• Congress passed an FY 2010 budget resolution that applies the budget reconciliation process to health care reform, according to this New York Times report. The budget reconciliation process would allow the Senate to avoid a filibuster over health care reform. Now the Sen. Arlen Spector has switched parties from Republican to Democrat, the Senate majority has inched closer (59 votes) to the magic 60 votes required for cloture, and the Minnesota election dispute to date favors the Democrat Al Franken who would provide the 60th vote. But of course Senators pride themselves on independence so no one should count their chickens before they hatch.
• Speaking of such independence, Sen. Max Baucus, the powerful Senate Finance Committee chairman made some interesting comments at a hearing last week according to the Kaiser Foundation daly health policy report for April 30:
  

  During a confirmation hearing for William Corr, President Obama’s choice for deputy secretary of HHS, Baucus said, “There are some very, very thoughtful people in health care who really, seriously, wonder if CMS is up to the job,” adding that “there’s some question whether they are able to develop the designs and putting new programs together as opposed to just implementing old programs.” He raised the prospect of creating a separate entity to work alongside CMS that would be tasked with designing possible changes such as bundling payments for services, or developing accountable care organizations and the medical home concept. Corr said, “It begins also with leadership and I think Secretary Sebelius intends to bring in outstanding leaders to the department, to CMS,” continuing, “I hope within several months that when you make that assessment again, you will be able to say different things about the direction CMS is moving in” (Norman, CQ HealthBeat,
  4/30).

  I suggest that the problem is not CMS but rather the hideously complicated Medicare program.

• Modern Healthcare reports that “U.S. health officials are cautiously optimistic that the new swine flu isn’t as dangerous as first feared, but urged people on Sunday to keep taking commonsense precautions — and they can’t predict if it will roar back in the fall.” Modern Healthleaders offered a report on how “the onset of swine flu has reignited the debate about whether retail-based, walk-in healthcare clinics are an appropriate venue for treating people with highly communicable diseases.” Aren’t these people going the pharmacy anyway?
• On May 1, CMS released a proposed rule setting Medicare’s inpatient acute and long term care hospital payments for discharges occuring on or after October 1, 2010, the next federal fiscal year. “CMS is proposing to update acute care hospital rates by 2.1 percent for inflation less an adjustment of 1.9 percentage points to remove the effect of increases in aggregate payments due to changes in hospital coding practices that do not reflect increases in patient’s severity of illness.” CMS also announced new quality measures.
• Also on May 1, OPM announced the award of a seven year long term care insurance contract to John Hancock as insurer and Long Term Care partners as administrator. “Premium rates for current enrollees with automatic compound inflation (ACI) protection will increase between 5 percent and 25 percent. The program has not had an increase in the last seven years and another increase is not expected until 2016. There is no premium increase for enrollees with Future Purchase Option.”
• AHIP released a report on private sector health plan strategies to control expenses and improve quality, such as pay for performance.
• The new health information technology czar David Blumenthal announced according to Government HIT News that “he expects to start meeting shortly with members of health IT advisory panels set up under the economic stimulus law and take first steps on how to use some of the $2 billion health IT war chest it funded. HHS also rolled out a new HIT website.
• In the April 28 Federal Register, HHS, the Labor Department, and the IRS sought public comment on issues affecting the implementation of the new federal mental health parity law which takes effect next year. The comment deadline is May 28, 2009.
• The Federal Trade Commission announced a three month delay in implementaion of new identity theft prevention requirements imposed on creditors and financial institutions. Doctors have been screaming bloody murder about these rules. You can therefore imagine my consternation when I discovered that lawyers also are subject to these Red Flag rules. The new implementation date is August 1, 2009.

• I discovered today that AHIP offers dedicated web pages on value based insurance design and the medical home. These are two benefits initiatives, particularly the value based insurance designed, which OPM endorsed in its 2010 call letter for FEHB benefits and rate proposals.
• Prescription benefit manager (PBM) Medco reported solid first quarter 2009 financial results. Express Scripts reports tomorrow and CVS Caremark reports on May 5. The National Association of Community Pharmacists has expressed concerns to the Federal Trade Commission about the announced Express Scripts acquisition of insurer Wellpoint’s PBM operations. In other PBM news, AIS Drug Benefits News reports that
  

  Wal-Mart Stores, Inc. is rolling out a pharmacy benefit program to employers and health plans that it says will greatly simplify the drug-pricing system and eliminate up to 20% of the waste in the current pharmaceutical supply chain. Some industry observers say the new program could pressure pharmacy benefit managers (PBMs) on pricing, but others tell DBN that the jury is still out on whether the program will shake up the pharmacy benefits industry.

