Modern Healthcare reports that the Senate Finance Committee is making progress on its bill. “Senate Finance Committee Chairman Max Baucus (D-Mont.) said that a bipartisan team of negotiators have locked down ‘two major issues’ that will be part of the broad framework for healthcare reform, but declined to provide details. ‘We’re making significant headway,’ Baucus told reporters.” America’s Health Insurance Plans, the trade association, issued a press release supporting a bipartisan approach.

The Wall Street Journal reports that “Democrats from the House Energy and Commerce Committee emerged from a meeting Tuesday with President Barack Obama saying no decisions had been made on new ways to cut the price tag of health-care legislation.” Reuters reports that “the House Ways and Means Committee, was to meet on Wednesday where it was expected to discuss taxes and other roadblocks to its version of the bill. Its plan to add a tax on the wealthy, to raise about $544 billion over 10 years, has come under fire.”

The American Medical Association has endorsed the House reform bill (H.R. 3200). The Lewin Group, working for the Heritage Foundation, projects that in 2015 the House reform bill will start to hit doctors where it hurts the pocketbook due to the expected growth of the public plan option. Not surprisingly, seventeen state medical societies, including the Texas Medical Association, have not jumped on the HR 3200 bandwagon. According to the Fort Worth Star Telegram, these groups also are concerned that the House bill does not attempt to control medical malpractice liability and the related costs of defensive medicine.

The Federal Times provided links to an interesting exchange of correspondence between the ranking minority member and chairman of the House Oversight and Government Reform Committee concerning the impact of H.R. 3200 on the FEHB Program.

Finally, the American Medical Association released its 2009 report card on major health plan claims processing. Happy Heal the Claims Process Week!

Reuters reports that “President Barack Obama said on Monday the August deadline he had set for Congress to pass initial healthcare legislation may “spill over,” but repeated that he wanted reforms enacted soon.” According to the Wall Street Journal, the President will meet with Democratic members of the Energy and Commerce Committee tomorrow. That Committee currently is considering the House healthcare reform bill, HR 3200. Meanwhile, the Senate Finance Committee continues to meet on its bipartisan bill.

The Healthcare Administrative Simplification Coalition issued a final report today. According to a press release, the report

outlines a plan for physician practices, hospitals, insurance payers, benefits managers and others to voluntarily adopt a coordinated nationwide approach to conducting key administrative processes for:

• Credentialing physicians and other clinicians – A universal credentialing form would eliminate hundreds of hours of repetitious paperwork that physician practices now devote to completing multiple credentialing forms for insurance payers, hospitals and others.
• Determining and verifying patient eligibility for health insurance – Adoption of an industry-wide standard for interchangeable electronic data would help hospitals and physician practices determine each patient’s insurance coverage more quickly and accurately.
• Standardizing healthcare patient identification cards – Standardizing the design and content of patient ID cards, and ensuring they are machine-readable, would significantly reduce costly errors and delays in the medical claims billing process.
• Improving coordination of prior authorization processes for radiology and pharmacy services – A voluntary, standardized approach to how providers request and receive determinations of patient eligibility for pharmacy benefits and radiology services would reduce treatment delays and reduce costly paperwork.

HASC includes the American Academy of Family Physicians, the American Health Information Management Association, the Medical Group Management Association, and CMS among others.

Last week, United Healthcare and Aetna each won Tricare contracts. TRICARE is the health care program serving active duty service members, National Guard and Reserve members, retirees, their families, survivors and certain former spouses worldwide. Aetna beat out Health Net for the Tricare North region contract. Today Healthnet announced that it is selling its Northeast operations (Connecticut, New York, and New Jersey) to United Healthcare. Health Net will focus on its operations in Arizona and the West Coast. According to the Minneapolis Star Tribune,

UnitedHealth will pay Health Net $60 million for the Medicare and Medicaid businesses and renewal rights for the commercial membership. After the closing, UnitedHealth will transfer $290 million to Health Net, with another $160 million to be transfered over the next two years. If all commercial members end up renewing policies with UnitedHealth, UnitedHealth could pay Health Net up to an additional $120 million.

