• Last week, the House Oversight and Government Reform Committee organized its subcommittees. Rep. Stephen Lynch (D Mass) will chair the Federal Workforce, Postal Service, and District of Columbia subcommittee which is responsible for overseeing the FEHB Program. Rep. Lynch replaces Rep. Danny Davis (D Ill.) who remains on the subcommittee but gave up the chair in order to sit on the Appropriations Committee. Rep. Jason Chaffetz (R UT) will be the ranking minority member of the Federal Workforce subcommittee.  As previously noted, Rep. Edolphus Townes (D NY) is the full Committee chair and Rep. Darrell Issa (R. Calif.) is the full Committee’s ranking minority member.
• President Obama has not yet appointed a new HHS Secretary in the wake of Tom Daschle’s withdrawal. I thought that Howard Dean would be the likely appointee but I was not aware that Gov. Dean does not get along with White House Chief of Staff Rahm Emmanuel. According to Modern Healthcare and AP reports, the most likely appointee is Kansas Gov. Kathleen Sebelius. 
• Joe Davidson, the Washington Post’s Federal Diary columnist, reported on an FEHBP claim dispute last Friday.  The dispute was resolved in the member’s favor.
• AIS Health Business Daily reported on a dispute between the Tufts University Medical Center and Blue Cross Blue Shield of Massachusetts. Tufts was upset because BCBSMA was paying higher fees to Partners Healthcare, the parent of Mass General and Brigham and Womens Hospitals. AIS reports that Tufts and BCBSMA have reached a settlement of their dispute. 
• Finally Healthcare IT News reported last week that Google Health, IBM, and the Continua Health Alliance announced the development of “new IBM software that will enable personal medical devices used for patient monitoring, screening and routine evaluation to automatically stream data results into a patient’s Google Health Account or other personal health record (PHR). This breakthrough extends the value of PHRs to consumers and also helps to ensure that such records are current and accurate at all times. Once stored in a PHR, the data can also be shared with physicians and other members of the extended care network.”

The Institute of Medicine issued a report today concluding that “the HIPAA Privacy Rule does not protect privacy as well as it should, and that, as currently implemented, it impedes important health research.” When I think of the hundreds of millions of dollars that health plans and providers have invested in HIPAA compliance, this conclusion about the inadequacy of HIPAA is hard to swallow.

President Obama signed the State Children’s Health Insurance Program reauthorization bill today after the House of Representatives passed the Senate version which lacks certain House bill provisions that the medical community found objectionable. This Washington Post article summarizes the new law’s key aspect.

Yesterday, I mentioned that Humana is creating smart ID cards based on MGMA’s Project SwipeIt recommendations. IT News is reporting that United Healthcare is making similar modifications to to create its own smart enrollment cards.

UnitedHealth Group collaborated with the Workgroup for Electronic Data Interchange (WEDI), the Office of the National Coordinator for Health Information Technology, the Centers for Medicare & Medicaid Services, as well as physician and hospital associations to create the new healthcare ID card standards. “These new national standards will create a single platform that simplifies the exchange of information between insurers and care providers so that verifying important patient information will be as easy as a swipe of a card,” said Peter Barry, co-chair, WEDI Workgroup for National Provider Identifier Implementation and CEO, Enumeron, LLC.

Of course, it’s hardly a tidbit that former Senate Majority Leader Tom Daschle asked President Obama to withdraw his nomination as HHS Secretary and White House health care reform czar, and the President agreed. It will be interesting to see who is the President’s next choice. My money is on former Vermont governor Howard Dean, who is an MD.

In an interesting development, the U.S. Court of Appeals for the D.C. Circuit rejected Consumer Checkbook’s Freedom of Information Act lawsuit seeking to get Medicare data in order to assess the quality of health care. According to an AP report, “The requested data does not serve any (freedom-of-information-related) public interest in disclosure,” Circuit Judge Karen LeCraft Henderson wrote for the majority. “Accordingly, we need not balance the nonexistent public interest against every physician’s substantial privacy interest in the Medicare payments he receives.” A copy of that opinion can be accessed here. The AP report indicates that Consumer Checkbook’s lawyers are considering an appeal.

Another shoe just dropped in the Ingenix out of network provider reimbursement controversy. According to this Hartford Courant report (Go UConn), Aetna “reimburse more than $5.1 million on 73,000 health claims for college students it underpaid between 1998 and April 1, 2008,” under a settlement agreement with New York Attorney General Andrew Cuomo. The AG’s press release is available here. Evidently, the Aetna subsidiary in question failed to keep the Ingenix usual reasonable and customary payment database up to date.

