Business Strategy

WASHINGTON, D.C.-Legislation permitting federal government negotiation of Medicare drug discounts has stalled in the Senate, partly due to disputes over the measure's potential for savings. A coalition led by Sen. Debbie Stabenow (D-Mich.) claimed that government negotiation of Medicare drug prices would save patients and taxpayers $30 billion a year. That number assumes such a change would yield 40% drug price reductions to match rates obtained by the Department of Veterans Affairs health program.

NATIONAL REPORTS-The proposed merger of Highmark Inc., of Pittsburgh, and Independence Blue Cross (IBC), of Philadelphia, combines two large health plans into a single organization that would become the dominant player in the Pennsylvania market. It also represents another step in the consolidation of the health plan marketplace, say industry experts.

Apparently somebody forgot to carry the one. The U.S. Census Bureau recently revised its 2005 data on the uninsured and now reports that the initial numbers were off by 1.8 million people. New totals show 44.8 million people were uninsured in 2005, not the 46.6 million previously reported.

Twenty years ago, health insurance was marketed on a wholesale basis. Over the past five years-as managed care turned mainstream-different product designs have surfaced and become more retail oriented.

As healthcare costs continue to spiral out of control, state officials across the country are pursuing creative ways to control the high costs of Medicaid services for low-income women, children, the disabled and the elderly.

The State Children's Health Insurance Program (SCHIP) will expire September 30, 2007, unless Congress approves legislation reauthorizing this popular program offering healthcare services for children and some adults. The deadline puts this issue at the top of the Congressional agenda as an opportunity for Democratic leaders to increase public access to care. Efforts to expand coverage for children and secure the Medicare program are important to the managed care community because the legislators are eyeing "overpayments" to Medicare Advantage plans as a possible source for some $50 billion to fund SCHIP and other healthcare programs.

Washington, D.C.-Sierra Health Services recently disclosed a $2 million monthly loss from its Medicare full donut-hole-coverage prescription drug plan (PDP), blamed the financial problem on a competitor, and decided to sell out to the leader in the field. Sierra executives say they will drop the Sierra Rx Plus plan, which pays for brand-name drugs through the Medicare coverage gap for its 42,000 members, and the new owner, UnitedHealth Group is unlikely to question that decision.

Washington, D.C.-While members of the Medicare Payment Advisory Commission (MedPAC) may be willing to go slow on proposals to reduce rates for Medicare Advantage (MA) plans overall, they are leery about the fast growth and high cost of private fee-for-service plans. MedPAC members generally believe that payments to MA plans should be comparable with the cost of the traditional Medicare FFS program and that it is inequitable for seniors to receive better benefits from MA plans. They are unhappy over analysis that shows that Medicare pays MA plans 16% on average more than the cost of care under FFS. This breaks out to 15% excess payment to local HMOs, but 22% higher rates for private FFS plans, a newer type of private plan that is growing fast: PFFS plans have attracted 66% more seniors since last August to serve more than 1.3 million Medicare beneficiaries as of February.

Washington, D.C.-The need to reauthorize the Prescription Drug User Fee Act (PDUFA) before it expires Sept. 30, 2007, has set the stage for Congressional action on broader legislation to enhance government regulation of drug safety. Bills under consideration aim to expand Food and Drug Administration (FDA) oversight by establishing new requirements for postmarket risk assessment, for posting information on active clinical trials and the resulting study data, and for completing agreed-upon postmarketing studies.

Most Medicare Advantage and Part D sponsors share a common goal: make Medicare a more profitable line of business. To help alleviate some of the challenges associated with enrollment practices, consider the following tips:

Some health insurers are hoping that new benefit designs targeting individuals will attract some of the uninsured and the self-employed, who either don't realize that they can get insurance or don't know how much they can afford.

Detroit's Big Three automakers are considering shifting future retiree healthcare costs to union-controlled trust funds and are eyeing a new contract between Goodyear Tire & Rubber Co. and the United Steelworkers (USW) union.

Wal-Mart and the Service Employees International Union (SEIU) have formed what industry watchers have called an "unusual" partnership to push for quality, affordable healthcare.

Legislation encouraging more equitable coverage of mental illness is moving forward in Congress following important modification of previous requirements. The Senate Health, Education, Labor and Pensions (HELP) Committee recently approved a bill that requires health plans to offer similar benefits for mental and physical illness in terms of deductibles, copayments and treatment limitations. But the new measure no longer mandates that group health plans cover mental illness.