• The Wall Street Journal reports on the pressure that the recession is placing on health insurer first quarter earnings, particularly Aetna.
  

  When people see layoffs at their employers, they apparently are accelerating their use of medical services for fear that they, too, may lose their jobs, [Aetna] CEO Williams said. Those already laid off and using the Cobra program to extend their insurance coverage also appear to be accelerating their use of services, he said. In addition, the cohort of people on Cobra has a significantly higher medical cost ratio, according to the CEO. An increase in benefit buydowns also is accelerating use of services, as people realize their benefits will be less “rich” in coming years, Williams said.

  This is a trend that is unlikely to impact the FEHB Program as the federal government is adding, not shedding jobs.

• The Senate confirmed the President’s nomination of Kathleen Sibelius to serve as Secretary of Health and Human Services by a vote of 65-31.
• The leadership of the Senate Finance Committee released a set of health care reform policy options that the Committee will consider tomorrow. Public comment is invited on the options. The comment deadline is May 15.
• The Federal Times reports that “New Office of Personnel Management Director John Berry pledges to bring employee unions into discussions on pay for performance, benefits and outsourcing federal jobs.” The Director recently met with union officials who brought up the topic of extending benefits to domestic partners.

• OPM issued swine flu guidance to federal agency heads today.
• The House and Senate leadership is moving forward with including the fast track budget reconciliation option for health care reform option in the budget resolution. The Hill newspaper discusses this development : “Although talk of bipartisanship has not disappeared, one thing is certain: The Democrats are moving aggressively ahead, even if they have to go it alone.” A Hill newspaper article from last Friday reports on Senate Finance Committee chairman’s approach to the public plan option:
  

  “The public option’s on the table,” Baucus said during remarks at the National
  Press Club. “Now, the public option might be to the side a little bit … but it’s
  still on the table,” he said.“We’re trying to get momentum going. We’ll get to
  the public option a little later,” Baucus said. “We don’t have to decide it yet.
  I say all that because it’s a hot button. …“Let’s not forget: There’s an awful
  lot more here than the public option,” Baucus said, indicating that Democratic
  and Republican senators remain engaged in productive discussions on health
  reform.

  The Kaiser Foundation Capitol Hill Watch report indicates that at this briefing Sen. Baucus further explained that he does not wish to disrupt current employer sponsored coverage.

• The Senate Committee on Health, Education, Labor, and Pensions will be holding a hearing tomorrow about “Learning from the States: Individual State Experiences with Health Care Reform Coverage Initiatives in the Context of National Reform.” The Salt Lake Tribune reports that Utah officials will be talking up their state’s market based reforms.
• The New York Times reports today on the budding civil war between specialist physicians and general practioners over possible Obama administration changes to Medicare reimbursement designed to increase the number of GPs at the expense of specialists.
• Towers Perrin, the consulting firm, has released a report on value based insurance design, one of OPM’s call letter initatives.

• The U.S. declared swine flu to be a public health emergency today according to this Reuters report. This is a preparatory action, not a red alert. Health plans may want to share with their members the Centers for Disease Control’s common sense tips on how to avoid the flu. OPM’s pandemic influenza web page is here.
• On April 23, the Health, Employment, Labor, and Pensions subcommittee of the House Education and Labor held a hearing on ways to reduce the cost of health insurance. The American Benefits Council and the National Association of Health Underwriters testified at the hearing. The NAHU testimony observed that “In many ways, a connector [or health insurance exchange] operates like the Federal Employees Health Benefit Plan, in which many private insurance plans compete to provide coverage for federal workers. But, unlike the FEHBP, a connector does not achieve the marketing and other advantages of a homogenous group.” (In fact, FEHBP enrollment is not that homogeneous.) The NAHU testimony goes on the make recommendations on how to structure a connector. A Harvard professor David Himmelstein trashed the Massachusetts connector and urged the establishment of a single payer plan.
• The House Ways and Means Committee’s health subcommittee held a hearing about health insurance market reform on April 22. The subcommittee’s chairman Rep. Pete Stark (D Calif) is a major single payer proponent. The subcommittee will hold a hearing about employer sponsored coverage on April 29.
• Press reports, such as the Politico report, indicate the House and Senate Conference Committee on the budget resolution is poised to make the budget reconciliation process option applicable to health care reform. The President is pushing for this option. Under this option, a measure can be pushed through with limited Senate debate but the measure must sunset after 10 years. The 2001 Bush tax cuts were enacted under the reconciliation process which is the reason that the cuts expire after 2010.

