Business Insurance reports that

Large U.S. employers expect to pay 6% more for health benefits in 2009, the same rate of increase as 2007 and 2008, according to preliminary findings of a survey by Watson Wyatt Worldwide and the National Business Group on Health.

The cost increases were partially tempered by the growing use of consumer-driven health plans, which are now offered by 51% of employers, up from 47% in 2008, according to the survey.

Employers where at least half of their workers enrolled in a CDHP have a two-year cost trend that is 25% lower than non-CDHP sponsors, the survey found.

I find it interesting that over half of employers now offer consumer driven health plans, meaning plans featuring health reimbursement accounts or health savings accounts.

Speaking of health care costs, Sage Works has confirmed one of my basic operating hypotheses — that dentists are quite profitable because they don’t rely heavily on third party reimbursement. According to a Sage Works report, dentists have been the most profitable industry over the past 12 months. Physician’s offices are in sixth place, and lawyers in third.

President Obama’s health care reform effort recently took a step ahead with the stimulus bill and a step back with Tom Daschle’s withdrawal. The New York Times is reporting that Kansas Gov. Kathleen Sibelius is the leading candidate for the HHS Secretary position, but she would not concurrently hold the health care reform czar position as Daschle would have. Meanwhile the Politico reports that Office of Management and Budget Director Peter Orszag is picking up the slack created by Daschle’s withdrawal:

Now Orszag is preparing for the biggest week of his career, with a “fiscal responsibility” summit Monday and the release of Obama’s first budget Thursday.

He’s signaling that the moves in the stimulus package are just a hint of what’s to come in a budget that will begin in earnest the arduous process of health care reform.
“What has already been accomplished is a huge start toward a more efficient [health care] system, and I think you’re going to see more in the budget next week,” he told Politico.

Though the budget’s details have been closely held, Orszag revealed, in broad terms, two: a continued focus on health care policy and a plan “to restore the nation to a sustainable fiscal trajectory over the five-to-10- year window.”

The next step on health care, he said, is a set of “changes to Medicare and Medicaid to make them more efficient, and to start using those programs more intelligently to lead the whole health care system.”

With a growing body of research finding some practices more cost-effective than others, the program’s reimbursement rules can be used to force changes at those hospitals — a sort of back door to health care reform.

“Medicare and Medicaid are big enough to change the way medicine is practiced,” he said.

Meanwhile, the Commonwealth Fund released a report recommending national health care reform along the lines that President Obama proposed in his campaign, e.g., a Massachusetts connector model.

“The U.S. Department of Health and Human Services (HHS) and the Federal Trade Commission (FTC) today announced [in a press release] that CVS, the nation’s largest retail pharmacy chain, will pay the U.S. government a $2.25 million settlement and take corrective action to ensure it does not violate the privacy of its millions of patients when disposing of patient information such as identifying information on pill bottle labels.”

Here are the new government FAQs on the proper disposal of protected health information media. A word to the wise . . .

In yesterday’s Tuesday Tidbits, I asked whether $90 million would be enough to fund NY Attorney General Cuomo’s independent UCR database. I learned today that the answer is no because Business Insurance reports that Wellpoint has agreed to contribute $10 million more. “Mr. Cuomo said his office’s industrywide investigation is continuing.”

• Cigna reached a settlement with New York State Attorney General Andrew Cuomo as a result of his Ingenix UCR database probe, according to a Business Insurance report. Without admitting liability, Cigna agreed to contribute $10 million toward the development of an independent UCR database. Mr. Cuomo has now raised around $90 million for this database to be developed by a qualified university appointed by him. When will he reach his fundraising goal?
• I found it interesting a couple of years ago when the Business Roundtable teamed up with the Service Employees International Union (SEIU) and the AARP to create a healthcare reform advocacy group called Divided We Fail. The Boston Globe reports cracks in the coalition as the SEIU pushes for the Medicare for All approach while the Business Roundtable seeks a private sector oriented solution.
• President Obama signed the economic stimulus today which includes $19 billion of health information technology funding, complicated HIPAA privacy and security changes, and a new COBRA temporary continuation of coverage subsidy for the recently unemployed. Business Insurance reports that
  
  

  The federal government will pay 65% of COBRA premiums for employees who are laid off from Sept. 1, 2008, through Dec. 31, 2009. The subsidy will extend for nine months. However, individuals with an annual adjusted gross income of more than $125,000 and couples with an adjusted gross income of more than $250,000 will not be eligible for the subsidy. Employers will face a significant communications and administrative challenge to comply with the COBRA provisions, which go into effect March 1. Employees who were laid off since Sept. 1, 2008, and declined to opt for COBRA coverage will have a new right to enroll in COBRA, and employers are required to inform those individuals of that right. In addition, laid-off employees now receiving COBRA will have to be informed of the new subsidy and their premium contributions will have to be adjusted—as of March 1—to reflect the new subsidy.

