The Providence Journal reports that the U.S. House of Representatives will debate and vote on its mental health parity bill (H.R. 1424) on Wednesday of this week. The Senate passed its version of this legislation (S. 558) last year, and since then informal efforts have been underway to reconcile the two versions. (The House version is more expansive of the two; both are more expansive than the FEHB Program’s successful mental health parity initiative.) Formal reconciliation efforts will ensue once House passage occurs as is likely.

• The attorneys for First Databank and the class action plaintiffs in the Average Wholesale Price RICO case reported to the Court on Friday that they had reached in principle an alternate settlement proposal that will be submitted to the Court by March 5. You will recall that the Court on January 22 rejected the first proposal that would have provided no monetary relief to consumers or health plans harmed by the alleged jacking up of the AWP. The Court sent them back to the negotiating table. We likely will see their work product this week.

• The HIMSS mega-conference was held in Orlando last week. Modern Healthcare and Health IT News report on industry reaction to the Google and Microsoft electronic health information initiatives.

• Tomorrow is the first business day of the brave new world that CMS recently announced on its National Provider Identifier website:
  

  MARCH 1st IS A CRITICAL DATE! As of March 1, 2008: Medicare claims with both an NPI and a Medicare legacy number will continue to be rejected if the pair is not found on the Medicare NPI Crosswalk. Claims without an NPI in the primary provider field (i.e., the billing, pay-to, and rendering fields) will be rejected! Claims with only a Medicare legacy number in the primary provider field will be rejected!

  It would be advisable for health plans paying secondary to Medicare to take the same approach.

• These Washington Post and Chicago Tribune articles on the problems with the Chinese manufactured ingredients incorporated in Baxter’s Heparin product adds an interesting wrinkle to the prescription drug importation/reimportation debate.

OPM updated its strategic plan this week. Here are the new operational goals that relate to the Federal Employees Health Benefits Program:

• Establish a working group with OPM’s Office of the Inspector General and develop steps to strengthen the controls and oversight of the Federal Employee Health Benefits Program pharmacy benefits by July 1, 2008. (B-46)

• Develop and communicate clear documentation requirements for carrier compliance with health benefits related audit findings by August 1, 2008. (B-49)

While the strategic plan includes legislative initiatives such as a short term disability program, the Federal Times reports that

At a Feb. 29 press conference on her department’s priorities, [OPM Director Linda] Springer acknowledged that it will be tough to get any bills passed during the Bush administration’s final, lame-duck year.

• CMS actuaries released health care cost projections for the U.S. on Tuesday. Here are some tidbits:
  

  Through 2017, growth in health spending is expected to outpace that of GDP by an annual average of 1.9 percentage points. This projected differential in growth rates is smaller than the 2.7 percentage-point average difference experienced over the past 30 years, but wider than the average differential (0.3 percentage point) observed for 2004 through 2006.Hospital spending growth is expected to accelerate from 7.0 percent in 2006 to 7.5 percent in 2007, partly attributable to higher Medicaid payment rates.

  Hospital spending growth is then projected to decrease slightly though the rest of the projection period as the growth in demand for hospital services is expected to slow.

  Prescription drug spending growth is expected to slow to 6.7 percent in 2007 (from 8.5 percent in 2006), driven largely by slower drug price growth.For 2008 through 2017, prescription drug spending is projected to accelerate due in part to the projected leveling off of growth in the generic dispensing rate and evolving treatment guidelines that call for earlier introductions of pharmacotherapy.

• Kaiser Health Policy reports that Congress may take action in March on extending the Medicare Part B physician reimbursement fix, which currently expires on June 30.

• The New York Times reports on Aetna’s decision to continue reimbursing a “powerful anesthetic” when used on patients undergoing a colonoscopy. According to the article,
  

  Insurers have been split on whether to cover propofol for colonoscopies. Humana and WellPoint are among the large players that, like Aetna, have sought to curtail coverage while UnitedHealthcare, which has 26 million members, has advertised its intent to support propofol in all screenings. Medicare leaves the decision up to its local carriers, most of which have restrictive policies. Some doctors maintain that propofol helps them by keeping patients calmer during screenings than the traditional cocktails they administered of sedatives like Versed and tranquilizers like Valium. And, because it wears off sooner, patients can go home more quickly. (As a man over 50 that sounds good to me.)

• In health information technology news, Government HIT News is reporting that the federal government is building its own “mini” national health information network in order to jump start that critical process. The NHIN is the backbone that knits together the regional health information organizations or RHIOs.

