FEHBlog

Govexec.com offers an article this morning critical of the high deductible health plans and health savings account approach, particularly as applied to the FEHB Program. President Bush weighed in again on the issue of health care reform yesterday.

On a related note, earlier this month, the Internal Revenue Service announced the 2008 indexed maximums and minimums for high deductible health plans and health savings accounts.

The American Medical Association’s (AMA) House of Delegates met in Chicago this week. Two decisions coming out of the meeting caught my attention:

• The AMA is recommending that federal and state agencies investigate pharmacy based medical clinics, such as Minute Clinics, on conflict of interest grounds. According to Forbes.com, “The AMA said the request, made Monday at its annual meeting in Chicago, was spurred by reports that retailers say the store-based clinics help increase store traffic, which can increase sales of prescription drugs and non-health related items.” The Convenient Care Association and other supporters of free market competition took umbrage with the AMA’s position.
• The AMA is “endorsing the use of radio frequency identification tags (RFIDs), which store essential medical information under the skin of patients.” What is the frequency Kenneth?

Senators Rob Wyden (D Oregon) and Bob Bennett (R Utah) made a big push earlier this week for their proposed Healthy Americans Act (S. 334) They published an op ed in the Wall Street Journal explaining

Here’s how our legislation, the Healthy Americans Act, would work: All Americans, other than those in Medicare or the military, would be given incentives to buy basic private health plans. Individuals at or below the poverty level would receive a subsidy to buy insurance. And states would be given more flexibility (within a federal framework) to give consumers more choices in insurance available on the private market. These reforms would make health insurance portable (Americans could take it to wherever they work) and make access to health care universal and affordable. They would also give individuals more control over where their health-care dollars go. And they would break the link between health insurance and employment, freeing employers of a burden they’ve carried since World War II wage and price controls forced them to offer health benefits instead of pay raises. How would this be possible? Currently the tax code gives the affluent the biggest health-care breaks. Our bill would rewrite the code to give every individual a tax benefit for buying health insurance. That would create an incentive to buy insurance. That, in turn, would push the health insurance industry to offer more competitive plans and create a more dynamic insurance market.

The bill would do away with employer sponsored health insurance including the FEHB Program (§ 672).

The Senate Budget Committee held a hearing on the bill on June 26. According to Modern Healthcare.com, Committee members expressed support for the bill’s approach.

The FEHBlog has returned from vacation, and by golly there was a lot of news last week.

OPM News

• OPM released its Inspector General’s semi-annual report to Congress for the period ended March 31, 2007. Both the Federal Times and Govexec.com reported on this development.
• OPM released a benefit administration letter describing the schedule by which federal employees will be able to begin making pre-tax allotments of salary to their health savings accounts.
• OPM revised an earlier benefits administration letter by concluding that retired public safety officers may self-elect to exclude up to $3,000 of their FEHB plan premiums provided those premiums are paid directly out of their federal annuity. OPM bases this decision on Section 845 of the Pension Protection Act of 2006 and it refers annuitants to IRS Publication 721 for more information on how to make the election.
• The Federal Times offered a report reflecting on OPM’s recent employee satisfaction survey relating to federal employee benefit programs. The report’s theme was that “While federal health and retirement programs are the darlings of government benefits programs, many employees aren’t aware of or making use of many others, according to [this] new survey” previously noted on the FEHBlog. OPM recently produced a “quick guide” to these programs.
• OPM released guidance to federal agencies on combatting against identity theft.

HHS/CMS News

• As promised CMS began to report hospital mortality data for for heart attacks and heart failure on its Hospital Compare website. It’s important to understand that information on all hospital admissions, not just Medicare patient admissions, is used to develop the patient safety information on the Hospital Compare web site.
• CMS launched a Medicare personal health records pilot program. According to the UPI, “To choose the best personal health record format, Medicare is partnering with four private plans that already offer the records: HIP USA, Humana, Kaiser Permanente, and the University of Pittsburgh Medical Center.”
• The Washington Post reports that several insurers entered into a voluntary agreement with CMS regarding the marketing of popular Medicare Advantage private fee-for-service plans.
  
• On February 1, 2007, the Government Accountability Office (GAO) criticized HHS for failing to establish milestones for integrating privacy and security requirements in its national health information network (NHIN) prototype. At a June 19 Congressional hearing, GAO updated this report and the agency is displeased with HHS’s continuing lack of progress. Modern Healthcare.com offered two articles — here and here — on this hearing. Government HIT magazine reported that “Witnesses at a House Oversight and Government Reform subcommittee hearing June 19 on the privacy of health information differed on almost every aspect of the issue, including whether existing privacy laws are adequate and whether the Health and Human Services Department is doing enough to enforce the law.” And so it goes.
• In a related development, Senators Kennedy, Clinton, Enzi, and Hatch introduced a bipartisan health information technology bill that is substantively similar to the Wired for Health Care Quality bill (S. 1418) that the Senate passed in the 109th Congress.
  

