From AIS Health Business Daily — “iConecto, the Virginia company that both tracks and sponsors a new Web health gaming site, says the Health eGaming market will reach $7 billion over the coming year.”

• Press reports indicate that tomorrow President Obama will announce that he is nominating Kansas Governor Kathleen Sebelius to serve as Secretary of the Department of Health and Human Services. Of course, this nomination is subject to Senate approval. This news reminds me that in January there were several press reports that the President intended to nominate National Zoo director John Berry to serve as the OPM Director. I haven’t read any more about the OPM’s Director’s position since the President named Kathie Ann Whipple to serve as acting Director.
• The Dallas News includes an interview with Darren Rogers, the President of Blue Cross and Blue Shield of Texas. The interview focuses on the tension between physicians and health plans. This is a good exchange —
  

  I look at this as we’re all in this together and we’ve all got to get along. I think everybody’s heart is in the right place. I don’t think that physicians or hospitals are trying to put me out of business, and I’m certainly not trying to put them out of business. Without them, I have no business. I’m not saying conflict doesn’t exist, because there’s a natural tension. Health plans are an intermediary between the people who are paying for service – which are really the employers – and providers, who want to maximize their incomes. But where would providers be without the commercial health insurance companies? We all pay more than the government programs do. If we’re not there anymore, then they get to live on what Medicare and Medicaid pay them. And certainly there are bad actors. We do have situations where we know that physicians and other providers are harming people, and they get investigated. And there are probably things that health plans do that aggravate them. But you can’t have a free rein on the system or no one would be able to afford anything.

• The New York Times reports today on the efforts of Aetna and United Healthcare to prepare for the next round of health care reform efforts.
  

• The Labor Department has created a useful website on the COBRA continuation coverage subsidy created by the stimulus law. As explained on that site,
  

  The American Recovery and Reinvestment Act of 2009 (ARRA)[the official name of the stimulus act] provides for a 65% reduction in COBRA premiums for certain assistance eligible individuals for up to 9 months. An assistance eligible individual is a COBRA “qualified beneficiary” who meets all of the following requirements:Has a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.Those who are eligible for other group health coverage (such as a spouse’s plan) or Medicare are not eligible for the premium reduction. Other limitations may also apply. There is no premium reduction for periods of coverage that began prior to February 17, 2009.

  OPM is in the process of implementing these changes to the FEHBP’s analogous temporary continuation of coverage program.

• The Blue Cross and Blue Shield Association has published its annual report on state health care initiatives.
• HHS issued a projection of 2009 health care costs. The report discusses the impact of the current recession on health care spending.

Here’s a very interesting Dow Jones news service article on the healthcare industry’s reaction to the President’s FY 2010 budget proposal.

According to the Federal Times, the House of Representatives passed the FY 2009 appropriations bill (HR 1150) discussed in yesterday’s post by a 245-178 vote. The bill moves onto the Senate. Also in the House, according to Govexec.com, a bill was introduced to allow federal retirees to pay their FEHB plan premiums with pre-tax dollars just like employees. This bill has been introduced numerous times without success because Congress has been stymied by the difficulty of giving this benefit to federal retirees but not to private sector retirees. Of course, extending the pre-tax benefit to the whole magillah creates a whopping tax loss. But maybe that doesn’t matter this year.

The health care reform effort is heating up on Capitol Hill according to CQ Politics. The President’s speech left no doubt last night that there will be a push for universal health coverage in 2009. The Washington Post provides an advance report on the health care reform pieces of tomorrow’s FY 2010 budget proposal. The Post reports that

If the budget is approved, drug companies would be required to increase the rebate they now provide for medications sold to Medicaid patients from 15 percent to 21 percent. The proposal would likely spark a ferocious lobbying campaign by the industry, which has argued that the current 15 percent rebate is already cutting into profits.

What the Post fails to mention is that the drug industry maintains its profitability by increasing prices on the private sector health plans whenever Medicaid takes a bigger rebate.

Also it’s interesting to note that the big prescription benefit managers Medco and Express Scripts are staying afloat. Fox Business reports that

Medco Health Solutions reported fourth-quarter net income of $274.4 million, or 54 cents a share, up from $207.6 million, or 38 cents, earned in the final three months of 2007. Quarterly revenue generated by the Franklin Lakes, N.J.-based health-care provider reached $12.96 billion from the prior year’s $11.38 billion. The volume of mail-order prescriptions handled by Medco hit 26.7 million in the latest quarter, up 9.4% and a company record. Medco said revenue growth primarily reflected new client wins and price inflation on brand-name drugs, offset in part by higher volumes of lower-cost generic drugs.

CNN Money reports that

Express Scripts Inc.’s (ESRX) fourth-quarter net income rose 49% as gross margins expanded on wider use of generics, which also helped push revenue slightly lower.

Express Scripts reported net income of $206.8 million, or 83 cents a share, up from $138.5 million, or 54 cents a share, a year ago. The latest quarter included a $7.3 million charge related to a security breach.

Revenue fell 0.9% to $5.51 billion.

I am personally ecstatic about UConn’s win over # 10 Marquette tonight as it was Coach Jim Calhoun’s 800th victory of his illustrious career.

