The Washington Post reported today on the uproar over an Obama administration budget proposal to permit the Veterans Administration to bill health plans and other third party payers for care rendered to veterans for service-connected disabilities. For many years, the VA has billed third party payers for care rendered to veterans for non-service-connected disabilities (38 U.S.C. §1729). The American Legion’s president explained today in a Wall Street Journal opinion piece why this extension threatened veteran’s health care.

It was pointed out to me that this budget proposal would be similar to shifting the cost of workers compensable health care from the employer to the health insurers. The budget proposal would only increase the cost of health insurance for the veterans and inappropriately relieve the government of its clear responsibility.

Tonight the White House issued the following press statement:

The President has consistently stated that he is committed to working with veterans on the details of the 2010 VA Budget Proposal. The President demonstrated his deep commitment to veterans by proposing the largest increase in the VA budget in 30 years and calling VSO and MSO leaders into the White House for an unprecedented meeting to discuss various aspects of the budget proposal. In considering the third party billing issue, the administration was seeking to maximize the resources available for veterans; however, the President listened to concerns raised by the VSOs that this might, under certain circumstances, affect veterans and their families’ ability to access health care. Therefore, the President has instructed that its consideration be dropped. The President wants to continue a constructive partnership with the VSOs and MSOs and is grateful to those VSOs and MSOs who have worked in good faith with him on the budget proposal.

This is good news.

OPM announced today that Acting Director Kathie Ann Whipple has appointed Elaine Kaplan as OPM’s general counsel. Ms. Kaplan will be leaving her current position as Senior Deputy General Counsel for the National Treasury Employees Union.

Today’s session was sublime for FEHBP junkies like me. OPM announced that the call letter for 2010 benefits and rates proposals will be issued in “a week or so.” OPM provided a bevy of statistics on the FEHB Program. The OPM Inspector General’s office and carrier representatives discussed an innovative joint task force to combat fraud against the Program . Finally, OPM arranged for a panel of CMS representatives to discuss the new mandatory insurer reporting program known by the shorthand name Section 111. This program goes live for group health plans on April 1, 2009.

Today was day #1 of the 2009 FEHBP carrier conference sponsored by OPM and AHIP. For the past few years, OPM has distributed the annual call letter for benefit and rate call letter just before the conference. That was not the case today, which is not surprising due to the change in administrations. There was a helpful presentation by the Juvenile Diabetes Research Foundation which suggests that the call letter will ask carriers to cover continuous glucose monitors for members with Type 1 diabetes.The keynote speaker, Neera Tanden, counselor for health reform in the Health and Human Services Department secretary’s office. discussed health care reform. The Politico noted last June that Ms. Tanden was a key architect of, among other things, [Hillary] Clinton’s health care plan [in the 2008 campaign].” Govexec.com reports that

Tanden said it was unlikely that the Obama administration simply would open the Federal Employees Health Benefits Program to the public. But she said the team was studying FEHBP to learn how its efforts to provide high-quality care and leverage large enrollment to bring down costs might be replicated.

In other FEHBP news, I noticed a press release today stating that

The American Chiropractic Association (ACA), in coordination with the National Chiropractic Legal Action Fund (NCLAF), has initiated an “all fronts” response to the Blue Cross Blue Shield Association’s (BC/BSA) Jan. 1 policy change that removed doctors of chiropractic from the classification of “physician” in the Blue Cross Blue Shield Federal Employees Health Benefits Plan (BC/BS FEP).

This press release is part of the ACA / NCLAF’s efforts documented here to defend the status of chiropractors as physicians. The efforts are directed at a number of insurers and Medicare and, in my opinion, illustrate the difficulty of controlling medical expenses.

• 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.