The FEHBlog had a great weekend. One of his nieces got married in Philadelphia, and UConn, the team of destiny, continued its march toward a fourth national men’s basketball championship in Texas.

Congress will be in session this coming week according to the Hill’s Floor Action blog.  Congress continue sot evaluate postal reform. The House Oversight and Government Reform Committee will hold a hearing on the President’s proposed FY 2015 Postal Service budget on Tuesday morning. The Federal Times reports in an article about the Postal Service planning that Postmaster General  “Donahoe said the concept of a separate health plan for postal employees is also a ‘dead issue’” because he does not want the issue to interfere with broader postal reform.

As early as this week, the Centers for Medicare and Medicaid Services will be issuing a boatload of information about 2012 Medicare payments to doctors much to the chagrin of the American Medical Association according to a Washington Post report. The Wall Street Journal which pressed for this disclosure explains that

[The data set ] will include how many times the providers carried out a particular service or procedure, whether they carried it out in a medical facility or an office setting, the average amount they charged Medicare for it, the average amount they were paid for it, and the total number of people they treated. The data set would show the names and addresses of the [880,000} providers in connection with their reimbursement information,

This morning’s New York Times has a lengthy front page story on the rising cost of health care for people with chronic diseases, in particular diabetes 1. The article is definitely worth reading.

The FEHBlog appreciates receiving reader comments on this blog.  Here are the FEHBlog’s responses to recent comments:

1. A commenter on the FEHBlog’s entry on Provider Non-Discrimination noted that the Senate Finance Committee report dated July 11, 2013 (to accompany S. 1284) directing the ACA regulators to expand the scope of the ACA’s provider non-discrimination rule (PHCS § 2706) as discussed in ACA FAQ XV  to include an any willing provider requirement, among other things, “was included in the omnibus. The Explanatory Statement that goes along with the Consolidated Appropriations Act includes language that gives the Senate report the force of the full bicameral managers.” The FEHBlog will be sure to check this out but the ACA regulators don’t perceive the Senate report as binding. What’s more the Federal Trade Commission has recognized that any willing provider laws are anti-competitive.

2. Another commenter asked “Want to know what you mean by this statement [ in last Tuesday’s Tidbits, you didn’t explain: Congress did enact its 17th Medicare Part B payment fix yesterday which is good news for the FEHBP due to its large cadre of annuitant members over age 65.”  The FEHBlog chose not to provide an explanation last Tuesday because he has plowed this ground before. But he is happy to plow it again. Absent this Congressional action, Medicare Part B payments to doctors would have dropped by over 20%. When an FEHB annuitant has Medicare Part B, the FEHB plan pays secondary to Medicare. The result of this change would have been an increase in secondary payments. When an FEHBP annuitant enrolled in a fee for service plan has declines Medicare Part B coverage, the FEHB Act (5 U.S.C. § 8904(b)) allows the FEHB plan to price doctors services using Medicare Part B pricing. In those cases, the FEHB plan’s payment would have dropped. A lot of members would have been effected. On the occasions, which have occurred over the past 15 years, when Congress missed this deadline and adopted the fix retroactively,a lot of administrative work was created. So it’s a big deal for FEHB plans. Hopefully Congress will pass a reliable permanent fix in lame duck session of Congress.

3. Another commenter asked what’s next now that Congress has delayed the ICD-10 coding compliance date. The short answer is that we all have to wait for guidance from the Centers for Medicare and Medicaid Services, which is the HHS agency responsible for administering and enforcing the HIPAA electronic transactions and code sets needs to provide guidance to the affected parties — health plans, health care providers, and healthcare clearinghouses as Modern Healthcare further explains in this helpful article.  Here’s a link to a relevant press release from the industry group WEDI.

Congress did enact its 17th Medicare Part B payment fix yesterday which is good news for the FEHBP due to its large cadre of annuitant members over age 65. In the course of doing so, Congress also delayed the ICD-10 coding compliance date until at least October 1, 2015. Health Data Management reports on reactions to this development. You can read the FEHBlog’s right here.