Last year, Congress enacted and then President Bush signed into law a bill (H.R. 2638) that fully funds national security operations for the fiscal year (FY) 2009 that began October 1, 2008, and generally provides continuing appropriations at FY 2008 levels for other federal government operations until March 6, 2008.

Congress is now considering an omnibus FY 2009 appropriations bill (H.R. 1105). http://www.rules.house.gov/111/LegText/111_omni2009_2.htm The House is expected to vote on the bill this week, and the Senate next week. Under the House rule applicable to this bill, the bill will be given an up or down vote without further amendments H.R. 1105 does include the now standard FEHBP related appropriations provisions — a ban on application of the cost accounting standards to FEHB plan contracts (§611), prescription drug-contraceptive parity (§728), and a prohibition against the expenditure of funds for abortions except in cases of rape or when the health of the mother is at stake (§§613-614).

• Happy Birthday to George Washington! First in war; first in peace, and first in the hearts of his countrymen.
• On February 20, OPM finalized in the Federal Register its rule amending the Federal Employees Health Benefits Acquisition Regulation (48 C.F.R. Chap. 16). In response to an adverse decision from the U.S. Court of Appeals for the Federal Circuit, “[t]he rule clarifies the rate setting process for community-rated carriers with respect to Similarly Sized Subscriber Groups (SSSG) and removes the ban on adjustments based on rate reconciliation for the final year of Federal Employees Health Benefits Program (FEHBP) contracts.
• Also on February 20, the New York Times reported that a healthcare reform “workhorse group” organized by Senator Ted Kennedy is coalescing around an individual mandate to purchase health insurance similar to the Massachusetts Connector program. According to that report,
  

  The 20 people who regularly attend the meetings on Capitol Hill include lobbyists for AARP, Aetna, the A.F.L.-C.I.O., the American Cancer Society, the American Medical Association, America’s Health Insurance Plans, the Business Roundtable, Easter Seals, the National Federation of Independent Business, the Pharmaceutical Research and Manufacturers of America, and the United States Chamber of Commerce.

• Government Health IT News reports on one of the uncertain future of the private public successor to the American Health Information Community, the National eHealth Collaborative.
  

Business Insurance reports that

Large U.S. employers expect to pay 6% more for health benefits in 2009, the same rate of increase as 2007 and 2008, according to preliminary findings of a survey by Watson Wyatt Worldwide and the National Business Group on Health.

The cost increases were partially tempered by the growing use of consumer-driven health plans, which are now offered by 51% of employers, up from 47% in 2008, according to the survey.

Employers where at least half of their workers enrolled in a CDHP have a two-year cost trend that is 25% lower than non-CDHP sponsors, the survey found.

I find it interesting that over half of employers now offer consumer driven health plans, meaning plans featuring health reimbursement accounts or health savings accounts.

Speaking of health care costs, Sage Works has confirmed one of my basic operating hypotheses — that dentists are quite profitable because they don’t rely heavily on third party reimbursement. According to a Sage Works report, dentists have been the most profitable industry over the past 12 months. Physician’s offices are in sixth place, and lawyers in third.

President Obama’s health care reform effort recently took a step ahead with the stimulus bill and a step back with Tom Daschle’s withdrawal. The New York Times is reporting that Kansas Gov. Kathleen Sibelius is the leading candidate for the HHS Secretary position, but she would not concurrently hold the health care reform czar position as Daschle would have. Meanwhile the Politico reports that Office of Management and Budget Director Peter Orszag is picking up the slack created by Daschle’s withdrawal:

Now Orszag is preparing for the biggest week of his career, with a “fiscal responsibility” summit Monday and the release of Obama’s first budget Thursday.

He’s signaling that the moves in the stimulus package are just a hint of what’s to come in a budget that will begin in earnest the arduous process of health care reform.
“What has already been accomplished is a huge start toward a more efficient [health care] system, and I think you’re going to see more in the budget next week,” he told Politico.

Though the budget’s details have been closely held, Orszag revealed, in broad terms, two: a continued focus on health care policy and a plan “to restore the nation to a sustainable fiscal trajectory over the five-to-10- year window.”

The next step on health care, he said, is a set of “changes to Medicare and Medicaid to make them more efficient, and to start using those programs more intelligently to lead the whole health care system.”

With a growing body of research finding some practices more cost-effective than others, the program’s reimbursement rules can be used to force changes at those hospitals — a sort of back door to health care reform.

“Medicare and Medicaid are big enough to change the way medicine is practiced,” he said.

Meanwhile, the Commonwealth Fund released a report recommending national health care reform along the lines that President Obama proposed in his campaign, e.g., a Massachusetts connector model.

“The U.S. Department of Health and Human Services (HHS) and the Federal Trade Commission (FTC) today announced [in a press release] that CVS, the nation’s largest retail pharmacy chain, will pay the U.S. government a $2.25 million settlement and take corrective action to ensure it does not violate the privacy of its millions of patients when disposing of patient information such as identifying information on pill bottle labels.”

Here are the new government FAQs on the proper disposal of protected health information media. A word to the wise . . .