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.

• The House and Senate Budget Committees cleared for floor consideration FY 2019 budget blueprints that include the President’s proposed $634 billion downpayment for health care reform but no details. According to the Washington Post,
  

  A bigger fight is looming, however, over whether to use a powerful procedural maneuver to push Obama’s signature health, education and clean energy initiatives through the Senate without any Republican votes. The House advocates the maneuver, known as reconciliation, in its budget plan, but influential Senate Democrats have joined Republicans in opposing the move and said they will fight to block it when the chambers meet to resolve their differences in a conference committee next month.

  Yahoo News reports that House Majority Leader Steny Hoyer (D Md) predicted that the reform plan will include an insurance mandate. He noted that the insurance industry supports such a mandate. However, Rep. Hoyer also noted that the House leadership supports a government health plan option as part of the mandate. The insurance industry’s support of a mandate is contingent upon a reform plan that does not include a government plan option.On Friday, the Health Reform Dialogue, a broad coalition that includes the AMA, Phrma, AHIP, the Chamber of Commerce, and Families USA, among others, issued a set of constructs for reform that covers a broad range of consensus items, such as preventive health care, but avoids the areas of discord like the mandate and the government plan. It’s useful reading. Politico.com reports that “This report is meant to be progress to date,” according to Dialogue materials. “We’ll keep working with each other inside and outside the political process.”

• Last year, OPM solicited proposals from insurance carriers to fill the government wide indemnity benefit plan slot in the FEHB Program. That slot has been vacant since about 1990. Last Thursday, OPM announced its decision to withdraw that solicitation.
• Asparity Decision Solutions which offers federal employees and annuitants the Plansmartchoice tool during the FEHBP Open Season, announced the results of various surveys that it conducted during the most recent Open Season.
• U.S. News and World Report reported that “A 65-year-old couple retiring in 2009 will need approximately $240,000 to cover medical expenses throughout their retirement, even with Medicare insurance coverage, according to a Fidelity Investments estimate released this week.” This estimate does not include over the counter drugs, most dental care, and long term care. Consequently, it suggests what an FEHB plan would pay to cover such a couple as a secondary carrier to Medicare.
• AIS Health Business Daily reported last week on the Obama Administration’s push to allow prescription drug imports from outside the U.S. I find this move puzzling because the savings are short term at best, and drug imports can threaten drug safety here.
• Consumer Reports website is now offering downloadable, two page “reports [in English and Spanish] that compare prescription drugs by category— that is, drugs in the same class that are used to treat a specific condition or illness, such as high blood pressure, high cholesterol, allergies, coronary-artery disease, heartburn, or depression. They combine an expert review of the scientific evidence with pricing information.” There are currently 21 reports on the site.

• Govexec.com reports that John Berry had a successful confirmation hearing today before the Senate Homeland Security and Governmental Affairs Committee. According to the article,
  

  Berry declined to comment after the hearing on the imminent introduction of a bill that would extend health and retirement benefits to the domestic partners of gay and lesbian federal employees. He said he could not discuss specific policies until after his confirmation.

  The next step in the process is a Committee vote, followed by a full Senate vote.

• Modern Healthcare.com reports that two Senate committees have scheduled confirmation hearings for Kansas Gov. Kathleen Sibelius, the nominee for HHS Secretary.
• The AMA continued its jihad against health insurers today when its president Nancy Nielsen, MD, advocated legislation to require transparency in health insurance reimbursement practices. According to a Reuters report, “The AMA believes enormous savings would accrue to patients, physicians, health insurers and other third-party payers if there were complete transparency,” she told the Senate Commerce, Science and Transportation Committee. Why not start with more transparency in medical pricing? As I have explained before in the FEHBlog, the goal of the AMA “transparency initiative” is to place more benjamins in the pockets of out-of-network doctors.

• OPM posted its benefits administration letter implementing the ARRA premium subsidy for involuntarily terminated federal employees who elect the FEHBP’s analog to COBRA, called temporary continuation of coverage.

• Asparity Decision Solutions, which sponsors the Plansmartchoice tool to compare FEHB plans, announced today that nine FEHB plans had Nine (9) plans achieved a five-point overall performance rating this year, as determined by the PlanSmartChoice Plus rating system. These plans represent a mix of national, regional, and closed plans:
  • National Plans: APWU Health Plan (CDHP, Standard), GEHA High Deductible Health Plan (HDHP, High), NALC (FFS, High), and SAMBA (FFS, Standard)
  • Regional Plans: BCBS Service Benefit Plan (HDHP, Standard), Kaiser Health Plan of Georgia (HMO, High), Kaiser Health Plan of California (HMO, High), and Health America Pennsylvania (HDHP, High)
  • Closed Plans: Foreign Service Benefit Plan (FFS, High)

It’s interesting that five of the ten fee for service plan carriers received the top ranking.

• The AMA continues it jihad against health plans today by filing a class action against Wellpoint based on the ludicrous allegation that Wellpoint and Ingenix / United Healthcare were in league to underpay out of network doctors. The lawsuit was filed in the federal district court in Los Angeles. According to a Business Insurance report,
  

  In response to the suit, WellPoint said in a statement that it “is committed to providing appropriate reimbursement for out-of-network services. We are in the process of reviewing the complaint and are unable to comment further at this time.”

• The Watson Wyatt consulting firm and the National Business Group on Health published the results of a survey of 489 large employer on employer sponsored health care coverage. I was struck by these findings —
  

  Employers continue to monitor costs by conducting dependent eligibility audits. While 47 percent did so in 2007, that number increased to 54 percent in 2008. This year, 61 percent of companies conduct dependent audits.