In compliance with HIPAA and HHS’s implementing rules, health insurers have spent millions making their claims processing systems capable of handling claims bearing ICD-10 codes in anticipation of the HHS mandated October 1, 2014, compliance date. As readers of the FEHBlog know, the American Medical Association (“AMA”) has been crying the big tears about the cost of ICD-10 compliance to medical practices. The FEHBlog agrees with the AMA that the ICD-10 conversion will do nothing to advance HIPAA’s express objective of administrative simplification. The FEHBlog has noted that the AMA should have put more pressure on Congress at the time that HHS was considering whether or not to implement the ICD-10 late in the last decade. The FEHBlog thought that the AMA had missed its opportunity to defeat the ICD-10. But NOOOOOO, the AMA at the eleventh hour pulled out a legislative victory. Never underestimate the AMA’s legislative power.  In any event, the current delay is not all bad because HHS’s hard core approach to ICD-10 implementation this year portended a claims processing train wreck at Medicare.

Next the FEHBlog expects the AMA to argue that HHS should just stick with current ICD-9 until the ICD-11 is released later this decade. The FEHBlog would prefer that Congress just repeal HIPAA”s electronic transaction rules and let the industry work these problems out on its own. But the FEHBlog has no legislative clout.

At last week’s carrier conference, a medical director from the Blue Cross Blue Shield Association spoke about the need for health plans to consider community attitudes and resources at the zip code level when making decisions about promoting better health. The FEHBlog was reminded earlier this week that one of the best available public resources on community level health care is the Robert Wood Johnson Foundation’s online U.S. County Health Rankings.

Finally, here’s a potpourri of interesting pharma stories:

• A Wall Street Journal article about soaring sales for a new biologic drug called Solvadi that treated hepatitis C. A 12 week course of treat costs $84,000. 3.2 million Americans may be infected with this disease. You do the math. 
• A Wall Street Journal article about a promising and as yet still experimental class of biologic drugs to lower cholesterol — one of the Million Hearts campaign recommendations to avoid heart attack and stroke. “The companies [developing these drugs [called PCSK9 inhibitors] are vying in a market that includes millions of patients who can’t control their cholesterol with statins, which are among the most widely used and most lucrative drugs ever developed by the pharmaceutical industry.”
• Fierce Pharma reports that the Food and Drug Administration approved last Friday a  request to move 24 hour Nexium, a blockbuster acid reflux drug losing its patent protection, to over the counter status.  The prescription drug manufacturer Pfizer which owns the rights to the over the counter version of Nexium sought this FDA approval. Over the counter status simply means that the drug can be taken safely without a doctor’s supervision. 

What an afternoon! My college team, the UConn Huskies, are in the Final Four of the men’s basketball tournament for the fifth time in the last fifteen years (three national championships so far).

From the sublime to the ridiculous, Congress is in session again this week as the Hill’s Floor Blog reports and the Senate will take up the temporary Medicare Part B fix bill tomorrow. The AMA is upset that Congress decided not to pass the bipartisan permanent fix this go around. The FEHBlog does expect the permanent fix to be enacted in the lame duck session that will follow the Congressional election in November.

As the FEHBlog noted on Friday, the Medicare Part B temporary fix bill will delay ICD-10 code implementation for at least another year. ihealthbeat reports that industry reaction to the delay is mixed. Health insurers and hospitals are frustrated and doctors are relieved. The FEHBlog understands the frustration but the October 1, 2014, ICD-10 compliance date was shaping up to be a train wreck because so many medical practices are unprepared. What’s more moving to the ICD-10 code won’t improve the speed of claims processing which was HIPAA’s goal now almost 20 years ago. In the FEHBlog’s view, it is time to repeal the electronic transaction and code set provisions of HIPAA. Let the industry handle it. Technology standards should not be embedded in law.

The large prescription benefit manager, CVS Caremark, announced last week that it received a three year renewal of its contract to manage the Blue Cross Federal Employees Program’s retail, specialty, and mail order prescription drug benefits. “The new agreement, which runs through 2017, brings the relationship between CVS Caremark and FEP to more than 20 years.”

