• Govexec.com published an article this week criticizing FEHB plans for excluding so-called “routine care” associated with experimental drug trials. It was my understanding that such expenses were the financial responsibility of the drug company that was running the drug trial.
• The Chicago Tribune reported on “watchdog” concerns over the hospital prices now posted on many public and private websites. On a related note, the San Francisco Chronicle reported on the growing use of the internet by senior citizens, particularly for health care related matters.
• The HHS Secretary expressed concerns about the bipartisan Wired for Health Care Quality Act that the Senate is poised to pass, and the Government Accountability Office published a report on electronic data breaches.

• Robert Moffitt of the Heritage Foundation has published an interesting analysis comparing of the FEHB Program and state health insurance exchanges such as the Massachusetts health insurance connector.
• In the wake of the GAO and privacy advocates beating up HHS again for inadequately protecting privacy and security, the New York Times published a report yesterday about how health care providers are too restrictive in disclosing protected health information. The solution is a hearty dose of common sense on all sides.
• Google has created a health care advisory panel with a lot of heavy hitters from the health care world, but I didn’t notice any representatives from the health insurance industry.

• CMS is proposing a rule, to be published in the Federal Register on July 12, that would cut Medicare Part B payments by 9.8% in the federal fiscal year that begins October 1, 2007. FEHB plans would have to pick up the slack for its annuitant members if Congress does not take any action. Modern Healthcare.com reports that
  

  Efforts have been brewing on Capitol Hill in the meantime to revamp the [statutory sustainable growth rate formula known as] SGR. In a meeting last week, staff for the House Ways and Means and the Energy and Commerce committees shared with physician organizations a draft proposal to halt the 10% cut from taking effect next year. The proposal would replace the cut with at least a 0.5% increase in 2008 and 2009, and would repeal and replace the SGR payment system.

• Coventry Health Care closed today on its deal to acquire three FEHB plans and other group health business from Mutual of Omaha.

• Earlier this week, the President said that “States should make reforms to ensure that their citizens have access to basic private health insurance. It’s a dual responsibility. If we want a better system, the federal government has got a responsibility to reform, and so do states.” Today, the Commonwealth of Massachusetts initiated its state-wide universal health care reform plan known as the Commonwealth Connector , which has been analogized to the FEHB Program. The New York Times reports on the hurdles that the reform plan must cross, such as convincing younger adults to join the program instead of paying the nominal tax penalty and helping smaller businesses overcome the program’s cost. The report cautions that “Massachusetts’s model may not work everywhere. When the law passed, the state’s 370,000 to 500,000 uninsured represented less than 10 percent of its population, a smaller proportion than many states. And it does not have a scarcity of large employers, like Maine, or a huge number of immigrants, like California.”

• On June 21, 2007 the director of the Congressional Budget Office (CBO) testified before the Senate Budget Committee on “Health Care and the Budget: Issues and Challenges for Reform.” On June 27, the CBO director testified before the House Budget Committee about the Medicare Advantage program. CBO cautioned that
  

  The central long-term fiscal challenge facing the nation involves health care costs. Over long periods of time, cost growth per beneficiary in Medicare and Medicaid has tended to track cost trends in private-sector health markets. Many analysts therefore believe that significantly constraining the growth of costs for Medicare and Medicaid is likely to occur only in conjunction with slowing overall cost growth for health care. A variety of evidence suggests opportunities to constrain health care costs without harming incentives for innovation or Americans’ health (and perhaps even improving it). Moving the nation toward that possibility—which will inevitably be an iterative process in which policy steps are tried, evaluated, and reconsidered—is essential to putting the country on a sounder long-term fiscal path. Changes to the Medicare program should be evaluated with that broader perspective in mind.

• The Senate Health Education Labor and Pensions Committee favorably reported out the 2007 version of the Wired for Health Care Quality Act on June 27. Government HIT magazine reports that the bill would change the organizational landscape and extend HIPAA’s privacy and security rules to health care data exchanges such as the National Health Information Network.

