' genetic profiles. Other initial projects include looking at how genes influence the effectiveness of aromatase inhibitors for breast cancer, and side effects from gemcitabine and bevacizumab.

“We expect this international agreement to speed scientific discovery and the translation of results into improved treatments for cancer, heart disease, and other serious conditions,” Dr. Elias Zerhouni, NIH director, said in a statement. The alliance is supported by public funds.

Health Sector Biggest Lobby

The health care industry was the biggest spender when it came to lobbying Congress in 2007. Pharmaceutical, medical device, physician, and hospital groups spent $227 million, a larger tally than for any other sector, according to the Center for Responsive Politics, a Washington-based watchdog group.

Of individual lobbying concerns, the U.S. Chamber of Commerce was number one, spending $53 million on in-house and external personnel, the center reported. Close behind was General Electric ($24 million), followed by the Pharmaceutical Research and Manufacturers of America ($23 million), the American Medical Association ($22 million), and the American Hospital Association ($20 million).

Broken out by industries, the pharmaceutical sector has spent more than any other industry in the last decade, laying out an accumulated $1.3 billion since 1997, said the center.

The data are taken from official lobbying reports that are submitted to the Senate Office of Public Records. The figures do not include other spending that is still aimed at influencing policy, according to the center.

Home Test Coverage Expanded

The Centers for Medicare and Medicaid Services issued a final decision to expand coverage of home prothrombin time (or International Normalized Ratio) testing for patients taking anticoagulation therapy for chronic atrial fibrillation and venous thromboembolism. Patients have to meet certain other criteria, and the home tests can't be used more than once a week. Medicare has covered home testing since 2002, but only for patients with mechanical heart valves.

The request for expanded coverage was made in June 2007 by the three main manufacturers of home testing devices (Roche Diagnostics, International Technidyne Corp., and HemoSense Inc.). The companies said there was plenty of new evidence to support home testing for the two other conditions. The CMS agreed. “Medicare's coverage extension of home blood testing of prothrombin time… is based on current evidence for these two conditions,” CMS Acting Administrator Kerry Weems said in a statement. Currently, PT testing is conducted about every 4–6 weeks, primarily in physicians' offices, according to the CMS. Fewer than 5% of patients on anticoagulation therapy monitor PT at home.

“Those Medicare beneficiaries and their physicians managing conditions related to chronic atrial fibrillation or venous thromboembolism will benefit greatly through the use of the home test,” Mr. Weems said. In a statement, Roche estimated that Medicare beneficiaries would pay $35 for training in use of at-home devices, and about $30 a month for test strips. Patients who have supplemental insurance might not have any out-of-pocket costs, the company said.

Inquiry Request on Stolen NIH Data

A National Heart, Lung, and Blood Institute researcher had the misfortune of having his laptop stolen out of the trunk of his car in late February. More unfortunately, the laptop held confidential information from ongoing cardiac studies of about 3,200 patients, including unsecured Social Security numbers for about 1,200 patients. Most unfortunately, among those whose data are at risk is Rep. Joe Barton (R-Tex.), ranking minority member of the House Energy and Commerce Committee.

Rep. Barton was informed of the breach on March 28 and quickly wrote to the Department of Health and Human Services' Inspector General seeking an inquiry into why the data were not secure and why the NHLBI took almost a month to inform patients of the breach.

The data in the researcher's computer were from ongoing studies of MRI's potential to quickly determine the source of chest pain in the emergency department, and to determine the impact of myocardial infarction on heart structure and function, according to the NHLBI. A spokesman said in an interview that for now, it appears no data were lost, as they were backed up shortly before the theft on an institute server. Also, the NHLBI has offered free credit monitoring and up to $20,000 in identity theft insurance to those whose Social Security numbers were on the laptop.

The National Institutes of Health is now taking steps to ensure encryption of all data storage devices, said the spokesman. The theft and the NHLBI response are being investigated by the Energy and Commerce Committee and the panel's Oversight and Investigations Subcommittee.

