• On Thursday, the FEHBlog discussed a New York Times report on a same sex partner coverage dispute between the U.S. Court of Appeals for the Ninth Circuit and OPM. I was surprised to find the story on the front page of Friday’s paper. Also on Friday, Govexec.com published its own story captioned “Efforts to grant feds domestic partner benefits gain momentum.” I can’t argue with that considering the President’s expressed desire to repeal the Defense of Marriage Act and his nomination of a domestic partner coverage advocate, John Berry, to be OPM Director. I just took a look at the nominations page on whitehouse.gov and it appears that Mr. Berry’s nomination has not been formally delivered to the Senate yet.
• Also last week, the FEHBlog discussed Rep. Waxman’s introduction of a bill to create a regulatory pathway for biogeneric or biosimilar drugs. I suspected that his bill would be opposed by the biotech industry and my suspicion was confirmed by a Wall Street Journal report captioned “Firms Prepare for a Fight over Generic Drugs”
  

  The trade group Biotechnology Industry Organization quickly denounced the bill, saying it would undermine innovation. “This bill seeks to cut prices but instead cuts corners,” said the organization’s head, former Pennsylvania Rep. James Greenwood, in a statement. He said the bill “jeopardizes the continued development of new breakthrough therapies and potential cures for debilitating diseases such as multiple sclerosis, HIV/AIDS and Alzheimer’s.” Biotech companies say they’re not opposed to creating a path for generics, but they say it should require extensive clinical trials showing the copies are safe and effective. Biologics are among the most expensive medicines and are particularly used in cancer treatment. The Congressional Budget Office has estimated a generics bill could bring savings of $9.2 billion over 10 years in reduced payments by Medicare and other government agencies. Congressional jockeying over the legislation is likely. Sen. Charles Schumer (D., N.Y.) is planning to introduce a companion Senate bill to the Waxman House bill. Rep. Waxman is expected to face a challenge from Rep. Joe Barton (R., Texas) and Rep. Anna Eshoo (D., Calif.), who introduced a bill in 2007 that was more favorable to brand-name biotech companies. Their bill called for 12 years of exclusivity.

• On February 24 the Equal Employment Opportunity Commission issued a proposed rule implementing Title II of the Genetic Information Non-Discrimination Act (“GINA”). Title II applies to employers with 15 or more employees. Title I applies to health plans. I understand from a presentation by a panel of government experts that the law will impact wellness programs sponsored by employers and health plans. Comments are due on May 5, 2009, and title II of GINA takes effect on November 21,2009. Here’s a link to a report on the proposed rule by Human Resources Executive online.
• Finally last week, AHIP teamed up with Gallup and Healthways to publish a report measuring the quality of life in the various states and congressional districts. According to AHIP’s press release.
  

  Some highlights of the new reports include:

  Utah, Hawaii, Wyoming, Colorado and Minnesota top the state rankings, and

  California’s 14th Congressional District, located between San Francisco and San Jose, is highest among congressional districts.

The New York Times reports today on the mess that the activist Ninth Circuit has created by using its own employment policies to attempt to override the FEHB Act. The FEHB Act extends coverage to the enrollee’s spouse and dependent children to age 22. Two Ninth Circuit judges ruled internally that OPM must treat the same sex spouses of their employees as covered dependents. Citing the Defense of Marriage Act, OPM refused. The agency deserves credit, in my view, for faithfully executing the FEHB Act. If Congress wants to change FEHB Act by extending coverage to same sex partners, so be it. But until then the current law should be applied.

In today’s Wall Street Journal, two Harvard Medical School faculty members challenge the common wisdom that electronic medical records will dramatically reduce our national health care spending.

In yesterday’s post, I noted about a consultant’s study concluding that the ARRA subsidy will cover about 1/2 the cost of electronic medical record technology for doctors. Today, according to a New York Times report, Wal Mart announced that it is teaming up with Dell Computers and eClinicalWorks to offer low priced EMR technology to small medical practices.

