URAC, a health care accreditation organization, announced earlier this week that it is making progress developing quality metrics designed for PPO (preferred provider network) plans. URAC first announced these development efforts in September 2006 and based on public comments it has prepared the metrics for beta testing.

URAC explains that

It has put forward three principles for the measures:

* Performance measures should address dimensions of health plan performance that the consumer values—specifically those that concern consumer choice;
* Performance measures should target results that health plans or care management vendors are accountable for and have the ability to influence;
* Performance measures should be based on data that can be collected and reported in a consistent fashion across the continuum of health benefit plans.

The metrics themselves will fall under three broad categories:

* Service Quality
* Consumer Protection & Empowerment / Navigation
* Satisfaction with Service

Sample measures may include tracking client or consumer satisfaction rates, complaint rates, provision of care coordination and consumer navigation tools, provision of price and quality transparency and provision of quality incentives.

These URAC metrics likely will be a useful alternative to the NCQA’s HEDIS metrics which are HMO plan oriented.

Express Scripts is withdrawing its request for Federal Trade Commission antitrust review of its proposed acquisition of its fellow prescription benefit manager Caremark. Express Scripts plans to refile early next week in order to allow the FTC more time to evaluate the antitrust implications of the proposed merger. This means that the FTC review may not be completed by the time that Caremark shareholders are scheduled to vote on the CVS merger proposal, February 20. Moreover, the Wall Street Journal notes today hat

“With Express [Script]s’ antitrust case in limbo, the company [Express Scripts] is under increasing pressure to raise its offer, which yesterday was valued at $58.87 per Caremark share. That is only about 1% greater than CVS’s transaction terms, valued at $58.19, which includes a $2 per share dividend once the deal is completed.”

What’s more CVS announced today that its fourth quarter 2006 profit was up nearly three percent on increased sales of generic drugs and that its January 2007 revenues were 24% over the previous January. It therefore appears that momentum has shifted to CVS in the the battle for Caremark.

A study by Peter K. Lindenauer, M.D., M.Sc., et al., published in last week’s New England Journal of Medicine concludes that a combination of public reporting and pay for performance programs produce a modest improvement in health care quality over public reporting programs alone. (The entire study is available at the link.) The New England Journal editorializes that pay for performance is at the tipping point.

The Centers for Medicare and Medicaid Services (CMS) have a less nuanced view of the study’s results, according to Government Health IT magazine. CMS notes that the Medicare pay for performance pilot has “saved the lives of 1,284 heart attack patients.”

• The Caremark shareholder meeting to consider the CVS merger deal will be held on February 20. (The CVS shareholder meeting is three days later.) As previously blogged, Caremark, in advance of the meeting, has sent shareholders proxy statements supporting the deal (and offering a special $2 dividend), and Express Scripts has sent them an exchange offer to those shareholders offering a different deal. This week, Caremark sent shareholders a letter commending the value of the CVS deal. Express Scripts issued a retort according to the Boston Globe.
• The Pirelli Armstrong Retiree Medical Benefits Trust brought a shareholder derivative action in federal court in Nashville, where Caremark is headquartered, challenging the CVS merger. This is the latest of several lawsuits pending over the merger. Express Scripts has filed a suit in Delaware where Caremark in incorporated challenging the breakup fee in the CVS merger deal.
• Reuters is reporting today that sixteen state legislators have written to the Federal Trade Commission warning about the anti-competitive aspects of the Express Scripts deal, which would combine the 2nd and 3rd largest prescription benefit managers. The FTC, which already has approved the CVS deal, must complete its review of the Express Scripts deal by February 2. In a related article, the Wall Street Journal reported yesterday about how shareholder votes can be swung by institutional investors borrowing shares. Much worse than hanging chads.

The first question that Steve Barr received during his Washington Post Q&A yesterday was how would the President’s healthcare proposal would affect the FEHB Program. Mr. Barr wasn’t sure and he does not think that the proposal has legs. Nevertheless, it is an interesting proposal because it is so different from the current arrangement.

The FEHB Act provides for a government contribution and an enrollee contribution toward health benefits coverage. Under the current arrangement, the government contribution is excluded from income and employment taxation (Internal Revenue Code Sections 105 and 106), and the enrollee contribution is similarly excluded for employees based on OPM’s premium conversion plan (IRC Section 125). Retirees are not eligible for this premium conversion plan, although NARFE has been pushing for a legislative fix to allow their participation.

Under the President’s proposal, if enacted, the government contribution and the enrollee contribution would be taxable to both employees and retirees. Taxpayers with self only FEHBP coverage would receive a $7,500 standard deduction, and taxpayers with FEHBP family coverage would receive a $15,000 standard deduction. The deduction would be indexed to the consumer price index when it is fully implemented in 2009. If the actual FEHBP premium is below the standard deduction, the taxpayer wins and if the actual FEHBP premium is above the standard deduction, the taxpayer loses. Of course, in the FEHB Program, enrollees have an annual Open Season during which they could do their tax planning.

