The Federal Times reports that the House Federal Workforce Subcommittee of the Oversight and Government Reform Committee will hold a a round table discussion on how to control FEHBP spending on prescription drugs. The article states that “Prescription drug costs make up nearly 30 percent of FEHBP premiums.” That sounds right but it does not consider the demographics of the FEHB Program. The Program covers over 2 million annuitants and many of those annuitants have primary Medicare coverage for hospital expenses. This older population (even the active employees in the FEHBP tend to be older) heavily utilizes prescription drugs and what’s more the percentage of prescription drug expenses is further inflated by the fact that Medicare picks up a good chunk of hospital expenses.

Prescription drugs do benefit the health of all Americans, including me. Nevertheless, twenty years ago a health plan member would have to keep track of his drug store receipts and then submit them to the plan for 80% major medical coverage. Many of those receipts never were submitted – the so-called shoebox effect. Then the prescription drug card came along in the 1990s and every prescription became a claim. That change likely improved the health of plan participants. It certainly increased plan costs. There’s no quick fix. Good luck to the round table participants.

Govexec.com on Friday accurately reported that the Grassley amendment to demolish the FEHBP was modified by Senate Finance Committee Chairman Max Baucus into a relatively harmless provision as noted in the FEHBlog early last week. Sen. Grassley wants to force FEHBP participants into the reform created health care exchanges, while Sen. Baucus’s modified version permits FEHBP participants to join the exchanges. That’s not likely because participants electing exchange coverage would not be receive a government contribution or a low income premium subsidy.

According to Govexec.com. Sen. Grassley is still pressing his original amendment but “[i]t is not clear, however, whether Grassley’s proposal will receive a vote. Committee members filed more than 500 amendments to the bill, and the panel is unlikely to get to all of them during its markup, which is expected to continue next week.” The Senate Finance Committee resumes its work on Tuesday. I do think that it’s possible that the final bill could move Congress, but not federal and postal employees and annuitants, into the exchanges or (heaven forfend) the public plan option. Time will tell.

The Federal Times reports that on Friday, the House passed a continuing resolution to fund the federal government in October, the first month of the new fiscal year 2010. The CR which is part of a legislative operations appropriations bill also provides financial relief to the Postal Service, which needs it, and reauthorizes the e-Verify program, among other things. The Senate needs to take up the measure by Wednesday.

Earlier this month, the consulting firm Mercer released a projection of 2010 cost increases for employer sponsored plans.

If employers made no changes to their employee medical plans in 2010, they would
see cost rise by nearly 9 percent. But, with more than half of all employers
experiencing layoffs over the past 12 months – and nearly a third anticipating
lay-offs still to come this year – doing nothing is not an option for most
employers. Preliminary survey findings released today by Mercer indicate that
respondents plan to shave three percentage points off their annual renewal rates
through a variety of cost-saving actions, holding overall cost growth to 5.9
percent next year

Speaking of which, OPM should be releasing 2010 FEHBP premiums soon.

The Joint Commission has created a website for its Center for Transforming Healthcare. Its current project is improving hand hygiene, a worthy objective as we confront flu season.

Reuters reports on the third day of the Senate Finance Committee’s markup of the Baucus healthcare reform plan. The panel “upheld a requirement on Thursday that individuals purchase health insurance and rejected a proposal that could have scuttled an $80 billion White House deal with drugmakers.” Senators Schumer (D NY) and Rockefeller (D W Va) are pushing for a vote on a public plan option in lieu of the Baucus plan’s co-operatives tomorrow.

The House voted 406-18 to maintain the Medicare Part B premium of $96.40 in 2010. Modern Healthcare explains that

Because of the recession, next year’s Social Security cost-of-living adjustment is expected to be zero, and checks will not increase, meaning that 73% of enrollees under the “hold harmless” policy will not see a hike in their Part B premiums in 2010. However, for the remaining 27%, premiums would be disproportionately increased to $110-$120 per month, unless Congress acts. Currently, the Part B premium is $96.40 per month.

The bill extends this hold harmless policy to all Medicare beneficiaries. Is it any wonder that Medicare is going bankrupt?

The current federal fiscal year ends a week from today, and none of the FY 2010 appropriations bills have been enacted yet. Federal Times reports that the House may consider a continuing resolution tomorrow that will keep the federal government funded through October 30.

