Federal employees have tomorrow off but Congress has given itself the whole week off to celebrate Presidents’ Day. The Hill’s Floorwatch reports that Congress has only four legislative days left to avoid the sequester that begins on March 1. The Hill also reports that the defense industry has resigned itself to the sequester starting but hopes for a grand bargain before the continuing resolution funding federal government operations expires on March 27. The sequester will hit Medicare (as the AMA wails) but it will not impact the FEHB Program according to a September 2012 report from the Office of Management and Budget (OMB, see page  134). That’s due to the fact the FEHBP is funded from a separate trust fund in the U.S. Treasury (Employee Health Benefit Fund).  Of course, whenever Medicare gets hit directly, the FEHBP gets hit indirectly as providers shift their sequestration and other Medicare related losses onto the FEHBP and other employer sponsored health plans.

Speaking of Medicare, the Hill reports that HHS has shared with OMB a proposed rule applying an 85% minimum loss ratio to Medicare Advantage and Medicare prescription drug plans effective next year. These plans reported also will be hit by a 2% sequester in the current fiscal year, just like doctors. The Gorman Health Group has explained that  “The Part D cuts will affect the direct subsidy and not low income subsidies or reinsurance.  We would expect plans to submit higher bids next year to make up the difference.  MA plans that include drugs will have a double hit.”

In Affordable Care Act News, last Friday was the deadline for states to announce whether or not they would create their own health insurance exchange or marketplaces next year. Kaiser Health News reports that

The Obama administration will be running new health insurance marketplaces in half the states— including the major population centers of Texas, Florida and Pennsylvania.
The federal government had hoped more states this week would agree to
form a partnership exchange—the deadline to apply was Friday—but the
offer was largely rebuffed. New Jersey, Ohio and Florida, several of the
biggest states that had not declared their intentions, officially said
no late in the week. * * *
For consumers, it should make little difference whether the new Internet
sites are run from state capitals or Washington, D.C. But federal
regulators hoped states would shoulder some of the work and stakeholder
groups such as hospitals and insurers wanted states to help as well. The
exchanges will open for business Oct. 1. 

Also the Washington Post reported that “Obama administration officials said Friday that the state-based “high-risk pools” set up under the 2010 health-care law will be closed to new applicants as soon as Saturday and no later than March 2, depending on the state.  But they stressed that coverage for about 100,000 people who are now enrolled in the high-risk pools will not be affected.” Congress appropriated $5 billiion for these pools in the ACA.

Following up on the last FEHBlog post, the Wall Street Journal reported Wednesday that “Investors reacted with surprise to WellPoint Inc.’s  choice of hospital executive Joseph R. Swedish as its new chief executive, sending the company’s shares down 4.6% Wednesday as many scrambled to learn more about the incoming leader of the second-largest health insurer.” Again illustrating that the choice was bold. (Not to mention the fact that Mr. Swedish is 61.)

The Wall Street Journal also published an interesting interview with the head of Deloitte’s Center for Health Care Solutions about the impact of the Affordable Care Act on individuals, employers, States, and healthcare providers. One of his observations which the FEHBlog has noted is that the law pushes health care providers to consolidate and that tends to raise prices.  The article concludes that “The next couple of years will bring the biggest changes to the American health-care system since the advent of Medicare and Medicaid in 1965. We’re about to find out if they’re for the better.”  Hey, it’s the FEHBlog’s job to belabor the obvious.

Mobile Health News reports on an Inmedica study finding that in anticipation of a flood of new patients next year. “the American telehealth market is predicted to grow by 600 percent between 2012 and 2017. While there are currently 227,000 US telehealth patients, according to InMedica, that figure is forecast to reach up to 1.3 million patients in 2017. US telehealth revenues, meanwhile, will jump from $174.5 million last year to $707.9 million in 2017.” it will be interesting to see how health insurers react to this development.