• On June 27, HHS Secretary Leavitt and the Director of the National Economic Council discussed the State Children’s Health Insurance Program (S-CHIP) reauthorization issue now before Congress.

Govexec.com offers an article this morning critical of the high deductible health plans and health savings account approach, particularly as applied to the FEHB Program. President Bush weighed in again on the issue of health care reform yesterday.

On a related note, earlier this month, the Internal Revenue Service announced the 2008 indexed maximums and minimums for high deductible health plans and health savings accounts.

The American Medical Association’s (AMA) House of Delegates met in Chicago this week. Two decisions coming out of the meeting caught my attention:

• The AMA is recommending that federal and state agencies investigate pharmacy based medical clinics, such as Minute Clinics, on conflict of interest grounds. According to Forbes.com, “The AMA said the request, made Monday at its annual meeting in Chicago, was spurred by reports that retailers say the store-based clinics help increase store traffic, which can increase sales of prescription drugs and non-health related items.” The Convenient Care Association and other supporters of free market competition took umbrage with the AMA’s position.
• The AMA is “endorsing the use of radio frequency identification tags (RFIDs), which store essential medical information under the skin of patients.” What is the frequency Kenneth?

Senators Rob Wyden (D Oregon) and Bob Bennett (R Utah) made a big push earlier this week for their proposed Healthy Americans Act (S. 334) They published an op ed in the Wall Street Journal explaining

Here’s how our legislation, the Healthy Americans Act, would work: All Americans, other than those in Medicare or the military, would be given incentives to buy basic private health plans. Individuals at or below the poverty level would receive a subsidy to buy insurance. And states would be given more flexibility (within a federal framework) to give consumers more choices in insurance available on the private market. These reforms would make health insurance portable (Americans could take it to wherever they work) and make access to health care universal and affordable. They would also give individuals more control over where their health-care dollars go. And they would break the link between health insurance and employment, freeing employers of a burden they’ve carried since World War II wage and price controls forced them to offer health benefits instead of pay raises. How would this be possible? Currently the tax code gives the affluent the biggest health-care breaks. Our bill would rewrite the code to give every individual a tax benefit for buying health insurance. That would create an incentive to buy insurance. That, in turn, would push the health insurance industry to offer more competitive plans and create a more dynamic insurance market.

The bill would do away with employer sponsored health insurance including the FEHB Program (§ 672).

The Senate Budget Committee held a hearing on the bill on June 26. According to Modern Healthcare.com, Committee members expressed support for the bill’s approach.

The FEHBlog has returned from vacation, and by golly there was a lot of news last week.

OPM News

• OPM released its Inspector General’s semi-annual report to Congress for the period ended March 31, 2007. Both the Federal Times and Govexec.com reported on this development.
• OPM released a benefit administration letter describing the schedule by which federal employees will be able to begin making pre-tax allotments of salary to their health savings accounts.
• OPM revised an earlier benefits administration letter by concluding that retired public safety officers may self-elect to exclude up to $3,000 of their FEHB plan premiums provided those premiums are paid directly out of their federal annuity. OPM bases this decision on Section 845 of the Pension Protection Act of 2006 and it refers annuitants to IRS Publication 721 for more information on how to make the election.
• The Federal Times offered a report reflecting on OPM’s recent employee satisfaction survey relating to federal employee benefit programs. The report’s theme was that “While federal health and retirement programs are the darlings of government benefits programs, many employees aren’t aware of or making use of many others, according to [this] new survey” previously noted on the FEHBlog. OPM recently produced a “quick guide” to these programs.
• OPM released guidance to federal agencies on combatting against identity theft.

HHS/CMS News

• As promised CMS began to report hospital mortality data for for heart attacks and heart failure on its Hospital Compare website. It’s important to understand that information on all hospital admissions, not just Medicare patient admissions, is used to develop the patient safety information on the Hospital Compare web site.
• CMS launched a Medicare personal health records pilot program. According to the UPI, “To choose the best personal health record format, Medicare is partnering with four private plans that already offer the records: HIP USA, Humana, Kaiser Permanente, and the University of Pittsburgh Medical Center.”
• The Washington Post reports that several insurers entered into a voluntary agreement with CMS regarding the marketing of popular Medicare Advantage private fee-for-service plans.
  
