The Senate passed HR 3590, its leadership’s health care reform bill, this morning by a 60 to 39 party line vote. The Senate will take a break until Janaury 19.

The Washington Post reports that rather than use a conference committee, the House and Senate leadership are expected to negotiate amendments to the Senate bill. The amended Senate bill will be presented first to the House and then the Senate.

The Post also reports that the President expects that the 40% excise tax will be included in the final bill. Also Speaker Pelosi has expressed her approval for the compromise approach under which OPM would negotiate multi state plans that would be included in the health insurance exchanges.

Yesterday, OPM released a message about the recent statutory extension of the COBRA / TCC subsidy. The defense appropriations act extended the Program deadline to February 28, 2010 and expanded the subsidy period from nine to fifteen months. OPM’s message notes that the defense appropriations act changed the subsidy eligibility rules such that only the involuntary termination of employment must occur before March 1, 2010. Previously, the law required that the termination and COBRA / TCC enrollment had to occur by the statutory deadline. This meant that the statutory deadline was advanced 31 days for FEHB purposes due to the 31 day automaticextension for conversion available to involuntary terminees. The Labor Department has posted a fact sheet on the statutory changes to the subsidy program.

Happy Holidays.

Today, the Senate approved the manager’s amendment to the leadership’s health care reform bill, H.R. 3590. The Senate is on track for a final vote to approve the bill at 8 am on Thursday according to Business Insurance.

The Federal Times and Govexec.com report that federal employee unions and associations like NTEU and NARFE are satisfied with the provisions in the managers amendment that would authorize OPM to contract for multi-state plans to be added to the state based exchanges. This additional responsibility would not upset the FEHBP applecart. Govexec.com reports that

The Congressional Budget Office, in its analysis of the amendment, questioned whether any insurers would want to sign up for the plan, and estimated it would have little impact on national health care premiums or federal spending.

I am a believer in the precept that if you build it they will come so I expect that OPM will find willing carriers. Bear in mind that these new plans would first become available when the state exchanges become operational in 2014.The Washington Post and the Washington Times both reported on an odd case coming out of California. A federal judge out there is “ordering” OPM to cover the same sex spouse of a federal employee in the context of an internal administrative proceeding. The Washington Post’s columnist trumpets that OPM is defying a court order. But how can a ruling in an internal administrative proceeding be binding on OPM? It does not compute. In my view, it’s time for some patience while Congress considers the bill (S. 1102) extending FEHB coverage to same sex spouses and domestic partners.
Health Data Management reports that HHS plans to develop a national all payer, all claims database in order to assist the comparative effectiveness research funded by the this year’s recovery act. HHS has begun the process of soliciting a management consultant to develop a project plan.URAC “today announced its new Consumer Education Initiative, which teaches consumers about health insurance and identifies ways they can make more informed decisions about their health care.”

Yesterday, Senate Majority Leader Harry Reid (D Nev) announced that the Congressional Budget Office had blessed his Managers’ Amendment to HR 3590 (the great compromise) and that Sen. Ben Nelson (D Neb.) has agreed to support the amended bill which would give the Majority Leader the 60 votes that he needs to bring this bill to a final vote on the floor. The next cloture vote is scheduled for 1 am Monday morning which if it receives the necessary 60 vote approval will lead to a final vote on Thursday night, Christmas Eve. The CBO letters are available here and here and its Director’s post on the Manager’s amendment is here.

I heard Sen. John McCain (R Ariz) say this morning that he thinks that the Senate will pass the bill. At that point, the ball passes back to the House which either could adopt the Senate bill or demand a conference committee. Sen. Kent Conrad (D ND), who chairs the Senate Budget Committee said on the same show that the House will need to stick closely to the Senate version or risk unraveling the deal.

I have written about the great compromise including a parallel FEHB Program for the insured. Having read the relevant provision (Sec. 1334, p. 54), it’s not accurate to describe this as a parallel FEHB program. Rather the great compromise rips a page out of the FEHB Program playbook. The OPM Director would contact with at least two health insurance issuers, including at least one not for profit issuers, to offer a multi-state health benefit plan in the state based health insurance exchanges that the Senate bill would create. These multistate plans would be open to individuals and small businesses. The multistate plans would have to satisfy both a combination of health insurace exchange and FEHBA requirements. The manager’s amendment specifies that the FEHB Program will be unaffected by these new OPM contracts. It requires OPM to maintain the current level of effort to support the FEHB Program, and it allows OPM to create a new office to handle the multistate contract. I think that this is doable for OPM.

There are many other changes in the 736 page long Managers Amendment. For example, it would postpone the first $6.7 billion annual fee from 2010 to 2011. It will take a while to digest.

In other legislative action, the Senate approved the defense appropriations bill (H.R. 3326). This final Fiscal Year 2010 appropriations bill extends the 65% COBRA / TCC premiums to employees who are involuntarily terminated before March 1 (rather than January 1, 2010) and it extends the subsidy period from nine months to fifteen months retroactively to November 30, 2009, according to Business Insurance. The bill also averts for two months the 21% cut in Medicare Part B reimbursements to doctors according to California Healthline.

