• The U.S. Court of Appeals for the Federal Circuit today affirmed a lower court opinion invalidating an OPM regulation prohibiting final year SSSG pricing reconciliations as in conflict with the FEHB Act, 5 U.S.C. § 8902(i). HMOs participating in the FEHB Program use the similarly sized subscriber group (“SSSG”) methodology to set the community rates for their FEHB plans.
• Speaking of OPM, Director Linda Springer left office today. The Washington Post’s new Federal Diary columnist, Joe Davidson, reported on Ms. Springer’s reflections concerning this transition.
• CVS Caremark acquired the West Coast based Long’s Drug Store chain. The AP reports that “Longs operates 521 drug stores in California, Hawaii, Nevada and Arizona, which will give CVS about 6,800 stores when the deal is completed. It also operates the Rx America pharmacy benefits management business, which provides services to about 8 million members and prescription drug coverage to about 450,000 Medicare beneficiaries.”
• The Consumer-Purchaser Disclosure Project announced today that it “has named the nonprofit National Committee for Quality Assurance (NCQA) as an independent reviewer to certify that health insurers and other organizations assess and report on the quality of physicians in an effective and fair manner. NCQA is the first approved independent
  reviewer that can ensure that organizations follow the guidelines of the Patient Charter for Physician Performance Measurement, Reporting and Tiering Programs.”

According to a press release issued today “Aon Consulting surveyed more than 70 leading health care insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.6 percent for HMOs, 10.5 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH [consumer driven health] plans. These represent the lowest trend rate increases since the study began in 2001, and are slightly lower than one year ago, when HMO cost increases were 10.9 percent, 10.8 percent for POS plans, 11.2 percent for PPOs and 10.7 percent for CDH plans.” These are trends before benefit changes are made, and employers sponsoring self-insureds have an opportunity to make benefit changes to bring their increase below the benchmark according to Aon.

According to a San Francisco Chronicle report, “Aon’s findings mirror a similar study released late last month by PricewaterhouseCoopers, which estimated a nearly 10 percent increase in health costs for next year. The study pointed out that the percentage rate of increases has
diminished each year since 2003 and attributed some of the deceleration to similar cost-saving programs, including those that encourage people to select generics over brand-name drugs.”

• Govexec.com reports that federal employee unions are “cautiously optimistic” about President Bush’s appointment of Michael Hager to serve as OPM Director. According to the report, “Colleen Kelley, president of the National Treasury Employees Union,
  said she would try to meet with Hager as soon as possible and make the
  last few months in the Bush administration productive ones. ‘OPM has many important responsibilities in the months ahead, not the least of which is leveraging the size of the [Federal Employees Health Benefits] program to keep health care costs for federal employees from increasing,’ she said. The current director certainly has a good track record there.
• The Wall Street Journal today reports on the growth of urgent care clinics, such as Minute Clinic. Laura Landro notes that the clinics are a cost effective option to emergency rooms. I also located this Deloitte & Touche report on these facilities. Interestingly, Ms. Landro also reports that “the Urgent Care Association of America, a trade group representing
  3,141 urgent-care professionals, struck an agreement with the Joint Commission, the non-profit group that accredits hospitals and other health-care organizations, to take over accreditation and publish national quality standards by 2010.” She quotes Aetna’s medical director as saying “We’d look far more favorably at an urgent-care clinic that was accredited than one that wasn’t.”
• As I expected, doctors and hospitals are complaining about CMS’s recent expansion of its never events list. “‘It’s questionable whether the conditions are preventable and how they
  are to be recorded as present-on-admission is unclear’, said Beth Feldpush, senior associate director for policy at the American Hospital Association” in a Modern Healthcare.com article.
• The Chicago Tribune reports that Walgreen’s Pharmacies is expanding its generic drug discount club in an effort to compete with Wal-Mart’s $4 generic drug program.

• Congress is now in its August recess. Congress recessed without taking further action on mental health parity or health information technology legislation. The House of Representatives did pass a bill (HR 2851) “to ensure that dependent students who take a medically necessary leave of absence do not lose health insurance coverage.” The bill would not affect the FEHB Program whose dependent children coverage does not extends until age 22 whether or not the child is a student (5 USC Sec. 8901(5)). The House returns on September 6 and its target adjournment date is September 26. The Senate returns on Sept. 6 but it has not yet set a target adjournment date.
• Senators Kent Conrad (D ND), Chairman of the Senate Budget Committee, and Max Baucus (D. Mont.), Chairman of the Senate Finance Committee, introduced a bill called “The Comparative Effectiveness Research Act of 2008 [which would] establish the Health Care Comparative Effectiveness Research Institute to gather and produce data on what works best when it comes to how diseases, disorders, and other health conditions are treated.” AHIP, the managed care industry’s trade association, promptly endorsed this initiative. The AHIP Board of Directors previously released a statement supporting comparative effectiveness research.
• Senator Baucus’s Finance Committee held a hearing last Thursday on the role of the tax code in the health care system.
• The federal district court in New Jersey approved a class action settlement under which Health Net has agreed, without conceding liability, to pay $255 million and change its out of network reimbursement methodology. According to an AIS report, “[t]he suits charge Health Net and several regional subsidiaries with using a flawed database produced by Ingenix, a subsidiary of UnitedHealth Group, to ‘improperly reimburse’ its members for insurance claims for out-of-network medical treatment. The class period extends back to 1997 and involves more than 2 million people in several states.” The AP quotes that plaintiffs’ lead counsel as reflecting ““We feel that the settlement has
  significant implications for the health insurance industry because
  they’re all using the Ingenix database or a form of it for this kind of
  reimbursement.”
• The AP reported on growing consumer use of retail clinics (which I get) and medical tourism (which I don’t get).
• The Leapfrog Group is now offering consumers a hospital comparison tool on its website.
  

