The decision by the Des Moines-based Principal Financial Group to quit offering health insurance has nothing to do with the new healthcare reform law, Iowa's insurance commissioner clarified this week.  

Susan Voss said Thursday the company has been shifting away from medical coverage for a decade. 

"There's no correlation between health reform and Principal," Voss told Politico Thursday. "They have been slowly decreasing the medical percentage of their revenue base for 10 years now, from something like 30 percent down to 3 percent. We knew a decade ago they were focusing on a different market ... This is a strict business decision."

The New York Times on Friday reported that Principal would be leaving the health insurance market, linking the decision to the "upheaval emerging among insurers as the new federal health law starts to take effect."

The Department of Health and Human Services on Friday awarded another $9 million in grants to help root out fraud in the Medicare program.

The money will fund more than 50 Senior Medicare Patrol programs, which aim to educate beneficiaries so they can be on the lookout for billing errors and potentially fraudulent activity in their Medicare notices.

Fast food fallout: After spending Thursday responding to a Wall Street Journal story about McDonald's threat to abandon coverage for some 30,000 hourly employees, the Department of Health and Human Services announced that it intends to specifically address the issue of mini-med plans in "forthcoming regulations." 

The department points out that it has created an "expedited process" for plans to apply for a waiver from the health reform law's requirement establishing minimum annual limits "where such limits would result in decreased access or increased premiums;" HHS has already approved "dozens" of these waiver requests.

Furthermore, HHS suggests, waivers from the law's medical loss ratio requirements - the minimum portion of premiums insurers must spend on medical care - are also on the horizon even if the National Association of Insurance Commissioners must finish its work defining the ratio first.

"Although the NAIC is close to completing its work, we understand that some employers must soon make decisions regarding coverage options for 2011," Jay Angoff, director of HHS' Office of Consumer Information and Insurance Oversight, said in a statement. "As such, we fully intend to exercise (the secretary's) discretion under the new law to address the special circumstances of mini-med plans in the medical loss ratio calculations. According to the Affordable Care Act, medical loss ratio 'methodologies shall be designed to take into account the special circumstance of smaller plans, different types of plans, and newer plans.' We recognize that mini-med plans are often characterized by a relatively high expense structure relative to the lower premiums charged for these types of policies. We intend to address these and other special circumstances in forthcoming regulations."

California paves the way: California opted to move ahead with its own health insurance exchange Thursday after President Obama personally urged Gov. Arnold Schwarzenegger to do so, reports the Sacramento Bee. http://bit.ly/cTbcbd 

"The two bills signed late Thursday establish the California Health Benefit Exchange and an independent, five-member oversight board appointed by the governor and the Legislature that will be tasked with defining how the exchange will operate," the Bee explains. Anthem Blue Cross, the state's largest for-profit insurer, and the California Chamber of Commerce lobbied hard against the measure.

California is being touted as the first state to vote to create its own exchange under the healthcare reform law. However Utah and Massachusetts already had their own exchanges prior to the law's enactment in March. 

The California decision comes as the Department of Health and Human Services on Thursday announced the recipients of $49 million in grants to help states begin to look at the feasibility of operating their own exchanges versus letting HHS take over in 2014. Joel Ario, director of the Office of Health Insurance Exchanges at HHS, said 2011 would be "critical legislative year" for states to enact bills creating their exchanges. http://bit.ly/cGd6Zs

HHS to unveil new health plan information: Consumers will be able to access more information than ever before on HHS' insurance Web portal starting later today, HHS Secretary Kathleen Sebelius announced Thursday. The new information to be made available at HealthCare.gov includes: monthly premium price estimates; the percentage of people denied coverage by a particular plan; and the percentage of people who pay more than the base premium.