Finally, following up the FEHBlog’s comments on the worthy Million Hearts campaign last Friday, Modern Healthcare reports that “Nearly 6 million Americans diagnosed as needing high blood pressure medication may no longer need to take it, and another 13.5 million previously classified as having uncontrolled blood pressure would now meet healthy blood pressure targets, a new Journal of the American Medical Association analysis finds.” The study generally affects people aged 60 and older whose systolic blood pressure reading is between 140 and 150, which is consider a gray area. This could be relevant to NCQA HEDIS standard on blood pressure control.  But from a big picture perspective, the FEHBlog believes that the article illustrates the fact that practice of medicine remains as much an art as it is a science.

OPM and AHIP held an interesting FEHBP carrier conference over the past few days. Federal News Radio, Govexec.com, and the Federal Times all covered the OPM Director’s keynote speech.  The FEHBlog did learn a few things:

1. OPM willl be implementing the ACA;s employer shared responsibility mandate for 2015 which in the FEHBlog’s view is good news. OPM is collecting data necessary to estimate the impact of expanding FEHBP coverage to all federal employees who work on average 30 hours or more as calculated under the IRS’s rules. 
2. There are a few specialty drugs (injectables that require special handling, e.g. Gleevec) which are small molecule and therefore can be converted to generic upon patent expiration under the existing FDA approved regulatory pathway. A speaker from CVS/Caremark estimated that when the FDA creates the regulatory pathway for biosimilar drugs (large molecule drugs), the discounts will range from 10% to 40% in line with discounts for multibrand brand name drugs but not small molecule generics (75% discount or more for those).  He pointed out that the costs of developing biosimilar drugs will be much higher than the costs of developing small molecule generics. 
3. There are 700 or so manufacturer sponsored specialty drug copay assistance programs which are disrupting health plan designs. 
4. Blood pressure can be brought under control by prescription drugs alone. The Million Hearts campaign is promoting ABCS — aspirin for those who need it, blood pressure control, cholesterol management, and smoking cessation.  Other lifestyle changes improve health but aren’t critical to controlling blood pressure. That’s why it’s so important for people with hypertension — which affects one out of three adult Americans according to the CDC  — to see a doctor. The FEHBlog had hypertension a few years ago, but he lost weight and takes hypertension, medication, statins for cholesterol management, and aspirin. His blood pressure is perfect now. The trick, of course, is maintenance. So the FEHBlog understands why OPM is promoting blood pressure control in the call letter. 

Modern Healthcare confirms that Congress is likely to pass another Medicare Part B doctor payment patch this week rather than allow a rough 20% cut in those payments go into effect next month.

The Washington Post and Govexec.com posted articles about OPM’s 2015 call letter for FEHB carrier benefit and rate proposals.

Fedsmith.com posted an article about an OPM letter to benefit officers providing details on the scheduled 2016 implementation of a self plus one enrollment option in the FEHBP.

Fierce Health Finance.com reports that

Hospital inpatient prices increased 1.4 percent year-over-year [from February 2013 to February 2014], according to producer price data from the U.S. Bureau of Labor Statistics (BLS). They grew 0.3 percent between January and February {2014]. By contrast, the product price for hospital outpatient care increased 3.5 percent between February 2013 and February 2014, by far the biggest price increase among all the healthcare services studied.

Earlier this month, House Republicans tried to permanently kill the SGR formula in a bill that would also delay the individual mandate under ObamaCare for five years. The House passed that bill with 12 Democrats, but it’s seen as a dead letter in the Senate, and the Obama administration has threatened to veto it.  That means Congress has little choice but to agree on some short-term patch once again this week. The House seems likely to pass it by the middle of the week, and the Senate is likely to follow through soon afterwards.

The FEHBlog being an old guy reads two newspapers everyday. He reads the Wall Street Journal for international and national news and the Washington Post for federal employee news, local news, and local sports. (Also the New York Times on Sunday for old time sake.) The FEHBlog also gets a charge out of reading the Washington Post’s massive reports on the front page of the Sunday paper. Today’s deep dives concerned GWU’s admissions process and OPM’s retirement claim processing service located in a limestone mine in Boyers, PA (rented as it turns out by the Iron Mountain document storage company) — the “Sinkhole of Bureaucracy.”  The Post shellaced OPM for continuing to process retirement claims on paper. But as the article as points out, the root problem is a hideously complex retirement systems (two systems actually). The Post notes the the State of Texas can process a state employee retirement claim in two days. Congress should consider modelling the federal system on Texas if it wants to solve this problem instead pushing OPM to pound a square peg into a round hole.