Finally, Healthcare IT News reports that

Humana, one of the nation’s largest health-benefits companies, has promised to adopt machine-readable patient ID cards and, in the process, won the acclaim of the Medical Group Management Association, which estimates the cards could save physician offices and hospitals as much as $1 billion a year. Less than three weeks ago, MGMA launched ProjectSwipeIT, an industry-wide effort calling on health insurers, vendors and health care providers to initiate processes to support standardized cards by Jan. 1, 2010. Louisville, Ky.-based Humana is the first insurer to publicly pledge its support.

The SwipeIt projectstrikes me as a cool idea. You can pledge your support here.

• It occurs to me that the belated federal benefits enrollment period finally ended yesterday.
• The President issued several executive orders on Friday that reversed several Bush administration positions on government contracting. The Washington Post reported the Washington Post reports that these orders
  

  Require federal [service] contractors to offer jobs to current workers when contracts change.
  Reverse a Bush order requiring federal contractors to post notice that workers can limit financial support of unions serving as their exclusive bargaining representatives. [FEHBlog note — this is Section 5.61 of the current OPM standard contract]
  Prevent federal contractors from being reimbursed for expenses meant to influence workers deciding whether to form a union and engage in collective bargaining.

  Govexec.com reports that the NTEU and AFGE are pleased by these developments.

• You may recall that in May 2006, a laptop computer and external hard drive containing the personal information of millions of veterans was stolen from a VA employee’s home in Montgomery County, MD. The police later found the laptop and tests indicated that the personal information was not wrongly used, and the VA provided credit counselling. Nevertheless, a lawsuit ensued, and the AP reported last week that the VA has agreed to pay $20 million to settle the lawsuit, subject to judicial approval. According to the AP,
  

  The money, which will come from the U.S. Treasury, will be used to pay veterans who can show they suffered actual harm, such as physical symptoms of emotional distress or expenses incurred for credit monitoring [and of course their lawyers].

• The New York Times reported yesterday that the healthcare industry could benefit from “disruptive innovation.”
  

  Disruptive innovators in health care aim to shape a new system that provides a continuum of care focused on each individual patient’s needs, instead of focusing on crises. Mr. Christensen and his co-authors argue that by putting the financial interests of hospitals and doctors at the center, the current system gives routine illnesses with proven therapies the same intensive and costly specialized care that more complicated cases require.

  The article describes Kaiser Permanente, a group model HMO, as a successful integrated mode. The article quotes managed care maven Uwe Reinhardt

  “It is much cheaper than pay-for-service systems, because they have absolutely no incentive to overtreat you, but they have every incentive to keep you healthy,” he says. “Kaiser still makes mistakes — any large system does — but their facilities always come out ahead in every service quality survey I’ve reviewed.”

  Of course Kaiser Permanente has been around for over sixty years. According to Kaiser’s Fast Facts website, it has brought the following innovations to U.S. health care are:

  prepaid insurance which spreads the cost to make it more affordable

  physician group practice to maximize their abilities to care for patients

  a focus on preventing illness as much as on caring for the sick

  an organized delivery system, putting as many services as possible under one roof

  Kaiser has an interesting approach but it’s not for everyone (at least pending Medicare for All). The Wall Street Journal reports that CMS and commercial health plans are considering adopting a middle ground of paying doctors for episodes of care similar to Medicare’s hospital diagnosis related group payments — as opposed to a fee for service basis. The Bridges toExcellence group advocates this approach, but the medical community is concerned. According to the Journal,

  “It’s hugely worrisome to us,” said Lawrence Martinelli, an infectious-disease specialist in private practice in Lubbock, Texas. “There’s concern about not only how much you’re going to get paid, but whether you can negotiate a contract where you can at least break even.”

  “Ay, there’s the rub.” (hey, I’m quoting Shakespeare here.)

There’s a lot of health care spending in the House economic stimulus bill (HR 1). There are the significant COBRA changes (Section 3002) that I discussed in last weekend’s update and this Business Insurance article. There are many changes to the HIPAA privacy and security rules (beginning at Section 4401), including a new nationwide privacy breach notice requirement. Also the bill (Sec. 9902) would create a federal panel known as the Federal Coordinating Council for Comparative Effectiveness Research to

(1) assist the offices and agencies of the Federal Government, including the Departments of Health and Human Services, Veterans Affairs, and Defense, and other Federal departments or agencies, to coordinate the conduct or support of comparative effectiveness and related health services research; and(2) advise the President and Congress on–(A) strategies with respect to the infrastructure needs of comparative effectiveness research within the Federal Government;(B) appropriate organizational expenditures for comparative effectiveness research by relevant Federal departments and agencies; and(C) opportunities to assure optimum coordination of comparative effectiveness and related health services research conducted or supported by relevant Federal departments and agencies, with the goal of reducing duplicative efforts and encouraging coordinated and complementary use of resources.

This new panel reminds me of the Blue Cross Association’s recommendation that Congress pass a law creating an institute

“that would support research comparing the effectiveness of new and existing procedures, drugs, devices, and biologics based on four key principles:

1. funding should be ensured by asking all payers – government and private – to contribute;
2. the Institute should support a broad range of research, especially clinical trials;
3. significant education programs and incentives are needed; and
4. the new Institute should be governed by a board with both public and private representation.”

