The Federal Benefits Open Season has been over for almost a week, and the House has gone into recess until the new year. The Hill’s Floor Action blog reports that this coming week the Senate will take up the budget deal bill and the defense authorization bill, both of which have been approved by the House. The holidays are drawing near.

Santa finally came through for federal employees.  The Federal Times reports that federal employees (except for blue collar workers) will receive a 1% increase in base pay but not locality pay for 2014 after three years of pay freezes.

Modern Healthcare reports — contrary to the FEHBlog’s optimism — that the lame duck session bound to occur next year may be the most likely time that Congress repeals and replaces Medicare Part B’s sustainable rate of growth formula (discussed in Thursday’s post).

Finally, here are a couple of bits of potpourri. Buck Consultants released a survey finding the consumer driven plans do produce better healthcare consumers.

HSA members are responsible for a greater portion of their health costs, so they expect tools to help them make informed, rational decisions. When ranking important HSA product features, 44 percent of respondents ranked the ability to view claims on the HSA site as most important. They ranked paying medical claims on the HSA member portal second at 35 percent.

The second place finisher is unexpected. That feature must please the providers too. And AHIP published another report on the efforts to health insurers to improve healthcare literacy which is a key part of the process of creating better healthcare consumers.  

(The FEHBlog wrote this on Wednesday but it for some reason did not get onto the blog until Thursday.) The budget deal that House and Senate leadership reached yesterday will authorize OPM, when enacted into law probably next week, to create a self plus one coverage option for the FEHBP.  See the last line in this House Budget Committee summary. The change is made by Section 706 of the proposed legislation (p. 74).

Historically, OPM held the view that self plus one coverage would cost virtually the same as self and family coverage because of the relatively average small family size that the FEHBP experienced before Congress increased the dependent child eligibility age limit to 26 as part of the ACA.

OPM recently reevaluated this issue and proposed that Congress add a self plus one option to the FEHBP last Spring. The Congressional Budget Office finds that this change will create savings for the government. In a report issued today, CBO explains that

Section 706 would add a two-person “self plus one” coverage option for federal
employees and retirees under the Federal Employees Health Benefits (FEHB)
program. CBO estimates that option would be priced below the “self plus family”
option currently available. However, the “self plus family” option would become
more costly than under current law because the average number of people covered
by policies of that type would rise. CBO expects that federal retirees would be more
likely than active federal employees to switch to “self plus one” policies. As a
result, the average cost of FEHB policies for federal retirees would be lower than
under current law, and the average cost of FEHB policies for active federal
employees would be higher than under current law.

The provision would reduce direct spending because the government contribution
for health benefits for federal retirees is classified as direct spending. On the other
hand, implementing the provision would increase spending subject to appropriation,
assuming appropriation of the necessary funds, because the government
contribution for health benefits for active federal employees is classified as
discretionary spending

As it’s quite likely that this bill will become law, the change will go into effect for 2015.

The budget resolution bill remains on track for passage. According to California Healthline, the bill in addition to adding a self plus option to the FEHBP as discussed in yesterday’s post also would give Congress three more months to replace the defective statutory sustainable rate of growth formula used to set Medicare Part B reimbursement rates for doctors. That’s a relief for FEHBP carriers who have to coordinate benefits with Medicare Part B for thousands of enrollees and also use the Medicare Part B reimbursement schedule to pay doctors for annuitants without Medicare Part B (5 USC § 8904(b)).  LifeHealth Pro reports that both the Senate Finance Committee and the House Ways and Means Committee met today about the SRG replacement bill now under discussion (HR 2810).

Last Sunday, the FEHBlog noted a Washington Post article about Genentech manipulation of FDA labelling rules to boost profits. It is illegal for drug manufacturers to promote the off label uses of their drugs. (According to the Post, Genentech refuses to seek a labelling change for a cheaper drug that serves the same purpose as a much more expensive drug in its portfolio.)  On Monday, according to a Reuters report, the Supreme Court refused to hear a drug manufacturer’s appeals against a health plan which had obtained a federal racketeeting verdict against that manufacturer Pfizer. The health plan used Pfizer’s offlabel marketing of one of its prescription drugs to form the predicate acts for the RICO claim which carries treble damages. Other health insurers are lining up to file similar suits. Good for them.