The FEHBlog did his own deeper dive on the AvMed breach of privacy class action settlement that he discussed in the most recent mid-week update. The class action stems from the theft of two AvMed laptops containing unencrypted protected health information. A National Law Review article reviewed the terms of the settlement as follows:

Under the agreement’s terms, AvMed will establish a $3 million fund to pay the following:
1.Class members whose personal information was actually on the stolen laptops, but who have not suffered identity theft, can receive $10 for each year they paid AvMed for health insurance coverage before the December 2009 incident, up to a maximum recovery of $30. This relief is intended to compensate class members for that portion of their premiums that plaintiffs contend AvMed should have devoted to adequate data protection protocols and procedures.  This group comprises the “Premium Overpayment Settlement Class.”
2.Those class members who actually suffered identity theft will be reimbursed for the amount of any proven monetary loss that is shown by that member to have occurred “more likely than not” as a result of the December 2009 breach. Members of this class may also claim under the Premium Overpayment Settlement Class.  The parties have allocated $250,000 to cover identity theft claims by this sub-class.
3.An incentive award of $10,000 to be split evenly among the two class representatives (for their efforts in serving as class representatives).
4.Attorneys’ fees and costs for the plaintiffs’ class attorneys, in the amount of $750,000.
5.The costs of sending notices to the settlement classes as well as all costs of settlement administration.

Emphasis added. The settlement thus does include a small per capita  payment to everyone affected by the breach to reimburse them for a portion of their premiums that should have been spent on protecting the informaiton. This Premium Overpayment Settlement Class” is eligible to receive tiny slivers of about two thirds of the settlement fund. Clearly the class action plaintiff attorneys were interested in establishing a precedent for this type of relief.  (This aspect of the settlement also allowed those attorneys to beef up the attorneys fee recovery tranche of the settlement fund.) The legal pendulum is swinging in a troubling direction for entities that hold protected health information. Take cover — e.g, purchase adequate cyber liability insurance, keep your risk assessment up to date, and encrypt protected health information held on a mobile device.

Finally, the FEHBlog also is looking forward to attending the big OPM AHIP FEHBP carrier conference later this week.

OPM released the 2015 call letter for FEHB carrier benefit and rate proposals today. Here’s a link to the document. Just like the NFL’s new year begins when free agency starts, the FEHBP contract year begins when OPM issues the call letter. OPM will be discussing the call letter with FEHBP carriers at the OPM AHIP carrier conference in beautiful Arlington, VA next Friday. Carriers are allowed until May 31, 2014, to submit their 2015 benefit and rate proposals. OPM seeks to approve the proposals by mid-August, and then Open Season begins in early November for about six weeks. This is the Program’s Super Bowl to carry on the NFL analogy. Now it’s back to the NCAA tournament.

The FEHBlog often comments on the fact that the demographics in the FEHBP are lousy which given the FEHBP’s success should give hope to the insurers operating in the exchanges. The FEHBlog’s point was driven home today by a Washington Post report that “employees younger than 30 make up only 8.5 percent of the federal workforce, compared to 23.2 percent of the U.S. workforce overall, based on data from the Office of Personnel Management.”

The Wall Street Journal has a report on a successful IPO by a San Francisco based cloud software company called Castlight. A related Journal analytical report explains that the IPO was successful because there’s money to be made in controlling healthcare costs. Castlight advises self-insured employers on this matter. The Leapfrog Group, which was created by the National Roundtable to assess health care quality, just retained Castlight for a big project. Modern Healthcare explains

Castlight, which sells price transparency products and services to self-insured employers’ systems, will take its first look at Leapfrog data on early elective deliveries and infections. It will provide an analysis of the survey data nationwide, by region and by each of 28 survey metrics, according to the release. The Castlight analysis, including graphics, will be part of a Leapfrog report this spring evaluating hospitals on quality and safety.
 

Why aren’t the actuarial consulting services providing this service?

