The FEHBlog still has not been able to find a news report on the IRS hearing held last Tuesday about the minimum essential reporting requirements imposed on insurers and self insured employers by new IRC § 6055. The FEHBlog is sure that it was not a spine tingling event, but he does expect to hear a public outcry when insurers and employers start demanding dependent SSN’s required for these reports.  The FEHBlog found the U.S. Chamber of Commerce’s comments which made the following salient points:

Employers should be permitted to provide only the social security number of the employee subscriber and not the social security number of every relevant family member. With this information, Treasury and the IRS would be able to identify and determine the proper social security numbers of covered dependents listed based on income tax returns and, alternatively with the assistance of the Social Security Administration based on other the information provided by employers such as the name and date of birth of the covered family members. 

The FEHBlog could not find any news reports yet on the IRS public hearing held yesterday about the complex reporting obligation that new IRC § 6055 (added by the ACA) imposes on health insurers. As noted in Monday’s, the news coming out of Monday’s related hearing was not encouraging. The FEHBlog will keep poking around for a news report.

The actuarial consulting firm Mercer released its 2013 employer survey on health care costs. The survey revealed that the health benefit costs for “very large” employer (>5000 employees) rose 3.7%. That percentage is the average premium increase in the FEHBP for 2014.  The 2013 trend is just one component of the premium which suggests that the FEHBP trend is lower than average.

The Mercer press release explains that

Many employers anticipate spending more to cover more employees in 2014. The ACA mandate requiring all individuals to obtain coverage or face a tax penalty goes into effect in 2014. Currently, 22% of an employer’s eligible employees, on average, waive coverage for themselves, either because they are covered under another plan or because they choose to go without.  Among employees who do enroll, on average 53% elect dependent coverage. But next year, because of the individual mandate, it is likely that fewer employees will waive coverage for themselves and more will elect dependent coverage – although the extent of the change is difficult to predict.

The 22% declination figure is similar to the percentage that the FEHBlog has heard about the FEHBP. It will be interesting to see whether FEHBP enrollment jumps in 2014. Many of the federal employees who decline FEHBP coverage are covered under their spouse’s plan. However, the Mercer report indicates that “Some [employers] already impose a surcharge on premium contributions for spouses who have other coverage available (9% of large employers) or even make them ineligible for coverage (7% of large employers); it seems likely that these provisions will become more common next year.”

The Mercer survey also discloses that “Nationally, enrollment in [consumer driven health plans] CDHPs rose from 16% of covered employees in 2012 to 18% in 2013 (Fig. 6). This is the same portion that enrolled in HMOs. In the Midwest, CDHP enrollment is now more than double that of HMOs (27% compared to 10%).’  About 18% of the FEHBP enrollment is in HMOs. However, participation in  FEHBP CDHPs while significant does not mirror the national average which is skewed by the fact that a growing number of employers only offer CDHPs or HMOs.

Modern Healthcare reports that transparency tools and apps that compare prices against provider quality measures may overcome patient prejudice against using low priced providers. Fierce Health Payer reports that a blunter approach to achieving the same goal — reference pricing — is gaining steam with health plans.

Reference pricing, a relatively new model in the American healthcare industry, establishes a standard price for a drug, procedure, service or bundle service, and usually requires health plan members pay any charges beyond the set amount. Panelist shared information, first-hand knowledge and studies that showed reference pricing for routine procedures and prescriptions expanded the transparency of medical prices without reducing the quality of care. It also gives purchasers and members the opportunity to make choices that reduce costs, they said.

A family tragedy occurred in Virginia this week — a young man attacked his father and then killed himself. The first news reports indicated that the young man was mentally ill but no inpatient care was available for him. Today the Washington Post reports that three hospitals within two hours of the home where the tragedy occurred had beds available to care for the young man. The case was fumbled. The courts will figure out who is to blame. The point is that greater coordination of care is required.

Following up on yesterday’s update, the Insurance Journal reports on today’s IRS hearings about the proposed employer reporting requirements under IRC § 6056  which the IRS will use to help enforce the employer shared responsibility mandate under the ACA. This quote caught the FEHBlog’s eye:

One lawyer, speaking anonymously to protect his relationship with IRS officials, said the business requests for data cutbacks were “dead on arrival.” IRS officials will likely show limited flexibility in the final rules, he said.

The IRS hearings on the health plan reporting requirements under IRC § 6055 will be held tomorrow.

The FEHBlog has noted that HHS Secretary Sebelius recently informed Congress that the qualified health plans in the ACA’s health insurance exchanges are not federal health plans subject to the federal health plans anti-kickback act. (The FEHBA is expressly excluded from the scope of that complex law.)  The hospitals celebrated the fact that it appeared they could pay the QHP premiums for their patients when necessary. The celebration appeared to be cut short by a CMS FAQ warning QHPs not to accept third party premium payments. Health Leaders Media reports that the American Hospital Association is aggressively pushing back against this FAQ guidance. Litigation appears likely.