Gene Group to Look at Long QT

A new global collaboration led by the NIH and Japan's Center for Genomic Medicine will explore how genes may play a role in drug-induced long QT syndrome, among its first projects. The Global Alliance for Pharmacogenomics will identify genetic factors that influence individuals' responses to pharmaceuticals. The collaborative will also work with the International Warfarin Consortium to develop dosing recommendations based on patients' genetic profiles. Other initial projects include looking at how genes influence the effectiveness of aromatase inhibitors for breast cancer, and side effects from gemcitabine and bevacizumab.

“We expect this international agreement to speed scientific discovery and the translation of results into improved treatments for cancer, heart disease, and other serious conditions,” Dr. Elias Zerhouni, NIH director, said in a statement. The alliance is supported by public funds.

Health Sector Biggest Lobby

The health care industry was the biggest spender when it came to lobbying Congress in 2007. Pharmaceutical, medical device, physician, and hospital groups spent $227 million, a larger tally than for any other sector, according to the Center for Responsive Politics, a Washington-based watchdog group.

Of individual lobbying concerns, the U.S. Chamber of Commerce was number one, spending $53 million on in-house and external personnel, the center reported. Close behind was General Electric ($24 million), followed by the Pharmaceutical Research and Manufacturers of America ($23 million), the American Medical Association ($22 million), and the American Hospital Association ($20 million).

Broken out by industries, the pharmaceutical sector has spent more than any other industry in the last decade, laying out an accumulated $1.3 billion since 1997, said the center.

The data are taken from official lobbying reports that are submitted to the Senate Office of Public Records. The figures do not include other spending that is still aimed at influencing policy, according to the center.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but by the third year, should be made public, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians. The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling. With virtual bundling, the payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, said MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but by the third year, should be made public, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians. The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling. With virtual bundling, the payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, said MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

WASHINGTON — The Medicare Payment Advisory Commission has given its backing to bundling payment for hospitalization, which would essentially give hospitals and physicians an incentive to control costs and avoid readmissions.

At its April meeting, the commission (MedPAC) unanimously voted to include a bundling recommendation in its June report to Congress. As a first step, physicians and hospitals should be required to report to the Centers for Medicare and Medicaid Services (CMS) on resource use and readmissions during an “episode of care,” which is proposed to include the first 30 days post hospitalization. The data would be confidential initially, but by the third year, should be made public, MedPAC commissioners recommended.

Once the resource and readmission data are in hand, CMS should start adjusting payment to hospitals, according to the recommendation. There would be the possibility for gainsharing among hospitals and physicians. The commissioners also voted to direct CMS to study the feasibility of “virtual” bundling. With virtual bundling, the payment would be adjusted based on aggregate use of services over an entire episode of care.

Finally, MedPAC voted to recommend that CMS create a voluntary pilot to test actual bundled payment in selected disease conditions. The pilot could throw some light on how the hospital or accountable care organization receiving the payment decided to share funds, and how Medicare might share in any savings, according to MedPAC staff.

The pilot represents Medicare's ultimate goal—making bundled payments, said MedPAC chairman Glenn Hackbarth, a health care consultant in Bend, Ore.

The Food and Drug Administration has given manufacturers of coronary drug-eluting stents a look at what kind of safety and effectiveness data it will be seeking in the future—and the industry does not appear to be taken aback by what's in the 89-page document.

“This draft guidance is part of FDA's ongoing effort to provide regulated industry with recommendations on measures that can minimize the risks while preserving for patients the benefits of drug-eluting stents,” said Dr. Daniel Schultz, director of the FDA's Center for Devices and Radiological Health, in a statement accompanying the document's publication.

The draft gives recommendations on assessing the toxicity of drug coatings, both on their own and as part of the stent product, according to the agency. Most of the guidance pertains to metal drug-eluting stents; there is less complete information provided on stents made from other materials, such as ceramic or polymer.

The document clearly states an expectation of postmarketing studies out to 5 years after approval. The proposed “guidance,” if made final, would not carry the weight of a regulation.

The guidance is a departure for the agency, as it combines the efforts of the drug and device divisions. “This guidance demonstrates how FDA will need to work across traditional product boundaries to guide the development of innovative new products,” said Dr. Janet Woodcock, director of the Center for Drug Evaluation and Research, in the statement.

