Business Insurance reports that the Senate Health Education Labor and Pensions Committee braved the snow in DC today and voted 18-3 in favor of the improved mental health parity (S 558) billed discussed in the FEHBlog last Monday. This is not yet posted on the Thomas web site.

Sen. Ron Wyden (D. Ore.), who has proposed universal health coverage, and a bipartisan group of nine other Senators have written a letter to the President offering to cooperate on the development of legislation to control surging heath care costs. The letter proposes that the Administration and Congress work together to pass laws that would

1) Ensure that all Americans would have affordable, quality, private health coverage, while protecting current government programs. We believe the health care system cannot be fixed without providing solutions for everyone. Otherwise, the costs of those without insurance will continue to be shifted to those who do have coverage. 2) Modernize Federal tax rules for health coverage. Democratic and Republican economists have convinced us that the current rules disproportionately favor the most affluent, while promoting inefficiency. 3) Create more opportunities and incentives for states to design health solutions for their citizens. Many state officials are working in their state legislatures to develop fresh, creative strategies for improving health care, and we believe any legislation passed in this Congress should not stymie that innovation. 4) Take steps to create a culture of wellness through prevention strategies, rather than perpetuating our current emphasis on sick care. For example, Medicare Part A pays thousands of dollars in hospital expenses, while Medicare Part B provides no incentives for seniors to reduce blood pressure or cholesterol. Employers, families, and all our constituents want emphasis on prevention and wellness. 5) Encourage more cost-effective chronic and compassionate end-of-life care. Studies show that an increase in health care spending does not always mean an increase in quality of outcomes. All Americans should be empowered to make decisions about their end of life care, not be forced into hospice care without other options. We hope to work with you on policies that address these issues.

According to Business Insurance, “White House economic adviser Al Hubbard said the president was ‘pleased’ by the invitation to work on health care legislation. ‘We agree with these senators—we want to fix health care now,’ said Mr. Hubbard, director of the National Economic Council, in a statement.”

Finally, the Wall Street Journal reports tonight that Rep. Louise Slaughter’s genetic information non-discrimination bill (H.R. 493) may be enacted this quarter. “The bill was approved by the House Committee on Education and Labor yesterday and is expected to pass the full House. The Senate, which previously passed the legislation twice, is expected to vote on it within two weeks, and President Bush has indicated he will sign it.” The Thomas web site summarizes the bill as follows:

Genetic Information Nondiscrimination Act of 2007 – Amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Public Health Service Act to expand the prohibition against discrimination by group health plans and health insurance issuers in the group and individual markets on the basis of genetic information or services to prohibit: (1) enrollment and premium discrimination based on information about a request for or receipt of genetic services; and (2) requiring genetic testing. Sets forth penalties for violations. Amends title XVIII (Medicare) of the Social Security Act to prohibit issuers of Medicare supplemental policies from discriminating on the basis of genetic information. Extends medical privacy and confidentiality rules to the disclosure of genetic information. Makes it an unlawful employment practice for an employer, employment agency, labor organization, or training program to discriminate against an individual or deprive such individual of employment opportunities because of genetic information. Prohibits the collection and disclosure of genetic information, with certain exceptions. Establishes a Genetic Nondiscrimination Study Commission to review the developing science of genetics and advise Congress on the advisability of providing for a disparate impact cause of action under this Act.

The FEHB Program falls under the Public Health Service Act for purposes of this bill.

Yesterday, a Delaware state court in a suit by a Louisiana municipal police retirement fund ordered prescription benefit manager Caremark to delay its shareholder vote on the CVS merger proposal at least until March 9. That date is the Federal Trade Commission’s current deadline for issuing a Hart-Scott-Rodino Act pre=merger decision on whether or not the Express Scripts merger proposal is acceptable from an anti-trust law standpoint. (The essentially vertical CVS merger proposal already has cleared that hurdle, but the horizontal Express Scripts merger obviously raises greater antitrust issues.) The court reasoned that Caremark shareholders need more time to evaluate the merger proposals. According to press reports, the Delaware court was puzzled by the fact that the Caremark board has not negotiated with Express Scripts or solicited other offers.

Caremark publicly announced continuing support for the CVS deal and that it “will inform shareholders as promptly as possible regarding the new date of the special meeting to approve the CVS merger.” Express Scripts was pleased with the decision.

In wake of four major independent proxy advisory firms advising against the CVS merger proposal, CVS yesterday increased its special Caremark merger closing dividend from $2 to $6 per Caremark share. CVS also postponed its February 23 shareholder meeting on the Caremark merger proposal.