Among the measures included in the CR:

• The Postal Service’s scheduled Sept. 30 payment to its retirees’ health fund would be reduced from $5.4 billion to $1.4 billion. The Postal Service asked Congress for relief from the payment on grounds that it faces a $7 billion deficit this year and cannot afford the full payment.
• Multiple programs set to expire Sept. 30 would be extended. These include the Homeland Security Department’s controversial E-Verify program, which informs companies whether their employees are legally allowed to work in the United States.

The Senate also must approve this resolution, which is being included in a Congressional appropriations bill. The Politico supplies details on the legislative maneuvering.

The lead story on Govexec.com tonight is that Sen. Grassley has proposed an amendment to the Baucus health care reform plan that would demolish the FEHB Program by requiring federal elected officials and federal employees to participate in the state based health insurance exchanges beginning in 2013. In fact, the Committee yesterday considered and adopted a modified version of Se. Grassley’s amendment yesterday that permits rather than requires feds to use the exchange. The same arrangement is found in the House majority bill HR 3200.

Speaking of H.R. 3200, the House Energy and Commerce Committee held its supplemental markup today. The Committee approved a package of amendments, including a Republican amendment on pricing transparency. The Committee did not approve an amendment that would restrict health plan subrogation efforts, a provision no doubt favored by my colleagues from the plaintiff’s trial bar. Among the withdrawn amendments was one offered by Rep. Bart Stupak to open the FEHB Program to private sector employers. The Committee submitted the revisions to the Rules Committee. According to a Bloomberg report, “House Democratic leaders will produce the combined health- care legislation [meaning the versions of H.R. 3200 cleared by three different committees including Energy and Commerce} by next week and circulate it, said Representative John Larson, the Connecticut lawmaker who is chairman of the House Democratic caucus.” That strikes me as a tall order.

On the Senate side, the AP reports that the Senate Finance Committee markup session involved sparring between Democrats and Republicans over the Baucus plan’s impact on Medicare. Meanwhile, the House has scheduled a vote tomorrow on a bill, H.R. 3631, intended to avoid a large and politically unpopular Medicare Part B premium hike next year. Absent this action, the Part B premium will jump about 20% over the current monthly premium of $96.40. (The premium is higher for wealthier seniors.)

Bloomberg reports that “White House Budget Director Peter Orszag said health-care legislation can be completed in six weeks and may largely be based on a measure being drafted by the U.S. Senate Finance Committee.” The Politico reports that the Senate Finance Committee markup is just the beginning. And its reporter is right because, for example, Sen. Harry Reid and his leadership team must combine whatever comes out of that Committee with the Senate Health Education Labor and Pensions Committee approved bill into a bill for Senate floor consideration. That’s another tall order. And assuming that bill can get through the Senate, there will be a conference committee with the House. There’s a lot more fun to come.

The Senate Finance Committee released a set of approved amendments to Chairman Baucus’s health care reform plan known as the Chairman’s mark. Business Insurance reports on the changes to the proposed excise tax on so-called Cadillac plans and the addition of the same government funded reinsurance program for plans covering retirees aged 55 to 64, like FEHB plans, found in HR 3200 and the Senate HELP Committee bill. Among the approved amendments was one offered by Sen. Charles Grassley (R Iowa) providing that

Beginning in 2013 elected officials and federal employees may purchase coverage through a state-based exchange, rather than using the traditional Federal Employees Health Benefits Plan.

The same option is permitted under HR 3200, the House majority bill.

National Public Radio posted a piece on Kaiser Health News about the value of the FEHB Program to federal and postal employees and annuitants. “[Those] who are covered under FEHBP do report high levels of satisfaction, but it’s not some kind of super insurance. It’s pretty much like most insurance people get through their jobs. Federal workers, too, sometimes complain about the rising costs of their premiums and co-payments and about the hassles of getting care. “

AIS Drug Benefit News posted a report on steps that health insurers are taking to make sure that plan members receive the seasonal and H1N1 flu vaccinations. The Baltimore Sun reports that “The swine flu vaccine works in just one dose for older children, but kids younger than 10 will likely need two shots, according to early results of clinical trials, federal health officials said Monday.” Of course, that vaccine is not available yet, but the seasonal flu vaccine is. The Minneapolis Star Tribune reports shortages in the seasonal flu vaccine at least in that region.

AHIP reports that the House Energy and Commerce Committee which cleared a version of HR 3200, the House majority leadership’s health care reform bill, shortly before the August recess will take up about two dozen amendments this week.

