OREGON MEDICAID OUTCOMES RATING "EXPERIMENT" MAY GET CONGRESSIONAL OKAY THIS SESSION; REP. WAXMAN’s OPPOSITION IS SOFTENING: ONE-STATE TEST SET

Oregon's Medicaid "experiment" to limit medical reimbursement to procedures approved by an outcomes rating system may get a Congressional okay this session. House Commerce/Health Subcommittee Chairman Waxman (D-Calif.) reportedly has softened his prior opposition to the state plan and is ready to support a waiver to permit Oregon to implement the plan. According to proponents of the Oregon plan, Waxman's support carries the proviso that no other states will be allowed to adopt similar plans until the Oregon experiment is two years old. Oregon state legislator Rick Kotulski reported the progress of the state's Medicaid plan in a presentation to the Pharmaceutical Manufacturers Association annual meeting in Boca Raton, Fla. on April 3. "The last word that I had from Mr. Waxman's office," Kotulski told the PMA meeting, "is that he is at a position where he will allow Oregon to do this as long as it is completely understood by everybody that it is for a specific time period and no other state will be allowed to do anything to Medicaid until we find out how Oregon works out." Kotulski, who chairs the Oregon House's Human Resources Committee, also maintained that the plan has the support of two key members of the state's Congressional delegation: Sen. Packwood (R) and Rep. Wyden (D). Kotulski described Packwood as "very supportive." He said Wyden has shifted in favor of the bill after being initially reluctant. "It is still going to be a difficult time in Congress," Kotulski acknowledged. The success or failure of the Oregon Plan will be evident after two years, Kotulski indicated, from such indicators as the number of state residents reached by expanded access, the rate of low birth-weight babies and statistics on utilization of expensive emergency room treatment as opposed to preventative care. The Oregon legislator made two presentations at the PMA annual meeting: one to a general breakfast session, and a second at a private briefing for the association board. Kotulski reportedly asked the association for support in obtaining the waiver and making the plan work. The PMA board deferred action on his request. Kotulski noted that proponents of the plan have been seeking to build a broad base of support for the initiative outside the state. "We've been going around the country, Kotulski said, "speaking to medical associations, hospital associations, CPA associations, pharmaceutical associations -- every opportunity that those of us involved in the Oregon experiment can find." He maintained that the state physician community generally supports the change in Medicaid reimbursement. The Oregon plan is based on a state law (Senate Bill 27), which establishes a procedure for ranking over 7,000 treatments and deciding which justify coverage by the state. "Senate Bill 27 is a revolutionary concept of how we deliver health care," Kotulski declared. Noting that an 11-member commission has been holding sessions around the state to determine consumer expectations of health coverage and to do research on treatment outcomes, Kotulski said the commission has had over 70 meetings. In July, the Oregon House Human Resources Committee will receive a "priority list" of treatments. Kotulski explained that there "are over 7,000 treatment pairings that the commission is looking at." The list to the legislature will put each treatment pairing in a priority order with "a dollar figure next to each treatment." Based on the list, Oregon will decide which procedures to fund. "When we fund, it will be for everyone who is [at] 100% of the federal poverty limit or below," Kotulski said. Oregon currently limits eligibility to the program to persons at 60% of the federal poverty level. The expanded eligibility limits "will bring an additional 120,000 poor people in the state of Oregon into a basic health care system." Kotulski claimed that the Oregon approach to treatment ratings based on an outcome prediction formula is a more open form of rationing than the de facto eligibility rationing currently practiced by state Medicaid programs. "Some people have said this is the Oregon rationing system: they raise their eyebrows and wonder how primitive the [Oregon] legislators can be," Kotulski said. "The fact of the matter is that every state rations health care...They ration, however, by eligibility, by income." By expanding eligibility, the Oregon plan may actually increase the state's medical expenditures, Kotulski noted. "My prediction is that we will actually end up spending more dollars," Kotulski said, "but we will be spending them in a wiser way. We will be spending the dollars for preventative care rather than critical care. We will be spending those dollars based on what research says is the best treatment." The Oregon legislator explained the