Dr. Christopher White, chairman of the department of cardiovascular diseases at Ochsner Clinic Foundation, and a principal investigator for several stents, views the FDA guidance as a positive development. “The fact that FDA is willing to commit on paper the core elements of what they view as necessary for device approval is actually very helpful,” said Dr. White in an interview.

He said that the draft does not seek much that companies are not already doing—with the exception of long postmarketing data—and it will take a while to be put in place.

A Boston Scientific Corp. spokesman agreed that its pipeline would likely not be affected. In any case, Boston Scientific has already been collecting 5 years of postmarketing data on its products, said the spokesman.

The FDA will accept comments on the guidance through July.

The Food and Drug Administration has given manufacturers of coronary drug-eluting stents a look at what kind of safety and effectiveness data it will be seeking in the future—and the industry does not appear to be taken aback by what's in the 89-page document.

“This draft guidance is part of FDA's ongoing effort to provide regulated industry with recommendations on measures that can minimize the risks while preserving for patients the benefits of drug-eluting stents,” said Dr. Daniel Schultz, director of the FDA's Center for Devices and Radiological Health, in a statement accompanying the document's publication.

The draft gives recommendations on assessing the toxicity of drug coatings, both on their own and as part of the stent product, according to the agency. Most of the guidance pertains to metal drug-eluting stents; there is less complete information provided on stents made from other materials, such as ceramic or polymer.

The document clearly states an expectation of postmarketing studies out to 5 years after approval. The proposed “guidance,” if made final, would not carry the weight of a regulation.

The guidance is a departure for the agency, as it combines the efforts of the drug and device divisions. “This guidance demonstrates how FDA will need to work across traditional product boundaries to guide the development of innovative new products,” said Dr. Janet Woodcock, director of the Center for Drug Evaluation and Research, in the statement.

Dr. Christopher White, chairman of the department of cardiovascular diseases at Ochsner Clinic Foundation, and a principal investigator for several stents, views the FDA guidance as a positive development. “The fact that FDA is willing to commit on paper the core elements of what they view as necessary for device approval is actually very helpful,” said Dr. White in an interview.

He said that the draft does not seek much that companies are not already doing—with the exception of long postmarketing data—and it will take a while to be put in place.

A Boston Scientific Corp. spokesman agreed that its pipeline would likely not be affected. In any case, Boston Scientific has already been collecting 5 years of postmarketing data on its products, said the spokesman.

The FDA will accept comments on the guidance through July.

The Food and Drug Administration has given manufacturers of coronary drug-eluting stents a look at what kind of safety and effectiveness data it will be seeking in the future—and the industry does not appear to be taken aback by what's in the 89-page document.

“This draft guidance is part of FDA's ongoing effort to provide regulated industry with recommendations on measures that can minimize the risks while preserving for patients the benefits of drug-eluting stents,” said Dr. Daniel Schultz, director of the FDA's Center for Devices and Radiological Health, in a statement accompanying the document's publication.

The draft gives recommendations on assessing the toxicity of drug coatings, both on their own and as part of the stent product, according to the agency. Most of the guidance pertains to metal drug-eluting stents; there is less complete information provided on stents made from other materials, such as ceramic or polymer.

The document clearly states an expectation of postmarketing studies out to 5 years after approval. The proposed “guidance,” if made final, would not carry the weight of a regulation.

The guidance is a departure for the agency, as it combines the efforts of the drug and device divisions. “This guidance demonstrates how FDA will need to work across traditional product boundaries to guide the development of innovative new products,” said Dr. Janet Woodcock, director of the Center for Drug Evaluation and Research, in the statement.

Dr. Christopher White, chairman of the department of cardiovascular diseases at Ochsner Clinic Foundation, and a principal investigator for several stents, views the FDA guidance as a positive development. “The fact that FDA is willing to commit on paper the core elements of what they view as necessary for device approval is actually very helpful,” said Dr. White in an interview.

He said that the draft does not seek much that companies are not already doing—with the exception of long postmarketing data—and it will take a while to be put in place.

A Boston Scientific Corp. spokesman agreed that its pipeline would likely not be affected. In any case, Boston Scientific has already been collecting 5 years of postmarketing data on its products, said the spokesman.

The FDA will accept comments on the guidance through July.