FEHBlog

Yesterday, Senate Majority Leader Harry Reid (D Nev) announced that the Congressional Budget Office had blessed his Managers’ Amendment to HR 3590 (the great compromise) and that Sen. Ben Nelson (D Neb.) has agreed to support the amended bill which would give the Majority Leader the 60 votes that he needs to bring this bill to a final vote on the floor. The next cloture vote is scheduled for 1 am Monday morning which if it receives the necessary 60 vote approval will lead to a final vote on Thursday night, Christmas Eve. The CBO letters are available here and here and its Director’s post on the Manager’s amendment is here.

I heard Sen. John McCain (R Ariz) say this morning that he thinks that the Senate will pass the bill. At that point, the ball passes back to the House which either could adopt the Senate bill or demand a conference committee. Sen. Kent Conrad (D ND), who chairs the Senate Budget Committee said on the same show that the House will need to stick closely to the Senate version or risk unraveling the deal.

I have written about the great compromise including a parallel FEHB Program for the insured. Having read the relevant provision (Sec. 1334, p. 54), it’s not accurate to describe this as a parallel FEHB program. Rather the great compromise rips a page out of the FEHB Program playbook. The OPM Director would contact with at least two health insurance issuers, including at least one not for profit issuers, to offer a multi-state health benefit plan in the state based health insurance exchanges that the Senate bill would create. These multistate plans would be open to individuals and small businesses. The multistate plans would have to satisfy both a combination of health insurace exchange and FEHBA requirements. The manager’s amendment specifies that the FEHB Program will be unaffected by these new OPM contracts. It requires OPM to maintain the current level of effort to support the FEHB Program, and it allows OPM to create a new office to handle the multistate contract. I think that this is doable for OPM.

There are many other changes in the 736 page long Managers Amendment. For example, it would postpone the first $6.7 billion annual fee from 2010 to 2011. It will take a while to digest.

In other legislative action, the Senate approved the defense appropriations bill (H.R. 3326). This final Fiscal Year 2010 appropriations bill extends the 65% COBRA / TCC premiums to employees who are involuntarily terminated before March 1 (rather than January 1, 2010) and it extends the subsidy period from nine months to fifteen months retroactively to November 30, 2009, according to Business Insurance. The bill also averts for two months the 21% cut in Medicare Part B reimbursements to doctors according to California Healthline.

Let’s start off with some FEHBP news. This morning, the Senate Homeland Security and Governmental Affairs Committee approved S. 1102 which would extend FEHBP coverage, and other federal employee benefits, to same sex domestic partners by an 8 to 1 vote. Govexec.com reports that the Committee Chairman Sen. Joe Lieberman and the Ranking Minority Member Sen. Susan Collins advised that they will not move the bill to the Senate floor until OPM offers savings that make the measure deficit neutral. The Office of Management and Budget is considering OPM’s proposals.

Speaking of government finances, the House of Representatives today passed a further extension of the continuing resolution funding the government. The Federal Times reports that the CR now will expire December 23. The last piece of the appropriations puzzle is a defense appropriations bill which the House also passed today. Included in the defense appropriations bill is an extension of the COBRA / TCC premium subsidy that is scheduled to sunset on December 31, 2009. Business Insurance reports that

Embedded in H.R. 3326, a measure appropriating funds for the Department of Defense, the nine-month, 65% premium subsidy would be extended by six months to a total of 15 months. It would apply to those who lose their jobs through Feb. 28, 2010. Under current law, employees who lose their jobs after Dec. 31 are ineligible for the subsidy.

Also embedded in H.R. 3326 is a provision that would stave off the Medicare physician reimbursement cut of 21% for two months from January 1, 2010, to March 1, 2010, according to Modern Healthcare. The Senate is expected to act on H.R. 3326 by December 23.

Business Insurance also reports that “The Senate on Tuesday rejected two proposals to allow people to buy cheaper prescription medicines from other nations, preserving a deal between the White House and the pharmaceutical industry.” These decisions were made in the course of considering the mammoth health care reform legislation. For public safety reasons, I think the Senate made the right decision here.