The Wall Street Journal reports today that “at the close of trading yesterday [and the increased CVS dividend was considered], the CVS deal was worth $59.53 for each Caremark share, while Express’s cash-and-stock offer was valued at $61.37. In 4 p.m. New York Stock Exchange composite trading, Caremark traded higher than both offers, at $62.88, up $1.97.”

Who can forget that today is the 198th anniversary of the birth of one of our greatest Presidents Abraham Lincoln? Where would we be today as country without this man?

Senators Ted Kennedy (D Mass.), Mike Enzi (R Wyo.) and Pete Domenici (R N.M.) announced today a bipartisan improved mental health parity bill that the Senate Health, Labor, Education, and Pensions Committee will consider in executive session on Wednesday February 14, 2007, at 9:30 am. (Sens. Kennedy and Enzi are the chair and ranking member of the HELP Committee.) According to the press release,

The legislation would provide mental health parity for about 113 million Americans who work for employers with 50 or more employees. It will ensure that health plans do not place more restrictive conditions on mental health coverage than on medical or surgical coverage. As such it would require:
· Parity for financial requirements like deductibles, co-payments, and annual and lifetime limits; and,
· Parity for treatment limitations such as the number of covered hospital days and visits.

The 1996 Mental Health Parity law only provided parity for annual and lifetime limits between mental health coverage and medical surgical coverage. The new bill expands parity by including deductibles, co-payments, out-of-pocket expenses, coinsurance, covered hospital days, and covered out-patient visits.

The bill would not prohibit group health plans from negotiating separate reimbursement or provider payment rates, or managing the provision of mental benefits in order to provide medically necessary treatments under the plan (as a means to contain costs and monitor and improve the quality of care).

This is similar to the improved mental health parity program that has been utilized by the Federal Employees Health Benefits Program since 2001. However, the press release states that “Oversight and administration would be conducted by the Department of Labor for self funded ERISA plans and by the Department of Health and Human Services for insured plans.” Where would FEHB plans fit in here? Oversight over those plans should remain with OPM.

On January 30, 2007, the Food and Drug Administration announced that it will be taking the following steps to improve drug safety based on a September 2006 Institute of Medicine report:

• Strengthening the science that supports the FDA’s medical product safety system at every stage of the product life cycle from pre-market testing and development through post-market surveillance and risk management. Related FDA initiatives include developing new scientific approaches to detecting,understanding, predicting, and preventing adverse events, developing and incorporating new quantitative tools in the assessment of benefit and risk, and conducting a pilot program to review the safety profiles of certain newly approved drugs on a regularly scheduled basis.
• Improving communication and information flow among all stakeholders engaged in promoting the safe use of medical products. Related FDA initiatives include the establishment of an advisory committee to provide input to improve the agency’s risk communication policies and practices, conducting a comprehensive review of current public communication tools and developing a comprehensive risk communication strategic plan.
• Improving operations and management to ensure implementation of the review, analysis, consultation, and communication processes needed to strengthen the U.S. drug safety system. Related FDA initiatives include engaging external management consultants to help the Center for Drug Evaluation and Research (CDER) develop a comprehensive strategy for improving CDER’s organizational culture, and making specific organizational and management changes to increase communications among review and safety staff.

I am no expert on drug safety but I expect that follow-up studies on recently approved drugs would prove valuable, particularly in view of the Vioxx fiasco.

On February 1, 2007, Sen. Ted Kennedy (D Mass.) and Michael Enzi (R. Wyo.), the chair and ranking member of the Senate’s Health, Education, Labor, and Pensions Committee re-introduced a drug safety bill (S. 484). According to a press release, Senator Kennedy and Senator Enzi hope to report out a bill addressing the drug user fee reauthorization, drug safety, and three other FDA reauthorizations shortly after Easter, for consideration on the Senate floor by late spring, and a conference with the House with final passage before the August recess. The FDA drug approval user fee program must be renewed this year which provides a further impetus for this bill.

The Caremark shareholders vote on the CVS merger proposal on February 20, and of course most votes will be submitted by proxy. Yesterday, a proxy vote advisory service Glass Lewis & Co. advised Caremark shareholders to reject the CVS merger proposal. “We are not convinced that the process used by the company and the board to arrive at this deal resulted in shareholders receiving as big a stake as they deserve in the proposed, combined entity,” Glass Lewis said. Express Scripts sent a fifth letter to Caremark shareholders urging rejection of the CVS merger proposal. Express Scripts also sent a letter to the Caremark Board of Directors urging Caremark to open merger talks, and it reported record fourth quarter 2006 revenues. The good news has caused Express Scripts’ stock price to increase, thereby improving the value of its Caremark merger offer. According to the Wall Street Journal, “Based on closing prices Thursday, the Express Scripts bid is about 5%, or $3 a share, higher than the CVS offer.” That’s much better than last week when the two bids were just about even.