Finally, AHIP reports on a bipartisan bill introduced in Congress to repeal the health insurer tax or fee. This is a particularly insane provision of the Affordable Care Act that will saddle health insurers with a fee that starts next year at $ billion and ramps up tp $14.3 billion in 2018 and keeps rising after that.. To add insult to injury, the law does not permit insurers to deduct the fee as a business expenses on their corporate tax returns. This double whammy will cost “an average family will pay over $300 in higher premiums, seniors
enrolled in Medicare Advantage will face $220 in reduced benefits and higher
out-of-pocket costs, and state Medicaid managed care plans will incur an
additional $80 in costs for each person covered.”   Cost curve up.

The federal government has created a Healthmap vaccination provider finder to help people find out where to get vaccinated. For the FEHBlog’s neighborhood the #1 choice is a local CVS MinuteClinic. That can’t make the AMA happy.

CAQH, an alliance of health insurers, has announced

[T]he launch of a new, universal electronic funds transfer (EFT) enrollment tool for providers that facilitates the use of electronic payments between payers and providers by offering a single point of entry for adopting EFT. By streamlining and automating the EFT enrollment process, the tool creates efficiencies and cost savings for both payers and providers by eliminating the need for providers to enroll in EFT separately for each health plan in which they participate.

Beginning January 2014, all payers will be mandated to offer EFT under the requirements of the Patient Protection and Affordable Care Act (ACA) and Medicare will only reimburse providers through EFT. However, the Department of Health and Human Services (HHS) reports that only 32 percent of healthcare claims were paid electronically in 2010, partially due to the current cumbersome and burdensome enrollment processes which require that providers enroll separately with each payer. The switch to EFT for provider reimbursement will eliminate the need for redundant paperwork, reduce the time spent on printing, mailing and receiving checks, lower lockbox fees, as well as enable tighter security on monetary transactions. 

The CAQH press release indicates that Aetna and Cigna currently are making the new tool available. Quicker access to cash – that could improve relations between the Hatfield and McCoys too.

Following up on the last two FEHBlog posts on hospital readmissions, Kaiser Health News reports that

Writing in the Journal of the American Medical Association, researchers found no relationship between readmissions and mortality rates for Medicare patients who had heart attacks or pneumonia between 2005 and 2008. The paper did find a “modest” inverse relationship between readmissions and death rates for heart failure patients, where hospitals with low death rates tended to have somewhat higher readmission rates. But that was only for a small portion of hospitals and not strong even then.

“I feel we’ve dispelled the notion that your performance in mortality will dictate your performance in readmission,” said Dr. Harlan Krumholz of Yale University School of Medicine, the lead author of the study. “This result says they appear to be measuring different things, they’re not strongly related to each other and you can clearly do well on both.”

In other words, readmissions are not a sign of quality care.

Finally, the FEHBlog read with interest the report of a $50 million class action against a Long Island hospital whose patients were victimized by an identity theft ring.

Terence Lynam, spokesman for Great Neck, N.Y.-based North Shore-LIJ, confirmed in an e-mail that two people have been convicted and “multiple” other people have been arrested for operating “a widespread identity theft ring that victimized a number of organizations and about 1,000 individuals throughout the Northeast, including about 200 North Shore University Hospital patients.”

The victims say the 11-hospital system failed to notify them that their information had been compromised, even as thieves traveled the country opening credit lines and bank accounts in patients’ names, buying iPhones, maxing out patients’ existing credit cards and even filing bogus tax returns using victims’ information

This will be an interesting case to follow.

The House of Representatives and the Senate are both in session this week. On Thursday, the House Energy and Commerce Committee is holding a hearing about repealing and replacing the sustainable rate of growth formula discussed in Friday’s FEHBlog entry.

Modern Healthcare featured a detailed AP story about the myriad of efforts underway to reduce the “epidemic” of hospital readmissions, a topic in which OPM recently has shown interest.