President Bush today nominated Michael Hager, the assistant secretary for human resources and administration at the Veterans Affairs Department to replace Linda Springer as the OPM Director According to Govexec.com,

Hager also was senior vice president for human resources at federally chartered mortgage buyer Freddie Mac. Between his stints at Freddie Mac and VA, he was associate administrator in the Office of Capital Access at the Small Business Administration, where he managed a variety of investment programs.During a 15-year stint at Banc One Corp., Hager oversaw a large hiring wave like the one projected to hit the federal government in the coming years as baby boomers retire. The Columbus, Ohio-based holding company, which has since merged with JPMorgan Chase, expanded from 7,000 to 50,000 employees during Hager’s tenure.

The nomination requires Senate approval. According to the White House personnel announcement, Mr. Hager will take office as Acting Director when Ms. Springer leaves office on August 13.

Healthcare IT News reports that the AHIC’s Consumer Empowerment Panel complimented Microsoft, Google, and Dossia for advancing the use of personal health records. Several health care providers, such as CVS and Longs Drugs, and health plans, such as Kaiser Permanente, recently have announced arrangements with these vendors. Meanwhile, some privacy advocates express concern over the fact that these vendors are not subject to the HIPAA Privacy and Security Rules, and Congress is considering a law (the Pro(tech)t Act, HR 6357) that could lead to a change in that status. All three organizations have been participating in the Markle Foundation’s Connecting for Health Initiative, and Dr. Deborah Peel, the ne plus ultra of privacy advocates, has endorsed Microsoft’s Healthvault project. It will be interesting to see how this plays out.

The Centers for Medicare and Medicaid Services announced today that the agency has finalize the rule on changes to Medicare’s acute hospital care payment methodology for discharges occurring on or after October 1, 2008, the beginning of the federal government’s fiscal year. The announcement explains various revisions to Medicare’s never events and quality improvement programs:

The IPPS rule adds conditions, including one NQF never event, to the list of conditions that have been determined to be reasonably preventable through proper care. Beginning last year, as required by the Deficit Reduction Act of 2005 (DRA), CMS began selecting hospital-acquired conditions (HACs) that were determined to be reasonably preventable. If a condition is not present upon admission, but is subsequently acquired during the hospital stay, Medicare will no longer pay the additional cost of the hospitalization. The patient is not responsible for the additional cost. Rather, the hospital is being encouraged to prevent an adverse event and improve the reliability of care it is giving to Medicare patients. In last year’s final rule, CMS listed eight preventable conditions for which it would not make additional payments. In this year’s proposed rule, CMS identified nine potential categories of conditions, but based on public comments, is finalizing three of these. The new additional conditions in this year’s final rule include: · Surgical site infections following certain elective procedures, including certain orthopedic surgeries, and bariatric surgery for obesity · Certain manifestations of poor control of blood sugar levels · Deep vein thrombosis or pulmonary embolism following total knee replacement and hip replacement proceduresThe final rule issued today also expands the Reporting Hospital Quality Data for Annual Payment Update Program. The Medicare law requires CMS to reduce payments to hospitals that do not successfully report quality measures adopted under the program by two percent from the percentage increase that would otherwise apply to their payment rates. The quality measures are publicly reported on the CMS Hospital Compare Web site, a tool that can be used by beneficiaries in choosing where to receive treatment. Hospitals are currently required to report 30 quality measures on their claims for Medicare inpatient services to qualify for a full update to their FY 2009 payment rates. CMS had discussed 43 new quality measures in the proposed rule and requested public comment on those measures. After reviewing public comments on the proposed rule, CMS decided to add only 13 measures.

The rule will be posted on the Federal Register’s website tomorrow, and it will be published in the Federal Register’s print edition on August 19.

AHIP, the managed care industry’s trade association, announced today that

A new Government Accountability Office (GAO) report documents a
dramatic surge in the use of high tech imaging under Medicare Part B,
with rapid growth in spending, and draws attention to a substantial
variation in the use of services across regions that suggests not all
utilization is necessary or appropriate. Today, America’s Health
Insurance Plans (AHIP) released “Ensuring Quality through Appropriate
Use of Diagnostic Imaging,” a white paper that supports these findings
and highlights health plan strategies that are working to address the
quality, patient safety, and cost issues that our nation faces in the
use of high tech imaging.

“Potentially preventable medical errors that occur during or after surgery may
cost employers nearly $1.5 billion a year, according to new estimates by the
Department of Health & Human Services’ Agency for Healthcare Research and
Quality (AHRQ).”