The Congressional Budget Office (CBO) released its report on the Senate Finance Committee’s amended health care reform plan, known as America’s Health Future Act of 2009. The CBO concludes that the plan achieves one of the President’s goals of enacting health care reform without increasing the deficit. The plan would lead to health insurance coverage for 94% of legal American residents (91% if illegal residents are included.) But there are “important” caveats, such as the plan “has not been converted into legislative language. The review of such language could lead to significant changes in the estimates of the proposal’s effects on the
federal budget and insurance coverage. This caveat grabbed my attention:

These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate (SGR) mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments. The projected savings for the proposal reflect the cumulative impact of a number of specifications that
would constrain payment rates for providers of Medicare services. In particular, the proposal would increase payment rates for physicians’ services for 2010, but those
rates would be reduced by about 25 percent for 2011 and then remain at current-law levels (that is, as specified under the SGR) for subsequent years. [The House majority bill, which has a significantly higher CBO score, provides a permanent fix, and the doctors always get their way.] Under the proposal, increases in payment rates for many other providers would be held below the rate of inflation (in expectation of ongoing productivity improvements in the delivery of health care). The projected longer-term savings for the proposal also assume that the Medicare Commission is relatively effective in reducing costs—beyond the reductions that would be achieved by other aspects of the proposal—to meet the targets specified in the legislation. The long-term budgetary impact could be quite different if those provisions were ultimately changed or not fully implemented.

Nonetheless, the Wall Street Journal reports that “The widely awaited report paves the way for the Senate Finance Committee to approve its bill as soon as this week.” Damn the torpedoes, full steam ahead.

Modern Healthcare reports that the House leadership plans to complete work on the final version of its bill, H.R. 3200, the Affordable Health Choices Act, this week and send the bill to the CBO for scoring.

The Senate Finance Committee continues to wait for the Congressional Budget Office score before voting on its America’s Health Future Act of 2009, which is the Chairman’s health care reform proposal. Meanwhile, the AP reports today that

The Joint Committee on Taxation says drug companies, medical device manufacturers and insurers would pay $121 billion over 10 years as a result of taxes in the Senate Finance Committee bill.That’s compared with $92 billion originally calculated.

Either way that’s a lot of money.The House leadership continues to work on fusing the three versions of its health care reform bill, HR 3200. The Politico reports that 158 members of Congress wrote to the Speaker strongly objecting to the Senate Finance Committee’s concept of imposing an excise tax on so-called Cadillac plans. The House bill relies on Medicare Advantage cuts and a high earner income tax surcharge for its funding. (I wouldn’t be surprised if the House adopts the Senate Finance Committee’s taxes on health insurers, etc.) The House leadership will meet with its caucus tomorrow on health care reform. I was stunned to learn today that House Oversight and Government Reform Chairman Henry Waxman and several other Committee chairs wrote a letter to HHS Secretary Sibelius taking up the privacy zealots complaint that the harm standard should be eliminated from the HHS nationwide security breach notice rule. The security breach notice rule requires HIPAA covered entities and business associates to notify affected parties if a use or disclosure of protected health information violates the HIPAA Privacy Rule and creates “a significant risk of financial, reputational or other harm to individual.” The harm standard effectively requires the HIPAA covered entity or business associate to consider whether the breach creates a threat of identity theft or reputational harm before sending out a breach notice that no doubt will freak out the recipient. This common sense requirement is included in the Office of Management and Budget’s sensible guidance to federal agencies on handling security breaches. I do hope that calmer heads will prevail.

The Federal Times reported today that federal employees and annuitants are irate over 2010 FEHB Program premium increases. According to the report,

OPM said rising medical costs have also hit many private-sector plans. [OPM Associate Deputy Director Daniel] Green said consultants have told OPM that private-sector health care premiums will go up between 8 percent and 11.8 percent in 2010.

Green said OPM is trying to bring down health care costs by requiring pre-authorization before a patient can receive expensive drugs, to make sure there isn’t a cheaper generic drug that is equally effective. [This is known as step therapy.] OPM also is requiring pre-authorization for expensive imaging examinations, Green said.

OPM plans to encourage patients to seek out care to better manage chronic conditions such as diabetes before they develop into bigger problems.

Because FEHB plan carriers, not the Government, bear the plan’s underwriting risk and there are no pre-existing condition limitations on FEHB plan coverage, carriers typically are out front on these cost containment efforts. America’s Health Insurance Plans (“AHIP”), the managed care trade association, announced today

a landmark initiative to make delivering and getting health care easier for
patients and their physicians by reducing the time, effort, and expense for the
“paperwork” required for each patient office visit. The initiative, which will
simplify information flow between health plans and doctors’ offices, and later
between health plans and hospitals, is comparable to what ATMs did for banks and
consumers.

