OPM announced today that its new Deputy Director Christine Griffin has taken office following Senate confirmation. Ms. Griffin had been an U.S. Equal Opportunity Commissioner. Govexec,com reports that “A wheelchair user and labor and employment law expert, [Ms.] Griffin has been a forceful advocate for federal hiring of workers with disabilities, something she has said could provide a model to help overcome discrimination against disabled employees in the private sector.”

On the health care reform front, the Baltimore Sun reports that the Congressional majority leadership continues to lean toward informal negotiations over the substance of a final bill instead of a formal conference committee. The informal negotiations would be limited to the House and Senate majority leadership and the White House. The negotiations would be based on the Senate bill rather than the House bill. The outcome of the negotiations would be presented first to the House and then to the Senate which raises a risk of “ping ponging” between the Houses. A Business Insurance report reminds us of key differences between the House and Senate bills.

Not much news since the last post due to the New Year’s holiday weekend. I’m taking a deep breath as the Congressional leaders continue their efforts to merge the House and Senate health care reform bills. The House reconvenes on January 12, and the Senate reconvenes on January 19.

January 1, 2010, was the date on which the 2008 Mental Health Parity Act’s provisions and the 2008 Genetic Information Non-Disclosure Act, Title I (“GINA”), became applicable to the FEHB Program. The mental health parity changes, which principally apply to plans with out of network coverage, can be examined in the 2010 plan brochures. The FEHB Program has provided generous in- network mental health benefits for nearly ten years under an OPM initiative.

The GINA law’s impact on the FEHB is even more nuanced because FEHB plans have never engaged in placing restrictions in enrollment, such as modifying premiums, based on member’s health status, past, current, or projected.

The FEHBlog has just returned to DC following a Christmas trip to Los Angeles. The Politico reports that the Governors of California and New York are understandably dismayed over the Senate health care reform bill‘s (H.R. 3590) financing of the Medicaid program which would impose significant unfunded mandates on their states. They are not alone. The Politico reports that thirteen Republican state attorneys general are urging the House and the Senate to delete the Senate bill’s provision that gives Nebraska a pass on these additional Medicaid expenses.

The big news today was the issuance of the long awaited definition of “meaningful use” of certified electronic health record (EHR) technology by healthcare providers, which is the touchstone for federal government funding of EHR technology expenses under the Recovery Act. According to a government press release, “A proposed rule issued by CMS [the Centers for Medicare and Medicare Services] outlines proposed provisions governing the EHR incentive programs, including defining the central concept of “meaningful use” of EHR technology. An interim final regulation (IFR) issued by ONC [Office of the National Coordinator] sets initial standards, implementation specifications, and certification criteria for EHR technology. Both regulations are open to public comment [for sixty days].”

Modern Healthcare reports that CMS is implementing the two month delay in the 21% cut in Medicare Part B reimbursement to physicians that President Obama recently signed into law as part of the FY 2010 defense appropriations act. “In a memorandum, the agency clarified that it would be instructing its Medicare contractors to hold claims for [2010] services paid under the [Medicare Part B] fee schedule for the first 10 business days of January. This will allow Medicare contractors time “to receive the new, updated payment files and perform necessary testing before paying claims at the new rates,” the CMS explained in its memo.”

AIS Specialty Pharmacy News reports on a December 8, 2009, Congressional hearing on the rising cost of prescription drugs as disclosed by an AARP study. “Specialty therapy prices increased 10.3% in the most recent period [ending in September 2009], up from the previous high of 9.3%. During the same time, AARP reported, prices for prescription nonspecialty drugs grew 9.3%.” Non-specialty drugs, typically small molecule pills, are subject to generic competion, while specialty drugs , typically biologic injectables, are not. That imbalance may change with the health care reform bill.

The New Jersey Newroom reports about a survey commissioned by Medco, a major prescripton benefits manager, finding that senior citizens have a hard time juggling their multiple prescripton medications. (Hey, it’s my job as a lawyer to belabor the obvious!) Medco has created a brochure to help folks manage their prescriptions which is available here.

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

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

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

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

Happy Holidays.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The annual Federal Benefits Open Season ends tomorrow.

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

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

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

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

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

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