The FEHBlog also recently complained about the revamped DOL ACA website. The FEHBlog noticed today that DOL appears to have cleaned up the glitches by, for example, including a link to the all important ACA FAQs.

The big legislative news today is that the Senate approved a House endorsed bill strengthening the Food and  Drug Administration’s authority over drug compounders in the wake of last year’s New England Compounding Center tragedy. The bill now goes to the President so that he may sign the bill into law.

Health plans have been attempting to lower emergency room costs by diverting patients to urgent care centers. In a man bites dog story, Fierce Healthcare Payer reports that according to a Blue Cross executive in Buffalo NY those urgency care centers can siphon off primary care provider patients thereby raising costs. However, that may be unavoidable because urgent care centers are open long than doctors’ offices. But it’s useful information to consider when trying to find the Goldilocks point.

Finally, as you may know there large insurers and relatively small health plans participating in the FEHBP (frame of reference — a small plan covers about 70,000 to 100,000 lives).  The Health Affairs Blog reports on a study finding that economies of scale for health insurers/plans converge around 100,000 lives. The blog post explains that

Interestingly, it appears that, as scale increases, the incremental costs driven by greater complexity begin to counteract the economies of scale. [P]ayors with greater than one million covered lives tend to have more lines of business and to operate in many more states than smaller payors do, and they seem to have higher administrative costs. In our experience, smaller payors often have much greater standardization of products and processes, and are more likely to outsource IT platforms and core functions. Because their business is less complex, they often appear to be better able to make the most of the efficiencies derived from economies of scale.

This week we enter into the second week of Federal Benefits Open Season. This opportunity to enroll for the FEHBP or FEDVIP plans and sign up for the federal employee flexible benefits programs (FSAFeds) for the coming year ends on December 9.

Congress is in session this week. The Hill’s Floor Watch blog provides an overview of its activities.

The IRS will be holding public hearings this week on the complex reporting rules that the Affordable Care Act imposes on health plans (Section 6055) and large employers (Section 6056) to implement the law’s individual and employer shared responsibility mandates. The Section 6056 hearing will be held tomorrow and the Section 6055 hearing will be held on Tuesday. Both hearings will be held in the IRS Building’s auditorium, 1111 Constitution Avenue NW., Washington, DC, beginning at 10 am.  The FEHBlog took a gander at the employer and health insurer comments on those rules (available on regulations.gov – docket no. 2013-21791). Here are links to the AHIP and National Health Underwriters Association comments which give you a flavor for industry concerns that will be raised at the hearings.

Govexec.com features an article identifying the metropolitan areas in the U.S. that have the highest share of federal employees. Washington DC surprisingly comes in fourth (14.1%). “Topping it are Colorado Springs (with a 16.4 percent federal share), Virginia Beach (16.1 percent), and Honolulu (15.4 percent).”

Kaiser Health News reports on the latest results of Medicare’s hospital quality incentive program. “Medicare has raised payment rates to 1,231 hospitals based on two-dozen
quality measurements, including surveys of patient satisfaction and—for
the first time—death rates. Another 1,451 hospitals are being paid less
for each Medicare patient they treat.” That’s encouraging.

Business Insurance reports on a bipartisan bill introduced in the House of Representatives to exempt self-insured plans from the ACA’s transitional reinsurance fee (H.R. 3489). The article notes that “The Obama administration recently said it would propose in future regulations an exemption from the fee, which begins in 2014, for ‘certain self-insured, and self-administered plans’ in 2015 and 2016.”  The bill’s sponsor think that exemption is “too limited.” The FEHBlog can’t understand how the ACA regulators can apply this fee ($63 per belly button in 2014) to all plans next year but then administrative create this limited exemption for the following two years when the statute does not even hint at an exemption. We shall see.

The FEHBlog was out of town for a couple of days. A lot of controversy has arisen over the Affordable Care Act rollout but that controversy does not impact the FEHBP.

A study was published Tuesday in the AMA Journal that finds that medical “price increases, not an aging population, are responsible for 91% of the hike in medical spending the U.S. has experienced since 2000.” This is not that surprising to the FEHBlog because Medicare, the health care program for the elderly, relies on statutory price controls. The article further explains that

[I]nsurers are bearing not only the increase in costs but a greater proportion of health-care spending. Personal spending on health care has dropped 83% since 1980, the study says, while either government or commercial insurers are paying more than 90% of hospital and doctor costs and 80% of drugs and care for the aged. It also found that chronic illnesses for all age groups, not just those of the elderly, are responsible for 84% of all medical costs.

A UPI article on the study adds that “the analysis found personal out-of-pocket spending on insurance premiums and co-payments declined from 23 percent to 11 percent since 1980, contradicting the conventional wisdom that out-of-pocket spending has increased.”

FierceHealthFinance reports that three states are implementing programs to provide greater transparency on health care prices. The article concludes that New Hampshire and North Carolina, which place the transparency burden on the provider, are having better implementation success than Massachusetts which, as Kaiser Health News explains, chose to place the burden on the insurer.

