FEHBlog

• Happy Veterans’ Day! The FEHB Program’s Open Season starts tomorrow, and the benefit mavens are offering their perspectives here and here, among other places.
• There was a break in the appropriations logjam last week as Congress approved a Fiscal Year 2008 Defense appropriations bill (HR 3222) that the President plans to sign. This bill includes an extension of the current continuing resolution funding the federal government to December 14. Congress also sent the President a Labor-HHS-Education appropriations bill (HR 3043) that the President plans to veto. That bill currently lacks a veto proof majority. Thought is now being given to an omnibus appropriations bill according to the Hill. The Hill report, “The question ultimately remains whether either side will let the fight lead to a shutdown of the government, like the infamous standoff between the Clinton White House and the Republican-led Congress in 1995. Neither side seems to have much appetite for that scenario to repeat itself, but neither side is backing down.”
• Rather than send the second SCHIP bill to the President for a certain veto, Congressional negotiators are trying to work out a veto-proof compromise bill according to the Hill, which also reported that “The core group of negotiators included Majority Leader Steny Hoyer (D-Md.), Sen. Orrin Hatch (R-Utah), House Energy and Commerce panel Chairman John Dingell (D-Mich.) and Rep. Judy Biggert (R-Ill.).”
• Congress is also working to fix the 10.1% physician reimbursement cut built into the Medicare program for 2008. The prescription benefit manager’s (PBM) trade association, PCMA, is lobbying to include a Medicare e-prescribing mandate in this bill.
• In an interesting footnote, a major PBM, CaremarkPCS, is suing the Walgreen’s pharmacy chain for Walgreen’s decision to terminate its provider contract with respect to four Chicago area health plans, none of which are FEHB plans. The PBM’s TRO motion hearing is set for November 13.

OPM has issued its always interesting report of significant FEHB Program changes for 2008 (Benefit Administration Letter No. 2007-405). What’s more OPM has unveiled its 2008 Open Season web site.

• The Center for Medicare and Medicaid Services (“CMS”) last Thursday issued its final rule revising Medicare’s outpatient hospital prospective payment system for the 2008 calendar year. “CMS estimates hospitals will receive an overall average increase of 3.8 percent in Medicare payments for outpatient services in CY 2008.” CMS is linking Medicare reimbursement to quality measure reporting by hospitals.
  

  In CY 2008, CMS is requiring that hospitals report seven consensus quality measures, including five emergency department acute myocardial infarction transfer measures and two surgical care improvement measures. Hospitals that are paid under the Inpatient Prospective Payment System are required to report the applicable hospital outpatient quality measures in order to receive the full OPPS market basket update in CY 2009; otherwise, their CY 2009 update will be reduced by 2.0 percentage points.

• CMS also announced its final rule on Medicare Part B payments to physicians. CMS explains that a statutory formula mandates a 10.1% reduction in those payments for the 2008 calendar year, unless Congress changes the formula which is likely in my opinion. CMS currently is paying physicians who participate in the voluntary Physician Quality Reporting Initiative (PQRI) Medicare payment incentives of up to 1.5 percent of their total allowed charges, subject to a cap. “The 2008 rule also adopts recommendations of the American Medical Association’s Relative Value Update Committee to increase the payments for the work involved in providing anesthesia services by 32 percent. In addition, the value of the work component of certain physician visits to patients’ homes will increase.”
• The Philadelphia Inquirer is reporting the the Medicare Part D prescription drug program is one the factors causing a substantial reduction in prescription drug imports from Canada.

• There has not been much progress in the appropriations process since last week. Congress passed another SCHIP reauthorization bill this week that the President again intends to veto. Neither the House nor the Senate passed the bill by a veto proof margin. Business Insurance reported on the burdens that the SCHIP reauthorization bill will place on employers that sponsor health plans.
  

  Among these are requirements to: disclose plan information to states upon request; create special enrollment periods for employees and dependents who lose eligibility for the federal program; and extend the Family and Medical Leave Act to 26 weeks from the current 12 weeks for employees to care for injured members of the armed services.

  A Congressional Conference Committee agreed upon a combined Labor-HHS-Education (HR 3043) and Military Construction – Veterans Affairs (HR 2642) appropriations bill. According to the Washington Post. the leadership is betting that the President who has threatened to veto HR 3043 will not veto a bill that includes funding for veterans. The FY 2008 continuing resolution (H. Jt. Res. 52) that currently funds the Government and the SCHIP program expires on November 16.

• The New York Times business section today featured an article by a Harvard economics professor N. Gregory Mankiw who debunks “three of the true but misleading statements about health care that politicians and pundits love to use to frighten the public.”

Perhaps planning for 2009, AHIP held a forum on the European countries, the Netherlands and Switzerlahd, that offer universal coverage through a privately operated system in contrast to Great Britain, for example, or Canada on our continent.

“Our community is committed to working to achieve coverage for all Americans,” said AHIP President and CEO Karen Ignagni, in opening remarks at the event. AHIP and Kaiser Permanente held the forum, Ignagni said, not to endorse a particular system or model. She noted that “there is confusion in our public debate between the idea of ‘universal coverage’ and the term ‘government run.’”

Harvard Business School Professor Regina Herzlinger previously has pointed to the Swiss system as a possible model for the U.S.

