FEHBlog

• Business Insurance reports that health insurers are facing earning challenges.
  

  Major U.S. health insurers and managed care companies earned sharply lower profits in 2008, some nearly half of 2007 results, as poor stock market performance and lower interest rates chiseled away at their investment portfolios.

  The New York Times reports that a sign of these times is Wellpoint’s decision to sell its prescription benefit management operation to the independent PBM Express Scripts for $4.7 billion. According to that report,

  When WellPoint put the business up for sale several months ago, the bidding quickly grew heated as the three larger benefit managers fought to buy the unit. With the deal, Express Scripts is able to claim a victory over CVS. Nearly two and a half years ago, the two companies were locked in a takeover battle to acquire Caremark Pharmacy Services.

  Reuters offers five facts about PBMs including

  The four largest PBMs last year in terms of prescriptions were Medco (796 million), CVS Caremark (742 million) (CVS.N), Express Scripts (506 million) and NextRx (268 million).

  * Aside from WellPoint, other health insurers that operate PBMs include UnitedHealth Group (UNH.N), Aetna (AET.N) and Cigna (CI.N).

• I found a number of articles about efforts to increase the convenience of obtaining health care services. CNN Money.com writes about the growing use of retail clinics found in pharmacies and discount stores. The AP reports that “From New York to Los Angeles to St. Louis, health workers are going to barbershops, long a gathering place for black men, to provide screenings to those who may not get regular checkups.” The Minnesota Star Tribune reports about a Blue Cross Blue Shield pilot “to offer its 10,000 employees and dependents the chance to use a ‘virtual clinic,’ an Internet site that can connect them with a doctor for a live 10-minute consultation for a flat fee.” The virtual clinic is a product of American Well. Finally, the Boston Globe reports on a personal health record goof on Google Health that occurred because health insurance records were confused for medical records. There is always a limit to convenience.
• Health Leaders media reports on the relatively mild reaction of hospital compliance officers to the ARRA amendments to the HIPAA privacy and security rules. (I consider many of these changes to be nuts.) Interestingly, according to this report,
  

  some providers told us they’re more worried about the Red Flags Rule deadline—May 1. Hospitals considered to be creditors must set up a policy and procedure that helps them identify “red flags” on identity theft, prevents them and corrects them through self-audits (the FTC last week came out with some nice guidance to help comply).

  I learned from this week’s AMA News that the AMA is apoplectic about these new FTC anti-identity theft rules.

• The Senate Commerce Committee has posted a copy of the letter that Chairman Jay Rockefeller sent 18 health insurers about their use of the Ingenix usual reasonable and customary databases. A copy of that letter is here.

• Over the past week, the President created his White House health care reform office which is headed by Nancy-Ann DeParle and the acting Comptroller General named 13 members to the Health Information Technology Policy Committee, a new advisory body established by the American Recovery and Reinvestment Act. According to the HIT News, “the secretary of Health and Human Services, the majority and minority leaders of the Senate, and the speaker and minority leader of the House of Representatives, will appoint an additional seven members. The President can appoint other members as representatives of relevant federal agencies.” The representative for third party payers is Charles Kennedy, M.D., Camarillo, California (3 year term) Vice President, Health Information Technology, Wellpoint, Inc.
• The incoming national HIT czar Dr. David Blumenthal voiced his opinions on the ARRA’s HIT funding, according to this Government HIT report. “[M]uch will depend on how the federal government defines conditions that Congress set for how providers qualify for the funds, Blumenthal said.”
• Modern Healthcare reports that “Blue Cross and Blue Shield of Texas has agreed to stop using its risk-adjusted cost index to rate physicians as more or less affordable in providing medical treatments to patients, following an order from Texas Attorney General Gregory Abbott. The insurer has also agreed not to terminate—or threaten to terminate—physicians for making referrals outside of the Blue Cross and Blue Shield network.”
• AIS Health Plan Daily featured an interesting report on PBM developments.

• Modern Healthcare reports on today’s White House health care forum. Pretty dull. Much more interesting is the Politico’s five questions and answers about the possible use of reconciliation to ram through health care reform. HIT News reports on political consultant Charlie Cook’s address in which he predicts incremental reform this year. I heard Mr. Cook speak early in 2008. His observations for the 2008 election were right on the mark.
• The Chicago Tribune reports on the medical community freaking out over reports of possible health insurance company mergers. “Speculation has run rampant that some of the nation’s biggest health plans may be looking to consolidate, including a possible takeover of Humana Inc. by Aetna Inc., as well as UnitedHealth Group’s interest in Coventry Health Care Inc.” All four company’s are significant players in the FEHB Program.
• The Boston Globe talks up the medical home model which Sen. Finance Committee chairman Max Baucus also has found attractive.
  

  The “medical home” is a kinder, gentler approach to managed care, based on the idea that high quality care and stronger relationships between patients and their primary care doctors will save money in the long run. A medical home pays physicians to coordinate all of a patient’s needs – arranging visits to
  specialists, helping control chronic conditions, even fielding patients’ phone
  calls at all hours. Doctors often receive bonuses for meeting quality standards
  and often share in savings from fewer and shorter hospital stays.

