Weekly compilation of health care reform developments in Washington, D.C. and state legislatures

Week of August 3, 2009

The timetable for federal health care reform was delayed again. No vote on health care reform by the full Senate or House is possible before September, and it could be much longer before debate ends and votes are cast.

The difficulties were all too apparent in the Senate Finance Committee last week, which has so far not been able to achieve the bipartisan bill its Chairman Max Baucus (D-MT) clearly wants. The Finance Committee had to issue an official denial to counter a Washington Post article touting a breakthrough deal among the six Senators (three Republicans and three Democrats) forging a compromise bill for the whole Committee to consider.

To emphasize the tenuous nature of the negotiations, Committee Member Senator Mike Enzi (R-WY) responded to the Post article by noting the story was “off the mark” and “not helpful.”


As much as it has tried over the last week, Congress has only marginally moved the needle on health care reform. The Finance Committee will go home for the recess without a deal but with a promise to continue negotiating during the break, and with a target date of September 15 for Committee action.

In the House, the Blue Dog Coalition of 52 conservative Democrats put a halt to the Energy & Commerce Committee’s process for 10 days when seven coalition members refused to proceed without concessions and compromises on the House health reform bill: a public plan that is optional to providers and that negotiates rates; preservation of the role of agents/brokers; keeping the bill under $1 trillion; and allowing state-based exchanges.

The compromise reached allowed the committee to continue its mark-up and ultimately approve the bill. There are 50 additional amendments that the Committee intends to address prior to floor debate in the Fall. The House will try to meld all three Committee versions into one bill in anticipation of a full House debate and vote in September, at the earliest. The Blue Dogs have made it clear that the larger coalition of 52 has not signed off on anything and that the compromise was chiefly designed to allow the Committee process to proceed. No sooner was the Energy & Commerce Committee/Blue Dog compromise struck when opposition came from both the House progressive caucus and the Congressional Black Caucus.

The bottom-line is that neither the House nor the Senate will be voting as a Chamber on health care reform until the Fall, when there will be a major confrontation of all competing interests.


ILLINOIS: The Illinois Department of Insurance (DOI) published second notice of proposed rulemaking regarding regulation of Preferred Provider Programs that will be considered for adoption by the Illinois Joint Committee on Administrative Rules (JCAR) on August 18. These rules affect both insurers and network administrators that offer incentives to insureds to utilize the services of contracted providers. For example, new network adequacy language would require that when a beneficiary has made a good faith effort to utilize network providers for a covered service but the appropriate preferred specialty providers are not under contract, then the administrator shall ensure that the beneficiary is provided the covered service at no greater cost than if the service had been provided by a preferred provider.

NEW YORK: The Departments of Health and Insurance released their report by the Urban Institute that examines several proposals to reform the state’s health insurance system. The study analyzes the cost and coverage implications of:

1) the Public-Private Partnership proposal that would simplify and expand existing public programs and reform private health insurance;

2) New York Health Plus, which would give all New Yorkers an option to enroll in Family Health Plus;

3) Public Health Insurance for All, a single-payer public health insurance option; and

4) the Freedom Plan, an option that relies on regulatory flexibility and tax credits. Due to the growing state deficit and interest in federal reform, no immediate action is expected on these proposals. However, legislation based on one or more of the models is likely to be introduced, or reintroduced in 2010.

The report’s key findings include: Three of the four proposals would cover all New Yorkers. The Freedom Plan would leave 13.3 percent of New Yorkers uninsured, down from the current 15.8 percent. There would be minimal change in employer-based coverage under the Public-Private Partnership and the Freedom Plan proposals. However, employer coverage would drop significantly under New York Health Plus and end altogether under Public Health Insurance for All. The individual insurance market would cease to exist under Public Health Insurance for All and New York Health Plus. Individual coverage would increase under the Public-Private Partnership and the Freedom Plan. Post-reform expenditures by employers and individuals would also vary widely. Under Public Health Insurance for All, employer and individual spending would be eliminated. New York Health Plus would reduce both individual and small employer spending. Individual spending would remain constant under the Public-Private Partnership proposal while small employer spending would drop slightly. The Freedom Plan would increase individual spending but somewhat reduce small employer spending.

OREGON: Oregon’s health care reform efforts this year included passage of a 1 percent premium tax on health insurers. Recently, the Division of Insurance offered a draft opinion that the tax should be collected on group policies issued in Oregon and polices issued in other states that cover Oregon residents. The Division opinion is contrary to longstanding NAIC guidance and would result in the imposition of a double-tax on all group policies, as well as administrative hurdles in tracking where individuals reside.

No World Borders observation: The requirements to move to electronic health care records including HIPAA EDI 5010 for the electronic transfer of claims data, and the new medical coding standard ICD-10 will require all the time health care companies can get. Don’t wait while the legislators debate the issues. Process impacts as well as data and electronic transfer issues have been under-estimated by may companies. Move ahead now. We can help. See our capabiliites brief and brochure.

Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See https://www.noworldborders.com/news/ and https://www.noworldborders.com/clients/ for more about the company.

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