outcomes evaluation process, noting that "there is a very complicated formula that the health services group is taking around the state to rank these pairs of treatment. Basically, what the formula says is, if you do not treat this person, what happens, how much will it cost, and if you use a standard treatment, how much will it cost and what will the results be and are there alternative treatments that have a better cost and better results." Outcomes research is still in a "primitive stage," Kotulski observed, but he said Oregon's experiment should advance the procedure. "We are also hoping that the Oregon Plan forces states and the federal government to invest more dollars into what is really efficacious," Kotulski said. * The attraction of the Oregon approach to the pharmaceutical industry, Kotulski contended, is the ability to compare the cost effectiveness of drug therapies to other forms of health treatment. "I think that what Oregon is doing is providing an opportunity," Kotulski said. The pharmaceutical industry can make "true what you have been telling me as a state legislator for the last six years, namely that pharmaceuticals are cost effective and one of the initial ways that treatment should be done." While the comparative treatment assessments favoring drug therapies may be an attractive concept to the drug industry, pharmaceutical executives have been reluctant to support technology assessment schemes in the past. The drug industry has at least two fundamental concerns about such assessment programs: (1) the establishment of government-sanctioned committees that could dominate medical practice and which might expand their comparative activities from different types of treatments to drug-to-drug efficacy evaluations in the future; and (2) the creation of a split within the health care community by implicitly agreeing to focus cost containment efforts of other sectors, such as doctors and hospitals. Another potential concern is the spillover effect of the government plan into the private payer sector. The Oregon plan specifically calls for the private insurers handling small businesses mandated into coverage to adopt the priority list developed by the state. "Why should we ask [Oregon] employers to pay more for their employees and provide more for their employees than the state is willing to provide for the people that it is responsible for?" Kotulski asked. Kotulski defended the Oregon assessment plan as a catalyst for more public participation in the debate over health care treatments. "Now you can see that there is going to be a great deal of pressure on legislators because everybody is going to have that list," Kotulski said, pointing out: "it has been developed in the public by the public and it will be available to the public. Right now people are not involved in these kinds of issues." The Oregon proposal is being further portrayed as a long-term approach to addressing Medicaid cost pressures and equity issues in the delivery of care. "Oregon is unique in that it decided to face these issues head on instead of using stopgap measures like formularies or adding a few more dollars to the Medicaid budget." He maintained that the Medicaid "system is going to be fixed sometime. If you do not let the states experiment, then you only have the wisdom of Congress to rely upon." Samuel O. Thier, MD, president of the Institute of Medicine, also commented on the trend toward technology assessment at the national level at the PMA meeting April 4. The Institute of Medicine is charged with helping HHS' newly-formed Agency for Health Care Policy and Research develop practice guidelines for healthcare. "Anybody who believes that practice guidelines will not become a foundation of reimbursement strategy, I think, is being extremely shortsighted," Thier warned PMA. Thier noted that Congress has set big goals for the practice guidelines. "Congress literally expects," he said, "that there will be useful guidelines in place for three to four clinical circumstances by the end of the twelve months from having passed the law." However, Thier added, it is important to "reintroduce some reality" to this process: "I can tell you as one who spent a long time in medical care, that we won't even have reasonable answers upon which to base a number of the practice guidelines for five to ten years." Thier said an important basis of successful practice guidelines will involve "a continuous improvement model" of quality control for medical care. Technology assessment that merely picks off high-cost outliers should give way to assessing "the quality of care along a continuum," according to Thier. As an example, Thier said, the effectiveness of coronary bypass surgery should be evaluated in terms of how patients fare two years down the road as well as immediately after the procedure, and evaluated alongside the effectiveness of preventive care prior to surgery as well.