• It’s a Senate tradition to annually read George Washington’s farewell address. The 2008 reading will take place tomorrow. We all should take the time to read it over.
• Earlier this month, we learned that the federal court in Boston wisely had rejected the proposed First Databank average wholesale price settlement at the January 22 fairness hearing. The judge allowed the parties two weeks to offer a revised settlement agreement. I have found no evidence that a revised settlement agreement has been submitted to the court.
• We also learned about a week ago that the New York attorney general warned United Healthcare of his intent to file a lawsuit against UHC and its Ingenix subsidiary over the usual reasonable and customary price database that many insurers use to price out-of-network claims. No lawsuit has been filed yet. Bloomberg reports that “UnitedHealth Group Inc., the largest U.S. health insurer, is poised to reach its forecasts of 13 percent profit growth this year and next, even after being accused of cheating customers by New York’s attorney general.”
• The Cleveland Clinic announced last week an electronic health records project with Google Health, which is similar to Microsoft’s Health Vault pilot. The health care providers evidently obtain HIPAA compliant authorizations from the participating patients so that Google and Microsoft can avoid HIPAA business associate coverage. Meanwhile, the New York Times reports today that privacy concerns are leading many to avoid DNA tests. A genetic non-discrimination law has been pending Senate floor action in Congress for months.
• The New York Times also included an interesting article on parent attitudes toward the Gardasil vaccine.

The AP reports that for the first time the biotechnology drug industry via its trade association, the Biotech Industry Association, signalled its willingess to accept a law that creates a pathway for generic versions of biological drugs. The AP article suggests however that it is unlikely that such a law will be enacted this year. The generic drug trade association, the Generic Pharmaceutical Association, is not rushing for a deal this year because it expects a more favorably disposed Congress next year.

On February 15, the Food and Drug Administration published a proposed rule providing prescription drug manufacturers with guidance on “Good Reprint Practices” which explain the difference between appropriate distribution of scholarly articles on off-label uses of prescription drugs and illegal marketing of off-label uses. An AP report explains that “Off-label prescriptions account for an estimated 21 percent of overall drug use, according to a 2006 analysis in the Annals of Internal Medicine. The practice is common in treating conditions such as cancer, where doctors will prescribe drugs approved for one type of cancer for another.” The proposed rule will fill a gap in the law created when a law governing the practice expired in 2006. Rep. Henry Waxman (D Calif) plans to examine the proposed rule.

The Health IT Now Coalition, which is co-chaired by former Congresswoman Nancy Johnson is clamoring for Congress to pass a health information technology bill such as the Wired for Technology Act. The privacy zealots are clamoring for Congress to enact greater restrictions on health information technology. This week Rep. Ed Markey (D Mass) and Rep. Rahm Emmanuel (D Ill.) introduced the Technologies for Restoring Users’ Security and Trust (TRUST) in Health Information Act (HR 5442)

Government Health Information Technology magazine explains that the TRUST bill, like the Wired for Technology bill, “would provide grants and establish a standards-setting process to foster a nationwide health information exchange network. But the TRUST bill differs from the others by calling for:

• • An opt-in system that would require patient consent before records could be kept in electronic systems.
• • Mandatory notification of any privacy breaches in health IT systems.
• • Requirements for encrypting data and taking other security measures to protect records from unauthorized access. “

The Markey bill is endorsed by the Deborah Peel, chair of Patient Privacy Rights, and Microsoft (you can draw your own conclusions.)

• The President submitted to Congress a Medicare reform bill as required by the Medicare Modernization Act of 2003. The President’s proposal calls for means tested Medicare Part D premiums, medical malpractice liability caps, and increased use of health information technology. It was not well received on Capitol Hill.
• The Senate Budget Committee held a hearing on health information technology on February 14. The testimony can be found here.
• The Senate Budget Committee also released an interesting Congressional Budget Office chart on Medicare spending in 2005 by geography. It’s worth a click.
• CVS Caremark agreed to settle a lawsuit by a group of States Attorneys General alleging that the prescription benefits manager engaged in deceptive brand name drug switching practices. Under the settlement, Caremark will pay the states $38.5 million and follow certain rules on drug switching programs. In its press release, CVS Caremark explains that the liability stems from its predecessor companies’s legacy Caremark and legacy AdvancePCS “and will not result in significant changes to current business practices.:

For time immemorial, health insurers have capped their reimbursement to physicians at a usual, customary, and reasonable (UCR) limit that the insurer set using a database. When I began working in the health insurance field in the early 1980s, the health insurance trade association, HIAA, maintained a UCR database based on claims information contributed by members and broken down by three digit zip code. In the 1990’s as I recall HIAA sold the database to Ingenix, which is now a United Healthcare (UHC) subsidiary.