In other mid-week developments, House Energy and Commerce Committee chairman Rep. Henry Waxman introduced a bipartisan bill to create a regulatory pathway for generic versions of expensive biotech prescription drugs. There appears to be a fly in the ointment according to this AP report,

The debate over an approval process for biotech copies has dragged on for years, with both the biotechnology and generic drug industries at loggerheads over how much competition-free marketing the original drugs should get. The biotechnology industry has called for up to 14 years of exclusivity for their drugs before a copy could be introduced.But the bill instead mirrors the current system for chemical compounds, which allows for five years of market exclusivity for new drugs and up to three years additional exclusivity for modifications.

Also today, Senate Finance Committee Chairman Sen. Baucus and three powerful House chairmen announced plans to push comprehensive health care reform legislation this year.

• The Senate approved the FY 2009 omnibus appropriations bill (HR 1105) tonight thereby sending it along to the President for his anticipated approval, according to an AP report. Division D of this bill includes OPM and FEHB Program appropriations, together with the standard FEHBP related appropriations provisions — a ban against application of the federal Cost Accounting Standards to FEHBP carriers (Sec. 612), a restriction against abortion coverage except where “the life of the mother would be endangered if the fetus were carried to term, or the pregnancy is the result of an act of rape or incest (Sec. 613) and a contraceptive coverage mandate (Sec. 728).
• Business Insurance reports that the U.S. Court of Appeals for the Ninth Circuit has refused to reconsider the unanimous panel ruling that ERISA does not preempt San Francisco’s pay or play law. Under that law, San Francisco employers must provide health insurance coverage to their employees or pay a tax to the city. The Court’s action sets the stage for U.S. Supreme Court consideration of the issue.
• Government Health IT reports that
  

  The stimulus law calls for giving Medicare providers up to $44,000 apiece for adopting EHRs and reducing their payments by up to 5 percent if they fail to use them by 2015.

  But the Avalere Health analysis concludes that a doctor still will have to shell out $70,000 over five years for an EHR system, or about $14,000 a year, beyond the incentive payments. The maximum penalty for nonadopters would amount to $8,500, Avalere officials said.

  On the other hand, I don’t think that the stimulus bill is providing other professionals a handout to cover technology expenses. And while in the you can’t please everyone department, Healthcare IT News reports that “A recent survey finds that although more physician leaders are using healthcare information technology, they still find it clunky and unresponsive to their needs.”

I attended the Galen Institute’s valuable Lessons From Abroad for Health Reform in the U.S. program today. The conference materials are available here.

At the conference I heard an informative lecture on US health care reform by Emory University Prof. Kenneth Thorpe. He broke health care reform into three components — 1) primary care / prevention 2) redesigning the delivery infrastructure, and 3) covering the uninsured. He described the first two issues as bipartisan health care reform issues and the third as the hot potato reimbursement issue.

With respect to the first and second components, Prof. Thorpe explained that the U.S. has the best tertiary care health system in the world which is funded by a reimbursement system that is tilted toward paying for tertiary care. He asserted that the U.S. must devote more resources toward prevention, e.g., reducing obesity, and refocus the delivery structure from tertiary care to caring for the chronically ill, e.g. the obese, depressed, hypertensive diabetic. He explained that caring for the chronically ill requires teams of non-MD care coordinators. I think that the FEHB Program is ahead of the curve on these issues.

With respect to covering the uninsured, Prof. Thorpe noted that both AHIP and Phrma favor an individual mandate similar to that found in Sen. Baucus’s reform white paper. How do you pay for it? The President budget includes a reserve of $634 billion to cover the uninsured. But the 10 year cost is projected at $1 trillion. (Projections vary of course) Consideration is being given to tax changes and employer play or pay. Other hot button issues include the availability of a public plan option and the cost effectiveness institute that was funded by ARRA.

According to the Congressmen who spoke (both Republicans Dr. Tom Price and Dr. Michael Burgess), the leadership hopes to enact a comprehensive health care reform law before the August recess. Both Congressmen spoke of using the FEHBP as a model for a national health insurance exchange.

• In Thursday’s FEHBlog post about the White House health care summit, I noted that the the individual mandate found in Sen. Baucus’s health care reform plan conflicted with President Obama’s campaign proposal. The New York Times and Modern Healthcare report that at the end of the conference the President signalled his willingness to compromise. However, the question that provoked this statement was raised by Sen. Charles Grassley who wanted to know whether the President would stick to his guns on the campaign plan to create a public health plan option to private health plan coverage.
  