• Govexec.com reports on OPM Director John Berry’s official swearing in ceremony which was held today in the presence of the First Lady. The artcle notes that the new OPM Deputy Director will be former Equal Employment Opportunity Commission Vice Chairwoman Christine Griffin. Ms. Griffin is a labor lawyer who became an EEOC commissioner in 2005. According to her bio, “she served as the Executive Director of the Disability Law Center in Boston from 1996 to 2005. Prior to that, Ms. Griffin served from 1995 to 1996 as an Attorney Advisor to the former Vice Chair of the EEOC, Paul M. Igasaki, advising him on legal matters and policy issues.”
• GAO released its annual report on Improper Payments Information Act. The FEHB Program’s improper payments rated dropped from .05% in 2007 to .02% in 2008. The Medicare Program’s improper payments rate is in the stratosphere. GAO reports that
  

  Medicare and Medicaid comprise 50 percent of reported governmentwide improper payments in fiscal year 2008. HHS reported improper payment amounts of $10.4 billion in Medicare Fee-for-Service and $6.8 billion in Medicare Advantage. HHS also reported in its agency financial report that it issued its first full-year Medicaid improper payment rate estimate of 10.5 percent, or $18.6 billion for the federal share of expenditures for fiscal year 2008. This Medicaid improper payment estimate represents the largest amount that any federal agency reported for a program in fiscal year 2008. While CMS has taken steps to enhance its program integrity efforts, further work remains to put in place the internal controls necessary to effectively identify and detect improper payments

  These important facts seem to get lose when people tout Medicare as a model and suggest the need for a public health plan option.

• The AIS Specialty Pharmacy Report featured an interesting story on the legislative effort to bring bi0-generic (or bio-similar) drugs to market in the U.S. According to the experts whom I have heard including Medco’s CEO David Snow, this development offers huge savings to the U.S. health care economy. The struggle is over the patent exclusivity period for the original manufacturer. The Obama Administration favors seven years and the manufacturers want at least 12. A shorter period could kill the golden goose of creativity. A law is expected next year.
• In Tuesday’s post I touched on the topic of value based insurance design. The New York Times reports today on a value based initiative between Cigna and Merck, the manufacturer of the Type 2 diabetes drugs Januvia and Janumet. According to the article,
  

  Rather than getting paid more for good results, Merck will actually give Cigna
  bigger discounts on Januvia and Janumet. Some discounts will be granted if more people diligently take the drugs as prescribed. This helps both Cigna, because people who take their pills are likely to have fewer complications from the disease, and Merck, because it sells more pills. The assumption is that Cigna will push for patient-compliance programs that urge people to take their
  medicine at the right times and in the proper doses.

  In effect, though, Merck is betting not only that its drugs prove superior but that Cigna’s incentives to reap the benefits of the deeper Januvia and Janumet discounts will prompt the insurer to try to keep patients on those drugs.

Before approving the nomination of Kansas Gov. Kathleen Sibelius to be HHS Secretary by a 15-8 vote, the Senate Finance Committee today held a roundtable discussion on healthcare delivery reform. There are a number of health care delivery reform initiatives in OPM’s 2010 call letter noted in yesterday’s Post. One of them is value based benefit designed. At the roundtable, Aetna’s CEO made the following point about this concept which I found helpful

Value-Based Insurance Design. Based on evidence in the medical literature that co-payments and/or coinsurance can create barriers to care, value-based insurance design eliminates or reduces co-payments or coinsurance for certain medications or types of care that are demonstrated to be crucial in preventing or managing disease. In other words, insurance is designed so that costs are not a deterrent to individuals in seeking out the right kind of care. One important example is the various types of care that are provided with first-dollar coverage, including preventive care, routine physicals, gynecological exams and medications for chronic care conditions. In addition to offering these products in the market, Aetna and the Aetna Foundation are supporting two clinical studies to evaluate the efficacy of value based
insurance design with researchers at Brigham and Women’s Hospital and the
University of Pennsylvania.

