Medicare Compliance & Reimbursement

HSAs, medical liability reform get strong White House support.

In spite of ongoing glitches with the new Medicare drug plan, rising health care costs and millions of uninsured Americans, President George W. Bush assures the nation that the federal government is meeting its responsibility to provide health care for the poor and the elderly in his Jan. 31 State of the Union address.

"Keeping America competitive requires affordable health care," says the President. "We must confront the rising cost of care, strengthen the doctor-patient relationship and help people afford the insurance coverage they need." Bush went on to outline his key health care initiatives for 2006, which include wider use of electronic health records and other health information technology, strengthening health savings accounts, and passing medical liability reform.

Health IT initiatives will help control costs and reduce dangerous medical errors, Bush asserts. Consumer-driven health care initiatives, which have sparked debate in Congress, also top the President's goals for this year. Bush's support for portable HSAs aims to equip low-income individuals with "the same [health care] advantages that people working for big businesses now get." In addition, the President's support for medical liability reform proposes to deter lawsuits from "driving many good doctors out of practice."

Bush's Initiatives Meet With Criticism--And Support

Democrats had a different perspective on some of the President's health care initiatives, including Gov. Tim Kaine's (D-VA) response to the President's address. "Skyrocketing costs are hurting small businesses and pushing millions of working Americans into the ranks of the uninsured," notes Kaine. The governor went on to criticize the Part D's problematic rollout, which was notably absent from Bush's address. "[Beneficiaries] find getting their medicine to be more complex, more expensive and less reliable," he contends.

On the Democrats' behalf, Kaine suggests refocusing health care reform to do a better job of serving consumers, such as assisting seniors with purchasing American-made drugs from other countries at lower prices. "Republicans and Democrats alike have banded together to fight the administration's efforts to slash Medicaid and push more costs on to the states," Kaine adds.

In addition, the American Medical Association offered its support to Bush's consumer-driven health care initiatives in a Jan. 31 statement following the President's address. "[W]e must engage patients as partners to successfully manage costs and achieve greater value from the resources devoted to health care," says AMA president J. Edward Hill. AMA's 2006 advocacy agenda includes reforming Medicare's physician payments, expanding coverage for the uninsured, improving public health, improving patient safety and quality, and reforming managed care, says Hill.

Budget Bill Passes House Vote, Awaits President's Signature

In related news, the 2006 budget reconciliation bill finally passed Congress Feb. 1 after its second trip to the House of Representatives. The bill narrowly passed in a 216 to 214 vote and will now proceed to President Bush, who has said he's eager to sign it. The bill contains more than $39 billion in budget cuts, including $6.9 billion from Medicare and $4.8 billion from Medicaid. All House Democrats, plus 13 Republicans, voted against the bill in a losing effort.

The controversial bill's changes will increase Medicaid coverage for disabled children; on the other hand, it will increase copayments for most Medicaid benes and prevent seniors with high home equity from receiving nursing home benefits. Seniors will also face higher penalties for transferring assets before applying for long-term Medicaid coverage.

Medicare benes are in for higher premiums, and payments for home health care providers will freeze. The bill will reverse the 4.4-percent physician payment cuts that went into effect Jan. 1, however.

HSA Enrollment Jumps To More Than 3 Million

Health savings accounts, which are gaining momentum as mandatory add-ons to high-deductible health insurance plans, have tripled their enrollees over the past 10 months--much to the surprise of some industry analysts.

"This is a very significant success story," America's Health Insurance Plans president and CEO Karen Ignagni tells reporters. "Clearly a number of people are participating and purchasing this product who had not been able to have coverage before." Nevertheless, HSA critics point out that the 3 million enrollees represent only a small fraction--about 1.5 percent--of roughly 198 million beneficiaries who have private insurance.

HSAs are a critical element in the Bush administration's movement toward consumer-driven health care. HSAs first became available in January 2004 as part of the Medicare Modernization Act. Employers and benes can contribute pre-tax dollars into an HSA for future medical expenses, and account balances can roll over tax-free from year to year.

By March 2005, slightly more than 1 million benes had enrolled in HSA-compatible plans, according to an AHIP survey. The latest 3-million enrollee estimate is preliminary data from a study AHIP conducted more recently. AHIP announced the new study's preliminary results Jan. 26 and plans to release full results in several weeks.

The new study surveys AHIP member companies, including nearly all health insurance plans offering HSA products. Preliminary findings also show that the HSA market is becoming much broader. Companies are offering HSAs in more markets and to a wider array of large group, small group and individual customers, the study finds.

President Bush recently proposed to increase the limitations on HSA contributions in his Jan. 31 State of the Union address. Meanwhile, House legislation (H.R. 4511) is attempting to do the same. But many Democrats are skeptical of HSAs. Many suspect that high-income benes could abuse HSAs for tax-sheltering purposes. And the number of uninsured Americans, coupled with high health care costs, is another point of contention. Proposals for HSA expansion will likely meet with further Democratic opposition in Congress.