  This subsidy also applies to the FEHB Program’s temporary continuation of coverage program (5 U.S.C. § 8905a). The stimulus bill probably should not be called a tidbit.

• While the weekend has not allowed me enough time to time to read all of the health care provisions of the stimulus bill, I did get a better understanding of the Ingenix usual customary and reasonable (UCR) database litigation pending in New Jersey’s federal court. It turns out that while Aetna settled with the New York attorney general, Aetna has not settled its Ingenix related lawsuits pending in that court that was brought by classes of ERISA plan participants (Cooper v. Aetna Health, Civ. Action No. 07-3541 and Seney v. Aetna Health, Civ. Action No. -9-468). Now Aetna also faces an Ingenix-related class action brought by the American Medical Association and other medical societies (AMA v. Aetna Health, Civ. Action No. 09-579). In contrast, United Healthcare, the parent company of Ingenix settled with the New York attorney general and the AMA almost simultaneously. The Hartford Courant reports that
  

  Cynthia Michener, a spokeswoman for Aetna, said her company is “disappointed the medical community has chosen to litigate on top of already pending consumer litigation on the topic.”

  She added: “Both members and providers cannot be paid for the same claim under these cases. Ultimately, increasing health care costs increases the number of uninsured and the cost of health care for everyone.”

  I discovered that there are two ERISA plan participant class actions pending against CIGNA in New Jersey federal court arising out of its uses of the Ingenix UCR database (Franco v. CIGNA, Civ. Action No. 07-6039 and Chazen v. Cigna, Civ. Action No. 08-4106). Cigna, which has not settled with the New York attorney general, was hit with an AMA class action (AMA v. CIGNA, Civ. Action No 09-578). CIGNA issued the following press release about that lawsuit:

  The class action suit filed today by the American Medical Association and other physician groups reasserting prior allegations regarding purported flaws in the Ingenix database is without merit and will be vigorously defended.CIGNA used Ingenix data to determine reasonable amounts to pay for the small percentage of claims submitted for services provided by non-contracted health care professionals. CIGNA disclosed to doctors and consumers its use of the third-party Ingenix database as the basis of its out-of-network rate calculation. The use of the reasonable and customary methodology is a valuable method for our customers to manage costs and reduce upward pressure on the premium rates paid by individuals while maintaining access to a broad array of doctors.In keeping with the rest of the industry, many of CIGNA’s health plans give individuals the option of choosing to receive care from a physician who is in the company’s network or from a doctor that doesn’t have a contract and isn’t in the network. The CIGNA network provides access to doctors who provide high-quality care and who have agreed to charge reasonable fees for their services. If an individual decides to receive care from an out-of-network doctor, then the doctor is reimbursed based on a set, previously agreed upon, fee, and the individual is responsible for the difference between the set fee and the billed charge.CIGNA’s payments to out-of-network doctors are robust and fair, and greater transparency in regards to physician pricing will prove that point. For instance, for a 15-minute office visit in New York City – the most common service – health plans on average allow $74 to in-network doctors and as much as $160 using the Ingenix database to out-of-network doctors. Medicare pays $70 to in-network doctors and $77 to out-of-network doctors for the same office visit. However, on average, out-of-network physicians (who charge in excess of the amount previously set by the Ingenix database) charge consumers $214 – for the same service. More than 95 percent of office visits are made to in-network physicians today, and CIGNA believes that increased transparency around physician pricing will further support efforts to drive lower cost, high quality care.

  All of these cases are pending in New Jersey federal court before U.S. District Judge Faith S. Hochberg.