Beginning in early November, AHIP and the Blue Cross and Blue Shield Association (BCBSA) will sponsor regional and statewide initiatives to assess how best to offer physicians access to multiple insurers through the same information channel (e.g., a web portal) in a given region of the country for the purpose of conducting key office tasks. Savings are estimated in the hundreds of billions of dollars as the entire
health care system achieves efficiencies through similar moves to automation and
consistent business practices.

Many other health plans, including CIGNA, Aetna, and United Healthcare, as well as provider organizations are participating in this initiative. The initiative will be rolled out first in Ohio beginning next month.

• The Ohio initiative offers opportunities to simplify the work associated
  with patient visits and achieve savings, including providing physicians with
  information in “real-time” that:
• Allows office staff to quickly determine key eligibility and benefit information (e.g., co-pays, co-insurance, and deductibles, and differences in coverage for services provided in- versus out-of-network), minimizing time and expense needed for such purposes;
• Gives physicians access to current and accurate information on the status of claims submitted by physician offices for payment by insurers. This will minimize the need for follow up steps by office staff or submission of duplicate claims that delay rather than expedite payment in most systems;
• Tests real-time referrals and timely pre-authorization of services; and
• Provides for the online submission of healthcare claims.

Business Insurance reports that the Obama Administration is considering whether or not to propose an extension of the legislative initiative which lowered the cost of self-pay continuation coverage for laid off employees, known as TCC in the FEHB Program and COBRA in the private sector. Finally, the Wall Street Journal reports on the success of a Pennsylvania state program that has been controlling hospital costs by reporting hospital quality information for the past twenty years. “For two decades, a state agency has published “medical outcomes” — death and complication rates — from more than 50 types of treatments and surgery at hospitals. The state has found that publishing results can prompt hospitals to improve, and that good medical treatment is often less expensive than bad care.” An alliance of hospitals and insurers has built on this state initiative with this website. Interesting.

The Senate Finance Committee completed its mark up of Chairman’s Baucus’s proposal on Friday afternoon as reported in Business Insurance. The amended version has been posted on the Committee website. I should clarify that the Grassley amendment approved last week would exclude members of Congress and all Congressional employees from the FEHB Program begining in 2013 —

Enrollment by Members of Congress and Congressional Employees. Notwithstanding
any other provision of law, beginning July 1, 2013, Members of Congress and
congressional employees would be required to use their employer contribution
(adjusted for age rating) to purchase coverage through a state-based
exchange,rather than using the traditional Federal Employees Health Benefits
Plan (FEHBP).

The Committee awaits Congressional Budget Office scoring of the bill and a Committee vote this coming week. The Washington Post noted in an editorial today that

[The Senate Finance Committee bill] lays claim to passing Mr. Obama’s
test of not raising the deficit but manages to do so only by failing to pay for
increases in Medicare physician reimbursement rates that everyone knows that
Congress will approve — about $230 billion over 10 years. This is akin to
announcing that you have fully paid for renovating your house when one room has
a big blue tarp where its roof should be. As House Majority Leader Steny H.
Hoyer (D-Md.) put it, this may “look better, but it’s a facade of looking
better.”

The Politico reports that there’s a lot more backroom work to be done on the three House Committee versions of the leadership’s bill, HR 3200, and the two Senate Committee bill before the respective final versions appear for floor consideration.

Business Insurance reports on the 137 page regulation implementing the Genetic Information Non-Discrimination Act. This interim final rule applies to plan years that take effect on or after December 7, 2009, so as noted last week the rule applies to the FEHB Program on January 1, 2010. The rule, which I have not read yet, appears primarily to impact plans that collect family health information for purposes of health risk assessments, which is not a standard practice in the FEHBP.

Govexec.com reports on changes in the voluntary Federal Employees Long Term Care Insurance Program that took effect on October 1, 2009, following a re-bidding of the insurance carrier contract. OPM issued a benefits administration letter on the change on September 25:

By law, the FLTCIP operates on a seven-year contract cycle. Last year, the
Office of Personnel Management issued a Request for Proposals for the FLTCIP’s second contract term (2009-2016). After a competitive procurement process, OPM awarded the contract to John Hancock Life and Health Insurance Company to provide insurance coverage to all current and new FLTCIP enrollees. The transition to John Hancock as the sole insurer of the second contract term will occur on October 1, 2009. Until that date, insurance will continue to be provided by the John Hancock and MetLife consortium that provided insurance for the Program during the first contract term.

John Hancock is offering new enrollees a new benefit package called FLTCIP 2.0 and is changing premiums for certain FLTCIP 1.0 coverages as detailed in this letter. The Federal Employee Dental and Vision Insurance Program also operates on the same seven year contract cycle which if my arithmetic is right means that the FEDVIP contracts will be rebid in 2013.

