On July 18 the House Education and Labor Committee rejected the Senate version of the mental health parity bill (S. 558) by a 16 to 27 vote and approved by a 33-9 vote a substitute version of the more expansive House bill (H.R. 1424) proposed by Committee Chairman George Miller (D Calif). The bill now moves to the House floor.

• Notwithstanding the President’s veto threat, the Senate Finance Committee approved a $35 million expansion of the State Children’s Health Insurance Program this week.
• Vanessa Fuhrmans wrote an interesting report in the Wall Street Journal about how “Medicaid provides health-care coverage for millions of Americans — but a growing number of doctors won’t accept it” because Medicaid keeps cutting the fees that it pays doctors. Sever state health care reform programs, such as California’s, depend upon a Medicaid expansion. I was struck by this comment from Gary Sella on the WSJ health blog — “Who makes up the missing reimbursement? Well its like an oblong balloon. Squeeze the Medicare, Medicaid end and the private market swells.”
• The Health Information Technology Standards Panel has published a new round of standards including “Quality and Consumer Access to Clinical Information” for public comment. The deadline for submitting comments is August 17.
• U.S. News & World Report published an article on the battle between doctors and pharmacy based clinics captioned “In-store Clinics Give Doctors Heartburn”. The clinics fight with competition and the doctors attempt to use regulators to fight back.

• The Senate Appropriations Committee has cleared the FY 2008 Financial Services appropriations bill (S. Rep. No. 110-129) This is the bill that includes appropriations for the FEHB Program. The Senate bill includes the FEHB Program’s cost accounting standards exemption (§ 613) and the contraceptive mandate (§ 732). The House bill which the full body approved last month also includes an abortion coverage limitation. Typically, the Senate bill does not include that limitation, but the House provision will be found in the bill that the Conference Committee approves and is enacted into law.
• The President announced his intent yesterday to veto any State Childrens Health Insurance Plan expansion beyond his $5 billion budget proposal. The Washington Post reported on this development as well as a new Justice Department Medicare fraud taskforce.
• Post your questions now for HHS Secretary Mike Leavitt who will be holding an online chat tomorrow at 3:15 pm ET.

Congress and GAO have been pressuring the Health and Human Services Department (HHS) to create privacy milestones for the National Health Information Network. At these Congressional hearings, Mark Rothstein, a law professor who is a member of the National Committee on Vital and Health Statistics, has been demanding that HHS Secretary Leavitt respond to NCVHS’s June 2006 letter of recommendations. (Of course, as NCVHS is a unit of HHS, it strikes me that silence is a form of response.)

The Report on Patient Privacy reports that last month NCVHS sent new sets of recommendations to Secretary Leavitt. What’s more, AHIC’s Confidentiality, Privacy and Security Group sent its own recommendations to Secretary Leavitt and held a meeting on “relevant HIPAA requirements,” at which Prof. Rothstein testified on the need for privacy protection beyond the HIPAA Privacy Rule.

The upshot of the Report’s article is that both advisory groups are coalescing around an approach that would scrap that the business associate provisions of the HIPAA Privacy and Security Rules in favor of Congress extending those rules directly to business associates and all health care providers and vendors who handle protected health information. However, according to the Report, HHS HIT National Coordinator Robert Kolodner may not be on board with this approach.

As previously noted in the FEHBlog, the Senate Health Education Labor and Pensions Committee approved the Wired for Health Care Act of 2007 on June 27. At the markup, according to Government HIT News:

During committee consideration, it was amended to require that AHIC recommend policies and methods “to preserve the individual’s ability to control the acquisition, uses and disclosures of individually identifiable information.”

The bill also would extend the privacy rules of the Health Insurance Portability and Accountability Act of 1996 to health records banks and exchanges.

This change does not go so far as the approach described in the Report on Patient Privacy. The NCHVS approach would impose quite an administrative burden on small businesses and government agencies.

• PriceWaterhouseCoopers recently issued its healthcare cost projection for 2008. PwC expects those costs to grow at a slower, likely single digit rate.

• Milliman presented its actuarial projection of the costs of the House mental health parity bill (HR 1424) at a House Education and Labor Committee hearing held on July 10. The Milliman study which was commissioned by a collection of mental health provider associations, finds very little increase in health plan expenses as a result of this bill. An interesting aspect of the House bill is that the bill “defines a minimum scope
  of coverage for mental health and substance-related disorders as the same range of mental
  illnesses and addiction disorders covered by the health plan with the largest enrollment of
  federal employees (under chapter 89 of title 5, United States Code, [the FEHB Act]),” which is the Blue Cross FEP Standard Option.” Also testifying at this hearing was a representative of the American Benefits Council, a trade association of large employers and insurers, who offered support for the Senate mental health parity bill over the House bill for the following reasons:
  

  First, the Senate proposal does not mandate that health plans cover specific
  mental health benefits. It leaves those decisions up to employers. In the case of
  fully insured health plans, however, the Senate bill permits States to continue to determine whether to require any particular benefits.

  Second, the Senate bill includes a provision making clear that medical
  management of mental health benefits is not prohibited and preserves flexibility for employers and health plans in the formation of networks of health care providers who deliver these services. These provisions are vitally important because they allow employers to appropriately design and manage the health coverage they offer to meet their employees’ needs.