• In other lawsuit news, the federal judge in the average wholesale price class action litigation pending against First Databank and McKesson set July 23, 2009, as the date for a final hearing on the McKesson settlement agreement valued at $380 million.
• The U.S. Department of Health and Human Services has revamped its HIPAA/ Health Information Privacy website. Health Data Management explains that
  

  Now, it has added content on the Genetic Information Nondiscrimination Act and the privacy provisions in the rules that implemented the Patient Safety and Quality Improvement Act. For consumers, there also is new information covering such areas as medical records, personal representatives, health information in the workplace, court orders and subpoenas, and notices of privacy practices.

• AHIP announced last week the release of “The National Health Plan Collaborative’s new [web-based] toolkit to reduce disparities in health features innovative health plan case studies; a variety of sample tools, forms and policies related to implementation; and videos of experts talking about the importance of reducing disparities.

• AHIP also released a preliminary analysis of healthcare savings account (HSA) deposits, withdrawals and balances over the 18 month period ending in June 2008. Loads of fun facts such as this
  

  Based on 770,000 accounts for which the age of the account holder was known, the average age of HSA accountholders as of June 2008 was 44.5 years. Approximately 13 percent of accountholders were age 20-29; 23 percent were age 30-39; 27 percent were age 40-49; 26 percent were age 50-59; and 11 percent were age 60 and older.

• USA Today reports that “A new study [published in the New England Journal of Medicine] shows that smokers who earn financial incentives are three times more likely than others to kick the habit. In an experiment with nearly 900 smokers employed by General Electric, 15% of those given incentives were smoke-free after a year, compared with 5% of those who weren’t eligible for cash rewards.” I find this to be a very sad statement on our culture. Plus where’s my payment for not smoking?

Details on the stimulus bill conference report are now becoming available. The House Appropriations Committee’s summary of the report states that

Investments in Health include:
‐ $19 billion, including $2 billion in discretionary funds and $17 billion for investments and incentives through Medicare and Medicaid to ensure widespread adoption and use of interoperable health information technology (IT). This provision will grow jobs in the information technology sector, and will jumpstart efforts to increase the use of health IT in doctors’ offices, hospitals and other medical facilities. This will reduce health care costs and improve the quality of health care for all Americans.
‐ $1 billion for prevention and wellness programs to fight preventable diseases and conditions with evidence-based strategies.
‐ $10 billion to conduct biomedical research in areas such as cancer, Alzheimer’s, heart disease and stem cells, and to improve NIH facilities.
‐ $1.1 billion to the Agency for Healthcare Research and Quality, NIH and the HHS Office of the Secretary to evaluate the relative effectiveness of different health care services and treatment options.

The full conference report is available here.

The changes to the HIPAA Privacy and Security Rules cover over 30 pages and will take a while to digest. On first glance, the new law (§§ 13401, 13404) will apply the HIPAA Security Rule’s requirements and HIPAA’s civil and criminal penalties to business associates of covered entities. The new law (§ 13402) creates a consumer notice requirement in event of a security breach. The new law (§ 13405 – 06) makes changes to the HIPAA Privacy Rule’s provisions governing restrictions on disclosure, accounting for disclosures, marketing, fundraising, and limited data sets, and it generally prohibits the sale of protected health information. The law (§ 13408) expands the definition of business associate to include entities related to electronic medical records and personal health records. The law (§ 13409 – 10) toughens penalties, expands liability to individuals, and gives state attorney generals enforcement authority. And there’s more, but I think that I have hit the highlights.

Business Insurance reports that “Employees who are laid off between Sept. 1, 2008, and Dec. 31, 2009, would be eligible for a 65% federal subsidy for up to nine months of COBRA health insurance premiums under economic stimulus legislation nearing final congressional approval.” Evidently, the conference report does not include the COBRA continuation coverage extensions found in the House bill.

According to the Windy City Times, two different Ninth Circuit judges have ruled that FEHB coverage should be extended to the same sex spouses of court employees, notwithstanding the federal Defense of Marriage Act. The DOMA, 1 U.S.C. § 7, reads as follows:

In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word “marriage” means only a legal union between one man and one woman as husband and wife, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.

Like it or not, the DOMA applies to the FEHB Act, 5 U.S.C. § 8901, 8906, which extends coverage to the enrollee’s “spouse” and dependent children if the enrollee elects family coverage.

These rulings were made in response to internal complaints and therefore have limited precedential value. We shall have to wait and see whether Congress repeals the Defense of Marriage Act and/or extends FEHBP coverage to domestic partners / same sex spouses this year. I expect that these ruling will provide momentum to the legislative efforts.