Business Insurance reports on two new 2010 health care cost projections — one from Aon Consulting and the other from Segal Consulting. Both projections are based on broad surveys of health insurers, third party administrators, and PBMs. Both consulting firms project increases of slightly more than 10%, roughly in line with 2009. Projections vary regionally and do not account for benefit design changes.
On August 21, Senate Commerce Committee Chairman Jay Rockefeller (D WV) sent a letter to the 15 largest U.S. health insurers demanding data on their medical cost ratios — “the percentage of premium dollars insurers spend that go directly to covering consumer health care payments.” It’s not clear whether the inquiry extends to the profitability of FEHB Program business.
The Senator’s effort complements the investigation of health insurer profits and executive compensation launched by House Energy and Commerce Committee Chairman Henry Waxman (D CA).
Both the health care reform bills cleared by three House committees, including Energy and Commerce, and and by the Senate Health Employment Labor and Pensions Committee would authorize the government to cap those ratios. I’m still waiting for Congressional investigations of health care provider and pharmaceutical company profitability.
The Politico provided us with the background on the Energy & Commerce Committee’s assault against the health insurance industry. According to the report, the investigation started in July with an unsuccessful inquiry into grassroots tactics. As previously noted in the FEHBlog
In this week’s letter to insurance companies, Waxman asked for the individual
names of those who made more than $500,000 between 2003 and 2008 and a list of company events held outside the office. The committee also sought dividend payments, net income and premium revenue numbers as well as claims payments,
expenses and insurance product profits.
U.S. Chamber of Commerce President Tom Donohue wrote to Waxman and Stupak on Friday saying he was “deeply troubled” by the letters the committee sent to insurance companies and urged them to “disavow this letter and withdraw it immediately.”
A prominent Democratic lobbyist, who represents health care and other interests, also called the letters “an an overreach that has the potential to backfire on Democrats. I know nobody likes the insurance industry, but to bludgeon them when you’re losing the legislative debate just looks bad.”
A Wall Street Journal article laid out three end game options for the President — a small bipartisan bill now being hammered out in the Senate Finance Committee that would be limited to health insurance reform and would be presented as a first step, a mid-sized option with a public plan option or health insurance co-ops and a higher price tag for more insurance subsidies, and a large go for broke option that would be killed but would become a campaign issue in 2010.
Right now, most Democrats are hovering somewhere between the small and midsize
options — hence the talk that arose this week about breaking the package into
two pieces. One would be the small piece heavy on insurance overhauls, which
might get some Republican support. The other piece — designed to pass with only
Democratic votes — would establish either a public option or a new nonprofit
insurance cooperative to compete with private insurers and include subsidies for
expanding coverage.
Wall Street Journal and Modern Healthcare articles published today that read the tea leaves from today’s news programs support this analysis. Working against even the mid-sized option is the announcement due this week that the 10 year budget federal government budget deficit is $9 trillion even without factoring in healthcare reform, according to Reuters. AIS Specialty Pharmacy News published an interesting article on the status of the legislative efforts to create a regulatory pathway for bio similar or bio generic drugs, which will be create a significant cost savings for health plans and consumers.
While nothing is certain when it comes to health reform, it seems the
biotechnology industry and its supporters are gaining the upper hand in
Congress. In the most recent blow to biosimilar supporters, the House Energy and
Commerce Committee voted 47 to 11 on July 31 to attach a provision to its
broader health reform bill that would grant 12 years of data exclusivity to
biologic drugs.
The Wall Street Journal in related news reports that
One version of the health legislation passed by the House Energy and Commerce Committee last month includes provisions that could overhaul how pharmacy-benefit managers — middlemen hired by insurers to administer prescription-drug benefits — operate. It would require them to inform the government or federally approved health plans about differences between the average cost of drugs to the PBM and what the PBM charges insurers. It would also require PBMs to disclose rebates they receive from drug makers for pushing certain pills and say whether those rebates are passed on to insurers. * * * Greater transparency could result in drug makers giving smaller discounts to PBMs, which could lead to higher drug costs for insurers and consumers, according to analyses by the Congressional Budget Office of previous legislative proposals.The[se] provisions aren’t in versions of the health-care bill passed by other House committees. In the Senate, [Sen.] Maria Cantwell (D., Wash.), a member of the Finance Committee, said she wanted her committee’s health-care bill to include similar disclosure requirements for PBMs.