OPM posted on its website today a benefits administration letter providing guidance to federal agencies on how to inform employees about the federal benefits open season , Open Season fast facts for employees and retirees, and how to inform employees about the programs themselves. Open Season runs from November 9 through December 14.

OPM has not posted on the web its press release on 2010 FEHBP premiums. I learned today from Govexec.com that total premiums (Government and employee share) increased 7.4% on average while the employee share increased 8.8% which was the number bandied about on Tuesday. This discrepancy is not surprising because the government contribution toward FEHBP coverage for civil servants and annuitants is defined by statute (5 U.S.C. § 8906) at 72% of the enrollment weighted average premium capped at 75% of the selected plan’s actual premium. The most popular plans are above the 75% cap which causes the employee to assume a higher share of the premium increase. For the past several Congresses, bills have been introduced to increase the Government contribution and the cap, but no funding is available.

I found a great AHIP blog that tracks the fate of amendments proposed to be made to Chairman Max Baucus’s healthcare reform plan, which is now under Senate Finance Committee consideration. The Chairman is shooting for a committee vote next week, and the Senate Majority Leader cut back on the Senate’s Columbus Day recess in order to take up the health care reform bill. That’s not a lot of time for the Majority Leader to meld the Senate Finance Committee and Senate Health Education Labor and Pensions Committee bill. Yesterday,

• By a vote of 19 to 3, the committee approved an amendment by Senators John Ensign (R-NV) and Tom Carper (D-DE) that would allow health insurance plans in the individual and group markets to vary insurance premiums, providing a reward of up to 30 percent of the employee-paid premium, based on an individual or an employee’s participation in wellness programs.

Finally the Centers for Medicare and Medicaid Services set the wheels in motion today for the upcoming Medicare Advantage Open Season.

The 2010 federal fiscal year starts tomorrow, and Congress ensured continued funding of our federal government today when Congress adopted the continuing resolution that the House passed last Friday as part of conference report (H. Rep. No. 111-265) on the FY 2010 legislative appropriations bill, HR 2918. The continuing resolution provides needed financial relief to the Postal Service and reauthorizes the e-Verify program.

OPM has posted them here.

Last week, the federal employee news outlets erupted over a proposed amendment by Sen. Charles Grassley (D Iowa) to require all FEHBP participants to join the new health insurance exchanges to be created by Sen. Baucus’s reform proposal. Sen. Baucus modified the amendment to permit FEHBP participants to join the exchanges. The Hill reports that Sen. Charles Grassley further modified his amendment to limit the required move to members of Congress and their families.

Committee Chairman Max Baucus (D-Mont.) immediately, even cheerfully, agreed to accept the amendment. “Well, senator, I’m gratified — very gratified — that
you have so much confidence in our program that you want to be able to purchase
insurance in this new program, and I’m confident, too, that the system will work
very well, and I therefore accept the amendment,” Baucus, the bill’s author,
said to Grassley.

The Senate Finance Committee continued today its markup of Chairman Baucus’s health care reform proposal. The Wall Street Journal reports that

A bipartisan Senate vote swept aside demands by liberal Democrats for a
government-run health insurance plan, delivering a potentially lethal blow to
the most controversial measure of the proposed U.S. health-care
overhaul.

Dramatizing Democratic divisions on the issue, five Democrats joined with
all Republicans on the Senate Finance Committee to defeat 15-8 a proposal by
Sen. Jay Rockefeller for a government plan to help those who couldn’t get
affordable insurance through their employers. A similar proposal fell by a 13-10
vote.

Of course, we have not heard the end of this crazy idea (because it’s found in both the Senate Health Education and Labor Committee bill and the House majority bill, HR 3200) but it may be the beginning of the end. Modern Healthcare reports that Sen. Baucus thinks that a bill with a public plan option cannot get through the Senate.

OPM held a press conference today to announce 2010 FEHBP premiums. Press reports can be found in the Washington Post, the Federal Times, Federal News Radio, and Govexec.com . OPM has not yet posted the press release on its website. According to those reports, the average 2010 premium increase is 8.8%, about a point more than last year.

The Kaiser Family Foundation earlier this month released its 2009 Employer Health Benefits Annual Survey which found that

In 2009, the average annual premiums for employer-sponsored health insurance are $4,824 for single coverage and $13,375 for family coverage. Premiums for family coverage are 5% higher than last year ($12,680), but there was no statistically significant growth in the single premiums.

In my estimation, as discussed yesterday, the Program’s premium increases are higher than the national average because of its demographics. The Washington Post reports that a Blue Cross executive explained that “The average age of [Blue Cross Federal Employee] program participants is 62, a slightly older pool of participants that require more complex medical care.” The Program is fully 1/2 annuitants because of generous federal retirement benefits, and that’s a good thing, but you have to take the bad with the good.