Sebelius outlines the new information in a post on the White House blog. http://bit.ly/9VLyqo

Now for the bad news: Following Sebelius' Sept. 9 letter to insurers warning that "there will be zero tolerance" for the "unjustified rate increases" some of them are proposing for 2011, Energy and Commerce Republicans are demanding that she provide "all written material she has proving that the premium increases are unjustified or not actuarially sound, and to provide all documents or evidence in your possession showing that state insurance commissioners are unable or unwilling to protect consumers." 

"We fear that your letter is an effort to intimidate those who reveal the negative consequences of the law and an attempt to block actuarially sound premium increases, which would put all consumers at risk," Reps. Joe Barton (Texas), John Shimkus (Ill.) and Michael Burgess (Texas) write in a letter to the secretary. http://bit.ly/aGUIx2

Hospital asks outlined: The American Hospital Association outlines its legislative agenda for the lame-duck session in a "quick reference guide" for members. These include higher Medicare and Medicaid payments and changes to federal health information technology incentives for multi-campus systems. 

Medicare DME saga continues: Medicare's bidding program for durable medical equipment will fail, 167 leading experts on auctions and competitive bidding systems tell Congress in a letter to Ways and Means Chair Pete Stark (D-Calif.). The program is due to take effect on Jan. 1 in nine of the country's largest metropolitan areas. http://bit.ly/bcm63d

The experts do not oppose the concept of using a competitive bidding system to set Medicare prices, according to the American Association for Homecare.  But they're concerned that "the bidding program designed by CMS has several flaws that will prevent it from achieving the objectives of low cost and high quality."

Doctor shortage looms: So says a new report from the Association of American Medical Colleges, which estimates that the shortage of physicians beginning in 2015 will be 50 percent worse than originally anticipated prior to healthcare reform. At fault: The 32 million extra people who will have coverage, coupled with 36 million more elderly Americans joining the Medicare rolls. http://bit.ly/c8RY2i

AHIP tracks state implementation: America's Health Insurance Plans has created a chart and map tracking state implementation of the health reform provision that prohibits pre-existing condition exclusions for children.

Top House lawmakers on Thursday accused government regulators and a major drug company of misleading Congress and the public over last year's recall of a defective pain medication.

Johnson & Johnson executives should have told the public it was pulling defective Motrin off the shelves, the lawmakers charged, while the Food and Drug Administration (FDA) should have pushed harder for the company to do so. Both groups misled Congress about their involvement in the episode, some members alleged.

But while Democrats tended to focus their criticisms on company executives for putting shareholders above public health, Republicans spent more time blasting federal regulators for not going further to protect consumers. 

"The pattern emerging at FDA is one of carelessness, deficiency, and untruthfulness," said Rep. Darrell Issa (Calif.), senior Republican on the House Oversight and Government Reform Committee. "Johnson & Johnson and its subsidiaries do not get a pass," he added, "[but] the government has failed to do its job." 

Rep. Edolphus Towns (D-N.Y.), chairman of the panel, didn't disagree, but argued the primary responsibility in drug safety cases rests with the company. 

"Even if the FDA was technically aware of it, that does not excuse what Johnson & Johnson did," Towns said. "[The company] had both the legal and moral obligation to do the right thing, and they did not."

The controversy swirls around the 2009 voluntary recall of defective Motrin tablets. To prevent the public from learning of the event, a J&J subsidiary (McNeil) hired third-party contractors to buy up defective pills from retailer shelves, rather than launching a national recall, which would have alerted the media.

Not even the retailers stocking the defective pills were told of the plan.

"Run in, find the product, make your purchase and run out," the contractors were instructed. "There must be no mention of this being a recall of the product."

The tablets weren't suspected of posing a health risk, but they contained lesser amounts of active medicine — and were therefore less effective — than the label advertised. 

As part of the committee's investigation, lawmakers learned that J&J officials told the FDA about the defect as early as November 2008, but agency officials didn't press the company for a national recall until seven months later. In the meantime, J&J informed the agency that its contractors were visiting drug stores to "assess" the situation, but failed to mention that the contractors were buying up the medication.