There is no single solution. But what’s clear is that hospitals will have to reach well outside their own walls if they’re to make a dent in readmissions.
Otherwise a slew of at-home difficulties — confusion about what pills to take, no ride to the drugstore to fill prescriptions, not being able to get a post-hospital check-up in time to spot complications — will keep sending people back.
“This is a team sport,” says readmissions expert Dr. Eric Coleman of the University of Colorado in Denver. It requires “true community-wide engagement.”

Last year an underregulated compounding pharmacy in Massachusetts caused a string of deaths due to tainted medicine.  The Washington Post reported last week that

Shoddy practices and unsanitary conditions at three large-scale specialty pharmacies have been tied to deaths and illnesses over the past decade, revealing that the serious safety lapses at a Massachusetts pharmacy linked to last fall’s deadly meningitis outbreak were not an isolated occurrence, records and interviews show.

The AMA News reports this morning on the litigation fall out from the this catastrophe. Litigation is impacting the prescribing doctors on negligence and product liability theories because the compounding pharmacy quickly was shut down. . .

The sustainable rate of growth formula has been a political football for almost a decade. The SGR is a statutory formula that is used to annually adjust the reimbursement formula (known as the resource based relative value schedule) that Medicare Part B uses to pay doctors. Every year for the past eight or nine years the SGR has called for a sharp reduction in Medicare payments to doctors, and every year Congress defers the cut which is too painful to doctors and the Medicare beneficiary community. There is a concern that a sharp cut in Medicare reimbursements will cause doctors to leave Medicare in droves and with the looming expansion of the insured population next year that’s a very real threat. There won’t be enough doctors already according to many reports (and common sense).  However, the Washington Post’s Wonkblog recently took the contrary position.

The SGR debate is relevant to the FEHBP because the FEHBP has a large cadre of Medicare eligible annuitant members. FEHB plans pay secondary to Medicare so when Medicare cuts payments, FEHB plans pick up the slack. That would happen for example when the statutory sequestration kicks in on March 1 and cuts Medicare payments to doctors by 2%.  Also pursuant to the FEHBA (5 USC § 8904(b)) fee for service plans pay doctors using Medicare reimbursement rates for annuitants over 65 who have declined Medicare Part B coverage.

The current SGR fix lasts until the end of this year. Medpage Today and the Hill’s Health Watch report on Congressional activity to repeal and replace the SGR this year. The FEHBlog was most intrigued by the AMA News article about how health insurers who are not bound by statutory reimbursement formulas are testing out new approaches such as shared savings, medical homes, and performance contracts. Time will tell.

The FEHBlog apologizes that last Friday’s FEHBlog entry was posted after the Super Sunday entry. The system clutched and failed to post the Friday entry on the same day.

The Wall Street Journal reports today that

[I]nsurers and health systems are sending teams of doctors, nurses, physician assistants and pharmacists into homes to monitor patients, administer treatments, ensure medications are being taken properly and assess risks for everything from falling in the shower to family care-giver burnout. Some are adopting programs called “Hospital at Home” to provide hospital-level care in the home, including portable lab tests, ultrasounds, X-rays and electrocardiograms.
In large part, the aim is to avoid new financial penalties from the Centers for Medicare & Medicaid Services. … But there is also growing pressure to keep patients from being admitted to the hospital in the first place, especially if they have chronic disease. Such patients, particularly older ones, are more vulnerable to infections and complications like bed sores in the hospital, and are actually safer at home, experts say.  * * *

For example, insurer Aetna  is contracting with home health agencies to expand a transitional care program for customers of its Medicare Advantage plan in a number of communities around the country. A pilot for the program reduced readmissions by 20% and saved $439 per member. “It is costly to send nurses into the home, but not nearly as costly as readmissions,” says Aetna national medical director Randall Krakauer.

The Commonwealth Fund issued a report concerning lessons from early adopters of telemedicine — an important innovation in a time where the medical profession could be overwhelmed by the ACA.  “Remote patient monitoring (RPM)—like home teleheath and
telemonitoring—can help improve coordination, improve patients’
experience of care, and reduce hospital admissions and costs.”