The UCR limit does not apply to doctors who belong to the insurer’s provider network. Thus the lower UCR reimbursement incents consumers to use network providers thereby controlling medical costs.

Today, Andrew Cuomo, New York State’s attorney general, sent a letter to United Healthcare advising the company that the State plans to sue UHC and certain subsidiaries because the UCR database is flawed and works a fraud on consumers. Cuomo in his press release explained that his “investigation found a clear example of the scheme: United insurers knew most simple doctor visits cost $200, but claimed to their members the typical rate was only $77. The insurers then applied the contractual reimbursement rate of 80%, covering only $62 for a $200 bill, and leaving the patient to cover the $138 balance.: As usual, Consumers Union and the American Medical Association loudly applauded the action.

UHC which now has five days to convince Cuomo to not file suit, issued the following press release:

We are in the midst of on-going discussions with the Attorney General’s office and we will continue to cooperate fully. UnitedHealth Group recognizes the excellent health care delivered to patients by the physicians of New York and is committed to fair and appropriate payment for physicians, the state’s other health care providers and consumers. The company also believes in delivering high quality and dependable database tools.

The reference data is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the health care industry. We believe these reference tools add substantial value to the health care system by providing all participants – providers, payers and consumers – with a long-standing transparent, consistent, and neutral line of sight into the health care market, its costs and performance.

Health plans and other health care payers use these reference tools to independently negotiate their own reimbursement schedules, establish fees for out-of-network care, negotiate provider service contracts and review claims for their members and consumers.

Cuomo also announced that his office was serving subpoenas on sixteen major health insurers/managed care companies that use the Ingenix UCR database, including Aetna, CIGNA, and Empire Blue Cross. Shares of publicly traded managed care companies fell on the news.

Karen Ignani, the President of the managed care trade association AHIP offered the following observations:

“Today’s announcement presents an opportunity to shed light on one of the root causes of rising health care costs in America. “At a time when the costs of medical services soar above inflation every year, health insurance plans’ tools and techniques are mitigating the damage done to consumers and employers. Last year, health insurance premiums grew at the lowest rate in a decade due to health plans’ cost-containment and quality-improvement strategies. “It’s unfortunate that today’s media event ignored these facts and failed to address the appropriateness of charging out-of-network patients $200 for ‘simple doctor visits’ lasting ‘15 minutes’ — which equates to a billing rate of at least $800 an hour. As medical costs continue to soar, this is the discussion that public policy leaders need to have.”

This case will be worth watching.

America’s greatest President Abraham Lincoln was born today in 1809. Next year will be the 200th anniversary of his birth but a winter storm in Hodgenville, Kentucky, caused the cancellation of the birthday party. I traveled north by car today to visit a client, and it was likely the same storm that doubled the time it took me to travel home. But at least I made it.

The Department of Health and Human Services issued a proposed regulation today that would allow for the creation of patient safety organizations as authorized by the Patient Safety and Quality Improvement Act of 2005. Modern Healthcare.com explains that “Under the rule, public and private for-profit and not-for-profit organizations could become certified through the Agency for Healthcare Research and Quality as PSOs. The organizations will consult providers on patient-safety events and quality-improvement initiatives in confidential and privileged settings. “

Speaking of regulations, the U.S. Office of Personnel Management finalized last week a regulation concerning allotments from federal employee salaries. OPM’s press release explains that

“These final regulations involve the use of OPM’s allotment authority to allow for pretax salary reductions as part of OPM’s flexible benefits plan. Using an allotment from an employee’s pay to the employing agency allows certain payments (e.g., employee health insurance premiums, contributions to a flexible spending arrangement, and contributions to a health savings account) to be paid with pretax dollars, as provided under section 125 of the Internal Revenue Code.”

For example, this regulation will help those employees who have enrolled in high deductible FEHB plans with health savings accounts because effective March 10, 2008, they can contribute to their HSAs with pre-tax dollars. An employee making those contributions with after tax dollars receives the same tax savings via an income tax refund after filing his form 1040. So it’s a cash management thing.

The Senate Budget Committee will be holding a hearing on February 14, 2008 at 10:00 AM: Health Care and the Budget: Information Technology and Health Care Reform with the following witnesses (and a third to be name later)

Valerie C. Melvin — Director, Human Capital and Management Information Systems Issues, U.S. Government Accountability Office

Laura Adams — President and CEO, Rhode Island Quality Institute