The Star Tribune also reports that Health Net has protested the Tricare contract award to Aetna.

On Friday, the House Education and Labor Committee and the House Ways and Means Committee both approved the House health care reform bill, HR 3200. Business Insurance reports that “the Education and Labor bill was narrowly approved on a 26-22 vote, while the Ways and Means measure passed on a 23-18 vote. Three Democrats on each committee joined Republicans in voting against the legislation, H.R. 3200, which seeks to greatly reduce the number of uninsured.” One more House Committee, Energy and Commerce, must clear the bill before the Rules Committee can create a rule consolidating the various versions and setting the bill for floor consideration.

On Saturday, the Wall Street Journal reported that “House Democratic legislation overhauling the nation’s health care system would add more than $230 billion to the federal budget deficit over the next ten years, according to the Congressional Budget Office, the official scorekeeper of legislation on Capitol Hill.” This article was very enlightening to me because it explained why the American Medical Association came out in support of the House bill last week:

The gap in the legislation is largely attributed to provisions of the bill that eliminate steep cuts – planned under current law – in Medicare payments to doctors, congressional aides said. The provision was among the reasons the American Medical Association, the influential physicians group, endorsed the bill this week.

The article also points out that the CBO report and CBO Director Elmendorf’s testimony last week has caused activity to slow at the Energy and Commerce Committee which has a large contingent of Blue Dog Democrats and at the Senate Finance Committee, where Chairman Max Baucus is trying to craft a bipartisan measure.

An article in the online Wall Street Journal which will be published tomorow explains that

In the Senate, where Democratic leaders hope to pass legislation overhauling the nation’s health-insurance system by the end of the month, a group of centrist Republicans and Democrats issued a plea for delay Friday. “There is much heavy lifting ahead,” the six-member group, which includes Sens. Ben Nelson (D., Neb.) and Olympia Snowe (R., Maine), said in a letter delivered to Senate leaders. “While we are committed to providing relief for American families as quickly as possible, we believe taking additional time to achieve a bipartisan result is critical.”

The article also notes that the Blue Dog Democrats are concerned about voting on the House bill with its large tax increases before the Senate Finance Committee bill is unveiled.

The New York Times reported on the concerns that many Governors are expressing about the unfunded cost of the massive expansion of Medicaid that the House bill and the Senate HELP bill would create. “The role of the states in a restructured health care system dominated the summer meeting of the National Governors Association here this weekend — with bipartisan animosity voiced against the plan during a closed-door luncheon on Saturday and in a private meeting on Sunday with the health and human services secretary, Kathleen Sebelius.”

Enacting healthcare reform before the August recess, as urged by the President, “‘would be analogous to a hail Mary pass in a football game,’ Stuart Rothenberg of The Rothenberg Political Report told ABC News. ‘It increasingly looks virtually impossible.'”

On the FEHBP front,

• The House on Thursday approved the FY 2010 Financial Services and General Government Appropriations bill (H.R. 3170) which funds the FEHBP. The bill would allow federal employees a 2% raise as proposed by the President, according to a Federal Times report.
• Govexec.com reports that
  

  Four unions representing the nation’s postal workers are pleading for a meeting with the White House to address possible funding shortfalls for workers’ payroll and retiree health benefits, according to a letter obtained by CongressDaily.
  The presidents of the American Postal Workers Union, National Rural Letter Carriers’ Association, National Association of Letter Carriers and National Postal Mailhandlers Union co-signed the Tuesday letter to White House Deputy Chief of Staff Jim Messina, warning that the U.S. Postal Service is at risk of defaulting on a $5.4 billion payment to prefund retiree health benefits at the end of September.

  According to the article, while the Postal Service is working with OMB and OPM to provide the necessary funding, the Unions want the White House to support a bill that will allow the Postal Service to tap the Postal Service Retiree Health Benefits Fund. “We believe that the Obama administration must intervene now to avoid both a political and economic train wreck,” the Union Presidents wrote.

• On July 16, The Senate Homeland Security and Governmental Affairs Committee held a hearing on the President’s nomination of Christine Griffin to be OPM Deputy Director. Govexec.com reports that “Senators from both sides of the aisle expressed strong support for” Ms. Griffin. The next step for Ms. Griffin is a Committee vote.