  All along Obama has called for the creation of a public health insurance plan that would provide low-cost coverage options to potentially millions of Americans. Republican lawmakers and private payers, however, have said that such an option would siphon away members. Sen. Chuck Grassley (R-Iowa), the senior Republican on the Senate Finance Committee, raised the issue with the president, saying “there’s a lot of us that feel that the public option—the government—is an unfair competitor and that we’re going to get an awful lot of crowd out.” Obama acknowledged the concern—as well as the political realities that could make such a proposal a sticking point. “I think it’s a serious one and real one, and we’ll make sure that it gets addressed,” he said

  Under these circumstances, it’s less surprising that the Washington Post reports that opponents of Hillarycare in the early 1990s are supporting this health care effort.

  In the room [at the White House summit on Thursday] was Rep. Joe L. Barton (R-Tex.), who proudly reminded the crowd of 150 that he was instrumental in killing “Hillarycare” in the 1990s. Yesterday, he announced that he supported the principles that have been outlined by Obama.Also at the summit was Chip Kahn, who 15 years ago, as an insurance lobbyist, helped mastermind the iconic “Harry and Louise” ads that attacked the health-care overhaul proposed by President Bill and first lady Hillary Rodham Clinton. Kahn, who now represents hospitals, said Obama has “successfully launched the process we need to achieve health reform, which we all want, and brought together congressional Democrats and Republicans with stakeholders to begin to forge a consensus.”Karen Ignagni, who runs the nation’s leading insurance association, told Obama, “You have our commitment to play, to contribute and to help pass health-care reform this year.”

  I think that this quote from the Washington Post story sums it up the best:

  U.S. Chamber of Commerce President Thomas Donohue said, “We know where everyone stood. But they don’t stand there anymore,” adding, “We’re going to get some kind of an agreement here, whether it’s two-thirds of what everybody wants or three-quarters of what everybody wants or who knows. If you don’t get in this game … you’re not on the menu”

• The Financial Times reports that the Wellpoint, which provides Blue Cross coverage to 35 million Americans, plans to auction off its inhouse prescription benefits management operation.
  

  The three dominant companies in prescription healthcare services – ExpressScripts, Medco and CVS Caremark – are independent, free-standing companies. Several others are embedded within managed care providers such as WellPoint, Aetna, Cigna and UnitedHealth, the largest US health insurer.WellPoint paid 67.5m ­prescriptions in the fourth quarter of last year, an increase of 5.6 per cent from the same period a year earlier.Its PBM business is likely to attract interest from CVS Caremark, Medco and ExpressScripts, and the sale process has been under way for months, according to people close to the matter. WellPoint did not have any immediate comment.Expectations have risen that insurers with in-house PBMs might consider selling them or spinning them off as the political and economic environment surrounding the healthcare industry grows more challenging.

• HHS made the following announcement on interest to HIPAA covered entities —
  

  On January 15, the U.S. Department of Health and Human Services released
  two final rules that will facilitate the United States’ ongoing transition
  to an electronic health care environment through adoption of an updated set
  of diagnosis and procedure codes and updated standards for electronic
  health care and pharmacy transactions.

  In accordance with the White House Chief of Staff’s memorandum of January
  20, 2009 entitled “Regulatory Review,” a determination has been made that
  the effective date will not be extended and the comment period will not be
  reopened for either of these rules.

  The first rule finalizes new code sets to be used for reporting diagnoses
  and procedures on health care transactions. This final rule replaces the
  ICD-9-CM code sets, developed nearly 30 years ago, with greatly expanded
  ICD-10 code sets. The second final rule adopts updated versions of the
  standards governing electronic transactions under the authority of the
  Health Insurance Portability and Accountability Act of 1996. The updated
  versions replace the current standards and will promote greater use of
  electronic transactions. In response to public comments suggesting that
  more time would be needed for effective industry implementation, the final
  rules include later compliance dates. More specifically, the final rules
  provide compliance dates of Jan. 1, 2012, for the transaction standards and
  Oct. 1, 2013, for the ICD-10 code set.