Let’s start off with some FEHBP news. This morning, the Senate Homeland Security and Governmental Affairs Committee approved S. 1102 which would extend FEHBP coverage, and other federal employee benefits, to same sex domestic partners by an 8 to 1 vote. Govexec.com reports that the Committee Chairman Sen. Joe Lieberman and the Ranking Minority Member Sen. Susan Collins advised that they will not move the bill to the Senate floor until OPM offers savings that make the measure deficit neutral. The Office of Management and Budget is considering OPM’s proposals.

Speaking of government finances, the House of Representatives today passed a further extension of the continuing resolution funding the government. The Federal Times reports that the CR now will expire December 23. The last piece of the appropriations puzzle is a defense appropriations bill which the House also passed today. Included in the defense appropriations bill is an extension of the COBRA / TCC premium subsidy that is scheduled to sunset on December 31, 2009. Business Insurance reports that

Embedded in H.R. 3326, a measure appropriating funds for the Department of Defense, the nine-month, 65% premium subsidy would be extended by six months to a total of 15 months. It would apply to those who lose their jobs through Feb. 28, 2010. Under current law, employees who lose their jobs after Dec. 31 are ineligible for the subsidy.

Also embedded in H.R. 3326 is a provision that would stave off the Medicare physician reimbursement cut of 21% for two months from January 1, 2010, to March 1, 2010, according to Modern Healthcare. The Senate is expected to act on H.R. 3326 by December 23.

Business Insurance also reports that “The Senate on Tuesday rejected two proposals to allow people to buy cheaper prescription medicines from other nations, preserving a deal between the White House and the pharmaceutical industry.” These decisions were made in the course of considering the mammoth health care reform legislation. For public safety reasons, I think the Senate made the right decision here.

We are still waiting for the Senate Majority Leader to release the details of the great compromise, which includes the parallel FEHBP. The Politico reports tonight that “Senate Majority Leader Harry Reid’s plan to pass the Senate health care reform bill by Christmas looked increasingly in doubt Wednesday, as Republicans launched an offensive to stall the legislation and Democrats had yet to strike a 60-vote compromise.” The Democrats ultimate goal is to present the President with a bill to sign before the State of the Union address in late January or early February. Time will tell.

Last week, Sen. Majority Leader announced that he had submitted to CBO for scoring a great compromise that would expand Medicare and various other programs and would create a parallel FEHB program under OPM supervision in lieu of a public plan option. The details of the great compromise still are under wraps. The Wall Street Journal reports tonight that “Senate Democrats signaled their intention to back away from a plan to expand Medicare [a program facing imminent bankruptcy], in a bid to break a deepening impasse on the health-overhaul bill.”
The Wall Street Journal report does not discuss a plan B. However, the Senate Democrat caucus will be meeting with President Obama tomorrow after which more information may become available.

The Federal Times published a report on the predicted impact of the great compromise’s parallel FEHB program on OPM. Bear in mind that I call it a parallel FEHB program because I am certain that there would continue to be a separate risk pool for federal and postal employees and annuitants. According to the article

David Ermer, general counsel for the Association of Federal Health Organizations, a partnership of unions and health care plans serving federal employees, thinks it would only require a few hundred more employees. Ermer said his group has not taken a position on the proposal, but he thinks OPM could handle it.

I take this apparently contrarian approach because OPM is able to administer the FEHB Program with a relatively small workforce. The beauty of the FEHB Program is that in contrast to Medicare the FEHB Program is not heavily regulated and it relies on market forces and competitition. OPM has put up other programs in this decade such as the successful Federal Employees Dental and Vision Insurance Program. I think that OPM’s keep it simple approach could work with the parallel program too. But that’s up to Congress, not OPM.

The annual Federal Benefits Open Season ends tomorrow.

The Senate and the House now have approved the omnibus spending measure which funds the FEHBP for the current federal fiscal year, according to the Washington Post. This bill also allows federal employees a 1.5% pay raise and a 0.5% locality pay increase.

Business Insurance reports that the chief actuary for the Centers for Medicare and Medicaid Services has concluded that “U.S. health care spending would rise by about $234 billion over the next decade under the Senate Democrats’ overhaul bill, and some of the proposed savings might never be achieved.” This frankly does not surprise me.

The details on the compromise that would replace the public plan option in the Senate bill with a Medicare expansion and a parallel program to FEHBP supervised by OPM have not been released. Nevertheless Sen. Joe Lieberman (I Conn.) has come out against the Medicare expansion according to the Politico. Investors Business Daily offers expert views on the parallel FEHB program while NARFE has come out against OPM supervision of that program.

