Thursday, June 09, 2011

Mid week update

The Federal Times reports that NARFE, among other organizations, is concerned that Congress will pick up on the Presidential deficit reduction commission's recommendation that the FEHB Program provide premium support instead of the current defined contribution. Currently, the government pays 72% of the enrollment weight average premium capped at 75% of the selected plan's premium. Under premium support, the government would give employees and annuitants a voucher to purchase health insurance. If the plan's annual premium falls under the voucher amount, there's no employee contribution. However, if the plan's annual premium exceeds the voucher amount, the employee must pay the difference. And the voucher amount usually is adjusted using a measure that reflects cost changes in the general economy rather than the health care industry. Unquestionably, the premium support approach would push employees to enroll in low premium plans.

A similar game changing event occurred in the early 1980's when the incoming Reagan administration mandated an across the board benefit cut that had a smaller impact on the lower cost plans. The Reagan adminstration's change shook up the Program and so would a switch to premium support. However, to adopt premium support, Congress must amend the FEHB Act and according the Federal Times article, "Republican staffers on the House Oversight and Government Reform Committee, which oversees federal employee issues, and the House Budget Committee, which Ryan chairs, say they're interested in the FEHBP proposal, although they aren't pursuing it now."

Barron's reported this afternoon that "Shares of health insurance giants Aetna (AET) and Cigna (CI) jumped today amid growing speculation that the two companies should merge."

Drugstore News reports that "Moody's Investors Service compared the three largest pharmacy benefit managers — CVS Caremark, Express Scripts and Medco Health Solutions — in a report issued Tuesday. While it maintained a positive view of all three, it gave CVS Caremark the highest credit rating." Moody's gave Caremark a higher rating because of the diversity of its business -- combining a retail pharmacy chain with a PBM -- which until recently was a knock on the company.

Kaiser Health News offers a lengthy report on the regulatory controversy over Food and Drug Administration approval of medical devices. Here's a snippet:
The device industry has launched an aggressive campaign to avoid tighter Food and Drug Administration rules that would help generate the information needed to show whether newer devices are actually superior to the ones they replace. The latest devices – from heart valves and defibrillators to artificial knees and hips – are usually significantly more expensive than older devices, and the intense marketing surrounding the introduction of new devices has become a major driver of rising health care costs.

Many medical specialists say tighter rules are needed to ensure newer devices are safe and effective, which could help hold down costs. "Better regulation of medical devices has the potential to reduce health care costs," said Steve Nissen, chairman of cardiovascular medicine at the Cleveland Clinic. "New devices are often more complex and expensive than existing products, but may not offer any improvements in health outcomes. The current regulatory approach allows these devices to reach the market with little or no clinical data." * * *
After health-care reformers targeted the industry for higher taxes to help pay for covering the uninsured, Democratic leaders in Congress asked the prestigious Institute of Medicine (IOM) to convene a blue-ribbon panel to determine if the industry needed tougher regulations to ensure the safety and effectiveness of its products. With the IOM’s final report due later this month, the industry is mounting a major public relations offensive to blunt calls for stronger oversight.
Speaking of Affordable Care Act fees, the Internal Revenue Service's website announces that
The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute and that the institute be funded by the Patient-Centered Outcomes Research Trust Fund. The institute will assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing clinical effectiveness research. The Trust Fund is to be funded in part by fees to be paid by issuers of health insurance policies and sponsors of self-insured health plans. IRS Notice 2011-35 requests comments regarding how the fees to fund the institute should be calculated and paid, including several possible rules and safe harbors.
 It puzzles the FEHBlog that health care providers (the "clinicians") are not required to kick into this fund.

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