FEHBlog

Heal the Claims Process (or pay us more money faster)

Rep. Henry Waxman held a House Government Oversight & Reform Committee hearing today titled, “The Medicare Drug Benefit: Are Private Insurers Getting Good Discounts for the Taxpayer?”Rep. Waxman is upset because Medicare Part D prices are higher than the artificially low Medicaid drug prices.

Under the Medicaid program, a brand name drug manufacturer by law must give the Medicaid program its lowest price, subject to a number of arcane exceptions. If the manufacturer agrees to sell a brand name drug below the Medicaid price floor, then the Medicaid price comes down. Medicare Part D, however, is exempt from the Medicaid price floor. For that reason, I expected that Medicare Part D plans would be able to cut better deals for brand name drugs than FEHB plans. However, according to testimony today from Mark Merritt, President of PCMA, the PBM lobby, “overall savings of PDPs in Part D are comparable to levels achieved by PBMs in the Federal Employees Health Benefits Program (FEHBP), according to analysis conducted by PricewaterhouseCoopers (PwC).”

The House Energy and Commerce Committee cleared by voice vote a modified version of the Pro(tech)t Act, H.R. 6357, that would complicate health plan use of electronic medical records by injecting a consent requirement, would formally extend certain HIPAA requirements and penalties to business associates, would create requirements for handling security breaches by covered entities and business associates, and would begin to expand the scope of HIPAA. A Govexec.com article discusses other new privacy and security requirements found in the bill. The bill also would provide financial incentives to health care providers that adopt electronic medical record technology according to Modern Healthcare Online. (Bear in mind that the bill is 107 pages long.)

The bill also is pending with the House Ways and Means Committee and the Science and Technology Committee. As I mentioned on Sunday, there is not much time to enact legislation in this election year. I don’t think that it will happen but the $560 million now on the table for the docs may cause the AMA to push hard for this bill.

• The House Energy and Commerce Committee plan to mark up the Pro(Tech)T Act, HR 6357, tomorrow according to the Healthcare IT News. I agree with “Dave Roberts, a lobbyist for the Healthcare Information and
  Management Systems Society, [who] said he believes the House has “achieved
  what it’s going to achieve” this session in regards to health care IT.
  He said a provision aimed at encouraging doctors to use electronic
  prescriptions that was included in the recently passed Medicare
  physician payment bill was a good first step (Noyes, CongressDaily, 7/21).”
• AHIP, the health insurance industry’s trade association, has launched a reform campaign called Campaign for an American Solution.
• The Federal Times reports that Federal employees were paid an average salary of $69,000 last year. The Asbury Park Press maintains a database of federal employee salaries covering 70% of the total workforce.

The House Ways and Means Committee has posted a series of fact sheets about H.R. 6331. I read in BNA this morning that the new law also postpones until September 30, 2009, Medicaid’s adoption of the average manufacturer price reimbursement methodology for generic drugs dispensed by retail pharmacies. This was a reform mandated by the Deficit Reduction Act of 2005. Pharmacies argued that the change would bankrupt them.

CMS posted a fact sheet explaining how it will implement the new law. The fact sheet explains that

Physician PayAs a result of the new law, the mid-year 2008 Medicare Physician Fee Schedule (MPFS) rate reduction of -10.6 percent is retroactively replaced with the fee schedule rates in effect from January – June, 2008, which reflected a 0.5 percent update from 2007 rates. In addition, MPFS payment rates are being revised to increase the fee schedule amounts for certain mental health services. Effective immediately, CMS has instructed its contractors to implement the new law. However, it may take up to 10 business days to implement these changes. To minimize physician disruption during this transition, CMS will post the new physician fee schedule as soon as possible and will continue its rolling 10 day hold and release of claims. This means that, until the new fee schedule rates are implemented, some claims may still be paid at the lower rates that were in effect between July 1st and July 15th. To the extent possible, contractors will begin to automatically reprocess any claims paid at the lower rates in a timely manner. CMS will issue guidance about the collection of corrected co-insurance payments in the next few days.

• OPM has released an request for proposals to fill the government wide indemnity benefit plan slot in the FEHB Program that has been vacant for nearly 20 years. Aetna was the indemnity benefit plan carrier from the Program’s inception in 1960 through 1989. OPM is seeking to fill the slot for the 2010 contract year. Attachment 1 to the RFP includes interesting FEHBP demographic data for you statistical mavens.
• The Senate Finance Committee held a health information technology hearing on July 17. The Director of the Congressional Budget Office blogs about his testimony here.
• HHS Secretary Leavitt blogged about his reflections on the enactment of the Medicare fix bill. On the bright side, CMS announced on July 15 “payment of more than $36 million in bonus payments to many of the more than 56,700 health professionals who satisfactorily reported quality information to Medicare under the 2007 Physician Quality Reporting
  Initiative (PQRI).”
• The Wall Street Journal reported last week that “the number of prescriptions dispensed by pharmacies in the U.S. is growing at its worst rate in at least a decade as consumers are squeezed by both a troubled economy and the growing burden of out-of-pocket health-care costs.” Preliminary data indicate that the number of prescriptions dropped in the second quarter for the first time since 1994. “In May, branded medicines accounted for 30.6% of treatments dispensed, down from 45.9% in 2003, according to IMS.” This change could be attributable to the push to generics lead by Medicare Part D and commercial health plans. It’s also hard to locate the Goldilocks point because of all the direct to consumer advertising.

Healthcare IT News reports that HHS has imposed a $100,000 civil penalty on Providence Health and Services of Seattle for HIPAA violations. “The violation, involving unprotected backup tapes, optical disks and laptops three years ago, compromised the protected health information
of more than 386,000 patients, HHS officials said.”

I don’t recall HHS previously exercising its civil penalty enforcement authority.

Government Executive reports today that “Springer will join Ernst & Young’s government and public sector advisory services practice as an executive director.”

Congress voted to override the President’s veto of the Medicare fix bill (HR 6331) today, according to the Washington Post. Hopefully, this means that the new law will be implemented in a manner that does not require FEHB carriers to adjust Medicare secondary claims.

The Federal Times reports that OPM Director Linda Springer has resigned effective August 13. Deputy Director Howard Weizmann will fill the position for the remainder of the Bush administration.