I have newfound faith in the non-partisan Congressional Budget Office whose director Douglas Elmendorf told the Senate Budget Committee today that “Instead of saving the federal government from fiscal catastrophe, the health reform measures being drafted by congressional Democrats would increase rather than reduce public spending on health care, potentially worsening an already bleak budget outlook,” according to a Washington Post account. The director urged Congress to end or scale back the tax exclusion for employer-sponsored health care coverage. The Wall Street Journal reports that “The CBO assessment quickly reverberated around Capitol Hill, where House and Senate Democratic leaders are struggling to secure votes to advance health legislation before a scheduled break in August.”

Details of the 1000+ House bill are emerging. Business Insurance reports that the bill would impose an unspecified tax on insured and self-insured plans to cover the cost of medical research. The tax is projected to raise $375 million annually. The Self Insurance Institute of America promptly protested. Business Insurance further reports that

Several other provisions in the House Democrats’ measure, which is designed to extend coverage to many currently uninsured individuals, would affect benefit plans.For example, one last-minute addition to the bill would bar flexible spending accounts, health reimbursement arrangements and health savings accounts from being used to reimburse participants for over-the-counter drugs. Under another provision, employers could extend health care coverage to employees’ same-sex or opposite sex partners without the cost of that coverage being added to employees’ taxable income.A third late addition would bar employers that sponsor retiree health care plans from cutting benefits to current retirees unless comparable reductions were made for employees.

Apparently the AMA is still willing to play ball with the Democratic leadership. The Wall Street Journal reports that

In a letter delivered to House Ways and Means Chairman Charles Rangel, a New York Democrat, the AMA expressed its “appreciation and support” for the bill, providing a crucial private-sector boost. Among other things, the group welcomed a provision that would put in place a new formula for payments to doctors under Medicare, avoiding deep cuts scheduled to take place next year and in future years. The AMA’s support of House bill is striking because many doctors have expressed concern that a proposed public health-insurance plan to compete with private insurers might hurt their own bottom lines.

Finally, Modern Healthcare reports that the Senate Finance Committee bill may emerge tomorrow. The Committee’s chairman Sen. Max Baucus, in contrast to the HELP Committee and the House leadership, has been seeking a bipartisan bill with assistance from Sen. Charles Grassley.

The Senate Health Education Labor and Pensions (HELP) Committee approved along party lines its own version of the Affordable Health Choices Act of 2009 today. Key provisions include a “strong” public plan option, a health insurance exchange, an employer mandate, and long-term-care insurance coverage. Business Insurance explains that

The coverage mandate would apply to employers with more than 25 employees.
Employers would have to pay 60% of the premium, plans could not have annual or
lifetime dollar limits, and coverage would have to be extended to employees’
adult children to age 26.

Employers not meeting these standards would have to pay an annual assessment of $750 for each full-time employee not covered and$375 for every part-time employee not covered.

However, in a slight modification of an earlier proposal, the assessment would start with the 26th employee not covered. If an employer had 26 employees and did not provide acceptable coverage, its assessment would be $750, not $19,500.

In addition, individuals not enrolled in a health care plan would be liable for an annual penalty of $750.

The HELP Committee’s press release claims that “The non-partisan Congressional Budget Office estimates the bill to cost less than $615 billion over 10 years.” But this bill relies on a major expansion of the federal and state government financed Medicaid program to cover the uninsured. A USA Today article published today explains that

Under the proposals being discussed, anyone with annual income that puts him or
her at the federal poverty level or slightly above it would be eligible to sign
up for Medicaid. Now, states set rules about who is eligible to sign up, but
none allows all poor adults to enroll.

At the House threshold of 133% of poverty, CBO estimates an additional 11 million people would sign up for Medicaid. Raising the limit to 150% of poverty, as the Senate [HELP] panel envisions, means an additional 15 million to 20 million people would enroll.

The estimated 10-year cost: $500 billion.

Some governors are raising alarms that the measure will increase the burden on their hard-pressed states, which pay part of Medicaid’s costs.