The company, FDA's Principal Deputy Commissioner Joshua Sharfstein testified Thursday, "did not disclose the phantom part of the phantom recall."

Appearing before the oversight panel, J&J executives at turns apologized for and pushed back against the charges that they didn't tell the FDA what they were up to. 

"We should have notified them that we would be taking these products … off the shelves," J&J CEO William Sheldon said. "You're absolutely correct that we made a mistake. But we feel we did keep people informed as to the actions we were taking."

It wasn't the only apparent discrepancy. Weldon also said he was ready to accept "full accountability" on behalf of the company, but  later added that he "can't comment for the conversations that go on across the organization."

Meanwhile, Colleen Goggins, head of J&J's consumer group, reiterated her statement — made before the panel in May — that she knew nothing of the recall at the time.

"I did not know that at the time of my testimony — I don't believe," Goggins said.

Much of Thursday's hearing, though, highlighted the different philosophies of the two parties as it pertains to government oversight. Issa maintained that the focus of the panel should be the conduct of federal agencies. 

As the committee's name suggests, Issa said, "we are overseeing government."

The remark wasn't overlooked by some Democrats, who argued that the panel's responsibility is broader than that. 

"This committee is not just oversight of the government," said Rep. Dennis Kucinich (D-Ohio). "It's [also] oversight of misconduct in the private sector."

Towns was quick to note that the FDA lacks the authority to force a company to recall a product, regardless of the threat to public health. 

"Even if the FDA had been notified about the Motrin problem, the agency did not have the legal authority to order a recall," Towns said. "This needs to be rectified." 

The debate carries echoes of other battles swirling around Capitol Hill in recent months. In the wake of deadly accidents in a West Virginia mine and on a Gulf of Mexico oil platform, for instance, Democrats have called to expand the powers of the federal regulators overseeing those industries. Republicans, though, have rejected the proposals, arguing they would force expensive new requirements on private companies, crippling their ability to hire amid an employment crisis.

Some Democrats on Thursday noticed a discrepancy between the Republicans' criticism of government regulators and their opposition to bills lending the same agencies stronger teeth. 

"On one hand, some of my colleagues would reject a beneficial role for government in people's lives," Kucinich said. "And on the other hand, when a regulatory agency does attempt to assert government responsibility for corporate misconduct, that's not recognized."

But Issa maintained that granting the agency greater power is no indication it would use it. 

"Even if we gave them additional authority for mandatory recalls, if they were complicit in a silent recall, then to what end would that new authority be?" he asked.

Alaska and Minnesota were the only two states to turn down federal grants for the development of insurance exchanges, the Department of Health and Human Services announced Thursday.

HHS announced that 48 states and the district of Columbia were receiving a total of $49 million to help them research and plan how to set up a health insurance exchange. The health reform law requires states to have exchanges up and running by 2014; the federal government will take over in states that don't set up their own exchanges.

Joel Ario, the director of the Office of Health Insurance Exchanges at HHS, said it would be "premature" to say that the states that have asked for money will be setting up their own exchanges. Rather, he explained, the grants will allow them to determine if setting up their own exchange is feasible.

On the flip side, the two states that didn't apply for the grants aren't necessarily ruling out starting their own exchange either.

Minnesota Gov. Tim Pawlenty (R), who is mulling a presidential run in 2012, has said he doesn't want to apply for federal grants tied to a law he disagrees with.

And Alaska Insurance Director Linda Hall told The Hill that the state does not want federal funds to set up an exchange that would require people to buy insurance. Alaska is a party to the 20-state lawsuit questioning the constitutionality of the individual mandate.

That's not to say that the state would reject operating its own exchange, she said: "There are a lot of things to consider."

Ario said more grants should be available in early 2011 to help states establish their exchanges. Next year, he said, will be a "critical legislative year" for states to enact bills creating their exchanges if they're going to meet the Jan. 1, 2013 deadline by which HHS will certify that they'll be ready to run their own show in 2014.