Speaking of chronic illnesses, Reuters reports that employers are using the Affordable Care Act’s wellness program provisions to crack down financially on their employees’ unhealthy behaviors. OPM advised Congress last Spring that wellness penalties cannot imposed in the FEHBP without a statutory amendment to the government contribution formula.

Last month, the FEHBlog noted CVS Caremark’s third quarter earnings report. It’s only fair to provide a link to the Express Scripts third quarter report.

The Federal Benefits Open Season begins tomorrow and OPM’s Open Season website is ready to go.

OPM posted its 2013 federal employee viewpoint survey results last week.  The survey discloses that 28% of the 354,000 survey employees use their heath and wellness programs and 14% use the employee assistance program (“EAP”).  Surprisingly less than 5% use available childcare and eldercare programs. Govexec.com takes a broader look at the survey results here.

Federal regulators issued final mental health parity rules on Friday. The new rules, which principally tweak the current mental health parity requirements applicable to FEHB plans and other large group health plans. The new rules  will become applicable to the FEHBP in 2015. In the meantime the interim final rules that took effect in 2011 will continue in force. (The FEHBlog was distraught to discover that the Labor Department reorganized its Affordable Care Act page (more compressed means more clicks — maybe the page will become easier to use over time).

Business Insurance points out that the final mental health parity rule’s major change is applicable to small group plans. The mental health parity law which was enacted as part of TARP in 2008 created an exemption for small group plans (< 50 employees).  The ACA regulators have required mental health coverage and compliance with the mental health parity rule as part of the ACA’s essential health benefit requirements.  Thus the final rule “wipes out” the small group plan exemption found in the 2008 law.

OPM’s 2014 Open Season website is operational and OPM’s Federal Benefits Facebook page and Twitter account are again operational. Open Season is only a few days away. Can the FEHBlog control his excitement?

CVS Caremark, the major phamacy chain / prescription benefits manager,  issued a positive third quarter earning report on Tuesday according to the AP. This nugget is of interest given OPM’s push for generic drug utilization:

CVS Caremark said more than 81 percent of the prescriptions it dispenses from its retail pharmacies are now generics. That’s up from nearly 80 percent in last year’s quarter.
In contrast, the company’s retail pharmacies had a 73 percent generic dispensing rate in the third quarter of 2010, a year before top-selling drugs like the cholesterol fighter Lipitor lost U.S. patent protection. 

OPM also has been pushing plans to give plan members ready access to their claim records through Blue Button. That’s all well and good but the mother lode of information is the doctor’s records, and Government Health IT reports about successful initiatives to make primary care doctors’ notes available to patients electronically.

Finally Employee Benefit News discusses how mobile devices can supplement traditional case management programs.

If people with chronic conditions only spend about an hour a year with their physician, how can they stay adherent with medication and their disease education for the 8,759 hours they’re outside the doctor’s office? The most promising answer is through mobile devices.
Health plan providers and plan sponsors can use mobile devices to monitor and engage participants with notifications, such as medication reminders, when it is most convenient for them. Backsliders know where they are failing through self-monitoring in real time and coaches monitoring their results can intervene when necessary.

The FEHBlog noted last week that HHS Secretary Sebelius had sent a letter to Congress last week indicating that exchange plans are exempt from the federal health programs anti-kickback law. Hospitals saw that law as an obstacle to pay patients’ premiums for exchange coverage, The Wall Street Journal reported that brand name drug manufacturers were jumping for joy because the letter appeared to give the green light for the use of co-pay cards in the exchanges. Yesterday, however, CMS posted the following FAQ which will not make hospital or drug manufacturer CFOs happy:

Q: Are third party payors permitted to make premium payments to health insurance issuers for qualified health plans on behalf of enrolled individuals?
A: The Department of Health and Human Services (HHS) has broad authority to regulate the Federal and State Marketplaces (e.g., section 1321(a) of the Affordable Care Act). It has been suggested that hospitals, other healthcare providers, and other commercial entities may be considering supporting premium payments and cost-sharing obligations with respect to qualified health plans purchased by patients in the Marketplaces. HHS has significant concerns with this practice because it could skew the insurance risk pool and create an unlevel field in the Marketplaces. HHS discourages this practice and encourages issuers to reject such third party payments. HHS intends to monitor this practice and to take appropriate action, if necessary.

But let’s end on an upbeat note. The Cleveland Clinic, a hospital, recently announced its top ten medical innovations for 2014 (not a typo). The number one innovation is a “bionic retina, capable of restoring rudimentary sight in patients after years of near blindness,” Amazing.

Katherine Archuleta was sworn in as OPM’s 10th director yesterday. The OPM press release is here — the White House blog post welcoming Ms. Archuleta is here — Ms. Archuleta’s own OPM Director blog post is here. Good luck, Ms. Archuleta.