Innovation to lower overall costs. Cool. Unfortunately the Wall Street Journal also reports that the medical profession is fighting efforts by paraprofessionals like physicians assistants to fill this gap.  The FEHB Act, 5 U.S.C. § 8902(m)(2), for many years has required plans to reimburse paraprofessionals acting within the scope of their licenses for services normally only covered when provided by MDs when the care is provided in medically underserved states as designated by OPM. The number of medically underserved states is likely to grow in the next few years. The fights discussed in the WSJ article concern the scope of paraprofessional state licenses. For example,

One of the bitterest fights is in Kentucky, where physician assistants are lobbying the state legislature to repeal a law that says that for the first 18 months after certification, physician assistants are allowed to treat patients only when a supervising physician is on site. Being in phone contact isn’t deemed sufficient. 

AHIP released a claims processing survey today. Among the findings were the following tidbits:

• In 2011, 93 percent of electronic claims were processed within two weeks, compared to 79 percent of paper claims.
• The percentage of claims that were automatically adjudicated—processed without manual intervention—rose significantly from 37 percent in 2002 to 79 percent in 2011.
• In 2011, the average cost of processing a claim was reported at $1.36 per claim. The average cost of processing an automatically adjudicated claim was $0.99 per claim; the average cost of processing a “pended” or delayed claim (often a claim that requires additional information or more complex manual processing) was $3.99 per claim.
• In 2012, responding plans estimated that 88 percent of all claims were paid on an “in-network” basis, up from 85 percent in 2008.

Well we deserve a TGIF this week because it was a full work week. The FEHBlog’s high school senior son was shocked this morning when there was no two hour school delay even though it was lightly snowing. The snow has now stopped.

The Obama Administration keeps rolling out new Affordable Care Act regulations. On Wednesday HHS and IRS regulations governing the individual mandate (or tax in Chief Justice Roberts view) were issued. Here’s a link to the HHS fact sheet.  According to these rules, federal and postal employees and annuitants who enroll for FEHBP coverage, which is employer sponsored coverage, will not be subject to the individual mandate penalty, which is $95 in 2014 and ramps up to $695 over three years or so.

The Hill’s Healthwatch blog observes that “The Obama administration had a clear message Wednesday as it issues rules for the healthcare law’s individual mandate: Not many people will be affected by the new requirement to buy insurance or pay a penalty.” That can’t make insurers happy as they have been relying a strong penalty / tax to offset the risks of eliminating pre-existing condition penalties.

As an aside, the FEHBlog refers readers to the New York Times Economix blog which explores an interesting and perfectly legal (for now) approach to gaming the individual mandate. Complex laws get people to thinking.

Around Thanksgiving, the IRS issued proposed welllness program rules allowing health plan sponsors to adjust premiums based on certain health factors as wellness program incentives. These rules do not apply to the FEHBP because there is a statutory contribution formula (5 U.S.C. § 8906). The comment period on this rule recently ended. Business Insurance reports that several powerful Democratic members of Congress asked regulators “to severely limit wellness programs that use premium variation based on health status factors as an incentive, by narrowing the allowable health status factors to tobacco use only.”   Given the fact that HHS responded to similar objections to the HITECH Act rule, the FEHBlog expects HHS to jump again here (and why not? — although health cost curve up).

Both of Houses of Congress will be in session this week. The Hill’s Floor Watch blog sums it up this way — the two Houses will pursue “dueling agendas.” Meanwhile the March 1 sequestration implementation date gets ever closer without a compromise in sight. (Of course the sequestration itself was something of a compromise when Congress and the President created the deficit reduction approach in August 2011.) The sequestration would not adversely impact the FEHBP directly but doctors will not sit still for the 2% Medicare cut that would hit them.