  What was old becomes new.

• The brand new Federal Coordinating Council for Comparative Effectiveness Research will hold a public listening session on April 14, 2009, in Washington DC. The council will hear public comment regarding comparative effectiveness research and the Coordinating Council’s activities. You can sign up for the session here. AHRQ’s head, Dr. Carolyn Clancy, discusses the council’s work here. AHRQ maintains this web site where clinicians and consumers can find summary guides on comparative effectiveness research for various ailments, including prostate cancer, type 2 diabetes, and GERD.
• According to the Raleigh News and Observer, Blue Cross Blue Shield of North Carolina has become the latest insurer to adopt a no-pay policy for certain “never events.” The trick with these policies is holding the plan member harmless.

• After holding a series of state health care forums, the Obama Administration holds another White House forum — this time White House healthcare reform czar Nancy-Ann DeParle will lead the forum which can be viewed online here. Modern Healthcare reports on a teleconference that Ms. Deparle held with the AARP:
  

  Fielding questions during the teleconference, Nancy-Ann DeParle said the Obama administration was working with Congress on a new plan to set up an insurance exchange, which would offer a range of private insurance options as well as a new public plan that would allow individuals and small businesses to buy affordable health coverage.

  Yesterday, the Lewin Group released a report on the public plan option. The Boston Globe summarized that report as follows: “A public health insurance option for middle class families could help cover the uninsured but it may well put private insurers out of business, a respected consulting firm concluded in a study released Monday.” A copy of that report is available here.

• The ever popular Healthcare Information and Management Systems Society (HIMSS)conference is being held this week in Chicago. HIMSS is jazzed up over the stimulus funding for health information technology. The Kaiser Healthcare CEO George Halvoron gave a keynote speech attacking fee for service medicine (“merely sells ‘pieces of care’ to consumers”) and paper records (‘incomplete, inaccurate and inaccessible’) according to an HIT News report. (The publication’s website has wall to wall HIMSS conference coverage.)
• In the brave new HIT world, the National Health Information Network (NHIN) will serve as a patient registry to link up the regional health information organizations (RHIOs). I still can’t figure out how the NHIN will work without a universal patient indentifier other than the Social Security Number. In any event, Government HIT News reports that
  

  The Federal Health Architecture project released into the public domain the code for Connect, a software gateway that will let organizations outside the federal government share health information via the National Health Information Network. Any public or private sector organization can download the Connect software and tie into the NHIN once it goes into full production. The source code and its documentation are available at http://www.connectopensource.org/

  That’s cool.

• CMS has released a general equivalence mapping fact sheet to help HIPAA covered entities and their business associates with the massive project of converting from the International Classification of Diseases 9 code set to the ICD 10 code set.
• The American Medical Association laid off about 8% of its staff (100 employees) according to the Chicago Tribune.
• Here’s the top tidbit. The Dallas Morning News reports that
  

  Nine people accounted for nearly 2,700 of the emergency room visits in Central Texas during the past six years at a cost of $3 million to taxpayers and
  others, according to a report from the nonprofit Integrated Care
  Collaboration, a group of hospitals Of the nine patients, eight have drug
  abuse problems, seven were diagnosed with mental health issues and three
  were homeless. Five are women whose average age is 40, and four are men
  whose average age is 50.

• Last week, the House and Senate approved FY 2010 budget resolutions along party lines. No Republicans voted for the resolutions in either House. According to the Washington Post’s report,
  
  

  The biggest dispute between the two chambers is whether to use a powerful procedural shortcut that could allow Obama’s health, education and energy initiatives to pass the Senate with 51 votes rather than the usual 60, eliminating the need to win over any Republicans. The House voted to include the procedure, known as reconciliation, in its budget plan to speed health care and education legislation. But Senate Republicans — and some Senate Democrats — argue that the maneuver would make bipartisan cooperation all but impossible on some of the most significant measures to come before the Senate in years.

  An AP story provides background on the reconciliation option.

  According to the AP report, Majority Leader Harry Reid, D-Nev., has been circumspect about whether he’d permit the reconciliation process to ram health care legislation through his chamber, not ruling it in or out.

  Republicans are angry about the prospect.

  “It’ll be like a declaration of war,” said Sen. Michael Enzi of Wyoming, the top Republican on the Senate Health, Education, Labor and Pensions Committee.

  Even some Democrats are wary.

  “I don’t think things should be done this way,” Louisiana Sen. Mary Landrieu said of the reconciliation process. “If we’re changing the whole system of health care, it needs to be done carefully, with hearings and thorough discussions.”

  Such uneasiness was apparent Wednesday, when 26 Senate Democrats joined 41 Republicans to pass a measure forbidding reconciliation from being used to pass legislation controlling carbon emissions.

  AHIP also offered its perspective on the use of the reconciliation process.