Earlier this week, Senate Majority Leader Harry Reid (D Nev.) announced that he had submitted to the Congressional Budget Office for scoring a compromise under which the Senate bill would be amended to expand Medicare to folks aged 55 to 64, to create a health insurance exchange under OPM’s supervision and to expand other public programs such as CHIP in lieu of a public plan option. Modern Healthcare reports that House members have not heard the details of this compromise although Speaker Pelosi tends to favor Medicare expansion according to the Wall Street Journal. The American Medical Association and the American Hospital Association are upset over a Medicare expansion because of the Program’s low reimbursement rates to providers according to the Journal’s Health Blog

Those of us interested in the FEHB Program are curious to learn the details of the parallel universe that would provide coverage to the uninsured. I do expect that the compromise will create separate risk pools for the FEHBP vs. the uninsured pool.
The Politico reports that “senators grew restless over a lack of information and declined to commit their vote until they could review the legislative language and the Congressional Budget Office cost estimate. Republicans also stepped up their criticism of the [compromise] plan.”
In other news, the House approved by a 220-201 vote an omnibus appropriations bill for the current federal fiscal year that includes funding for the FEHB Program. According to Govexec.com, “Rejecting President Obama’s recommendation to freeze locality pay at 2009 rate s, the House allocated 1.5 percent of the 2.0 percent raise to base pay and 0.5 percent to locality pay.”

Bloomberg reports that a federal judge in New York City has given preliminary approval to the $350 million payment that United Healthcare has agreed to make in order to settle the American Medical Association’s class action lawsuit alleging that the usual reasonable and customary databases owned by United subsidiary Ingenix underpaid out of network doctors. Since the settlement was announced last winter, objecting doctors have assailed the settlement as too little a sum. The judge disagreed. Here’s another situation where the AMA successfully attacked and killed a means of controlling healthcare costs. The UCR schedules sensibly encouraged patients to use in-network providers. In my opinion, this settlement does a disservice to the providers and health plan members who have played by the rules. But I am glad that the judge is putting the case to rest.

A trade association of FEHB plans, which I represent, prepared a white paper explaining the adverse impact of the Senate bill’s $6.7 billion annual insurer fee and the 40% excise tax on FEHB plans. Read it here. The paper was publicized today at a press conference organized by the National Association of Letter Carriers, the American Postal Workers Union, and the Communications Workers of America, among others — details here. The press conference was reported by CBS News, the Washington Post, and Govexec.com.

The Politico reports on the President’s visit to Capitol Hill today to press for Senate passage of a health care reform bill. Last week, the Blue Cross Blue Shield Association released an Oliver Wyman actuarial report finding that the Senate leadership bill will significantly increase premiums for individuals, young people, and small groups. Over the weekend, Govexec.com and the Politico reported that a group of ten Senators is developing a health insurance exchange that would be modelled on the FEHB Program and administered by OPM. According to Govexec.com, the “group consists of [Sen. Tom] Harkin [of Iowa], [Sen. Jay] Rockefeller [of West Virginia] and Sens. Russell Feingold of Wisconsin, Mark Pryor and Blanche Lincoln of Arkansas, Sherrod Brown of Ohio, Thomas Carper of Delaware, Ben Nelson of Nebraska, Charles Schumer of New York and Joseph Lieberman of Connecticut. Details may be released tomorrow.

Karen Ignani, the President of America’s Health Insurance Plans, gave a speech to the Detroit Economic Club in which she opined that the ongoing healthcare reform effort in Congress is off track. “[T]he bills before Congress settle for timid pilot programs, rather than requiring major changes; creating incentives that apply only to Medicare, rather than across the board; and establishing a new oversight body, but severely limiting its scope of review.” Ms. Ignani offers five recommendations to achieve health care cost containment:

1. Set a National Goal and Measure Progress.
2. Build on the Pilots and Incentives in the Senate Legislation with a Comprehensive Plan to Introduce Health Care Delivery Reforms Across the System.
3. Reform the Legal System to Protect Patients and Allow Doctors and Hospitals to Deliver “Best Practice” Medicine.
4. Empower Patients and Their Doctors to Make the Most Informed Health Care Decisions.
5. Avoiding “Reforms” that Increase Costs, such as the additional fees and excise taxes on health plans and insurers.

As Ms Ignani points out, there’s still time to get it right. Interestingly, Modern Healthcare reports that

A bloc of freshmen Democrats [in the U.S. Senate] is readying a legislative package of changes to a broad health reform bill that could affect the financial ledgers of hospitals and doctors.

Sen. Mark Begich, a first-term Democrat from Alaska, said that a number of his newly elected colleagues are unhappy with the current slate of provisions aimed at curbing runaway healthcare costs. “It’s really going to focus on cost containment,” Begich said. “A lot of us freshmen came in here focused on how to do the business differently—not the same old way of just putting money on the table and hope that solves the problem.”

The Politico reports that Senate “Majority Leader Harry Reid has told senators they should expect roll call votes all day Friday, Saturday and Sunday afternoon” following approval of women’s health care amendment this afternoon according to this Reuters report.