Earlier this week, HHS Secretary Mike Leavitt announced a five year demonstration project to encourage small and medium sized medical practices to implement electronic health records (EHRs). According to Healthcare HIT News, such medical practices would receive financial rewards for implementing EHRs and reporting on health care quality. CMS is still figuring out the bonus structure. The Blue Cross and Blue Shield Association endorsed the HHS program. Modern Healthcare.com reports on a study that finds that HHS has a tough row to hoe.

• The Wall Street Journal reports on the Democratic leadership’s “risky” appropriations strategy. According to the report, “No one predicts a government shutdown, but the Democratic majority faces a lame-duck president who has interpreted the 2006 elections as a call to vigorously exercise his veto power against spending.”
• According to a New York State Attorney General press release, CIGNA has entered into an agreement with Attorney General Cuomo, witnessed by the American Medical Association and Consumer’s Union, to provide more transparency over its doctor ranking process. The AP reports that CIGNA “said its list of preferred doctors, always based on quality and cost, won’t change because of Cuomo’s agreement. Cigna will still consider both but will begin sharing more information with customers.”
• A Wall Street Journal editorial directed me to an interesting study titled “Comparing Public and Private Health Insurance: Would A Single-Payer System Save Enough to Cover the Uninsured?” The study was written by Benjamin Zycher of the Manhattan Institute. The author explains in pertinent part that

Administrative costs for private health insurance, defined broadly, are in the range of 11-14 percent of total premiums.

Administrative costs reported directly in the Medicare budget, combined with a proportional allocation of the costs of other federal government administrative functions, yield a finding of 6 percent of Medicare outlays as the total reported administrative costs for Medicare. This more complete estimate is twice as high as a proportion of Medicare outlays as commonly asserted.

The lower reported administrative costs for Medicare are unsurprising, in that Medicare spends substantially less on such functions as marketing, risk evaluation, claims scrutiny, and compliance with the regulatory requirements of the individual states. This does not mean that the higher reported administrative costs of private health insurance are “wasteful.” Instead, they serve the interests of consumers by reducing the extent to which insurance creates cross-subsidies among consumer classes; such cross-subsidies reduce the economic benefits of risk-pooling. Private administrative functions also impose discipline on the consumption of health-care resources, thus reducing upward pressure on insurance premiums.

The study is worth reading.

• The President and Congress are pointing fingers at each over over the delays concerning the SCHIP reauthorization bill and the appropriations process. The continuing resolution that currently funds the federal government expires on November 16.
• BNA is reporting that the House mental health parity bill (H.R. 1424) should arrive on the House floor in November after a pay-go issue is resolved. A September 7, 2007, Congressional Budget Office report projected that the House bill would lead to a $3.1 billion decrease in taxable income over 10 years attributable to higher employer paid health benefit costs and lower wages and a $820 million increase in Medicaid expenses over 10 years.
• The House Science and Technology Committee approved a (H.R. 2406) bill that would give the National Institute of Standards and Technology a larger role in federal health information technology (HIT) efforts.
• Inside the Beltway Alert! The Office of National HIT Coordinator awarded Bearingpoint a contract to standardize HIT definitions.
• The National Committee on Vital and Health Statistics is drafting a report recommending that the HHS Secretary adopt stronger and more extensive HIPAA privacy and security rules.
• Seven large health insurers, including the Blue Cross Blue Shield Association, CIGNA, Aetna, and Humana, have joined the Patient Centered Primary Care Collaborative. The Collaborative encourages the use of the primary care physician as the medical home or care coordinator for her patients. The health insurers plan plan to create medical home pilots and take other steps to encourage adoption of this model.

The Red Sox are clobbering the Rockies so why not do a little blogging?

• The Health Information Technology Standards Panel has released a privacy and security architecture for electronic medical records.
• The Employee Benefits Research Institute has released its 10th annual study on consumer confidence in our health care system. The interesting twist is that high medical costs are encouraging Americans to take better care of themselves and talk with their doctors about the cost of medical care. Aren’t these the primary objectives of consumer driven health care? In this regard, CIGNA just released a two year study of its consumer driven health plans which finds that medical trend and member out of pockets costs were significant lower for consumer driven plan members as compared to CIGNA PPO plan members.
• Washington Post correspondent Steve Barr held on online chat today with OPM Deputy Associate Director Kathy McGettigan.

Much has been written in the press about the rise of primary care clinics, such as Minute Clinic, located inside chain pharmacies, and the American Medical Association has gone on the war path against these competitors. Vanessa Fuhrman wrote an article in the Wall Street Journal today about a Wheeling WV doctor of osteopathic medicine, Vic Wood, who is offering unlimited urgent and primary care for $83 per month for an individual or $125 per month for a family. Medical Economic magazine has described Dr. Wood’s practice as a bargain basement version of concierge medicine. Ms. Fuhrmans reports that health insurers are exploring the merits of these prepaid plans. Dr. Wood is speaking at December 2007 conference of the Society for Innovative Medical Practice Design.

Meanwhile the Orange County California Register reports that “When retail clinics [such as Minute Clinic] first started, all visits were cash-only. But lately, as health care costs continue to soar, some insurers have started covering the visits as a less expensive alternative to a traditional doctor’s office. Locally, Aetna and Cigna are among about a dozen insurers that cover visits to Minute Clinics.