Prescription drug news

• Last summer, I followed in the FEHBlog Apotex’s generic challenge to Bristol Myers Squibb’s (BMS) and Sanofi-Aventis’s blockbluster anti-coagulant drug Plavix. Apotex took advantage of a settlement agreement with BMS to temporarily flood the market with its generic versions. A federal court preliminarily enjoined Apotex from marketing its generic version but the court did not require Apotex to withdraw from the market the pills that it already had sold. Last week, the federal district court upheld the Plavix patent against Apotex’s challenge. The patent now will remain in effect until 2011 and BMS and Plavix will seek patent infringement damages against Apotex. The court also made the preliminary injunction final. Apotex plans to appeal the decision.
• U.S. District Judge Patti Saris, who sits in Boston, issued a 183 page opinion holding BMS, AstraZeneca, and Schering Plough liable for overcharging the Medicare program and third party payers operating in Massachusetts by inflating the average wholesale price of certain doctor administered drugs covered by Medicare Part B. (Medicare no longer uses AWP as its reimbursement yardstick.) According to the Wall Street Journal, the Judge “ordered AstraZeneca to pay damages of $4.45 million to non-Medicare third-party payers and Bristol-Myers Squibb to pay damages of $183,000. The ruling affects third-party payers who paid for certain prescription drugs from December 1997 to 2003.” The next step in the litigation is for the judge to decide whether to extend her ruling, which was based on Massachusetts state law, to other states via a class action. The Judge held that Johnson & Johnson was not liable.
• A University of Michigan study endorsed the practice of splitting scored pills in order to reduce prescription drug plan copayments. Many health plans encourages this practice.
• The House Energy & Commerce Committee cleared drug safety legislation unanimously last week, according to the Washington Post.
• Senators Kennedy, Clinton, Hatch, and Enzi have crafted a bipartisan bill designed to create a pathway for Food and Drug Administration approval of generic versions of biotechnology drugs (so-called biogenerics).

The FEHBlog will be on vacation until June 24. I plan to catch up with a weekend miscellany post on June 24.

• Health savings accounts have been coming under fire this week. The Washington Post ran a story on Sunday about how “Health Savings Accounts Make Sense if You’re Physically and Fiscally Fit.” Not exactly a ringing endorsement. Yesterday, the Wall Street Journal published a report titled “Health Savings Plans Begin to Falter.” (subscription required — abbreviated AP report available here. The WSJ report noted that “In the Federal Employees Health Benefits Program, which has offered the plans for several years, only about 50,000 of its eight million members were enrolled in them in 2006, according to industry estimates.”
• Business Insurance reports today that the ERISA Industry Council proposed a new platform for health insurance and retirement coverage similar to the FEHBP. According to this trade association of large employers, ‘Health care coverage and retirement plans for American workers should be delivered by competing third-party benefit administrators such as banks, investment companies and insurers.”
• HHS Secretary Michael Leavitt announced his plan to convert the American Health Information Community from a federal advisory committee to an independent, private-sector health Information Technology (IT) leadership entity next year.
  

On June 8, the U.S. Office of Personnel Management released the results for its 2006 Employee Benefits Survey. “The benefits survey focused on ten benefit programs [including the FEHB Program] and was issued to a random sample of 2,000 employees governmentwide last August. The target population included almost equal numbers of employees with three or more years of Federal service and new hires who had less than three years service.” OPM Director Linda Springer was pleased with the results.

• The House Oversight and Government Reform Committee hearing held on June 6 apparently did not provide any resolution to the Avandia diabetes drug controversy, although the FDA commissioner did announce that “the agency had asked that Avandia, made by GlaxoSmithKline, and Actos, made by Takeda Pharmaceuticals, carry the more prominent warning because ‘despite existing warnings, these drugs were being prescribed to patients with significant heart failure.'”
• Dr. David Brailer, who was the Nation’s first health information technology czar, resigned his position as co-chair of the American Health Information Community, in order to pursue managing his private venture capital firm called Health Evolution Partners. The firm will be investing $700 million of CALPers assets.
• The U.S. District Court for the District of Massachusetts approved on June 6, 2007, the class certification motion in the First Databank case that challenges the validity of the Average Wholesale Pricing (AWP) methodology widely used for prescription drug manager pricing purposes with third party payers. Third party payers, who form the class, will be receiving a notice of class certification this summer, and they have until October 22, 2007, to opt out of the class action as described in the order. The class has been certified solely for purposes of the proposed settlement between First Databank and the plaintiffs, e.g, the class certification does not extend to the complaint against McKesson. The Court also preliminarily approved the proposed settlement and has scheduled a fairness hearing on the proposed settlement for November 14, 2007.
• On Monday June 4, the U.S. Court of Appeals for the Third Circuit upheld a proposed Equal Employment Opportunity Commission rule that exempts from the Age Discrimination in Employment Act the common employer practice of reducing or eliminating retiree healthcare benefits when the retiree becomes eligible for Medicare. The caption of the case is AARP v. EEOC, — F.3d — , No. 05-4594, and a copy of the opinion is here.

Business Insurance reports on a new Aon consulting survey “of more than 70 medical, dental, pharmacy and vision plan vendors” projecting that for health plan 12 month rating periods occuring between April and September 2007 increase will average “10.9% for health maintenance organizations; 10.8% for point-of-service plans; 11.2% for preferred provider plans; 12.7% for indemnity plans; and 10.7% for consumer-driven health plans.”

It’s the latest thing for former members of Congress — push for a health care information technology law. Of course, former House Speaker Newt Gingrich has been preaching that paper kills for a few years. Now former Sen. John Breaux and former Rep. Nancy Johnson have formed the “Health IT Now Coalition!“. According to a press release,

Health IT Now! believes federal legislation should include:

— Permanence in statute for a federal responsibility to lead a public-
private process to establish standards for system interoperability,
product certification, and quality measures and an accelerated process
for standards improvement;
— Federal financial incentives to practitioners of care to facilitate the
adoption of Health IT, and for communities, states, and other entities
to plan HIT components and develop Health Information Exchanges;
— Federal focus on consumer empowerment through patient education tools
to encourage patient use of electronic health records and provider
quality information; and
— Federal leadership of a federal-state process to resolve policy issues
central to a secure and safe care system, like privacy and professional
licensure, to provide a secure and safe care system.

Note to Coalition — this is already occurring without a law.