We are still waiting for the Senate Majority Leader to release the details of the great compromise, which includes the parallel FEHBP. The Politico reports tonight that “Senate Majority Leader Harry Reid’s plan to pass the Senate health care reform bill by Christmas looked increasingly in doubt Wednesday, as Republicans launched an offensive to stall the legislation and Democrats had yet to strike a 60-vote compromise.” The Democrats ultimate goal is to present the President with a bill to sign before the State of the Union address in late January or early February. Time will tell.

Last week, Sen. Majority Leader announced that he had submitted to CBO for scoring a great compromise that would expand Medicare and various other programs and would create a parallel FEHB program under OPM supervision in lieu of a public plan option. The details of the great compromise still are under wraps. The Wall Street Journal reports tonight that “Senate Democrats signaled their intention to back away from a plan to expand Medicare [a program facing imminent bankruptcy], in a bid to break a deepening impasse on the health-overhaul bill.”
The Wall Street Journal report does not discuss a plan B. However, the Senate Democrat caucus will be meeting with President Obama tomorrow after which more information may become available.

The Federal Times published a report on the predicted impact of the great compromise’s parallel FEHB program on OPM. Bear in mind that I call it a parallel FEHB program because I am certain that there would continue to be a separate risk pool for federal and postal employees and annuitants. According to the article

David Ermer, general counsel for the Association of Federal Health Organizations, a partnership of unions and health care plans serving federal employees, thinks it would only require a few hundred more employees. Ermer said his group has not taken a position on the proposal, but he thinks OPM could handle it.

I take this apparently contrarian approach because OPM is able to administer the FEHB Program with a relatively small workforce. The beauty of the FEHB Program is that in contrast to Medicare the FEHB Program is not heavily regulated and it relies on market forces and competitition. OPM has put up other programs in this decade such as the successful Federal Employees Dental and Vision Insurance Program. I think that OPM’s keep it simple approach could work with the parallel program too. But that’s up to Congress, not OPM.

The annual Federal Benefits Open Season ends tomorrow.

The Senate and the House now have approved the omnibus spending measure which funds the FEHBP for the current federal fiscal year, according to the Washington Post. This bill also allows federal employees a 1.5% pay raise and a 0.5% locality pay increase.

Business Insurance reports that the chief actuary for the Centers for Medicare and Medicaid Services has concluded that “U.S. health care spending would rise by about $234 billion over the next decade under the Senate Democrats’ overhaul bill, and some of the proposed savings might never be achieved.” This frankly does not surprise me.

The details on the compromise that would replace the public plan option in the Senate bill with a Medicare expansion and a parallel program to FEHBP supervised by OPM have not been released. Nevertheless Sen. Joe Lieberman (I Conn.) has come out against the Medicare expansion according to the Politico. Investors Business Daily offers expert views on the parallel FEHB program while NARFE has come out against OPM supervision of that program.

Earlier this week, Senate Majority Leader Harry Reid (D Nev.) announced that he had submitted to the Congressional Budget Office for scoring a compromise under which the Senate bill would be amended to expand Medicare to folks aged 55 to 64, to create a health insurance exchange under OPM’s supervision and to expand other public programs such as CHIP in lieu of a public plan option. Modern Healthcare reports that House members have not heard the details of this compromise although Speaker Pelosi tends to favor Medicare expansion according to the Wall Street Journal. The American Medical Association and the American Hospital Association are upset over a Medicare expansion because of the Program’s low reimbursement rates to providers according to the Journal’s Health Blog

Those of us interested in the FEHB Program are curious to learn the details of the parallel universe that would provide coverage to the uninsured. I do expect that the compromise will create separate risk pools for the FEHBP vs. the uninsured pool.
The Politico reports that “senators grew restless over a lack of information and declined to commit their vote until they could review the legislative language and the Congressional Budget Office cost estimate. Republicans also stepped up their criticism of the [compromise] plan.”
In other news, the House approved by a 220-201 vote an omnibus appropriations bill for the current federal fiscal year that includes funding for the FEHB Program. According to Govexec.com, “Rejecting President Obama’s recommendation to freeze locality pay at 2009 rate s, the House allocated 1.5 percent of the 2.0 percent raise to base pay and 0.5 percent to locality pay.”