The OPM Inspector General similarly argued for greater PBM transparency at a Congressional hearing in June.
The House Energy and Commerce Committee has posted a copy of the August 17 letter that it sent to 52 health insurance companies inquiring about executive pay practices, revenues, administrative expenses, and profitability. Included in the letter is a request for a table that breaks out revenues, claims expenses, administrative expenses, and profits by line of business, including the FEHBP. National Underwriter reports that “The data call ‘is just a fishing expedition designed to silence the health insurance industry and distract attention away from the fact that the American people are rejecting a government-run plan,’ [according to] Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, Washington.” Considering the fact that the Committee did not send similar requests to hospital chains, pharmaceutical companies, etc., it would be hard to argue against this position.
The AP reports that “Finance Committee Chairman Max Baucus says his group of three Democrats and three Republicans “is on track” to reach agreement on a deal that can pass a divided Senate. The Montana Democrat said the negotiators — dubbed the “Gang of Six”_ will hold a teleconference Thursday to continue their talks.” However, the Wall Street Journal reports that “The White House and Senate Democratic leaders, seeing little chance of bipartisan support for their health-care overhaul, are considering a strategy shift that would break the legislation into two parts and pass the most expensive provisions solely with Democratic votes” using the fast track budget reconciliation process. The Finance Committee’s deadline for a bipartisan measure is September 15.
Meanwhile, the Centers for Disease Control report that “U.S. life expectancy reached nearly 78 years (77.9), and the age-adjusted death rate dropped to 760.3 deaths per 100,000 population, both records. *** The 2007 increase in life expectancy – up from 77.7 in 2006 — represents a continuation of a trend. Over a decade, life expectancy has increased 1.4 years from 76.5 years in 1997 to 77.9 in 2007.” Pretty, pretty good.
The Department of Health and Human Services issued its nationwide security breach notice regulation today. The HHS press release explains that
The regulations, developed by the HHS Office for Civil Rights (OCR), require health care providers and other HIPAA covered entities to promptly notify affected individuals of a breach [meaning an improper use or disclosure of protected health information that compromises its security], as well as the HHS Secretary and the media in cases where a breach affects more than 500 individuals. Breaches affecting fewer than 500 individuals will be reported to the HHS Secretary on an annual basis. The regulations also require business associates of covered entities to notify the covered entity of breaches at or by the business associate.Entities subject to the HHS and FTC regulations that secure health information as specified by the guidance through encryption or destruction are relieved from having to notify in the event of a breach of such information.
This 121 page interim rule which takes effect 30 days after Federal Register publication applies to HIPAA covered entities, including health plans, most health care providers, and health care clearinghouses, and their business associates. The rule is scheduled for publication on Monday August 24, and HHS is accepting public comment about the rule for 60 days.
HHS also announced Centers for Disease Control guidance for employers on how to prepare for the upcoming flu season featuring the H1N1 virus. According to the HHS press release,
It is not known whether the 2009 H1N1 influenza virus will cause more
illness or more severe illness in the coming months, but the CDC recommends that
everyone be prepared for influenza. Because seasonal and 2009 H1N1
influenza pose serious health threats, employers should work with employees to
develop and implement plans that can reduce the spread of flu, and to encourage
seasonal flu vaccination as well as H1N1 vaccination when that vaccine becomes
available.Employers’ plans should address such points as encouraging
employees with flu-like symptoms or illness to stay home, operating with reduced
staffing, and possibly having employees who are at higher risk of serious
medical complications from infection work from home, according to the CDC
guidance.