Caremark disagreed with the Glass Lewis advice, and CVS ran a full page ad in the Wall Street Journal “citing the substantial negative consequences to shareholders, consumers and employers that would stem from Express Scripts acquiring Caremark.” The CVS deal has one advantage over the Express Scripts deal — the regulatory approvals are in place. This explains why Express Scripts is now advocating Caremark shareholder rejection of the CVS deal, rather than adoption of its deal.

In 1972, Congress expanded Medicare eligibility to persons with end stage renal (kidney) disease, regardless of age. At the time, the plan was to gradually expand Medicare to other catastrophic illnesses. However, this expansion wound up being much more expensive than Congress anticipated because business follows money.

Congress later mandated that employer sponsored health plans, including FEHB plans, provide their benefits before Medicare for a certain time period. The current time period is 30 months (ncreased from 18 months ten years ago). Business Insurance reports that the President’s FY 2008 budget proposes (for the second year running) that such period be increased to 60 months or 5 years. The budget estimates that this change would save Medicare $1 billion. As the GEICO gecko might say, “Easy Money.”

Last month, as noted here, the Service Employees International Union (SEIU) joined the Divided We Fail coalition including the Business Roundtable and AARP to find solutions to the Nation’s health insurance coverage problem. Today. the SEIU and the Communications Workers of America joined the Better Health Care Together coalition with a similar purpose that includes the labor movement’s pariah, Wal-Mart, and several other large employers. According to the coalition’s press release

America’s health care system is broken. The traditional employer-based model of coverage in its current form is endangered without substantial reform to our health care system. It is being crushed by out of control costs, the pressures of the global economy, and the large and growing number of uninsured. Soaring health costs threaten workers’ livelihoods and companies’ competitiveness, and undermine the security that individuals of a prosperous nation should enjoy. We can only solve these problems — and deliver health care that is high quality, affordable, accessible and secure — if business, government, labor, the health care delivery system and the
nonprofit sector work together.
Specifically, the four principles are:
1. We believe every person in America must have quality, affordable health insurance coverage;
2. We believe individuals have a responsibility to maintain and protect their health;
3. We believe that America must dramatically improve the value it receives for every health care dollar; and,
4. We believe that businesses, governments, and individuals all should contribute to managing and financing a new American health care system.

This obviously is easier said than done, but it is more likely that results will be deliver through such cooperative efforts.

NARFE and the federal employee unions, particularly NTEU, expressed objections to the President’s FY 2008 FEHBP budget proposals according to Steve Barr’s Washington Post column and Govexec.com.

The President’s massive FY 2008 budget was released today. It includes the following Federal Employees Health Benefit Program nuggets:

From OPM’s Budget:

The Budget reflects savings from a proposed technical change to the FEHB statute that will permit the program’s Service Benefit Plan and Indemnity Benefit Plan to offer more than two coverage options and from a proposal to reduce the amount of the Government contribution for new annuitants with fewer than 10 years of Federal service. These and other cost-neutral proposals will be transmitted separately. Finally, the Budget also proposes that the PTO [Patent and Trademark Office] will fund the accruing costs associated with post-retirement health benefits for PTO’s employees.

From the OPM Inspector General’s Budget:

In 2008, the Office of the Inspector General (OIG) will continue to develop its prescription drug audit program, which includes audits of pharmacy benefit managers. It is estimated that $6 billion is paid annually for prescription drug premiums by both the Federal Government and employees combined. This represents approximately 26 percent of the total premiums for health benefit coverage for Federal employees and annuitants. By performing these audits, OIG assists FEHB recover inappropriate expenses charged in previous years, negotiate more favorable contracts, and positively affect the future costs and benefits provided to program enrollees. OIG will also continue its FEHB data warehouse initiative. This project streamlines and enhances the various administrative and analytical procedures involved in overseeing FEHB. The purpose of the project is to capture data from experience-rated insurance carriers in a data warehouse of health care information. Software tools are available to support a variety of analytical procedures, including data mining, using the data in the warehouse. The data warehouse project has facilitated more efficient and effective oversight of FEHB by enhancing the ability of our auditors and investigators to identify improper payments.