The grants announced Thursday cover such issues as: 

- Assessing current information technology (IT) systems and infrastructure and determining new requirements; 

- Developing partnerships with community organizations to gain public input into the exchange planning process;

_ Planning for consumer call centers to answer questions from their residents; 

_ Determining the statutory rules needed to build the exchanges;

_ Hiring key staff and determining ongoing staffing needs;

- Planning the coordination of eligibility and enrollment systems across Medicaid, the Children's Health Insurance Program (CHIP), and the exchanges; and 

_ Developing performance metrics, milestones and ongoing evaluation.

Reports alleging McDonald's might stop covering workers because of  reform are "flat out wrong," Secretary Sebelius said Thursday.

House Republicans are blasting the health reform law after a recent report indicated new insurance requirements might lead McDonald's Corp. to drop coverage for tens-of-thousands of employees.

Officials at the fast-food giant informed the Health and Human Services Department (HHS) this month that a provision requiring plans to spend at least between 80 and 85 percent of premiums directly on healthcare treatments would force the company to scrap its health coverage for about 30,000 workers, the Wall Street Journal reported Wednesday.

The report wasn't overlooked by Republicans on the House Ways and Means Committee, who blasted it to reporters Wednesday as evidence that the new law will harm patients. 

McDonald's, the Journal reports, offers so-called "mini-med" plans, which offer low-premium, limited-benefit coverage for workers. Due to the high-turnover rate of employees covered by such plans, the company contends, HHS should exempt those products from the medical loss ratio (MLR) rules included in the new health reform law, the Journal reports.

"[I]t would be economically prohibitive for our carrier to continue offering" mini-med coverage under the current MLR thresholds, McDonald's wrote to the administration, according to the Journal. 

The National Association of Insurance Commissioners on Wednesday released a 10-page draft bill for the state health insurance exchanges mandated by the healthcare reform law.

The document could become the basis for exchange legislation that states will start considering in 2011 and 2012, according to Ipsita Smolinski of the consulting firm Capitol Street. 

The law requires the Health and Human Services Department determine by Jan. 1, 2013, whether states will have exchanges ready in 2014; the department will take over in states that won't.

The regulation is offered as an "issue paper for state consideration." Comments are due by Oct. 6. States have also asked for HHS to provide guidance by the end of the year.

Some of the questions raised by the document include: 

• Whether to merge the individual and small-group exchanges;
• Whether the exchange or the state insurance commissioner should determine unjustified rate increases;
• How to define the small-group market (50 or 100 employees).

Children's medicine - and FDA - under scrutiny: The House oversight committee is scheduled to hold a hearing on Johnson and Johnson's recall of children's medicine this morning. This is the second hearing examining the circumstances surrounding the April recall of more than 135 million bottles of Children's Tylenol and other popular pediatric medicines produced by Johnson & Johnson/McNeil Consumer Healthcare. http://bit.ly/aR0FIO

Ranking member Darrell Issa (R-Calif.) is expected to grill Food and Drug Administration officials over what the agency knew about the recall. He released the following statement late Wednesday after receiving new FDA documents:

"Given the information that has come to light during our investigation, it’s clear that the FDA was inappropriately defensive and unconstructive when evidence contradicted their previous public statements regarding what they were told by J&J and when," Issa said. "Only after new documents came to light that revealed the FDA was in fact told by Johnson & Johnson about contractors buying Motrin off store shelves did they reverse course and acknowledge what the evidence had been pointing to all along. Now that we’ve set the record straight on what the FDA knew and when, the conversation now turns to how did this happen and what can be done to ensure that the significant problems at this critically important agency are addressed.  When it comes to the safety of the American people, there can be no room for ambiguity and inaction on the part of the entities we rely on to monitor the safety and quality of products like Motrin."