On Tuesday, Julie Goon, a special assistant to the President for economic policy, explained that

What this plan would do is give a flat, standard deduction for anybody who purchases any kind of health insurance, no matter how much the health insurance costs and no matter where they get it. It would be $15,000 for people purchasing family policy, $7,500 for people purchasing single policies. So if your employer is giving you insurance through your job, you get the standard deduction. If you go buy health insurance on your own, you get the standard deduction. If your policy costs $5,000, you still get $15,000 of compensation tax-free. If your policy costs $20,000, you still get $15,000 of compensation tax-free, using the family example.

The President was on the road today in Lee’s Summit, Missouri (home of the FEHB plan, GEHA) advocating his plan.

VA Secretary James Nicholson announced at yesterday’s American Health Information Community (AHIC) meeting that the Veterans Affairs Department and the Defense Department, which both operate hospital chains, plan to implement a joint, interoperable electronic health record system. Also at that meeting, the contractor teams seeking to develop a National Health Information Network, which will link electronic health record systems, demonstrated their prototypes/works in progress. More demonstrations will occur at next week’s NHIN Forum. Finally, Secretary Leavitt officially accepted “thirty (30) consensus [health information technology interoperability] standards recommended by the Healthcare Information Technology Standards Panel (HITSP)” in September 2006.

Reading the GAO report on FEHBP premium growth remains on my to do list but both the Federal Times and Steve Barr of the Washington Post are reporting this morning that the report criticizes OPM for declining the Medicare Part D subsidy and that Sen. Akaka plans to review the GAO report at a subcommittee hearing this Spring. In a statement released yesterday, Senator Akaka said that

“I will take a closer look at how OPM decisions affect health care premiums,” Senator Akaka said. “Although OPM did a good job in keeping premium increases down in 2006, the GAO report clearly shows that if OPM had applied for and used the subsidy, premium growth would be reduced by 2.6 percent.”

Steve Case, AOL’s founder, launched the pilot version of his Revolution Health web site yesterday while his competitor WebMD revamped its site . Both sites are consumer oriented. The Washington Post notes that WebMD already has “35 million unique visitors per month and about $170 million in annual revenue.”

Revolution plans to charge about $100 a year for membership in return for which members will receive a call a nurse service, assistance with insurance claim disputes, and assistance with picking a health plan. I found it interesting that the Revolution health site includes a directory “over 700,000 doctors, 150,000 dentists, plus over 400,000 allied health professionals” and since yesterday it has received over 2000 viewer ratings on the listed providers.

The U.S. Government Accountability Office (GAO) released today a report titled “Federal Employees Health Benefits [FEHB] Program: Premium Growth Has Recently Slowed, and Varies among Participating Plans” GAO-07-141. The report was prepared for Senator Daniel Akaka (D Hawaii) whose staff has announced, according to the Washington Post, that the Senator plans to examine this topic as chairman of the Senate Homeland Security and Governmental Affairs subcommittee with responsibility for the FEHB Program.

The White House has released the health care proposals that President will make in his State of the Union address tomorrow night:

The President’s Plan Includes Two Parts: Reforming The Tax Code With A Standard Deduction For Health Insurance So All Americans Get The Same Tax Breaks For Health Insurance And Helping States Make Affordable Private Health Insurance Available To Their Citizens.

1. The President’s Plan Will Help More Americans Afford Health Insurance By Reforming The Tax Code With A Standard Deduction For Health Insurance – Like The Standard Deduction For Dependents. The President’s primary goal is to make health insurance more affordable, allowing more Americans to purchase coverage. The President’s proposal levels the playing field for Americans who purchase health insurance on their own rather than through their employers, providing a substantial tax benefit for all those who now have health insurance purchased on the individual market. It also lowers taxes for all currently uninsured Americans who decide to purchase health insurance – making insurance more affordable and providing a significant incentive to all working Americans to purchase coverage, thereby reducing the number of uninsured Americans.
   • Under The President’s Proposal, Families With Health Insurance Will Not Pay Income Or Payroll Taxes On The First $15,000 In Compensation And Singles Will Not Pay Income Or Payroll Taxes On The First $7,500.
   • At the same time, health insurance would be considered taxable income. This is a change for those who now have health insurance through their jobs.
   • The President’s proposal will result in lower taxes for about 80 percent of employer-provided policies.
   • Those with more generous policies (20 percent) will have the option to adjust their compensation to have lower premiums and higher wages to offset the tax change.
2. The President’s Affordable Choices Initiative Will Help States Make Basic Private Health Insurance Available And Will Provide Additional Help To Americans Who Cannot Afford Insurance Or Who Have Persistently High Medical Expenses. For States that provide their citizens with access to basic, affordable private health insurance, the President’s Affordable Choices Initiative will direct Federal funding to assist States in helping their poor and hard-to-insure citizens afford private insurance. By allocating current Federal health care funding more effectively, the President’s plan accomplishes this goal without creating a new Federal entitlement or new Federal spending.

Currently, the health benefits tax exclusion is only available when the health insurance/benefits are purchased within the workplace. Under the President’s proposal, the deduction would be available to those who purchase insurance outside the workplace, or individually. The White House anticipates that this change if accepted by Congress will generate a significant reduction in the number of uninsured Americans. To pay for this expansion, employer provided health benefit coverage that exceeds the applicable tax would be taxable for the first time.