President Obama held a health care reform summit today at the White House, and HHS launched a new health care reform website. The President emphasized his support for full-scale health care reform this year. The Washington Post reports that

Scott Serota, president of the Blue Cross Blue Shield Association, told the group that opposition to health care reform by insurers is a thing of the past. “We are embracing the need for reform,” he said. “We believe the time is right for appropriate and sustainable health care reform.” He said reform should include an “enforceable individual mandate” for health insurance coverage, which he called the “cornerstone” for universal coverage.

Congressional Quarterly and Business Insurance also reported on the summit.
Senate Finance Committee chair Max Baucus has offered a health care reform plan that would utilize a national health insurance exchange and an individual mandate similar to the Massachusetts state health care reform plan. His committee will be holding two health care reform hearings next week. Interestingly, President Obama opposed now Secretary of State Hillary Clinton’s individual mandate for adults proposal during the campaign last year.
Congressional Quarterly also reports that

House Majority Leader Steny H. Hoyer said Thursday that House and Senate Democratic leaders are discussing whether to use the filibuster-proof budget reconciliation process to move major elements of President Obama’s agenda this year. At the top of that list are the president’s health care overhaul and his climate change proposal, which would impose a cap on carbon dioxide emissions and then sell emission permits that companies could use or trade. A Hoyer aide said changes in the federal student loan program also could move through reconciliation. The Maryland Democrat emphasized that no decisions have been made, and that leaders have just begun discussing how to proceed.

• Tomorrow is President Obama’s health care reform summit. According to Modern Healthcare.com,

  House leaders have pledged at least a half-dozen hearings over the coming weeks to seek out fixes for the nation’s fractured healthcare system, but were less clear on a timetable for a bill. [For instance, the Health Subcommittee of the Energy and Commerce Committee will hold a health care reform hearing on March 10, and the House Ways and Means Committee will hold a health care reform hearing on March 11.

  Rep. Frank Pallone (D-N.J.), chairman of the House Energy and Commerce Health Subcommittee, said that the House does not have an official deadline, but acknowledged that under President Barack Obama’s goal to sign a bill this year, “I would say you have to get it passed by end of summer or early September.”

  This week, Senate Finance Chairman Max Baucus (D-Mont.) said he would target midsummer for a reform package to emerge from the Senate. Baucus, who has emerged as the point person on health reform, said he had met with many lawmakers to help shape the legislative process, including those on the House side.

• The Davies public relations firm released the results of a 2009 national survey of hospital executive attitudes towards health insurers. According to the firm’s press release,
  

  Although health plans are rated poorly in a variety of other surveys – including JD Powers and Harris Poll – the DAVIES survey revealed two outliers in the health insurance community. For the first time, hospitals identified a preferred business partner in Aetna. And for the third straight year, UnitedHealthcare stood out dramatically as a bad actor in its ratings.

• The DC Examiner reports that five federal annuitants have sued the Department of Health and Human Services in DC federal court to block an HHS rule requiring them to enroll in Medicare Part A if they want to receive Social Security benefits. The lead plaintiff had been happily enrolled in the Mail Handlers Benefit Plan’s high deductible plan with a health savings account (“HSA”). However, you cannot contribute to an HSA if you are enrolled in Medicare. There’s the rub that lead to the lawsuit.
• Up in the Bay State, according to the AP, a group of federal employees who have same sex spouses have sued OPM in Massachusetts federal court in an effort to force OPM to open FEHBP coverage to their spouses. The AP reports that
  

  The new lawsuit challenges only the portion of the [Defense of Marriage Act] that prevents the federal government from affording Social Security and other benefits to same-sex couples. President Barack Obama has pledged to work to repeal DOMA and reverse the Department of Defense policy that prevents openly gay people from serving in the military.

• Joe Davidson of the Washington Post reports this morning on a glitch in President Obama’s budget outline. The budget outline projects $9.5 billion in savings over ten years from reductions in postal employee fringe benefits. The budget fails to consider that in those benefits are collectively bargained between the postal unions and the USPS. In contrast, the federal employee unions do not have collective bargaining rights over wages and fringe benefits. Those must be “negotiated” with Congress. Hence the efforts year in and year out to get Congress to increase the Government contribution toward FEHBP coverage for federal employees and annuitants.