• 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.

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.