Weekend update II

Last week, the House Appropriations Committee chairman issued a schedule for consideration of FY 2012 appropriations bills. The Financial Services subcommittee will consider its bill, which includes FEHB Program appropriations, by June 13, and the full committee will consider that bill by June 23.

Last Wednesday, the Health subcommittee of the House Ways and Means Committee held a May 12 hearing on alternatives to Medicare's sustainable rate of growth formula. The FEHBlog found the Blue Cross Blue Shield of Massachusetts testimony interesting reading. The BCBS MA representative discussed their Alternative Quality Contract ("AQC") program.

The AQC [is] an innovative global payment model that uses a budget based methodology, which combines a fixed population-based budget (adjusted annually for health status and inflation) with substantial incentive payments for performance on a broad set of clinically important, nationally accepted measures of quality, outcomes, and patient care experiences.

First-year results show the AQC is on track achieve its original goals of improving patient care and moderating health care costs. In year-1 of the contract [2009], all AQC groups met their budgets, and  achieved a surplus.  On the quality side, the AQC groups’ first year improvements in the quality of patient care were greater than any one-year change seen previously in our provider network – well exceeding both the rates of improvement on quality measures that AQC groups were achieving prior to the contract, and exceeding rates of improvement among non-AQC physicians. 

Business Insurance reported that the House Energy and Commerce Committee approved HR 5, a medical malpractice reform bill, by a 30-20 vote.  The House Judiciary Committee approved a version of the bill on March 17. Both House committees with jurisdiction over the bill have now cleared it. 

The AHIP Coverage blog published an interesting chart about the profitability of different sectors of the health care industry. Based on Yahoo Finance data for the most recent quarter, hospitals enjoyed a  5% profit margin; health insurers 4%, and medical practitioners 3.6%. The average profit margin was 4.4%. The sectors with profit margins over 10% include drug and medical device manufacturers.