FDA Principal Deputy Commissioner Joshua Sharfstein is expected to testify that "(b)ecause of the Committee’s investigation, we now understand much more about the events … based on what we now know, the 'phantom recall' raises important questions for Johnson & Johnson, FDA and Congress."

Food safety bill teed up: Senate Majority Leader Harry Reid (D-Nev.) filed cloture on food safety legislation Wednesday evening, setting up a vote when the Senate returns in November.

Child nutrition bill inaction decried: Advocates are pressing House lawmakers to pass the Senate's $4.5 billion childhood nutrition bill as soon as they return in November. The bill reauthorizes and improves a federal program that expires today.

Margo Wootan, director of nutrition policy at the Center for Science in the Public Interest, expressed her dismay at Democrats who blocked a vote on the measure because the bill is paid for in part by ending a temporary increase in food stamp funding five months earlier than expected.

"This wasn't a Sophie's Choice," she said. "An additional five months of the temporary increase in SNAP funding is a price worth paying for a lifetime of reforms and ten years of resources to address childhood hunger and obesity. The bill was more like choosing between your child and your pet fish. Like the temporary increase in SNAP funding, goldfish never live long anyway."

Erin Boltz, campaign manager for the Child Nutrition Initiative, said she was "extremely disappointed that the House did not make the needs of our kids a priority prior to the election recess."

Rep. Dennis Kucinich (D-Ohio) had proposed denying tax deductions for expenses related to advertising fast food and to children as an alternative pay-for.  http://bit.ly/a5EYod

"It is wrong to cut food stamp assistance," Kucinich said. "In the Greater Cleveland Area there are over a quarter million people using food stamps to feed their families. We are trying to deal with a high level of unemployment, record foreclosures and poverty rates that continue to climb.  It is unconscionable to speak of any reduction in food stamp assistance to the increasing number of Americans who are dependent on it for their survival."

AHIP conference features slew of officials: AHIP's two-day 2010 State Issues Conference starts today and features Sandy Praeger of the National Association of Insurance Commissioners and Jay Angoff, director of the Office of Consumer Information and Insurance Oversight at the Health and Human Services Department. The forum will provide the opportunity to discuss, debate, and analyze the legislative and regulatory environment related to health care reform. http://bit.ly/9WNyWB

Physicians press for action on Medicare payments: The current fix to the Medicare physician payment formula doesn't expire until Dec. 1, but doctors are already pressing lawmakers to act during the lameduck session to avoid a pending 30 percent cut to rates. http://bit.ly/aBgffE

"The AMA is calling on Congress to immediately address this impending crisis when they return to Washington after the November elections," said AMA President Cecil Wilson. "Without action to stop the cuts, Congress will create a Medicare meltdown with access to care threatened for seniors and the baby boomers who will begin entering Medicare in January."

Republicans introduce Medicare fraud bill: Sen. Tom Coburn (R-Okla.) and Rep. Peter Roskam (R-Ill.) introduced legislation Wednesday that they say is President Obama’s endorsement of several Republican proposals during the White House health reform summit. http://bit.ly/dfuZFt

"The status quo in Medicaid and Medicare is unsustainable and unacceptable. American taxpayers lose $100 billion in waste, fraud, and abuse in Medicare and Medicaid each year," Coburn said in a statement. "Congress and the Administration must do a better job of working to staunch this flow of taxpayer dollars that goes to crooks instead of providing care."

Pressure mounts on insurance companies: Sen. Robert Casey (D-Pa.) warns insurers not to drop children's coverage in a letter to AHIP President and CEO Karen Ignagni.

"I have written to Secretary Sebelius urging her to use the full force and extend HHS's authority to enforce the law," Casey writes, "and have asked that she keep members of Congress informed about any gaps in the law that may require future legislation."

The letter comes after Sebelius informed insurers that her department "would welcome" legislation being considered by some states requiring individual-market issuers that offer family coverage to also offer child-only policies. http://bit.ly/91zBmq