Weekend Update

The House and Senate remain in session this week as the leadership and the President seek to resolve the debt ceiling issue which, according to the Administration, comes to a head on Tuesday, August 2. The Wall Street Journal is now reporting that "President Barack Obama, speaking from the White House, said the leaders of both parties in both chambers of Congress have agreed to a deal to raise the federal debt ceiling and cut government spending."

Last Wednesday (the FEHBlog missed posting at the end of the week as he was moving his law offices -- the FEHBlog is now officially a K Street lawyer), the Washington Post posted an enlightening Q&A on the impact of a default on federal workers. In a live chat, Eric Yoder of the Post addressed the following FEHBP related question:

Under the normal furlough rules, the health insurance continues on for up to a year I think. However, the possiblity exists that the insurance bill would not be paid according to today's WP. How real is that possibilty? What are federal workers supposed to do? When is OPM going to address this and other issues regarding the possible furlogh that would start if federal workers are not paid, etc. ?

Eric Yoder : If funding lapse shutdown policies are followed, health insurance would continue uninterrupted, and for employees put on nonpay status, and assuming that status would continue past the next pay date, the employee's obligation would accumulate and would be taken out of the next pay received.

But of course, that's an assumption. We have tried repeatedly to get OPM to answer questions about this and they have refused. The administration's stance is that it doesn't think a default will happen and therefore all of this talk is speculation. But employees such as yourself do have real concerns.

Using this past spring as a guide when a shutdown loomed, the administration did not provide any guidance until literally the day before the shutdown was to happen. Until then, you can only watch and wait.

On Friday, the Post reported this comment confirming the soundness of Mr. Yoder's answer:

Moira K. Mack, a spokeswoman for the Office of Management and Budget, said in a statement, “The president believes we will resolve this situation and avoid any disruption in government operations or payments.” She added that the budget agency would not engage in “hypotheticals” on what happens if the government loses its borrowing authority.

The FEHBlog hopes that the President is right but with all due respect to OMB, engaging in contingency planning is all about addressing hypothetical situations.

In addition to the debt ceiling, Congress presumably also has to address ongoing furlough of over 1,000 Federal Aviation Administration employees before going on August recess. Of course, the federal government's fiscal year ends on September 30, which may result in another round of "hypotheticals" about government shutdowns.

Tomorrow is the deadline for public comments on the proposed revisions to the HIPAA accounting for disclosures rule which includes a new and burdensome access report requirement.  So far 194 comments have been posted on regulations.gov. Modern Healthcare reports that two major organizations -- American Health Information Management Association and Medical Group Management Association -- have voiced their opposition to the access report requirement.

Kaiser Health News offers an interesting report about an impending Medicare rule to penalize hospitals which have a high readmission rates and high costs. The upshot is that

many hospitals are already scrambling to change how they supervise former patients, says Chas Roades, chief research officer at The Advisory Board Company, a health care consultancy. "One of the big themes I'm hearing now across the hospital industry is, 'We can no longer think of ourselves as just hospital companies, we have to be full-service health care managers,'" he says.

Consider Trinity Health, which owns 50 hospitals around the country, including Holy Cross in Silver Spring, Md. Before patients leave the hospital, Trinity's nurses now set up appointments for them with their regular doctors. They also make sure patients can get to the appointment, either by helping them figure out whether Medicare or Medicaid pays for transportation, or by paying for the trips directly.

"We're trying to do a better job of sending them home better-prepared, rather than just saying good luck," says Dr. Terry O'Rourke, Trinity's chief clinical officer. But he says there are limits to what they can do: "The majority of physicians are not employed by the hospital, and we don't have control over their practices."

Dr. Kavita Patel, a Brookings Institution fellow and former Obama administration official, says changes occurring in both the private sector and Medicare will speed up the trend of hospitals' overseeing the care of former patients.
For example, she says, many hospitals are buying the practices of primary care doctors, making it easier for them to arrange and oversee the care of patients after discharge. "The more hospitals realize they're going to be held accountable, that's where they are going to get creative," Patel says. 

The FEHBlog noticed several reports this week about the tidal wave of blockbuster drugs that will become available as generics over the next 14 months, such as Lipitor, Plavix, and Lexapro.  The Wall Street Journal reported yesterday on the prescription drug manufacturer Merck's announcement of a 13,000 employee layoff:

Prescription drugs with $91.8 billion in U.S. sales are slated to face competition from cheaper generics due to patent expirations through 2015, according to investment bank Crédit Agricole. However, setbacks in developing new drugs have hurt companies' ability to find new revenue.
There are new drugs coming on the market and under development. But the pipeline is expected to yield just $78 billion in world-wide sales by 2015, according to Kalorama Information, a medical market-research firm.

The result: extensive cost-cutting throughout the pharmaceutical industry. Drug makers announced plans to eliminate 53,636 U.S. jobs in 2010, according to Challenger, Gray & Christmas, a job-outplacement firm. Through June, companies had announced 4,771 job cuts.
The new round of layoffs at Merck targets personnel in administrative positions and at the company's headquarters, [Merck CEO Kenneth] Frazier said. The company spokesman said 35% to 40% of the new work-force reductions will be in the U.S., while Merck will continue to hire new employees in "growth areas," including emerging markets such as China.

When finished by the end of 2015, [Merck] will have eliminated about 30% of the work force it had at the end of 2009, in the wake of its $41.1 billion acquisition of Schering-Plough. Some of the cuts have been offset by hiring, however.