State’s health care ideas hit big time in Cantwell's hands

By:  Kathie Durbin
Source: The Columbian

If some parts of the new health reform law passed by Congress sound familiar here in Washington, it’s no coincidence.

As a member of the Senate Finance Committee, U.S. Sen. Maria Cantwell, D-Wash., helped write several of the law’s provisions with the goal of building on Washington’s success in providing cost-effective and humane health care.

Throughout the long debate over health care reform, Cantwell has argued for cost containment. The new law “will set us on a path to control health care costs, which are spiraling out of control and threatening our economy,” she predicted last week.

Washington spends an average of $7,100 per year on each Medicare beneficiary, $1,200 less than the national average. That’s in part due to the popularity here of managed care programs, which tend to keep costs down. But under current reimbursement formulas, Washington is actually penalized for controlling costs.
A rescue mission

Cantwell also wrote language that could help rescue the state’s Basic Health Plan. The health insurance program for the working poor was slashed by 40 percent last year due to the state budget crisis. It’s down to 69,000 enrollees, has a waiting list of more than 100,000, and is closed to new enrollment. Without significant new revenue, it could face more cuts during the Legislature’s special session.

The 20-year-old Basic Health Plan gets no federal money. It is funded entirely by the state and by sliding-scale premiums paid by enrollees. Under the plan, the state negotiates with private insurers for the lowest possible premiums to serve its low-income clients.

“There’s a pride in the people that are part of the program, because it is not an entitlement,” said Dave Wasser, spokesman for the Washington Health Care Authority, which manages the program. “It is something they help pay for.”

Language in the new law would allow Washington to apply for a federal waiver from Medicaid rules and receive grants of up to $180 million a year to support the program until 2014.

“It’s loosening up the rules that previously prohibited this kind of approach,” Cantwell said. “Now they can apply without strings attached. They can negotiate rates that will get them cheaper health care.”

In the long run, Cantwell said, the program, which is in effect a public option, could morph into Washington’s new health care exchange, and could save the state 20 to 30 percent on health care costs.

“We think this is the model moving forward for the country,” she said. “In a few years, this new law will allow significant expansion of our highly popular Basic Health Plan to states all across the country.”

State officials are more guarded.

“It certainly looks good in terms of the future of insuring more Washingtonians,” Wasser said. “Exactly how it will work is unclear.”

“We are cautiously optimistic,” said Jonathan Seib, Gov. Chris Gregoire’s health care policy adviser. “The provision that Sen. Cantwell wrote opens the door for us to ask for a waiver.”

But because the new health care exchanges the states must set up by 2014 will serve middle-income families as well as the working poor, insurance companies might be less willing to slash their premiums to cover them, Seib said.

“Once you start to engage with higher-income families, the providers might not be so willing to cut costs,” he said.

At a minimum, Seib said, Cantwell “has provided every state with an additional option that would take advantage of the role the states can play in negotiating better prices.”
More with less

The new law also includes another of Cantwell’s top reform priorities: Fixing the Medicare reimbursement formula. State officials say the current formula unfairly penalizes Washington hospitals, doctors and other providers for delivering quality, efficient health care at a lower cost than those in most other states. At the same time, it rewards providers for ordering redundant or unnecessary tests and procedures.

“The disparate reimbursement on Medicare goes back a long time,” Seib said. “We have done more with less. But when you do more with less you get less.”

The new law will phase in a major shift in the reimbursement formula as the national norm.

“The notion is, (health care providers) would be reimbursed for outcomes and not procedures,” he said. “Those sorts of ideas are explicit in the federal reform legislation: That we pay for quality and not quantity, that we pay for value and not volume. The current reimbursement system, the fee-for-service system, says the more you do, the more you make.”

The Congressional Budget Office has said that changing the Medicare reimbursement formula will be a major factor in cutting the nation’s health care costs.

Here in Washington, Cantwell said, it will have a more immediate effect: Encouraging doctors to accept new Medicare patients. They’ve been reluctant to do that because the state’s reimbursement rate is so low.

One of the changes Cantwell is most excited about is the inclusion of $1.1 billion to encourage other states to enact policies like Washington’s, which pay for long-term care workers to help seniors stay in their homes.

“We did this in the Legislature to allow the state to be more flexible,” she said. “We were visionary. We were trying as a state to say, ‘How do we fix some of our long-term health care costs?’”

Home and community-based care costs 70 percent as much as nursing home care, Cantwell said, and it allows seniors to remain active in their communities.

“Most states, particularly now, won’t do it, because they have revenue shortfalls,” she said. “They know it will save money in the long run, but they can’t afford it.”

The $1.1 billion won’t go far, she acknowledged, but it will pay for some pilot projects.

“If you took a poll of all the issues” in the massive health reform law, Cantwell said, “I believe this would be one of the three most popular things.”