Speaking of improving quality, Modern Healthcare reports on a survey on physician participation in accountable care organizations or ACOs–

The results, published online in the journal Health Services Research, show that roughly 6 of 10 physician groups have so far avoided accountable care, a proliferating payment model that rewards and penalizes hospitals and doctors based on their ability to meet cost and quality targets. Medicare accountable care efforts, launched in 2012 under the Patient Protection and Affordable Care Act, now include more than 350 organizations. Private insurers have entered into more than 600 accountable care contracts, according to estimates by healthcare consultant Leavitt Partners.
When measured against an index of 25 measures of care management, patient engagement and quality, the physician practices with no plans to join an ACO scored lowest, the study said. Medical groups already under accountable care contracts ranked highest.
One-quarter of survey respondents were in ACOs. The survey included roughly 1,180 medical groups that researchers adjusted to reflect a nationally representative sample. Another 15% planned to join an ACO soon.

Finally, the FEHBlog as a lawyer urges readers who are covered entities or business associates to read this Computer World article that begins

Courts have generally tended to dismiss consumer class-action lawsuits filed against companies that suffer data breaches if victims can’t show that the the breach directly caused a financial hit.
A federal court in Florida broke the mold by approving a $3 million settlement for victims of a data breach in which personal health information was exposed when multiple laptops containing the unencrypted data were stolen.

The plaintiffs’ lawyers argued for restitution on the group that part of the payments that the victims made to AvMed were to cover the cost of securing the data.  That’s what we lawyers call precedential or an attention grabber.  .

Congress is not in session this week. The current Medicare Part B doctor payment fix expires two weeks from tomorrow. As the FEHBlog has noted there is a bipartisan approach to replacing the sustainable rate of growth formula but no agreement on how to pay for that change. According to Modern Healthcare, The House passed the bipartisan approach but decided to pay for it by waiving the ACA’s individual mandate until 2019. Of course, that approach is unacceptable to the Administration and the Senate leadership. It increasingly looks the can will be kicked down the road until the lame duck session after the mid-term elections.

On Friday, CMS issued guidance that it’s illegal under the ACA for an insurer offering non-grandfathered group or individual health insurance coverage to extend coverage to opposite sex but to not same sex spouses. The guidance, which is based on 45 C.F.R. § 147.104,

does not require a group health plan (or group health insurance coverage provided in connection with such plan) to provide coverage that is inconsistent with the terms of eligibility for coverage under the plan, or otherwise interfere with the ability of a plan sponsor to define dependent spouse for purposes of eligibility for coverage under the plan. Instead, this section prohibits an issuer from choosing to decline to offer to a plan sponsor (or individual in the individual market) the option to cover same-sex spouses under the coverage on the same terms and conditions as opposite sex-spouses. 

Of course, this is not an issue for the FEHBP.  In the FEHBlog’s opinion, a plan sponsor is just asking for trouble if it excludes same sex spouses.

Reuters is reporting that

Aetna Inc, the third largest U.S. health insurer, said on Friday it would not proceed with a proposed $120 million settlement with healthcare providers and plan members over out-of-network reimbursements. Aetna, which had agreed to settle in December 2012, said enough claimants had opted out to trigger a provision enabling it to cancel the deal.

The FEHBlog is saddened this insane litigation continues to plague health insurers. For decades, plans based out of network provider payments on “usual, reasonable, and customary” data compiled by a third party — first a trade association and later an information company affiliated with United Healthcare. The American Medical Association alleged an unholy conflict of interest between United and its affiliate and challenged the integrity of the data . Insurer got caught in the middle in this sort of litigation. Insurers used the data as a common yardstick based on convenience not necessarily accuracy. The phrase “usual reasonable and customary,” however, implied accuracy, and plaintiffs’ attorneys flogged the United affiliate with alleged data flaws. Since this issue arose over 10 years ago — it erupted in late 2008 — plans have dropped the usual, reasonable, and customer phrase in favor of the much more generic plan allowance phrase.  United’s affiliate transferred the data base to a new New York non-profit called Fair Health.  Plans also have switched to Medicare’s relative value schedule as a yardstick. (The SGR controversy concerns setting the dollar multiplier that is multiplied times the Medicare relative value to obtain the payment value.) he incident does illustrate the importance of clear plan language.