The House bill calls for the federal government pick up all the new Medicaid expenses, and it promises to enact big savings in the program. The Senate Finance Committee has suggested the federal government would help states with their extra costs only for the first five years.

“This would be a haymaker thrown right at our taxpayers,”
says Indiana Gov. Mitch Daniels, a Republican and former budget director in the George W. Bush administration. He says expansion of Medicaid to 150% of poverty
could increase the state’s costs by $750 million a year — 5% of the state budget
— and wipe out an innovative Indiana health care program. Although Indiana is
now solvent, unlike California and some other states, “that would be a monster
of a mandate,” Daniels says.

I read a recent BNA article explaining that State government lobbyists are carefully tracking this legislation in an effort to avoid unexpected mandates. Modern Healthcare reports that “In a statement, Senate Finance Committee Chairman Max Baucus (D-Mont.) reaffirmed his commitment to work with the HELP panel to bring legislation to the Senate floor ‘that ensures quality, affordable healthcare for every Americanand lowers costs over the long-term.’ The Finance Committee is expected to officially release its reform bill before the end of this week. * * * [Senator Chris] Dodd [who is managing the health care reform bill in Sen. Kennedy’s absence] wouldn’t speculate on the outcome of merging the two bills, but said he hoped ‘nearly all’ of HELP’s language would make it into the final Senate package.”On the federal employee health care front, OPM announced today that in accordance with a Presidential executive order it has begun to collect information from federal agencies on existing employee health and wellness programs.

It was a big day on Capitol Hill as the House leadership introduced H.R. 3200, its 1,018 page long America’s Affordable Health Choices Act of 2009. The House fact sheets are available here. Business Insurance explains that

Under the proposal, employers would have to pay 72.5% of the premium for
individual coverage and 65% of the premium for family coverage. In addition,
health care plan enrollees with individual coverage could not be required to pay
more than $5,000 per year in out-of-pocket expenses, while such expenses would
be capped at $10,000 for enrollees with family coverage.

Preventive services would have to be covered without any employee cost-sharing. In addition, employers could not restrict coverage for new employees with pre-existing
medical conditions.

Most employers that fail to meet these requirements would be hit with a penalty equal to 8% of pay for each employee they did not offer coverage. However, employers with an annual payroll of $250,000 or less would be completely exempt from offering coverage or paying an assessment.For employers with more than $250,000 in annual payroll, the penalty would beginat 2% of payroll, rising to the full 8% penalty for employers with annual payrolls above $400,000.

Individuals who did not enroll in a health care plan, except those who could demonstrate financial hardship, would be hit with new taxes, based on their annual income.The proposal, though, would provide federal health insurance premium subsidies for those with adjusted annual gross incomes of up to 400% of the federal level. It also would create state health insurance exchanges for individuals and small employers—which could shop for coverage offered by private insurers—as well as a new public plan. Eventually, the exchange would be available to large employers.

In addition, the proposal would reimburse—through a new federal reinsurance program—employers providing coverage for pre-Medicare eligible retirees at least age 55. Under that provision, employers would be reimbursed for 80% of the cost of a claim between $15,000 and $90,000. The measure would be funded in part by a new graduated surcharge on annual income exceeding $350,000 a year. For example, the surcharge would be 1% for families earning between $350,000 and $500,000 and 1.5% for those earning between $500,000 and $1 million.

On my initial read it appears that the health insurance exchange would be implemented in 2013 and that no major changes to employer sponsored health insurance would occur until 2019. The FEHB Program is treated as employer sponsored health insurance coverage under the bill. Reuters reports that the House bill “would reduce the number of uninsured by about 37 million and cost about $1.04 trillion over 10 years, according a [preliminary Congressional Budget Office] analysis.”

Over on the Senate side, Modern Healthcare reports that

The Senate Health, Education, Labor and Pensions Committee, which is in the process of wrapping up negotiations on Sen. Edward Kennedy’s Affordable Health Choices Act, narrowly approved by a vote of 12-11 an amendment by Sen. Tom Coburn (R-Okla.) that would mandate Congress to enroll in the public option outlined in the bill.”