House Energy and Commerce Committee Chairman Henry Waxman (D Calif) and his Oversight and Investigations Subcommittee Chairman Bart Stupak (D Mich) have written to 52 health insurance companies requesting, according to an AP report, the production of documents relating to
compensation paid to any company executive earning more than
$500,000 in any year from 2003 to 2008, and premiums paid by policy holders, claims payments, sales expenses, administrative expenses and profits, broken down by categories such as employer-provided coverage; individual coverage, Medicare and Medicaid.
The documents are due in mid-September. The AP report notes that “Nick Choate, a spokesman for Stupak, said * * * letters were not sent to other industry groups, some of which have been airing television advertising in support of Obama’s call for legislation.” Modern Healthcare reports that the Obama administration is triangulating the public plan option in view of concerns raised by their health care reform allies.
“All I can tell you is that Sunday must have been a very slow news day because
here’s the bottom line: Absolutely nothing has changed,” Sebelius told attendees
of a Medicare fraud and abuse conference in Washington. “We continue to support
a public option.” * * * But Sebelius said that the administration is open to other
proposals. “If people have other ideas about how to accomplish these goals,
we’ll look at those too,” she said. “But the public option is a very good way to
do this.”
The Politico reports that “President Barack Obama plans an all-out push for health care reform legislation after Labor Day — but he is likely to find Congress and the media distracted by a series of thorny national security problems, including Guantanamo and Iran, which are set to come roaring back onto the national agenda.” The Centers for Medicare and Medicaid Services announced yesterday that CMS “[d]emonstrations * * * continue to provide strong evidence that offering financial incentives for improving or delivering high quality care increases quality and can reduce the growth in Medicare expenditures.” “’We continue to be encouraged by the progress of our ongoing programs that test value based-purchasing across a variety of health care services,’ said Charlene Frizzera, Acting Administrator of CMS; ‘Building on those efforts, we are pleased to announce the start of our Nursing Home Value-Based Purchasing Demonstration and two gainsharing demonstrations.’”The Federal Trade Commission has released its 88 page long rulemaking governing the security of personal health records offered by non-HIPAA regulated entities such as Microsoft Healthvault and Google Health. Health Data Management reports that “Despite efforts of the FTC and the Department of Health and Human Services to harmonize separate rules governing notification of breaches, the FTC rule takes confusion to a new level and will require considerable study.” The HHS rule governing HIPAA governed entities should be issued tomorrow. Business Insurance reports that “The percentage of involuntarily terminated employees opting for COBRA continuing health insurance coverage has doubled since a federal subsidy program began, according to a [Hewitt Analysis] analysis [of 200 large employers] released Tuesday.
According to the Wall Street Journal, “[t]he Obama administration [today] gave its strongest signal yet that it would be willing to compromise on plans to expand the government’s direct role in health-insurance coverage as it fights a growing crescendo of opposition to its effort to overhaul health care.” The Washington Post reports that
Health and Human Services Secretary Kathleen Sebelius opened the door to a
compromise on a public option, saying it is “not the essential element” of
comprehensive reform. White House press secretary Robert Gibbs said on CBS’s
“Face the Nation” that Obama “will be satisfied” if the private insurance market
has “choice and competition.”
In this regard, the Kaiser Health News published an interview with American Hospital Association President Chip Kahn who said “We are just opposed to a public option that is controlled by the HHS secretary and pays any kind of rate that is based on Medicare (fees). We see that as counterproductive … We would prefer to negotiate with a private entity.” Further, Health Leaders Media reports that
Private health plans’ administrative costs averaged 9% of premiums across
all policies sold and are well below “vastly overstated” estimates offered by
proponents of a government-run public plan, according to a new [Sherlock
Company] study paid for by the Blue Cross Blue Shield Association.The Sherlock report also claims that private plans perform the
administrative functions that Medicare performs for $12.51 per member per month,
compared to $13.19 per month for Medicare, and that private plans perform more
administrative functions than traditional Medicare, including care coordination
and wellness programs.