Bloomberg reports that a federal judge in New York City has given preliminary approval to the $350 million payment that United Healthcare has agreed to make in order to settle the American Medical Association’s class action lawsuit alleging that the usual reasonable and customary databases owned by United subsidiary Ingenix underpaid out of network doctors. Since the settlement was announced last winter, objecting doctors have assailed the settlement as too little a sum. The judge disagreed. Here’s another situation where the AMA successfully attacked and killed a means of controlling healthcare costs. The UCR schedules sensibly encouraged patients to use in-network providers. In my opinion, this settlement does a disservice to the providers and health plan members who have played by the rules. But I am glad that the judge is putting the case to rest.

A trade association of FEHB plans, which I represent, prepared a white paper explaining the adverse impact of the Senate bill’s $6.7 billion annual insurer fee and the 40% excise tax on FEHB plans. Read it here. The paper was publicized today at a press conference organized by the National Association of Letter Carriers, the American Postal Workers Union, and the Communications Workers of America, among others — details here. The press conference was reported by CBS News, the Washington Post, and Govexec.com.

The Politico reports on the President’s visit to Capitol Hill today to press for Senate passage of a health care reform bill. Last week, the Blue Cross Blue Shield Association released an Oliver Wyman actuarial report finding that the Senate leadership bill will significantly increase premiums for individuals, young people, and small groups. Over the weekend, Govexec.com and the Politico reported that a group of ten Senators is developing a health insurance exchange that would be modelled on the FEHB Program and administered by OPM. According to Govexec.com, the “group consists of [Sen. Tom] Harkin [of Iowa], [Sen. Jay] Rockefeller [of West Virginia] and Sens. Russell Feingold of Wisconsin, Mark Pryor and Blanche Lincoln of Arkansas, Sherrod Brown of Ohio, Thomas Carper of Delaware, Ben Nelson of Nebraska, Charles Schumer of New York and Joseph Lieberman of Connecticut. Details may be released tomorrow.

Karen Ignani, the President of America’s Health Insurance Plans, gave a speech to the Detroit Economic Club in which she opined that the ongoing healthcare reform effort in Congress is off track. “[T]he bills before Congress settle for timid pilot programs, rather than requiring major changes; creating incentives that apply only to Medicare, rather than across the board; and establishing a new oversight body, but severely limiting its scope of review.” Ms. Ignani offers five recommendations to achieve health care cost containment:

1. Set a National Goal and Measure Progress.
2. Build on the Pilots and Incentives in the Senate Legislation with a Comprehensive Plan to Introduce Health Care Delivery Reforms Across the System.
3. Reform the Legal System to Protect Patients and Allow Doctors and Hospitals to Deliver “Best Practice” Medicine.
4. Empower Patients and Their Doctors to Make the Most Informed Health Care Decisions.
5. Avoiding “Reforms” that Increase Costs, such as the additional fees and excise taxes on health plans and insurers.

As Ms Ignani points out, there’s still time to get it right. Interestingly, Modern Healthcare reports that

A bloc of freshmen Democrats [in the U.S. Senate] is readying a legislative package of changes to a broad health reform bill that could affect the financial ledgers of hospitals and doctors.

Sen. Mark Begich, a first-term Democrat from Alaska, said that a number of his newly elected colleagues are unhappy with the current slate of provisions aimed at curbing runaway healthcare costs. “It’s really going to focus on cost containment,” Begich said. “A lot of us freshmen came in here focused on how to do the business differently—not the same old way of just putting money on the table and hope that solves the problem.”

The Politico reports that Senate “Majority Leader Harry Reid has told senators they should expect roll call votes all day Friday, Saturday and Sunday afternoon” following approval of women’s health care amendment this afternoon according to this Reuters report.