PwC’s Health Research Institute has released its list of top 10 health industry issues for 2014.  The headline is encouraging –“Consumers tell HRI they do not believe expensive medical treatment means better quality.” To that end, the FEHBlog noticed this interesting Uwe Reihardt column in today’s New York Times on the topic of health care transparency.  The column notes that

a three-day conference [recently was held] in Washington, funded by the Robert Wood Johnson Foundation and a large number of other sponsors, under the theme “Health Care Price, Cost and Quality Transparency.” Slides of most of the many illuminating presentations featured at the conference are available to the public (click on “faculty materials”).

Well, tomorrow is the last day of this year’s Federal Benefits Open Season, and Monday also begins the last week in which both Houses of Congress are in session for this calendar year. According to the Hill’s floor action blog, Congress has a lot on its plate. including a budget deal and a short term or long term fix to the Medicare sustainable growth rate formula.

The FEHBlog, being an old guy, still likes to read the Sunday newspapers and here are three interesting articles that he noted:

• From the Washington Post (lead article in fact), a story about how a pharmaceutical manufacturer Genentech and doctors take advantage of the Medicare and Food and Drug laws to charge Medicare an extra billion dollars annually for dispensing a $2000 per injection drug when its $50 per injection cousin (made by the same company) is equally effective. The article also illustrates how off label use can be driven by the drug manufacturers who refuse to seek FDA approval for a particular use because a more expensive drug is already labelled for that use. 
• The FEHBlog recently wrote about the expansion of concierge medicine to folks who live below the upper 1% income level. The New York Times has an article today about two doctors who are establishing an old school Park Avenue concierge medical practice ($25000 annual retainer — 400 patients). These doctors are willing to hold a patient’s toe during a difficult MRI. I wish that I could make this up. 
• Finally, the New York Times business section lead with a story about how the British government is putting to effective use a book called Nudge that was written a few year ago by two U.S. academics, Richard Thaler and Cass Sunstein, who was head of OIRA in OMB during the current administration. The article discusses how the British government is using behavioral psychology to successfully encourage people to find jobs and pay their taxes and fines. “In their book, Professor Thaler and Mr. Sunstein defined their approach as steering people toward decisions deemed superior by the government but leaving them free to choose. “Libertarian paternalism,” they called it, and while that term is not used much in Britain, there is broad agreement on the subject among the left and the right.” Health plans try to nudge people; maybe there are more effective ways to do it. 

The Wall Street Journal and the Washington Post report this afternoon that Congressional budget negotiators are working to wrap up a two fiscal year (2014 and 2015) deal that would avoid a government shutdown in January and give us a federal budget for this first time since 2009. The deal would preserve the peace beyond the 2014 mid-term elections next November.

The Washington Post is reporting the Congress is reminding its membership and official staffers that they will retain their FEHBP coverage until January 31, 2013, if they are unable to sign up for DC SHOP program this month. The FEHBlog did not realize that the DC SHOP program’s website (which is separate from healthcare.gov) also has been encountering glitches. Under the ACA, these folks will need to sign up for DC SHOP coverage no later than January 15, 2014, if they want to avoid a break in coverage. Anyone who signs up from January 16 though February 15, 2014, we become eligible for DC SHOP coverage on March 1, 2014.

Govexec.com offered an article about the ACA’s impact on the FEHBP which feature the FEHBlog’s insights. The Federal Times offered an article on the same topic which did not.  

Deloitte consulting issued its 2013 survey of employer attitudes toward the healthcare system. “When asked what is likely to improve the system, the leading response was “increased transparency around the prices of specific medical products, services and procedures (52 percent)” followed by “clear, accessible information about the performance of care provided by doctors (46 percent).” Shocker.

Speaking of price transparency, the New York Times wrote earlier this week about soaring and inscrutable hospital care prices.

In a medical system notorious for opaque finances and inflated bills, nothing is more convoluted than hospital pricing, economists say. Hospital charges represent about a third of the $2.7 trillion annual United States health care bill, the biggest single segment, according to government statistics, and are the largest driver of medical inflation, a new study in The Journal of the American Medical Association found. * * * The main reason for high hospital costs in the United States, economists say, is fiscal, not medical: Hospitals are the most powerful players in a health care system that has little or no price regulation in the private market.