Business Insurance reports that the Blue Cross and Blue Shield Association has put its healthcare bank, the Blue Healthcare Bank, up for sale. “A variety of factors contributed to the reason for the sale, said Jeff Smokler, spokesman for the Blue Cross and Blue Shield Assn. ‘The future marketplace is one of those factors,’ he said.” The leadership in Congress is not a proponent of the health savings accounts which is a service offered by the Bank.Government Health IT News reports that “The federal Health IT Policy Committee today endorsed recommendations that would leave the Certification Commission for Health IT in[August 14] the short term as the sole organization authorized to certify health IT systems that qualified for funding under the economic stimulus plan.”Drug Store News reports that “CVS/pharmacy introduced Thursday [August 13] a free program that automatically fills prescriptions for maintenance medications and calls the patient to remind them that their medication is ready to be picked up. * * * Consumers must sign up to participate in the free ReadyFill program.”OPM has posted on its website a geographic breakdown of federal employees and annuitants as of September 2008.
The Office of Personnel Management has posted Fast Facts on federal employee benefits for new federal employees on its website.
The Centers for Medicare and Medicaid Services announced today that
The majority of Medicare beneficiaries currently enrolled in Medicare drug plans will not see significant changes in their premiums in 2010, but some may need to take steps to ensure they have the coverage they need when open enrollment begins later this year. “The majority of beneficiaries enrolled in prescription drug plans should see only small changes in their Part D premiums or benefits in the coming year,” said Jonathan Blum, acting director of CMS’ Center for Health Plan Choices. “Although most Part D plans should have relatively stable premiums, all beneficiaries should compare their current coverage with the plans that will be offered in 2010 when information becomes available in October.”
In particular, some beneficiaries who receive the low-income subsidy to pay for
their premiums will need to move to a new plan to ensure that they can remain in
a zero-premium plan in 2010 because the plan’s premium will be higher than the
2010 subsidy amount. CMS, working with its partners, will notify all individuals in this situation to make sure they are aware of their options.Based on the bids submitted by Part D plans, CMS estimates that the average monthly premium that beneficiaries will pay for standard Part D coverage in 2010 will be $30, an increase of $2 over the 2009 average premium of $28. Premiums and benefits for Medicare Advantage plans and more details about the Part D plans will be announced in September, as well as the list of plans that are not renewing their contracts with Medicare for 2010.
In encouraging news, Bloomberg reports that
A drug that can selectively target and kill the stem cells that drive the growth of tumors has been identified for the first time by scientists who searched more than 16,000 compounds to find it.
Researchers at Massachusetts Institute of Technology and the Broad Institute looked for compounds that could destroy the stem cells, which often resist conventional cancer treatment. One, salinomycin, cut the number of stem cells at least 100 times more than did Bristol-Myers Squibb Co.’s Taxol, a common chemotherapy medicine, according to a report on the findings published today in the journal Cell.
I reiterate my hope that the current health care legislation will not impair American ingenuity. Finally, the Washington Post reports tonight that “With polls showing rising concern over the government’s grim financial situation, key Republicans and a growing number of Democrats say it will be hard to push an ambitious health reform bill through Congress unless it reduces projected federal spending on medical care and begins to bring the national debt under control.” Could common sense be returning to our fair city?