The call letter also encourages FEHB plan carriers to address childhood obesity. The Aetna CEO made the following point in his testimony:

Childhood Obesity Pilot. In 2009, Aetna launched a childhood obesity pilot in cooperation with the Alliance for a Healthier Generation (partnership between William J. Clinton Foundation and American Heart Association), Aetna’s employer clients and the medical community. The program, currently available to five large employer groups totaling 74,000 employees, includes coverage for obesity and nutritional counseling provided by physicians, access to clinically-based community resources, educational materials distributed at the worksite and educational resources for physicians. We believe the program is breaking new
ground; currently there is no evidence-based protocol for treating childhood obesity with counseling absent a co-morbid condition (e.g., diabetes). By addressing childhood obesity before it leads to serious health complications, this program takes an important, proactive step in improving health and quality of life for children in need. Our program offers a uniquely comprehensive approach by combining proactive treatment of childhood obesity with collaboration among insurers, employers, the medical community and families.

Aetna, the Blue Cross Blue Shield Association, and the American College of Physicians struck similar notes in the support of the medical home concept. This large body of testimony appears to be a valuable resource. Chairman Max Baucus stated that “We will follow up today’s roundtable on delivery system reform with another on expanding health coverage to all Americans on May 5. And then we will have our third roundtable on financing health reform on May 14.” Yesterday, in a letter to the President, Sen. Baucus and Sen. Ted Kennedy “have reiterated their commitment to moving health reform legislation in the Senate this year, and announced that their committees will mark-up comprehensive health care reform legislation in early June.”

The U.S. Office of Personnel Management released today its call letter for 2010 benefits and rates proposals. Here’s a link to the letter–
CL2009-08%20Annual%20Call%20Letter.pdf

FEHB plans are required to submit their 2010 proposals no later than May 31. The call letter and the FEHB Program are proof that a national health insurance exchange can operate successfully without preexisting condition limitations or a public plan option.

• Modern Healthcare reports that the Senate Finance Committee will vote on Kansas Gov. Kathleen Sibelius’s nomination to be HHS Secretary on April 21 (time as yet undetermined) following “a roundtable discussion with industry policy-shapers on how to change the way healthcare is delivered in the U.S.” In a post last week, I noted that health care reform czar Nancy-Ann DeParle’s advocacy for a public plan option represents the camel’s nose under the tent. That’s a poor analogy when you consider that the fact that due to the expansion of Medicare, Medicaid, and the Children’s Health Insurance Program, the government already pays for almost 1/2 of health care in the U.S. So for better or worse, the camel already is in the tent. I need to be more careful with my analogies.
  
• HHS released guidance Friday on securing protected health information and preventing harm from breaches. HHS provides no new guidance on securing electronic PHI and HHS asks stateholders how to secure paper based PHI. Once the paper is disclosed, e.g., mailed, I am stumped on how you feasibly can make paper unreadable or indecipherable. The security breach provisions of the stimulus act are a terribly flawed law. HHS is accepting comments on the guidance until May 21, 2009.

• On April 13, CMS announced its pilot program to reduce Medicare hospital readmissions in fourteen communities.

• Business Insurance reports that the International Foundation of Employee Benefit Plans released a survey about the recession’s impact on benefit plans from the perspective of employers and employees.

• White House health care reform czar Nancy Ann DeParle thinks she is working up a compromise on the public plan issue according to the AP. This would be the proverbial camel’s nose under the tent.
• While the Wall Street Journal reports that hospitals continue to jack up their prices, Business Insurance reports about a Leapfrog Group 2008 survey finding that most hospitals have a long way to go before reaching adequate levels of efficiency and safety. That’s disheartening news even on the night that our Nationals win their first game of the season.
• AARP released a survey finding that brand name drug prices are increasing while generic drug prices are dropping, according to this AP report. I hope they didn’t pay for that survey.
• The Federal Trade Commission issued a proposed rule implementing the security breach notice provisions of the stimulus act that apply to entities not subject to HIPAA, like the Microsoft Healthvault and Google Health. Comments are due by June 1. HIPAA covered entities must wait for an HHS rulemaking.