Membership in the new Council would be limited to federal officials and employees, but it would be funded by the taxpayers. In the end, the new Council bears the most similarity to the Federal Health Board advocated by HHS Secretary designate Tom Daschle.

When the Food and Drug Administration approves a new drug for marketing, it authorizes the use of a label that prescribes the appropriate uses for the drug. In order to achieve FDA approval, the drug manufacturer must demonstrate the safety and efficacy of the drug in three levels of patient testing.

It’s illegal for a drug manufacturer to promote the use of one of its FDA approved drugs for so-called off-label or unapproved uses. Earlier this month, Eli Lilly & Co. agreed to plead guilty to promoting the off-label use of its anti-psychotic drug Zyprexa. Lilly also agreed to pay $1.4 billion (with a b) in fines and damages.

Yesterday Pfizer announced its acquisition of fellow drug maker Wyeth. Pfizer also announced a big drop in earnings. It turns out that a major cause of the drop is a proposed $2.3 billion (again with a b) settlement of the federal government’s charges that Pfizer promoted off label use of the painkiller Bextra and other Pfizer drugs (as reported at philly.com). Wow.

However, it’s lawful for doctors to prescribe FDA approved drugs for off-label uses. Whether the patient’s health plan will cover the off-label use is another question. Medicare Part B covers cancer drugs. Business Week reports that

Although it is not the case with other drugs, Medicare must reimburse doctors or patients for virtually all cancer drug uses, even those not yet approved by the Food & Drug Administration. And it is not permitted to favor the lowest-cost treatment. As a result, says author Dr. Peter Bach of Memorial Sloan-Kettering Cancer Center in New York, “the prices of cancer drugs appear to be rising faster than the health benefits associated with them.”

[Dr.] Bach recommends that Congress rectify the situation by establishing a center for comparative effectiveness—a concept embraced by President Obama’s Administration—that would determine when a cancer drug’s use is reasonable and necessary, based on clinical research. However, Bach acknowledges that patients may not be keen on this solution, as an authority other than their oncologist would end up restricting their access to some treatments. “This is going to be tough going,” he says. “But that is maybe one of the trade-offs we need to make to bring prices under control.”

A law creating a regulatory pathway for FDA approval of follow-on biologic drugs (or biogenerics) also would help. AIS reports that “the follow-on biologics debate will likely see renewed action with Waxman overseeing the House commerce committee, some say.” It should.

• Govexec.com reported on the new OPM Acting Director, Kathie Whipple. Ms. Whipple’s bio is now posted on OPM.gov.
• Congress is busily working on the economic stimulus package. Both Houses are prepared to provide health care providers with at least $20 billion in funding for health care technology. Of course, the devil is in the details, particularly the new privacy and security requirements under consideration — House/Senate. Karen Ignani, who is President of the health insurance industry’s trade association AHIP, warned in a press release that
  

  “Investing in health information technology will make the health care system safer, more efficient, and more effective. Patients need the peace of mind of knowing that their personal health information is protected. However, if Congress enacts provisions that inhibit the secure exchange of health information, it will turn back the clock on efforts to coordinate patient care, improve health care quality, promote prevention and wellness, conduct comparative effectiveness research, and streamline health care administration.”

• One aspect of the House bills that caused me to jump out of my chair is the proposal to drastically increase the COBRA continuation coverage period. Currently, an employee who loses his or her job, is entitled to self-pay continuation coverage for 18 months. If the employee is in the 29 month waiting period for Social Security disability benefit-based Medicare coverage, then she can receive an 11 month extension at 150% of the standard premium as opposed to 102%. The House panels are proposing to allow COBRA coverage to age 65 for any employee who loses his or her job after either after achieving ten years of service with the employer or after reaching age 55 (regardless of tenure with the company). According to this Business Insurance report, business groups have voiced concerns about this proposal because it changes the nature of this temporary coverage program and it would be quite expensive for employers.
• Another Business Insurance report provides industry reactions to the United Healthcare/Ingenix settlement with the New York Attorney General that will replace the Ingenix usual reasonable and customary databases with an independent database developed by a qualified university designated by the New York AG.
• AIS Drug Benefits report advises that Rep. Henry Waxman (D Calif), Chairman of the House Energy and Commerce Committee, is very interested in enacting a law that would create a regulatory pathway for follow-on biological drugs — a move that would save health plans and consumers millions of dollars.
• Finally, Business Insurance reports on a settlement between a group of ERISA governed plans and the attorneys representing the class members in the Vioxx settlement that allows those plans a portion of the class recovery to reimburse the plans for the expenses incurred to treat their participant’s heart ailments attributable to Vioxx use.