Also according to Modern Healthcare, the Senate HELP Committee included in that bill “an amendment by Sens. Mike Enzi (R-Wyo.), Orrin Hatch (R-Utah) and Kay Hagan (D-N.C.) was eventually approved, granting 12 years of data exclusivity for companies that develop a biological product, meaning that biosimilar or ‘follow on’ versions of this product may not be approved during this time period. “

Modern Healthcare reports that the House healthcare reform bill will be introduced tomorrow. “It is our plan to introduce legislation tomorrow,” [House Speaker Nancy] Pelosi said, adding that it won’t be the final product, but rather a version that could still be shaped as it goes through the committee process. “It’s just the beginning.” The Wall Street Journal notes that “With few Republicans, if any, expected to support the legislation, Democrats, who control the chamber with a 255-178 majority, can’t afford major defections in their ranks [such as the Blue Dogs]. They need 218 votes to ensure passage.”

Meanwhile Reuters reports that “U.S. health insurers are in talks with the Senate Finance Committee to reach savings in the the federal Medicare program of $100 billion over a decade, a source familiar with the talks said on Monday.” Unquestionably, Medicare costs need to be reduced, but I don’t understand how Medicare savings translate into the enormous funding necessary to cover the uninsured. Reuters also reports this evening that “Through the first nine months of fiscal 2009, the [federal] government has racked up a $1.086 trillion deficit. That compares with a shortfall of only $285.85 billion in the comparable year-ago period, underscoring the sharp deterioration in the U.S. fiscal picture.”

While waiting for a doctor’s visit this afternoon, I was watching a Senator on C-SPAN argue for the creation of a pathway for bio-generic drugs. The Wall Street Journal reports this afternoon that “blood is boiling” on Capitol Hill over the issue of the appropriate exclusive rights period for the brand name manufacturer of the biologic drug. The industry wants 12 to 14 years. Rep. Waxman advocates five years, and the White House proposed seven years. The Wall Street Journal points out that Sen. Ted Kennedy (D Mass), Sen. Patty Murphy (D Wash), and my own Sen. Barbara Mikulski (D Md) are siding with the biotech industry. The Wall Street Journal reports that “Leaders of the Health [Education and Labor] Committee [which Sen. Kennedy chairs] are trying to avoid a public showdown over the issue and may not produce a formal proposal until there is more unanimity on their panel, industry representatives and Senate staffers said.” That’s unfortunate as there are real savings to be had in biogenerics.

OPM posted federal worksite wellness resources on its website today. I did not realize until today that every federal agency has an employee assistance program. “Basic EAP services include free, voluntary, short-term counseling and referral for various issues affecting employee mental and emotional well-being, such as alcohol and other substance abuse, stress, grief, family problems, and psychological disorders.”

The AP reports that this afternoon that “President Barack Obama’s overhaul of the nation’s health systems is unlikely to be completed by the White House’s August deadline, lawmakers said Sunday as Congress turns its attention to other priorities.” such as Senate consideration of Judge Sotomayor’s nomination to the Supreme Court. Meanwhile Modern Healthcare reports that

House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) said that lawmakers would use a tax on the wealthiest Americans to help pay for a $1 trillion overhaul of the U.S. healthcare system.

“We have decided that instead of putting pieces of different revenue-raisers together, that the best that we can move is” a graduated surtax, starting with households that make $350,000, $500,000 and $1 million, Rangel told reporters on Friday.

Each income group would be taxed between 1% to 3%, though details remain unclear.

The tax plan would yield about $540 billion over the next decade in new revenue, he said. Those dollars would be coupled with predicted savings in the Medicare and Medicaid program to pay for most of the comprehensive bill, which is expected to be released on Monday.