Energy and Commerce Committee To Consider Additional Health Reform
Amendments The House Energy and Commerce Committee is planning to meet this week to
consider a number of additional health reform amendments. This markup, which is
expected to be brief, will fulfill a promise made by Rep. Henry Waxman (D-CA),
the committee chairman, at the conclusion of the committee’s July markup of H.R.
3200, the “America’s Affordable Health Choices Act.” According to preliminary information that is circulating around Capitol Hill, approximately two dozen amendments will be accepted as the “base text” for the upcoming markup. While legislative language is not available as of this writing, notable amendments included in this base text include:– an amendment by Rep. Bart Stupak (D-MI) would revise the bill’s prohibition against rescissions by providing insurers 30 days to rescind policies on the basis of fraud;– an amendment by Rep. Gene Green (D-TX) that would require states, as a condition of receiving federal Medicaid funding, to enact laws requiring health insurance plans to estimate out-of-pocket costs for their enrollees and requiring hospitals to disclose information on their charges;– an amendment by Reps. John Barrow (D-GA) and Bruce Braley (D-IA) would establish subrogation rules for qualified health benefit plans, stipulating that plans could be reimbursed for amounts recovered relating to personal injury or similar claims only if the enrollee has been fully compensated for all damages arising out of the claim; and– an amendment by Rep. Kathy Castor (D-FL) would provide grants for
employer wellness programs.An unofficial document that briefly lists these amendments also identifies additional amendments that may be offered to the base text, including an amendment by Rep. Michael Burgess (R-TX) that would prohibit the government-run plan from extending to its enrollees the existing Medicare beneficiary protections relating to balance billing and private contracts by physicians who opt out of Medicare.

Under HR 3200’s provisions, FEHB plans and ERISA plans are not subject to qualified health plan requirements until 2019.

The health care reform battle is placing focus on the Federal Employees Health Benefits Program. Both the Tulsa (OK) World and the Poughkeepsie (NY) Journal published articles today identifying for readers the FEHB plans in which their Senators are enrolled. Sen. Tom Coburn would not say; Sen. Jim Inhofe is enrolled in the MHBP standard option; Sen. Kirsten Gillibrand is enrolled in the Blue Cross FEP, and Sen. Chuck Schumer is covered under his wife’s non-FEHB plan. The Tulsa paper reported that

Randall Bovbjerg, who researches health care for the nonpartisan Urban
Institute, said the Federal Employees Health Benefits Program, which covers
members of Congress as well as other federal workers, should not be viewed as a
“Cadillac plan.” Bovbjerg said that impression has been fostered by the access
members of Congress can have to prestigious military hospitals and the doctor
that is always available for presidents.

In my view, what sets the FEHB Program apart from typical employer coverage is the wide variety of plan choices made available to employees and annuitants and the opportunity for federal and postal employees to carry their coverage into retirement with the full government contribution if they carry enrollment as an active employee for the five years preceding employment. Sen. Finance Committee Chairman Max Baucus will begin to mark up his healthcare reform proposal at open executive session of the Finance Committee on Tuesday morning. The New York Times and the Politico report on the 568 amendments to that proposal which alread have been proposed. The amendments and the proposal can be downloaded at this Senate Finance Committee website. Modern Healthcare reports that “The Health Insurance Industry Antitrust Enforcement Act of 2009, [a bill recently] introduced in Congress] by Sen. Patrick Leahy (D-Vt.) and Rep. Diana DeGette (D-Colo.), stipulate that nothing in [a] 64-year-old [federal] law [the McCarran Ferguson Act] should be construed to allow health insurers or medical malpractice insurers to “engage in any form of price fixing, bid rigging or market allocations.” The bill in the House is numbered H.R. 3596. Business Insurance notes that

The insurance industry has traditionally opposed legislation repealing the
exemption, which allows insurers to pool historic loss information so that they
are better able to project future losses and charge an actuarially based price
for their products. It also allows for joint development of policy forms. The
act does not, however, exempt insurers from state antitrust laws, which
explicitly prohibit insurers and any other businesses from conspiring to fix
prices or otherwise restrict competition. Also under the act, insurers remain
subject to rate and form regulation in every state.

The Office of Personnel Management is offering a personal health record tool on its new Managing My Own Health website. The tool is in Adobe Acrobat fillable form – one for adults and another for children. The website also offers NCQA HEDIS quality data for FEHB plans. The website offers information on recommended health care screenings for women and men.

Senate Finance Committee Chairman Max Baucus released today his Chairman’s mark of the America’s Healthy Future Act of 2009. Business Insurance reports that the mark closely resembles the outline that Sen. Baucus circulated last week. I have printed out the 223 page document and I look forward to reading through it. What strikes me as odd is that the mark is written like a committee report rather than legislation. In any event, the Chairman plans to mark up his mark beginning on September 22.