Bear in mind that Medicare pricing on hospital care is set by law which pushes air in the cost balloon over to the private sector (e.g., employer sponsored coverage, FEHBP) side

The FEHBlog is heading off to the airport for a quick trip to Connecticut. He ran across an interesting website called drugchannels.net and suggests that readers review the site’s articles on the cost of oncology drugs in outpatient hospital vs. outpatient doctors office settings and rising generic drug costs.

Government Health IT repohttp://www.govhealthit.com/news/policy-team-urging-hhs-ditch-hipaa-access-report-idearts that the Office of National HIT Coordinator’s Policy Committee voted today to urge HHS to “pare back a proposal that would let patients get access reports showing which health organization staff examined their information in an [electronic health record] EHR” as technologically impractical That’s good news because as the federal exchange debacle illustrates adding complexities to information technology systems can backfire on the users.

Kaiser Health News reports here on a colloquy about the new mental health parity rule that will apply to the FEHBP in 2015. In the FEHBlog’s view, the final rule tweaks the interim final rule that has been in effect since 2011. He doesn’t see big coverage changes resulting from the final rule which makes sense because the interim rule was quite comprehensive.

Happy Cyber Monday. This weekend update is a little late because I attended the Redskins game against the Giants last night. I think that I may have enjoyed staying home and typing up the FEHBlog more but here we are/

This is the last full week of the Federal Benefits Open Season which ends on December 9.  The House of Representatives is in session this week but the Senate remains out until next Monday. The House is scheduled to adjourn for the holidays on December 13 and the Senate will hold sessions in the following week before wrapping things up for 2013. The Hill’s Floor Blog has more details.

The FEHBlog took sometime over the weekend to read the lengthy final rule on the health insurer fee. This onerous fee allocates an $8 billion assessment on health, dental, and vision insurer premiums in 2014 (ramping up to $14.3 billion in 2018).  The 2014 fee has been estimated by an actuarial consulting firm (retained by AHIP) to add 2% to health insurer premiums in that year. The assessment principally impacts insured FEHB and FEDVIP plans, plans in the health insurance exchanges, insured plans offered to small businesses, Medicare Advantage plans, and private Medicaid plans.   Modern Healthcare has an article about this rule here. The article indicates that non-profit HMOs, which already get a statutory break on the assessment, may litigate over whether or not they are subject to the assessment at all.

The federal government has released its 2013 unified regulatory agenda. This is an inside the Beltway site that gives readers a semi-annual heads up on the federal government’s plans for regulatory activity. For example, in the Spring 2013 unified agenda, the IRS announced that the final health insurer fee rule would be published in December 2013. The IRS actually beat that projection. Here is a OPM’s overview of its regulatory priorities which does not mention the FEHBP, but if you dig deeper into the details there are several FEHBP regulations underway. And of course there are HHS and IRS and other agency regulations underway that impact the FEHBP. There’s lots for the FEHBlog to do.

CMS on Tuesday finalized Medicare Part B physician payment rates for 2014. The revised rates are based on the reviled yet statutory sustainable rate of growth formula. Consequently, Medicare Part B payments to doctors will drop around 25% in January unless Congress suspends the SGR formula for another year while it tries to repeal and replace the formula as discussed in a recent FEHBlog post. Interestingly, CMS also decided to create “separate payments [to doctors] for managing a patient’s care outside of a face-to-face visit for practices equipped to provide these services.” This policy will take effect in 2015.

Much to the chagrin of hospitals and doctors (as Modern Healthcare reports),  CMS also announced on Tuesday that next year Medicare’s Outpatient Prospective Pricing System:

will replace the current five levels of hospital clinic visit codes for both new and established patients with a single code describing all outpatient clinic visits.  A single code and payment for clinic visits is more administratively simple for hospitals and better reflects hospital resources involved in supporting an outpatient visit.  The current five levels of outpatient visit codes are designed to distinguish differences in physician work.

Finally, the Wall Street Journal reported earlier this week on the pros and cons of concierge medicine. Concierge medical practices charge a retainer on top of their regular fees for services in return for a higher level of patient care.

Of the estimated 5,500 concierge practices nationwide, about two-thirds charge less than $135 a month on average, up from 49% three years ago, according to Concierge Medicine Today, a trade publication that also runs a research collective for the industry. Inexpensive practices are driving growth in concierge medicine, which is adding offices at a rate of about 25% a year, says the American Academy of Private Physicians.

