In This Issue...

CBO Projects Growing Deficit and Health Care Spending

A recent Congressional Budget Office (CBO) report, The 2012 Long-Term Budget Outlook, projects increases in the federal deficit and health care spending in both near and long-term. According to CBO, the federal deficit will exceed $1 trillion in 2012 -- the fourth year in a row it has exceeded that amount. In the long-term, the deficit could decrease if current law were followed (e.g., tax cuts allowed to expire) but was likely to increase if current policies were maintained (e.g., tax cuts extended), the budget office forecasts.

Also predicted is that spending on federal health programs will increase from its current five percent of the gross domestic product to 10 percent by 2037. Similarly, national health care spending will grow from 16.8 percent of GDP in 2010 to nearly 25 percent in 2037. Among the factors contributing to this increase are:

  • The emergence and adoption of new medical technologies;
  • Increases in personal income; and
  • Expanding scope of health care coverage.

This report, as well as weak economic indicators, will continue to pressure Congress to reduce the federal deficit by the end-of-the-year. Most likely, this will occur after the election during a lame-duck Congressional session. If you would like to view the report, please go the CBO Web site.

OIG Issues Report on Coverage/Payment of Genetic Tests

On June 12, 2012, the HHS Office of the Inspector General (OIG) released a report, Coverage and Payment for Genetic Laboratory Tests, evaluating how various Medicare contractors pay for genetic tests, as well as how Medicare and Medicaid pay for 20 high-volume and/or high cost tests. The report was prepared at the request of the Centers for Medicare and Medicaid Services (CMS), now in the process of establishing payment rates for 101 new genetic codes. The OIG reported wide variation in payment amounts among state Medicaid programs for some genetic tests. For example, Pennsylvania paid $1,000 for a BRCA1 analysis, whereas nearby Iowa reimbursed nearly $4,000. OIG did not make any formal recommendations to CMS. If you would like a copy of the OIG report, please go to its Web site.

House Panel Examines Medicare Fraud

The House Energy and Commerce Subcommittee on Oversight and Investigations recently conducted a hearing, "Medicare Contractors’ Efforts to Fight Fraud – Moving Beyond Pay and Chase," which examined the failure of CMS to prevent, detect and recover fraudulent payments. The Government Accountability Office (GAO) has listed Medicare as a “High-Risk” program for fraud, a chronic condition since 1990. The investigative agency testified that CMS remained slow in recovering past overpayments, citing the fact that antifraud contractors identified $835 million in overpayments in 2007, only to have less than seven percent, or $55 million, of the total amount recovered. The OIG emphasized it is critical for CMS to improve its fraud identification and recovering processes, especially with Medicare spending over $500 billion annually.

PCORI Releases Preliminary Methodology Report

The Patient-Centered Outcomes Research Institute (PCORI) released a preliminary draft Methodology Report, on June 4th,, identifying 60 standards to guide patient-centered outcomes research. The report, which should be open for public comment in July, identifies five standards for studies of diagnostic tests:

  • Specify the clinical context and key elements of diagnostic test study design;
  • Study design is informed by investigations of the clinical context of testing;
  • Assess the effect of factors known to affect diagnostic performance and outcomes;
  • Structure reporting of diagnostic comparative effectiveness results; and
  • Give preference to randomized designs of studies of test outcomes.

PCORI was created by the 2010 health care law and is increasingly taking over the lead in evidence-based medicine-related research. The private-public group is expected to fund $120 million in comparative effectiveness research in 2012. To get a copy of the draft report, please visit the PCORI Web site.