Oregon Medical Care Plan Rejected by Administration : Health: Program would have rationed treatment for Medicaid patients. It is ruled to be discriminatory.

The Bush Administration on Monday rejected a revolutionary health care plan developed by the state of Oregon that would have rationed treatment for Medicaid recipients, saying it discriminated against the disabled.

But in a letter to Oregon Gov. Barbara Roberts, Health and Human Services Secretary Louis W. Sullivan praised the effort to hold down medical costs and encouraged the state government to redesign the plan to comply with the law and resubmit it.

“Given the real possibility that Oregon’s general approach will serve as a model for other states, it is critically important that it go forward only with strict adherence to the legal protections (for the disabled). . . “ Sullivan wrote.

“I urge Oregon to submit a revised application which addresses these concerns, and I look forward to approving such a demonstration,” he continued.

The decision met with outrage from two Oregon legislators, Republican Sen. Bob Packwood and Democratic Rep. Ron Wyden, both of whom claimed the plan was a victim of election year politics.

Roberts also reacted angrily. The state government requested the waiver more than a year ago, according to spokeswoman Gwenn Baldwin, and had been working closely with the Administration to resolve legal questions ever since.

“They’ve been incredibly complimentary of the health care plan, and now at the 11th hour, they make this decision without giving us any specifics,” Baldwin complained. “It was totally out of the blue.”

Packwood, in the midst of a tough reelection campaign, accused the Administration of making the decision partly for political reasons because of the growing critics of Oregon’s priority plan outside the state. Within Oregon, however, the decision will hurt Bush’s reelection prospects severely, Packwood said.

“Close to fatal in Oregon,” Packwood told the Associated Press.

But advocates for the poor and the disabled expressed their relief.

“We are exceedingly pleased,” said Joseph Liu, a senior health associate with the Children’s Defense Fund. “The plan posed tremendous dangers to low-income children, and would have set a dangerous precedent for health care reform at the state and federal level.”

The Oregon plan was viewed as one of the most radical efforts ever undertaken to restrain the unbridled growth in health care spending, which now accounts for 12% of the nation’s total economic output.

Medicaid, the federal-state program that helps pay the bills for poor people, is the fastest growing category of spending in many state budgets.

As designed, the plan would have included Medicaid coverage for an additional 120,000 low-income people who are not now considered poor enough to qualify. Among them: families of the working poor who are below the poverty line and single men and women without children.

To accomplish that goal, the Oregon Legislature approved spending an extra $30 million on Medicaid. But to offset the added cost, it agreed to ration services.

To do so, it ranked 808 medical procedures in order of priority, figured the cost of providing each service and determined a cut-off point. Treatments that ranked 1 through 587 would have been paid for by the state; those falling below the cut-off would not have been funded.

Prenatal care, most organ transplants and treatment for pneumonia, influenza, appendicitis and certain types of cancer with high cure rates would have been covered. Expensive treatments for conditions that improve on their own, such as the common cold, or are considered beyond hope, such as incurable cancer and the final stages of AIDS, would not be covered, although the state would pay for “comfort care” for those patients. Treatment of premature babies with virtually no chance for survival also would have been excluded.

The state was required to apply for a waiver from the Administration because it would not have met the current legal requirements for federally funded, state administered health care programs for the poor.

But the Administration ruled that the plan ran afoul of the Americans With Disabilities Act, which went into effect just last month and guarantees equal treatment under the law for all. “The Americans with Disabilities Act . . . leaves no question that those with disabilities must enjoy the same treatment under the law as other Americans. . . . Oregon’s proposal does not meet that test and we must return it for further work,” Sullivan said in a statement.

Opponents were highly critical of the way in which the rankings were determined. The state’s list of covered procedures was based in part on results of a statewide telephone survey that sought to assess how Oregonians felt about being confined to bed, having to use a wheelchair or about how suffering vision or hearing problems might affect someone’s quality of life.

Critics charged that treatments that might leave a patient with some type of disability were given lower priority because the quality of life of the disabled was believed to be less than for others.

The results of this survey, wrote Sullivan, clearly reflect “stereotypic assumptions” about the disabled. “Scholars who have examined quality of life surveys have concluded that, as compared to persons who have the disabilities in question, persons without disabilities systematically undervalue the quality of life in question.”

Baldwin insisted that the Administration’s emphasis on the public opinion survey was inappropriate. The survey, she said, had “very, very limited impact” on the final list, which was put together by a commission of health care professionals based solely on the effectiveness of the treatment and its trade-offs.

Times staff writers Robert Rosenblatt and James Gerstenzang contributed to this story.

Oregon’s Priority Plan

The state planned to bring 120,000 more poor people under the health coverage of Medicaid. But to do that, it would limit what services would be paid for with public money. Here are the top 10 and bottom 10 items on the Medicaid rationing list of 808 items. The top 10 would be treated automatically; the bottom 10 would not be treated under Medicaid coverage: THE TOP 10 1. Pneumococcal pneumonia, other bacterial pneumonia, bronchopneumonia, influenza with pneumonia. 2. Tuberculosis. 3. Peritonitis, an inflammation of the abdominal cavity. 4. Foreign body in pharynx, larynx, trachea, bronchus and esophagus. 5. Appendicitis. 6. Hernia with obstruction and/or gangrene. 7. Croup syndrome, an upper respiratory ailment. 8. Acute orbital cellulitis, an inflammation of the tissue around the eye. 9. Ectopic pregnancy. 10. Injury to major blood vessels of upper extremity. THE BOTTOM 10 799. Gynecomastia, benign enlargement of the breast. 800. Cyst of kidney, a benign condition. 801. Terminal HIV disease with less than a 10% survival rate at 5 years. 802. Chronic pancreatitis, an untreatable ailment. 803. Superficial wounds without infection and contusions. 804. Constitutional aplastic anemia, untreatable. 805. Prolapsed urethral mucosa, a minor urinary condition. 806. Blockage of the retinal artery. 807. Extremely low birth weight (under 1.1 pounds) and under 23-week gestation. 808. Anencephaly and similar conditions in which a child is born without a brain. Source: Oregon Health Services Commission