The Bush administration spending plan for 2008 proposes major funding curbs for Medicare, Medicaid, children's health and other government health programs.

Consumerism in health benefits has moved beyond buzzword status to a mainstream strategy. Increasingly, health plans and employers view consumerism with a global approach to benefits-a collaboration with employees financially, organizationally and personally.

Millions of people's lives have been influenced by the work of Mollie Orshansky, even though very few people know who she is. Dozens of health-related programs throughout history have benefitted from Mollie's contributions, including programs through HHS, charitable agencies, private companies and managed care. In 1963, it was Mollie-an accomplished mathematical genius and daughter of a poor immigrant family-who developed the U.S. government's official measure of poverty and the guidelines for what we call the Federal Poverty Level (FPL) today.

When you're the most populous state in the union, any extraordinary policies you sketch out could likely become a national catalyst for change. California has begun working on its state initiative for comprehensive healthcare reform, not simply for lack of a national proposal, but also because the health of its 36.1 million residents is at stake.

Rising pressure to reduce federal spending for Medicare has put the spotlight on payments and policies governing the Medicare Advantage program. MA plans are "vastly overpaid," according to Rep. Pete Stark (D-Calif.), chairman of the House Ways & Means Health subcommittee, largely because they sign up more healthy beneficiaries. Senate Finance Committee chairman Max Baucus (D-Mont.) is looking closely at whether "funneling dollars into private plans gets us the most bang for our healthcare buck."

William Copeland JR.'s assessment of the United States' healthcare system is crystal clear: The system is a financial and structural mess.

The campaign to provide healthcare to all Americans is making headlines once more as business, labor and consumer groups join with healthcare insurers and providers to urge major changes in the nation's healthcare system.

In an attempt to reduce healthcare costs, a U.S. company is encouraging its employees to go abroad for necessary medical or surgical care. A recent article in the Christian Science Monitor noted that Blue Ridge Paper Products in North Carolina is sending an employee to India for two surgeries that will cost about $20,000-far less than the estimated $100,000 for comparable procedures in the United States.

WITH changes on Capitol Hill and at the state level after 2006 mid-term elections, experts are expecting more focus on broadening Medicaid coverage.

In America, we assume that we get what we pay for, whether it be food, clothing or healthcare. Given that healthcare consumes 16% of the Gross Domestic Product and we spend more per capita than any other nation on cutting-edge care, we expect improved outcomes and more bang for the buck. However, these expenditures do not rank the United States first, second or even third in terms of life expectancy, infant mortality, immunization, cancer screening and the like.

The new House leadership delivered on one of its prime campaign promises last month by pushing through legislation requiring the Health and Human Services (HHS) secretary to negotiate directly with pharmaceutical companies on prices for medications covered by the Medicare drug benefit. The bill (HR 4) repeals the so-called "non-interference" clause in the Medicare Modernization Act (MMA) and replaces it with a provision requiring the secretary to negotiate prices that manufacturers may charge prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PDs).

An annual government analysis of healthcare spending indicates that outlays for healthcare rose only 6.9% in 2005, continuing a three-year slow-growth trend. Total U.S. healthcare spending reached almost $2 trillion, or $6,697 per person, but this reflects the slowest growth in outlays since 1999, when "enrollment in more tightly managed care plans peaked," according to analysts at the Centers for Medicare and Medicaid Services (CMS).

Everyone is jumping into the pool-the state-purchasing pool that is. States are beginning to dive into healthcare overhaul with almost artistic creativity, coming up with state-specific, collectively funded plans to fix the leaks in coverage.

When health savings accounts (HSAs) are attached to high-deductible health plans, employers find the accounts' low cost and high employee accountability attractive. They can bring in lower health insurance premiums, reduce payroll taxes and, for employees, serve as tax incentives and an additional source of retirement savings.

In the late 1990s, the idea of a disaster preparedness strategy hardly registered for most of the nation's hospitals, but today more and more are coordinating individual and regional strategies. Hospitals in those communities where disasters have previously occurred are the most likely to have ongoing disaster preparedness plans in place.

Washington, D.C.-As members of Congress headed out of town for the holidays in December, they managed to push through legislation containing a number of important policy initiatives for health plans and payers. A major tax bill delivered a reprieve for doctors from planned Medicare rate cuts. The bill freezes Medicare fees to physicians for one year, which could lead to an even bigger cut in 2008. It also offers a small bonus to those doctors who comply with quality reporting requirements. And to further bolster pay-for-performance initiatives, the legislation calls for hospitals and clinics to report on quality measures.