Unlike high-end concierge practices, which typically bill insurers for medical services on top of collecting retainer fees, the lower-end outfits usually don’t accept insurance. Instead, they charge patients directly for treatment along with membership, often posting menu-style prices for services and requiring payment up front, which is why it is called “direct primary care.” Eliminating insurance billing cuts 40% of the practices’ overhead expenses, enabling them to keep fees low, doctors say.

That practice, of course, does not stop the patient from submitting an out-of-network claim to the health insurer. The article illustrates one of the problems with the Affordable Care Act — it creates new “free” services that people historically paid out of pocket — the change adds administrative expenses to the cost of the service or supply. It’s more affordable for the individual up front but it increases overall health insurance premiums. There is no such thing as a free lunch.

Happy Hanukkah and Thanksgiving to the FEHBlog’s readership.  The Obama Administration issued a deluge of Affordable Care Act regulations yesterday and today.

• Proposed 2015 ACA Benefits Parameter Notice which creates an exemption from the transitional reinsurance fee (estimated $63 per covered bellybutton in 2014, and $44 per covered bellybutton (NEW!))  for self-insured, self-administered plan in the second and third years of the three year program (2015 and 2016). The change principally benefits multi-employer plans in the private sector but could help a handful of FEHB plans. This law is flexible when the government wants it to be. 
• Final IRS health insurer fee rules which implement a massive tax on insured but not self-insured plans effective next year. In contrast to the transitional reinsurance fee, this tax burden keeps increasing from year to year (particularly in the first four years) and there’s no statutory sunset.  AHIP’s comments are here.  
• Final IRS rule on the additional taxes that the ACA imposes on high earning individuals to support Medicare. 

We are entering the third week of the Federal Benefits Open Season.  The House and Senate have left town for the Thanksgiving holiday. According to the Hill, the House returns on December 2 and the Senate returns on December 9.

Govexec.com reports that the House leadership is preparing a 90 day extension of the current continuing resolution funding the federal government in order to allow the budget negotiations some breathing room. A 90 day extension would take us to April 15, 2014.

Modern Healthcare reports that

With time running out to prevent a major pay cut for doctors, the Senate Finance Committee scheduled an “open executive session” for Dec. 12 to discuss repealing and replacing the Medicare sustainable growth-rate physician payment formula [used to reimburse doctors for services covered under Medicare Part B].
Democratic and Republican House and Senate leaders had released a draft proposal of legislation [on October 31, 2013] that contains elements physicians are not thrilled with—such as a 10-year payment freeze and certain quality measures. But if Congress does not act, an SGR-driven 24.4% Medicare pay cut is set to take effect Jan. 1.

According to the report, the American Medical Association’s President Dr. Ardis Dee Hoven “said the freeze ‘doesn’t make sense’ because Medicare payments are currently 20% below the cost of delivering care. ‘It makes you want to throw up your hands and scream,’ Hoven said. But, she said, ‘walking away right now would be a colossal mistake.’

The Govexec article indicates that the House plans to recess for the holidays on December 13 so we can expect another Congressional punt on the SGR (e.g.., defer the cut for another year) hopefully in December. Perhaps replacement will occur next year.  The issue is important to FEHBP carriers because so many FEHBP annuitant enrollees also have Medicare coverage.

We also can expect that another year will pass without Congress enacting a postal reform law. Govexec.com reports that

Legislation to overhaul the Postal Service has hit yet another roadblock, with the agency’s oversight committee [in the Senate] once again delaying its markup of the reform bill [which the Committee chair Sen. Tom Carper (D Del) and its ranking minority member Sen. Tom Coburn )R Okla) introduced on August 2 before the August recess].
The markup — which gives Homeland Security and Governmental Affairs Committee members an opportunity to offer and vote on amendments to the bill, and ultimately decide whether to move it to the full Senate — was originally scheduled for Nov. 6, but was delayed indefinitely due to a lack of support from Democrats. Aides said the committee would vote on the bill — the 2013 Postal Reform Act — before Thanksgiving, and Sen. Tom Carper, D-Del., rescheduled a markup for Wednesday [November 20]. But Carper, who introduced the reform measure along with Sen. Tom Coburn, R-Okla., was forced once again to push back his timetable as he still failed to muster enough backing.
Carper and Coburn will now work on new language, which they will offer in the form of a substitute amendment to the original bill, according to a committee aide. The chairman and ranking member will reschedule a markup after the Senate returns from the Thanksgiving recess.