The Wall Street Journal ran an interesting story today about the impact of the Massachusetts health insurance mandate on the middle class. The article is headlined “Mandated Health Insurance Squeezes Those in the Middle.” The following paragraphs from the article that really rang my bell.

Peter and Kirsten MacDonald of Brockton, Mass., are the kind of young,
healthy individuals Massachusetts needs in the system to spread the risk and
help pay for it. But the MacDonalds have calculated that they’re better off
without coverage.

They bought their own insurance in 2006, after Mr. MacDonald, a 39-year-old computer consultant, lost his job and began to work as an independent contractor. Insuring the couple and their four children then cost $650 a month, or $7,800 a year, and didn’t include prescription-drug coverage. It was “a lot, but something we could afford,” Mr. MacDonald says.

The next year, premiums rose to $750 a month and to about $900 a month in 2008. The MacDonalds say their actual medical costs hadn’t come close to the premiums they were paying. “What are we getting for it?” Ms. MacDonald says they asked
themselves before canceling.

They were getting insurance protection. My grandfather declined to buy life insurance because “nobody has been left on top of the ground yet.” I followed my father’s lead and bought life insurance. I pay the premium every year and I am never disappointed that it hasn’t paid off yet. That’s because I am insuring a risk that I don’t want to occur. Mr. McDonald was not looking at the premium payments as health insurance but rather as deposits into a health savings account. Nevertheless, the article points out that he does appreciate the value of health insurance.

Now they put aside $750 a month to cover medical costs as they arise, plus the $1,068 penalty each adult would pay for going without coverage. The biggest expense came last year, when their then 4-year-old son, James, fell and cut the bridge of his nose. The five stitches and care of a plastic surgeon cost $2,000, which the MacDonalds said they were able to pay from reserves they’d set aside. Mr. MacDonald said he’d be inclined to buy insurance if he could buy cheaper catastrophic coverage, but such policies don’t count in the Massachusetts plan.

However, you won’t find a catastrophic plan in H.R. 3200, and I doubt that I will find a catastrophic plan in the Chairman’s mark. I think that’s unfortunate because that would be a fair mandate that people could understand.Yesterday, the House of Representatives approved H.R. 22 which will give the Postal Service a break from its statutory obligation to pre-fund FEHB benefits for its retirees. According to the Federal Times the Postal Service, which is suffering a large operating deficit, would not be able to make its next payment of $5.4 billion due on September 30. The National Association of Letter Carriers issued a press release stating in part: “The one-year version of H.R. 22 passed today is a good first step toward devising a more sensible and affordable schedule for prefunding our future retiree health benefits,” [NALC President] Rolando said. “The National Association of Letter Carriers urges the Senate to quickly pass H.R. 22 as passed by the House so that we can continue to work on long-term solutions.”

The AP reports that Senate Finance Committee Chairman Max Baucus (D Mont) will be releasing his health care reform bill tomorrow without Republican support. The Politico reports that the Gang of Six will continue to meet. Baucus projects that a bill can clear his committee, be reconciled with the HELP Committee bill, and reach the Senate floor early next month. The Wall Street Journal reports that business support is building for Baucus framework while Modern Healthcare reports that Sen. Jay Rockefeller (D WV) has announced his opposition to it. The difference of opinion stems from the fact that the Baucus framework lacks a public plan option.

CMS announced today a proposal to pay a bundled fee for renal dialysis services provided to Medicare beneficiaries. Medicare coverage is offered to patients with end stage renal or kidney disease regardless of age. “Under the proposed rule, CMS would establish a base bundled payment rate of $198.64 for all of the services related to a dialysis session, including the services in the current composite rate as well as items, including oral drugs that are billed separately. The proposed base rate was derived from 2007 claims data for both composite rate and separately billable services and updated to reflect projected 2011 prices.” CMS is receiving comments on this proposal until November 16. CMS then intends to promulgate a final rule that would take effect on January 1, 2011. No doubt this statutorily mandated initiative will shift costs onto the private sector.

Medco has released its annual survey of plan sponsors “to help plan sponsors and their benefit advisors tackle the impact of current economic conditions on pharmacy benefit coverage.”

America’s Health Insurance Plans, the managed care trade association, announced that “Seniors in Medicare Advantage spent fewer days in a hospital, were subject to fewer hospital re-admissions, and were less likely to have “potentially avoidable” admissions, for common conditions ranging from uncontrolled diabetes to dehydration, according to a new [AHIP Research] analysis of publicly available AHRQ data.”