The health insurance trade industry AHIP has released a report on the value of health plan networks and the role of out-of-network charges in rising health care costs. This conclusion strikes me as self-evident but these are strange times when the American Medical Association is riding high. My summer reading has become the House health care reform bill (HR 3200) and the Senate Health Education Labor and Pension Committee bill. I have been struck by the fact that the bills cap health insurer underwriting profits but not healthcare provider profits. What’s good for the goose should be good for the gander. A Washington Post article on a local school district’s efforts to control the H1NI flu suggest that it’s going to be an intense flu season. The article also provided an update on the H1N1 flu vaccine:
At the University of Maryland School of Medicine in Baltimore, 66 adult
volunteers have received the first of two doses of an H1N1 vaccine. The
university is one of 10 sites for national clinical trials of the vaccine, which
started Monday. The goal of the clinical trials is to determine how strong a dose is required to protect different age groups. To that end, researchers will test for antibodies in the volunteers’ blood to assess their immunity. Once testing is complete, the vaccine is to be given to states and local governments and administered to millions of Americans, starting with vulnerable populations such as children and young adults, pregnant women and people with weak immune systems. But there is no timeline or firm idea of how the vaccinations will be administered. The H1N1 vaccine will not be a substitute for seasonal flu
vaccine, and health officials recommended that their employees and everyone else
get both.
Congress is in recess until just after Labor Day. The Washington Post reports that “Senators headed home for their August break Thursday [August 6] amid an escalating partisan battle over health-care reform, with a small band of lawmakers [the three Democrat and three Republic Senators from the Finance Committee] hoping to keep their delicately negotiated compromise alive until Congress reconvenes in September.”
Also on August 6, the National Business Coalition on Health sent the letters to the President and Congressional leaders offering five recommendations for value based health care reform —
1) measuring the comparative effectiveness and performance of health services and providers; 2) making such information easily accessible and transparent to the public; 3) reforming the fee-for-service payment system; 4) empowering consumers to make better and more informed choices along the full spectrum of their health and health care journey; and 5) creating a failsafe mechanism and establishing an
independent entity to insure that serious cost containment measures are taken in
response to escalating health care costs.
I noticed that the Coalition’s proposals resemble recommendations made in a 2008 Blue Cross Blue Shield Association report titled the Pathway to Covering America.
Speaking of reforming the fee-for-service payment system, the American Academy of Family Physicians last week posted a web site intended to held family physicians transition to a medical home centered practice.
The Centers for Medicare and Medicaid Services announced that the agency is resurrecting a pilot program to competitively bid for Medicare durable medical equipment providers in nine regions. The “rebid” will begin in October 2009.
Top management of Microsoft and Google encouraged the Obama Administration to incorporate web based solutions such as the Microsoft Healthvault and Google Health as a key part of its health information technology plan according to a Nextgov.com article.
Eric Schmidt, chairman and chief executive officer of Google, told top health
technology officials at a meeting of the President’s Council of Advisors on Science and Technology that * * * like the Google and Microsoft applications, the national health IT system should be based on Web records that patients can control. In addition,
current electronic health record systems are proprietary and don’t interoperate,
said Richard Levin, president of Yale University. “What is out there is not very
good,” he said. “The reality is dismal.”
The New York Times offered a report today on the privacy issues affecting these services.
Companies like Google, Microsoft and WebMD see a lucrative business opportunity in assembling and holding personal health records. Patients and their doctors would be able to consult the records wherever and whenever needed. But the companies themselves recognize that they have work to do to persuade consumers and physicians that records will be safe and protected.
Although as many as one in four adult Americans are currently offered an online personal health record, by a health plan or physician’s office, most have not taken up the offer.
Google, Microsoft and WebMD all say they will not show advertising alongside a person’s health records. But visitors to WebMD, Google Health and Microsoft’s site, HealthVault, see ads for drugs for diseases like osteoporosis or acid reflux as they seek information on an array of ailments.
Technology experts say identities of viewers and their health interests are often captured at the moment they click on online ads for a drug. That provides the advertiser with a prospective customer to pursue online or by mail.
“Personal health records linked to advertising, even indirectly, put them in the hands of marketers and profilers,” said Robert Gellman, an independent privacy consultant in Washington.
I find the lack of use of personal health records interesting. I think that the lack of use is more attributable to the fact that people just aren’t that interested at this point in these online records than to privacy concerns. That could change as more features are added and demographics change. Finally, it’s worth noting that the HHS rules that will trigger the 30 day implementation period for the new nationwide health information security breach notice requirement are due to be issued within the next ten days.