Mid-week update

Right now, a House Science, Space, and Technology subcommittee is holding a hearing on the OPM data breach. The subcommittee issued this helpful overview of the situation.  The Federal Times reports that the National Treasury Employees Union has joined AFGE in filing a lawsuit over the OPM data breach. The article explains

While other suits — like the one filed by AFGE — are based on alleged violations of the Privacy Act, the NTEU suit makes the case that OPM’s failure to secure personal information violated employee’s constitutional right to privacy.  NTEU lawyers noted the Privacy Act requires plaintiffs to meet a higher standard, such as proving damages occurred and that the violation was willful and intentional.  “Our approach isn’t really focused on recouping damages,” said NTEU general counsel Greg O’Duden. “We are looking for a court injunction that will cure the source of the problem; that will ensure that OPM gets its act together and institutes appropriate security measures.”

Fierce Health Payer has this useful update on state of health insurer mergers and acquisitions.

The American Medical Association has raised the white flag over the ICD-10 battlefield.  On Monday, the AMA and the Centers for Medicare and Medicaid Services issued a joint press release offering doctors an ICD-10 transition plan. The AMA explains that the transition plan addresses

  • Claim denials. For the first year ICD-10 is in place, Medicare claims will not be denied solely based on the specificity of the diagnosis codes as long as they are from the appropriate family of ICD-10 codes.This means that Medicare will not deny payment for these unintentional errors as practices become accustomed to ICD-10 coding. In addition, Medicare claims will not be audited based on the specificity of the diagnosis codes as long as they are from the appropriate family of codes. This transition period will give physicians and their practice teams time to get up to speed on the more complicated code set. Both Medicare Administrative Contractors and Recovery Audit Contractors will be required to follow this policy.
  • One of the commenters on the AMA website asked what does a family of codes mean? Another commenter replied “Family of codes means if you submit a claim with diabetes type 2 and is should have been DM 2 with diabetic retinopathy, they are not going to stop payment because you used a less specific code in the “diabetes family”
  • Quality-reporting penalties. Similar to claim denials, CMS will not subject physicians to penalties for the Physician Quality Reporting System, the value-based payment modifier or meaningful use based on the specificity of diagnosis codes as long as they use a code from the correct ICD-10 family of codes. In addition, penalties will not be applied if CMS experiences difficulties calculating quality scores for these programs as a result of ICD-10 implementation.
  • Payment disruptions. If Medicare contractors are unable to process claims as a result of problems with ICD-10, CMS will authorize advance payments to physicians.
  • Navigating transition problems. CMS has said it will establish a communication center to monitor issues and resolve them as quickly as possible. This will include an “ICD-10 ombudsman” devoted to triaging physician issues.

CMS explained in the joint press release that it otherwise is sticking to its single coding policy — “the Medicare claims processing systems will not have the capability to accept ICD-9 codes for dates of services after September 30, 2015, nor will they be able to accept claims for both ICD-9 and ICD-10 codes.”

If  non-Medicare carriers want to adopt the transition plan approach to claim denials,, there won’t be a lot of time to reprogram claims systems to accommodate the change before October 1.

Health Affairs has a great post about CalPERS use of reference pricing with joint replacement surgeries. According to the post,

With reference pricing, the health care purchaser places a limit on what it will contribute towards payment for a particular procedure, assuring that the selected payment limit allows appropriate access for patients. The payment limit typically is the median or some other mid-point in the distribution of prices in the local market. Consumers who select a provider that charges less than the purchaser’s limit receive standard coverage, with minimal cost sharing. Consumers who select a provider charging above the contribution limit must pay the entire difference.

The post further explains

The application of reference pricing to inpatient orthopedic surgery led to significant price reductions from some of the hospitals whose initial prices were above the CalPERS payment limit. These price reductions have increased; the number of California hospitals charging prices below the CalPERS reference limit ($30,000) rose from 46 in 2011 to 72 in 2015.
It should be emphasized that reference pricing has caused actual price reductions, not merely slowdowns in the rate of price growth. This is the way markets are supposed to work.
Reductions in prices contribute to affordability of care. In the first two years after implementation, reference pricing saved CalPERS $2.8 million for joint replacement surgery, $1.3 million for cataract surgery, $7.0 million for colonoscopy, and $2.3 million for arthroscopy.

The post suggests that reference pricing does not adversely affect health service quality and is best used when patients can price shop for services, such as joint replacements.

Finally, the FEHBlog nearly fell out of his chair when he read that a recently enacted federal law that used increased IRS penalties as a pay go. Lockton consulting explains that

These increased penalties apply to [the ACA reporting forms the 1095-B and 1095-C] and other information returns and filings, such as W-2s, and are effective for reporting required to be filed or furnished after 2015. For example, the increased penalties would apply to the first year’s filings under the ACA, which relate to 2015, but are due in early 2016.
The general penalty for failure to file a required information return with the IRS (which is subject to reduction, waiver or increase for various reasons) will increase from $100 per return to $250 per return.
The cap on the total amount of penalties for such failures during a calendar year will increase from $1,500,000 to $3,000,000.
If a failure relates to both an information return (e.g., a Form 1095-C required to be filed with the IRS) and a payee statement (e.g., that same Form 1095-C required to be furnished to the individual), these penalties are doubled.
If a failure is caused by intentional disregard, the new $250 penalty noted above is doubled to $500 for each failure, and no cap applies to limit the amount of penalties that can be applied with respect to that calendar year.
As you consider these increases, keep in mind that these do not affect the IRS’s enforcement policy for the first year of ACA filing. Specifically, the IRS will not penalize employers “that can show they make good faith efforts to comply with the [ACA] reporting requirements.” So, we still have the “good faith efforts” standard, but the penalties that will apply if that standard is not met are much more severe.


One comment on “Mid-week update

  1. David: As always, your in depth information on all things FEHB is greatly appreciated.

    Regarding your last topic in today's blog, to wit: "…recently enacted federal law that used increased IRS penalties as a pay go" It makes one think that much of the new ACA and IRS requirements have become a virtual legal minefield requiring affected organizations to hire or retain additional legal advice just to avoid financial penalties for inadvertent, erroneous filings. This of course becomes a cost-driver for the ever increasing cost of health care which will ultimately be paid for by either the taxpayer or via premiums.

    As a retired federal business manger, I had a sign over my desk which read: "Nothing's impossible for the person not doing the work and nothing costs too much for the person who's not paying the bill."

    Unfortunately, it would appear this maxim is still alive and well.

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