• Kansas Gov. Kathleen Sibelius attended two Senate confirmation hearings this week. According to this Business Insurance report, She expressed her support for including a public plan option in the national health insurance exchange, which has been outlined as part of the health reform initiative. Democratic leadership in the House strongly supports this approach. As explained in this Inside Health Reform article, the health insurance industry is strongly opposed to a public plan option. There is no public plan option in the FEHBP which has operated successfully for almost 50 years. The FEHBP is considered one of the models for the national health insurance exchange. The New York Times reports that the Senate is expected to take up her nomination later this month.
• Speaking of office changes, AIS Health Business Daily reports that
  

  CMS announced key staffing changes March 12 for officials overseeing the MA program. Jonathan Blum, formerly vice president at Avalere Health and a Hill staffer, was named acting director of CMS’s Center for Drug and Health Plan Choice. Abby L. Block, who had held that position since 2005, has become senior advisor to the CMS administrator.

  Before joining CMS, Ms. Block was in charge of FEHBP policy at OPM for many years.

• CQ Politics reports that odds are very good that the Senate will join the House in passing Rep. Henry Waxman’s bill (HR 1256) to require FDA regulation of tobacco products.
• Last week, the Robert Wood Johnson Foundation’s Commission to Build a Healthier America today issued 10 cross-cutting recommendations for improving the nation’s health.” The recommendations include the elimination of smoking and desserts. I will miss desserts.
• The Houston Chronicle reports that
  

  According to Hewitt Associates, 80 percent of companies are trying to improve the chronic health condition of their employees this year by taking steps like assigning personal health coaches, setting up on-site clinics for easy medical access and waiving co-pays for essential drugs.

  That’s up from last year when 51 percent of companies launched specific disease management programs, according to the study that surveyed 343 large employers.

• OPM posted its Benefits Administration Letter 2009-03 concerning FEHBP changes created by the Children’s Health Insurance Program Reauthorization Act of 2009.

The Senate confirmed John Berry to be OPM Director last night. Congressional Record for April 2, p. D402:

Nominations Confirmed:

John Berry, of the District of Columbia, to be Director of the Office of Personnel Management for a term of four years.

OPM’s press release is here. Good luck, Mr. Berry.

The Internal Revenue Service has released Notice 2009-27 which provides guidance on the COBRA / TCC premium subsidy authorized by the stimulus law (ARRA). According to Business Insurance, the guidance “resolves numerous questions—such as clarification of situations when laid-off employees are entitled to the subsidy—that employers have been asking since the subsidy legislation was signed into law in February.”

This afternoon, the Senate Homeland Security and Governmental Affairs Committee favorably reported by voice vote the nomination of John Berry to be OPM Director. Next stop the Senate floor.

I watched the testimony of the United Healthcare Group CEO and the Ingenix CEO before the Senate Commerce Committee today. They gave sound reasons to support the validity of the Ingenix usual reasonable and customary (UCR) database, but the Chairman Sen. Jay Rockefeller was swayed by the American Medical Association’s testimony. I think that UHC and Ingenix placed themselves in a difficult situation by settling with the NY Attorney General and the American Medical Association for over $400 million. As Sen. McCaskill put it, and I’m paraphrasing here, “why would you pay that much money if you hadn’t done anything wrong.” However, as a lawyer, I know that, as Kenny Rogers put it so well, you have to know when to hold em and know when to fold em. In any event, the Chairman, Sen. Jay Rockfeller, was “profoundly” troubled by today’s testimony and plans to inquire of health plans outside New York State whether they plan to use the new database being established under the Ingenix settlement agreement with the New York attorney general. Ingenix has placed its health plan customers in a difficult position. And as I have said before, it’s not a fraud; the winners are the out of network doctors and the losers are the health plan members and doctors who play by the rules. This ongoing investigation will only increase health insurance premiums.

• The Senate Commerce Committee will have the Ingenix and United Healthcare CEOs testify tomorrow morning about the Ingenix ususal reasonable and customary fee schedule controversy. The American Medical Association and other UCR critics testified last Thursday. The AMA’s testimony included a report card on insurer payment practices. It’s ironic that at the same time the medical profession is trying to block insurers and patients from rating them, according to this AIS article.
• The Federal Times featured an perceptive report captioned “Outlook dim for improved [federal employee] pay, benefits.”
• CMS released its 2010 call letter guidance for Medicare Advantage plans and Medicare prescription drug plans today. I found noteworthy this tidbit from the CMS press release:
  

  CMS is also asking Medicare Advantage organizations to make sure the plans they offer in 2010 significantly differ from one another to ensure that beneficiaries have the tools they need to make informed decisions. Many plan sponsors offer multiple plans with very little distinguishing characteristics and low enrollment. These low-volume plans crowd the field and makes selecting a plan much more difficult for Medicare beneficiaries. Twenty-seven percent of total Medicare Advantage plans have fewer than 10 enrollees.

  OPM should be releasing its 2010 call letter for FEHBP benefit and rate proposals soon.