The debate over healthcare reform continues in the Senate. Reuters reports tonight that

Senator Dick Durbin, the Senate’s No. 2 Democrat, said the Senate would vote on Thursday on two competing measures to ensure women have access to mammograms and other preventive screenings and two amendments on proposed spending cuts in the Medicare government health program for the elderly.

The agreement requires that the amendments, which include one offered by Republican Senator John McCain to strike Medicare spending cuts from the bill, win 60 votes in the 100-member Senate in order to pass.

The New York Times reports that

As the skirmishing continued on the floor, the American Medical Association endorsed the thrust of the Senate bill. In a letter to Mr. Reid, the doctors’ group praised the measure’s strict federal regulation of health insurance and new tax credits to help low- and moderate-income people buy coverage.

But the medical association objected to some provisions, including
a new tax on “elective cosmetic medical procedures” and creation of an
Independent Medicare Advisory Board that could “mandate payment cuts for
physicians.”

The association also objected to antifraud provisions that it said could penalize doctors who make “an honest mistake,” with no intent to defraud Medicare or Medicaid. And it complained about a section that would impose new restrictions on
doctor-owned hospitals.

The provisions pale in comparisons to the burdens that the Senate bill would impose on health insurers, such as the $6.7 billion annual fee, the 40% excise tax, and the $25 billion “stabilization” fund. Sen. Charles Grassley issued a press release yesterday expressing dismay over the fact the the Senate leadership’s health care reform bill carved back his initiative approved by the Senate Finance Committee to shift Senators, Representatives, and Congressional employees from the FEHB Program to the state based health insurance exchanges.

Grassley said he’ll offer an amendment to restore his amendment, which the inance Committee accepted without objection, and which the Congressional
Research Service said made clear that leadership and committee staff would be
required to access the new exchange.

Grassley said his floor amendment also will expand the requirement to include the President, the Vice President and all political appointees in the executive branch.

Business Insurance reports that the Labor Department has issued new guidance on the continuation coverage subsidy created by the February 2009 economic recovery act.
“’An individual who does not become eligible for COBRA until after Dec. 31, 2009, does not meet the qualifications to be an assistance-eligible individual and would therefore be ineligible for the ARRA premium assistance,’ the Labor Department said.” Involuntary termination of FEHBP coverage generally is subject to an automatic 31 day extension of coverage. Consequently, if an employee was involuntarily terminated on November 30, he would receive a 31 day extension of coverage, and he would not be eligible for TCC, the FEHBP’s version of COBRA until after December 31, 2009. Consequently, he would not be eligible for the premium subsidy according to this guidance. Efforts are underway on Capitol Hill to extend the premium subsidy beyond the end of this month as previously noted in the FEHBlog.Forbes Magazine reports that

Medco Health Solutions Inc. and Coventry Health Care Inc. said Tuesday they will work together to see if they can reduce health care costs for senior citizens by addressing factors like home safety, diet and medication use.

The companies say they will conduct a study to determine if they can reduce hospitalizations for seniors on Medicare. Teams of Coventry and Medco employees will identify patients who are at the most risk for hospitalization, and work with their physicians and other agencies to find factors that can cause poor health, and they will keep in touch with patients through regular visits and phone calls.

Gook luck to them with this study.

I hope that everyone had a pleasant Thanksgiving holiday. Due to the long holiday weekend, there’s not much to update this Sunday. The Senate will begin to debate Sen. Majority leader’s healthcare reform bill tomorrow. The Wall Street Journal reports that “Debate on the bill will officially begin at 2 p.m. Monday with opening statements from Mr. Reid and Minority Leader Mitch McConnell (R., Ky.). But it starts in earnest on Tuesday when Democrats and Republicans begin offering alternating amendments.” The Journal and the AP report that many amendments are expected. The Senate leadership will need 60 votes to shutoff debate and hold a vote on the bill or any amendment for that matter.

The Kaiser Family Foundation’s side by side comparison of the House and Senate health care reform bills can be found here.