  Health savings accounts (HSAs) are currently offered by 34 percent of companies. By 2010, that number is expected to increase to 43 percent. Health reimbursement accounts (HRAs) are offered by 21 percent today, and only 3 percent plan to add one next year.

• On the electronic health record (EHR) front, Government Health IT News reports on a study finding an “abysmally low” rate of EMR adoption at non-federal government hospitals. “Fewer than 8 percent of hospitals have EHRs in even one clinical department, and only 1.5 percent have EHRs for all clinical departments, the researchers reported in today’s online edition of the New England Journal of Medicine.” Even with the stimulus law funding, we have a long way to go.

• On Friday, the U.S. Department of Health and Human Services announced that David Blumenthal, MD, MPP, will replace Robert Kolodner, MD, as National Coordinator for Health Information Technology. This position, which President Bush created by an executive order, was codified by the stimulus act. Dr. Blumenthal is a Harvard medical professor and the director of the Institute for Health Policy at The Massachusetts General Hospital/Partners HealthCare System in Boston. According to a report in Health Information Technology News, Dr. Blumenthal’s nomination was well received by industry representatives, and Dr. Kolodner is expected to return to work at the Department of Veterans’ Affairs.
• While on the topic of health information technology, Government HIT.com reports that
  

  The stimulus law’s incentives for providers to adopt health information technology will double the rate of e-prescribing and result in a $22 billion reduction in drug and medical costs in the next decade, according to a study commissioned by the Pharmaceutical Care Management Association. If the study’s authors at consulting firm Visante are correct, the e-prescribing savings alone will more than pay for the $19 billion in adoption incentives and other health IT promotion activities required under the stimulus law.

• The Senate Committee on Homeland Security and Governmental Affairs will hold a hearing next week on the President’s nomination of John Berry to serve as OPM Director. The hearing will be held on March 26 at 2:30 pm.
• First Databank announced that on March 17 that the U.S. District Court for the District of Massachusetts has approved a proposed settlement of the average wholesale price (“AWP”) rigging class action against itself and McKesson. (The court is considering a separate settlement agreement involving McKesson). Prescription benefit managers (“PBMs”) often use the AWP to set prices for its health plan customers. First Databank publishes the AWP schedule. Under the settlement and as a result of separate voluntary action by First Databank, described in the announcement, the company will roll bank the AWPs on thousands of prescription drugs in about six months and stop publishing the AWP schedule in two years. Prescription benefit managers now will seek to renegotiate prices with their customers — both health plans and pharmacies.

CNNMoney.com offers an interesting look back and look forward on the second anniversary of the mega merger between the CVS pharmacy chain and the Caremark, prescription benefit management company.

At the FEHBP carrier conference, OPM encouraged plans to use benefit designs that drive members toward effective, quality care. In my opinion, that’s easier said than done because medicine remains as much an art as a science.

I am aware that step therapy is one such approach. Step therapy is “the practice of beginning drug therapy for a medical condition with the most cost-effective and safest drug therapy and progressing to other more costly or risky therapy, only if necessary. The approach aims are to control costs and minimize risks.” Business Insurance reported today on a study published in the American Journal of Managed Care finding that “benefit plan members subject to step therapy incurred $99 more in quarterly health care expenditures than a comparable group. Moreover, plan members in step therapy programs also had more inpatient admissions and emergency room visits, the study found.”

It turns out that the underlying problem may be poor communication with doctors and patients about the step therapy. In any event, the study tends to support my opinion. Of course, that’s no reason not to try to improve quality with benefit design. I just wouldn’t expect results over night.

Speaking of comparative effectiveness, HHS today named fifteen members to the new “Federal Coordinating Council for Comparative Effectiveness Research. Authorized by the American Recovery and Reinvestment Act (ARRA), the new council will help coordinate research and guide investments in comparative effectiveness research funded by the Recovery Act.” The keynote speaker from the OPM carrier conference, Neera Tanden, HHS health reform counselor and a lawyer, is one of the members.

The Washington Post reported today on the uproar over an Obama administration budget proposal to permit the Veterans Administration to bill health plans and other third party payers for care rendered to veterans for service-connected disabilities. For many years, the VA has billed third party payers for care rendered to veterans for non-service-connected disabilities (38 U.S.C. §1729). The American Legion’s president explained today in a Wall Street Journal opinion piece why this extension threatened veteran’s health care.

It was pointed out to me that this budget proposal would be similar to shifting the cost of workers compensable health care from the employer to the health insurers. The budget proposal would only increase the cost of health insurance for the veterans and inappropriately relieve the government of its clear responsibility.

Tonight the White House issued the following press statement:

The President has consistently stated that he is committed to working with veterans on the details of the 2010 VA Budget Proposal. The President demonstrated his deep commitment to veterans by proposing the largest increase in the VA budget in 30 years and calling VSO and MSO leaders into the White House for an unprecedented meeting to discuss various aspects of the budget proposal. In considering the third party billing issue, the administration was seeking to maximize the resources available for veterans; however, the President listened to concerns raised by the VSOs that this might, under certain circumstances, affect veterans and their families’ ability to access health care. Therefore, the President has instructed that its consideration be dropped. The President wants to continue a constructive partnership with the VSOs and MSOs and is grateful to those VSOs and MSOs who have worked in good faith with him on the budget proposal.

This is good news.

OPM announced today that Acting Director Kathie Ann Whipple has appointed Elaine Kaplan as OPM’s general counsel. Ms. Kaplan will be leaving her current position as Senior Deputy General Counsel for the National Treasury Employees Union.