Midweek Miscellany

I feel the fog lifting. Yesterday, Speaker Pelosi announced that a revised H.R. 3200 would only include a one year fix to Medicare's physician payment formula. I suggested that the American Medical Association, which wants a permanent fix, was betting on the come. Boy was I wrong. Modern Healthcare reports that "The American Medical Association, the American College of Surgeons and about a half-dozen more physician groups met with Senate and White House leaders to support a legislative effort to wipe away the current Medicare payment formula." A bill introduced by Sen. Debbie Stabenow would replace formula with a freeze. "Under [this] legislation, the Sustainable Growth Rate formula—which annually accounts for steep, double-digit physician pay cuts—would be removed, according to a source who attended the meeting. At some point, a new payment formula would be implemented." The AMA works fast. Is it any wonder that Medicare is going bankrupt?

The Wall Street Journal reports that "Employees will pay $4,023 on average in [employer sponsored health plan] premiums and out-of-pocket charges next year, up 10% from 2009, according to a projection from Hewitt Associates , a benefits-consulting firm. In dollar terms, it's the biggest boost since the firm started keeping track of the data a decade ago." This report puts in perspective the 2010 increase in the employee share of FEHB plan premiums == 8.8%. And as I have pointed out the FEHB Program has unenviable demographics.

A Senate Homeland Security and Governmental AffairsCommittee announced that the conference report to the FY 2010 Defense authorization act includes several changes to the federal employee retirement programs.

The provisions - three of which were reported out of HSGAC as stand-alone
legislation and all of which are similar to provisions included in unsuccessful
Senate amendments to the Family Smoking Prevention and Tobacco Control Act in
June and to the National Defense Authorization Act in July - would:

• Replace the cost of living increases that federal employees in Hawaii, Alaska, and U.S. territories receive with locality pay that federal employees in the contiguous 48 states receive. COLAS are neither taxed nor applied toward retirement benefits. Locality pay is taxed and applies to retirement. This provision was approved by HSGAC as S.507

• Allow federal employees participating in the Federal Employee Retirement System (FERS) to apply their unused sick leave to their length of service for the purposes of computing the amount of retirement benefit. Federal employees under the older Civil Service Retirement System (CSRS) are already allowed to do so. This would bring equity to the two groups of employees and help reduce the absenteeism that results from the current “use it or lose it” FERS policy.

• Correct an injustice in calculating the retirement benefits and dates for
non-judicial employees of the D.C. courts system. When these employees were converted to federal employees in the late 1990s, they had to start over in accumulating eligibility for retirement and retirement benefits. The provision would direct that the time served before these employees became federal employees counts towards their federal retirement eligibility.

• Allow former federal employees under the FERS who withdrew their contributions to the retirement trust fund, thereby waiving retirement credit for those years of service, to redeposit their earlier contributions, plus interest, upon reemployment with the federal government.

• Remove a retirement penalty that is imposed on long-time federal employees who choose to switch to part-time work at the end of their careers. The
retirement annuity for these employees is determined based on the amount of
salary they receive, which drops when they switch to part-time work. This
leaves employees with little incentive to stay in a part-time role and many
retire. The provision would direct annuities for these employees to be
determined using the rate of salary, not the amount. This provision was
approved by HSGAC as S.469.

• Authorize federal agencies to reemploy retired federal employees under certain
limite conditions, without offset of an employees’ annuity against their salary, and requires the Comptroller General to report on the use of this authority. This provision was approved by HSGAC as S.629

The DoD conference report must still be approved by both the House and Senate and signed by the President.

The Senate HSGA Committee's Subcommittee on Oversight of Government Management and the Senate Special Committee on Aging held a joint hearing on Federal Employee Long Term Care Insurance Program changes today. Govexec.com reports that Democrat and Republican Senators "found common ground on Wednesday afternoon blasting premium increases in the Federal Long-Term Care Insurance Program."