• On February 1, 2007, the Government Accountability Office (GAO) criticized HHS for failing to establish milestones for integrating privacy and security requirements in its national health information network (NHIN) prototype. At a June 19 Congressional hearing, GAO updated this report and the agency is displeased with HHS’s continuing lack of progress. Modern Healthcare.com offered two articles — here and here — on this hearing. Government HIT magazine reported that “Witnesses at a House Oversight and Government Reform subcommittee hearing June 19 on the privacy of health information differed on almost every aspect of the issue, including whether existing privacy laws are adequate and whether the Health and Human Services Department is doing enough to enforce the law.” And so it goes.
• In a related development, Senators Kennedy, Clinton, Enzi, and Hatch introduced a bipartisan health information technology bill that is substantively similar to the Wired for Health Care Quality bill (S. 1418) that the Senate passed in the 109th Congress.
  

Prescription drug news

• Last summer, I followed in the FEHBlog Apotex’s generic challenge to Bristol Myers Squibb’s (BMS) and Sanofi-Aventis’s blockbluster anti-coagulant drug Plavix. Apotex took advantage of a settlement agreement with BMS to temporarily flood the market with its generic versions. A federal court preliminarily enjoined Apotex from marketing its generic version but the court did not require Apotex to withdraw from the market the pills that it already had sold. Last week, the federal district court upheld the Plavix patent against Apotex’s challenge. The patent now will remain in effect until 2011 and BMS and Plavix will seek patent infringement damages against Apotex. The court also made the preliminary injunction final. Apotex plans to appeal the decision.
• U.S. District Judge Patti Saris, who sits in Boston, issued a 183 page opinion holding BMS, AstraZeneca, and Schering Plough liable for overcharging the Medicare program and third party payers operating in Massachusetts by inflating the average wholesale price of certain doctor administered drugs covered by Medicare Part B. (Medicare no longer uses AWP as its reimbursement yardstick.) According to the Wall Street Journal, the Judge “ordered AstraZeneca to pay damages of $4.45 million to non-Medicare third-party payers and Bristol-Myers Squibb to pay damages of $183,000. The ruling affects third-party payers who paid for certain prescription drugs from December 1997 to 2003.” The next step in the litigation is for the judge to decide whether to extend her ruling, which was based on Massachusetts state law, to other states via a class action. The Judge held that Johnson & Johnson was not liable.
• A University of Michigan study endorsed the practice of splitting scored pills in order to reduce prescription drug plan copayments. Many health plans encourages this practice.
• The House Energy & Commerce Committee cleared drug safety legislation unanimously last week, according to the Washington Post.
• Senators Kennedy, Clinton, Hatch, and Enzi have crafted a bipartisan bill designed to create a pathway for Food and Drug Administration approval of generic versions of biotechnology drugs (so-called biogenerics).

The FEHBlog will be on vacation until June 24. I plan to catch up with a weekend miscellany post on June 24.

• Health savings accounts have been coming under fire this week. The Washington Post ran a story on Sunday about how “Health Savings Accounts Make Sense if You’re Physically and Fiscally Fit.” Not exactly a ringing endorsement. Yesterday, the Wall Street Journal published a report titled “Health Savings Plans Begin to Falter.” (subscription required — abbreviated AP report available here. The WSJ report noted that “In the Federal Employees Health Benefits Program, which has offered the plans for several years, only about 50,000 of its eight million members were enrolled in them in 2006, according to industry estimates.”
• Business Insurance reports today that the ERISA Industry Council proposed a new platform for health insurance and retirement coverage similar to the FEHBP. According to this trade association of large employers, ‘Health care coverage and retirement plans for American workers should be delivered by competing third-party benefit administrators such as banks, investment companies and insurers.”
• HHS Secretary Michael Leavitt announced his plan to convert the American Health Information Community from a federal advisory committee to an independent, private-sector health Information Technology (IT) leadership entity next year.