Also last week, the Centers for Medicare and Medicaid Services unveiled the latest version of the useful Hospital Compare website. According to the CMS press release,

Hospital Compare will provide better data on the previously posted mortality rates for individual hospitals, as well as the new data on 30-day readmissions for heart attack, heart failure, and pneumonia. Previously, Hospital Compare had provided only mortality rates for these three conditions. Research has shown that hospital readmissions are reducing the quality of health care while increasing hospital costs. Hospital Compare data show that for patients admitted to a hospital for heart attack treatment, 19.9 percent of them will return to the hospital within 30 days, 24.5 percent of patients admitted for heart failure will return to the hospital within 30 days, and 18.2 percent of patients admitted for pneumonia will return to the hospital within 30 days. “Providing readmission rates by hospital will give consumers even better information with which to compare local providers,” said Charlene Frizzera, CMS Acting Administrator. “Readmission rates will help consumers identify those providers in the community who are furnishing high-value healthcare with the best results.”

The Federal Times reports that on Friday, the House Oversight and Government Reform Committee cleared for floor consideration H.R. 22 “which would save the U.S. Postal Service $2.3 billion this year in health care costs. The bill allows the Postal Service to pay health care premiums for its current retirees using a trust fund designated for future retirees.”

According to the AP, the Senate, by a 55-36 vote, included in its FY 2010 homeland security appropriations bill (S. 1298) a proposal offered by Sen. David Vitter (R La.) to permit prescription drug imports from Canada. The proposal will be considered by the House-Senate conference committee. I don’t think that this is a good idea because our Nation’s safe prescription drug supply depends on a closed supply chain and Canada is too small a country to supply the U.S. with prescription drugs.

The AP reports that the a group of Democrats (wisely in my view) is urging the House leadership to slow down on the health care reform initiative. “The emerging bill [in the House] ‘lacks a number of elements essential to preserving what works and fixing what is broken,’ 40 members of the Blue Dog Coalition of moderate to conservative Democrats wrote in a letter to party leaders. To win their support, they said, any legislation would need to be much more aggressive in reining in the growth of health care.” The AP also reports that both House and Senate committees lost at least a bit of momentum in their effort to achieve passage of a universal health care bill by each House before the August recess.

Modern Healthcare.com reports that “A group of hospital associations from states that deliver self-described “low cost and high quality” healthcare is launching a proposal for value-based payment reform that could fly in the face of the agreement that national hospital associations announced Wednesday at the White House.” In an article on Tuesday, the New York Times raised questions about the long term value of these deals to lower health care costs.

Tonight the New York Times reports that Democrats are at odds over the method of financing covering the uninsured.

Senate negotiators had been eyeing a tax on some employer-provided health benefits but shifted course this week after the Senate majority leader, Harry Reid of Nevada, and other top Democrats voiced opposition. The House speaker, Nancy Pelosi of California, said Thursday that the House bill would not tax those benefits. Instead, the House Ways and Means Committee was said to be nearing agreement on an income tax surcharge of 2 percent or more on Americans with the highest incomes — those earning more than $250,000. The surtax would rise for those earning $500,000 and rise again for those earning more than $1 million.At the same time, aides said that the House was moving away from other ideas, including a proposed sales tax on sodas and other sugary drinks and a new payroll tax of 0.3 percent to be paid by employees and employers.

I repeat — the devil clearly is in the details.

The House Federal Workforce Subcommittee held a hearing today on a bill (HR 2517, S. 1102) that would extend FEHBP coverage to federal employees. The Subcommittee chairman, Rep. Stephen Lynch (D Mass.) and OPM Director John Berry, among others, expressed support for the bill. OPM suggested several technical corrections to the bill in Director Berry’s testimony.

Govexec.com reports that a Senate appropriations subcommittee has approved a 2.9% pay increase for federal employees in 2010 on the day after its House counterpart approved a 2.0% increase. The FY 2010 defense authorization bill includes a 3.4% raise for servicemen and women.

Govexec.com also reports that several federal employee retirement benefit changes are included in the FY 2010 defense authorization bill now under consideration by Congress. The following provisions are included in the House bill and may be adopted by the Senate:

• Allow Federal Employee Retirement System employees to count unused sick time toward their retirement annuities
• Change how retirement annuities are calculated for Civil Service Retirement System employees to make part-time work a more attractive option for those nearing retirement
• Encourage former FERS employees to return to government service by allowing them to redeposit the retirement money they withdrew, and also to credit their previous time towards retirement
• Give civilian employees outside the continental United States locality pay rather than annual cost-of-living increases.