Mark the tape. On Friday, health insurers officially became public utilities. As part of the great compromise to permit both the exercise religious freedom and the delivery of free contraception to women, the Administration is proposing to mandate that the health insurers provide free insurance.

With respect to insured group health plans, the eligible [religious employer] organization would provide the self-certification to the health insurance issuer, which in turn would automatically provide separate, individual market contraceptive coverage at no cost for plan participants.  Issuers generally would find that providing such contraceptive coverage is cost neutral because they would be they would be insuring the same set of individuals under both policies and would experience lower costs from improvements in women’s health and fewer childbirths.

With respect to self-insured group health plans, the eligible organization would notify the third party administrator, which in turn would automatically work with a health insurance issuer to provide separate, individual health insurance policies at no cost for participants.  The costs of both the health insurance issuer and third party administrator would be offset by adjustments in Federally-facilitated Exchange user fees that insurers pay.

The FEHBlog does not know where this compromise leaves faith based health plans. In FEHB appropriations laws, Congress has exempted those plans participating in the FEHBP from the FEHB’s contraception coverage mandate.

Also on Friday, America’s Health Insurance Plans issued a series of detailed state based reports about the problem of out of network providers who fly the pirate flag and charge exorbitant rates. The problem is nicely illustrated in this LA Times article. CMS issued a health care transparency rule on Friday about relationships between health care providers and drug manufacturer representatives. How about a professional ethics rule requiring providers to inform patients about the price of the care before it is rendered? Lawyers have to discuss that issue with their prospective clients. Dentists do it too because the insurance is limited.  

The New York Times reports that specialty drug manufacturers are lobbying state legislatures to pass laws restricting the ability of pharmacists to substitute biosimilar drugs for brand name drugs even before the Food and Drug Administration has approved a regulatory pathway for approving the marketing of biosimilar drugs in the U.S. That’s crazy.

Modern Healthcare reports that the Trust for American Health has issued a report urging smarter government spending and oversight of preventive care. Reuters gets to the nub of the issue

The report also makes an economic argument for preventive care, highlighting the possibility of reducing healthcare spending — which in 2011 reached $2.7 trillion, just shy of 18 percent of gross domestic product — by billions of dollars. And that has health economists shaking their heads.

“Preventive care is more about the right thing to do” because it spares people the misery of illness, said economist Austin Frakt of Boston University. “But it’s not plausible to think you can cut healthcare spending through preventive care. This is widely misunderstood.”

The FEHBlog understands the public health economics often are counter-intutitive and that economic forces tend to force the cost curve up despite the best efforts of health plans and insurers..

The House of Representatives in in recess this week while the Senate continues to work on the Hurricane Sandy relief legislation according to the Hill.

Modern Healthcare reports that health care “reform brightens the [finanial] outlook” for for profit hospital chains like HCA and Tenet. The chains already have taken their bitter medicine over the cliff deal and sequestration, the next shoe to drop on March 1, will hit doctors, not hospitals, with a 2% Medicare cut which has the AMA News freaking out.

The S&P Healthcare Index for the 12 months ended November 2012 (the most recent report) was up 5.07%, a deceleration from the 5.27% rate reported for the prior month. The Professional Services Commercial Index remained over 9%.  The Hospital Commercial Index hit its lowest rate since the index began in January 2005 — an annual growth rate of 4.26%.

Modern Health care also reports on health plan and healthcare provider efforts to lower the cost of specialty drugs — a concern that OPM raised in the March 2012 benefits and rates proposal call letter. When will the Food and Drug Administration finally create the regulatory pathway for biosimilar or generic specialty drugs which Congress requested almost three years ago. The European Union created this gateway over a decade ago. Puzzling indeed.

Government Health IT provides five sensible tips for health care providers and health plans to prepare for an HHS Office for Civil Rights audit of their compliance with the HIPAA Privacy and Security Rules. Enforcement efforts will only continue to ramp up as we hit the fourth anniversary of the HITECH Act’s passage as part of the early 2009 financial stimulus law.