  Finally, the Senate bill provides for a very targeted and narrow preemption of
  State insurance law (applicable to fully insured plans, as well as to self-insured
  plans) that assures a uniform federal rule for the specific parity requirements of S. 558 (e.g., treatment limits, financial requirements, cost exemption).

  Of course, as previously noted in the FEHBlog, the managers of the Senate bill have developed a “mark” that narrows the gap between the two bills while maintain broad industry support according to reports. I just hope the mental health parity law does not disrupt the FEHB Program’s successful mental health parity initiative.

• OPM announced earlier this week that the Senate has confirmed Howard Weizmann as OPM Deputy Director. Mr. Weizmann replaces Dan Blair who now serves as Chairman of the Postal Regulatory Commission.
• The Senate Finance Committee announced a tentative bipartisan compromise on the State Children’s Health Insurance Program (SCHIP) reauthorization. The compromise calls for a $35 billion increase in funding over five years which would be funded with a tobacco tax increase. The House wants a $50 billion increase which would be funded with Medicare Advantage cuts. The Washington Post reports today that the President would veto the Senate compromise. The Bush administration had proposed a $5 billion funding increase and is concerned that the Senate and House approaches will encourage people to drop their private coverage in favor of the publicly subsidized SCHIP coverage. The SCHIP authorization expires on September 30, so expect this issue to come to a head soon.
• The House passed its version of the FDA user fee reauthorization bill, which now must go to conference with the Senate version. This bill also must be enacted by the end of September.
• The San Francisco Chronicle offers an interesting report today on the biogenerics issue which Congress may take up as part of the FDA user fee reauthorization bill after a Senate bipartisan compromise approach was announced last month.
• The AP reports that adverse side effect reports on the GlaxoSmithKline (GSK) blockbuster diabetes drug Avandia tripled in the month following the release of a New England Journal of Medicine report. discussed in the May FEHBlog, suggesting that Avandia may cause heart ailments. A spokesperson remarked that “This is a very well-known phenomenon,” where news reports lead to increased reporting. It’s good that there’s awareness of the reporting system, but drawing conclusions on such data is inappropriate.” FDA hearings on the issue begin on July 30.
• U.S. News and World Report has issued its 2007 list of the top 100 hospitals in the U.S. Johns Hopkins Hospital in Baltimore, MD, leads the list followed by the Mayo Clinic in Rochester, MN, and the UCLA Medical Center in Los Angeles, CA.

Reuters reports that a newly issued study of 1.8 million doctors office visits occurring in 2003 and 2004 concludes that electronic health records, which were used in 18% of the visits, did not improve routine health care. Although experts believe that electronic health records will reduce medical errors, this is the first report study on the impact of electronic records on health care quality. According to the Reuters report,

Our findings were a bit of a surprise. We did expect practices (with electronic medical records) would have better quality of care,” said Dr. Randall Stafford of Stanford University. “They really performed about the same,” he said in a telephone interview.

In a final rule published on July 6, the Centers for Medicare and Medicaid Services (CMS) announced that based on the Deficit Reduction Act of 2005 (“DRA”), Medicaid is changing its reimbursement methodology for generic drugs from 150% of average wholesale price (“AWP”) to 250% of average manufacturers price (“AMP”) plus a dispensing fee. This anticipated change has been a very hot topic in the health care industry for the past year.

Bloomberg.com reports that

The new pricing and related changes will save $4.9 billion for the U.S. government during five years and $3.5 billion for the states, which jointly fund the program, according to Medicaid. While the new formula would affect the largest U.S. drugstore chains, including Walgreen Co. and CVS Caremark Corp., industry groups said the impact would be greatest at small pharmacies that depend more on Medicaid payments.

The National Association of Chain Drug Stores has pledged an “’All-Branches, All-Level Government Strategy’” to Fix Medicaid Reimbursement Model.” Who will be expected to pick up the slack? Private sector payers and FEHB plans.

CMS’s announcement further advises that

The DRA also makes an important change to health care purchasing by introducing transparency in Medicaid prescription drug pricing and requiring that for the first time, AMPs be publicly reported on the Internet. States will now be able to use actual AMP information as the basis for setting drug reimbursement. Drug makers will also have to report AMPs monthly, as well as quarterly, as was the practice prior to DRA. More frequent reporting will allow states to make timely adjustments to reimbursement rates.

This development could further accelerate the demise of the AWP. The rule is effective October 1, 2007.

• Govexec.com published an article this week criticizing FEHB plans for excluding so-called “routine care” associated with experimental drug trials. It was my understanding that such expenses were the financial responsibility of the drug company that was running the drug trial.
• The Chicago Tribune reported on “watchdog” concerns over the hospital prices now posted on many public and private websites. On a related note, the San Francisco Chronicle reported on the growing use of the internet by senior citizens, particularly for health care related matters.
• The HHS Secretary expressed concerns about the bipartisan Wired for Health Care Quality Act that the Senate is poised to pass, and the Government Accountability Office published a report on electronic data breaches.

• Robert Moffitt of the Heritage Foundation has published an interesting analysis comparing of the FEHB Program and state health insurance exchanges such as the Massachusetts health insurance connector.
• In the wake of the GAO and privacy advocates beating up HHS again for inadequately protecting privacy and security, the New York Times published a report yesterday about how health care providers are too restrictive in disclosing protected health information. The solution is a hearty dose of common sense on all sides.
• Google has created a health care advisory panel with a lot of heavy hitters from the health care world, but I didn’t notice any representatives from the health insurance industry.