The FEHBlog, which likes to follow the Big Data trend, noted last year that Aetna, Humana, and United Healthcare had agreed to establish a health care claims databank managed by the Health Care Cost Institute.  (Kaiser Permanente more recently came on board with HCCI.) HCCI issued its first report today which reflected health care provided to 33 million privately insured Americans in 2010. The conclusion came as no surprise to the FEHBlog.

Rising health care prices were the chief cost driver for this demographic group. “HCCI confirmed 2010 prices for the privately insured grew more than utilization after accounting for changes in the mix of medical services provided in hospitals (0.7%) and outpatient facilities (4.6%).”  The Kaiser Health News reports that

As part of the federal health law, all states last year began reviewing premium increases of 10 percent or more, requiring insurers to justify the increases.  There are no similar national efforts to examine price increases by hospitals or other medical providers.

Insurers argue they are just passing along rising costs to consumers, keeping only a narrow profit margin and are often outgunned in contract negotiations by hospitals, many of which are “must-have” facilities in an insurer’s network.

“This is an important study that clearly demonstrates that rising prices for medical services are driving health care cost growth,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans, the industry lobby. “Reducing medical costs is essential to making health care coverage more affordable for individuals, families, and employers.”

 The prescription benefits management company Express Scripts issued a report last week titled “Nine Trends in Rx Plan Management.” The report notes that

Concerns with member health behaviors have rekindled an interest in wellness programs. While only 58 percent of respondents report that they currently use a wellness plan, 81 percent say they intend to offer one in the next two years.

Integrated pharmacy/medical data is likely to play an increasing role in identifying members at risk, and coordinating efforts with disease management and wellness vendors.

Unfortunately, the Obama Administration’s legislative proposal to shift FEHBP prescription drug management from the FEHB plan carriers to OPM, if adopted, would disrupt such ongoing care coordination efforts

Health Data Management reports that the Medical Group Management Association weighed in with 27 pages of comments on the proposed HHS rule to create a standard health plan identifier. The MGMA wants a lot more numbers that HHS.

The proposed rule permits a health plan to enumerate itself with just one identification number, but insurers often have multiple plans with different benefit levels and fee schedules. “Without knowing which entity performs each role in the revenue cycle, physician practices experience difficulties in processing transactions, reconciling claims and posting payments, all contributing to patient dissatisfaction and confusion,” according to the letter.

The MGMA’s comments don’t make a lot of sense to the FEHBlog because the details about the member’s coverage already can be drawn from the member’s identification number.  Hopefully common sense will prevail.

It’s the end of the week for the FEHBlog who is flying out to Madison Wisconsin for his younger daughter’s college graduation from UW.  Go Badgers.

At yesterday’s Senate Homeland Security and Governmental Affairs Committee hearing, the Committee approved by voice vote a bill (S. 1910) that would extend FEHBP and FEGLI coverage to the same sex domestic partners of Federal employees. The cost of the expansion would covered by an overdue amendment to the FEHB Act that would confirm the right of FEHBP carriers to be reimbursed for medical expense payments when the FEHB participant has also received reimbursement from a third party for the same medical expenses, e.g, through an auto insurance claim or a lawsuit. In other words, the provision would avoid a double recovery by the participant. That’s just common sense.

On Tuesday, the Department of Health and Human Services unveiled a new web-based tool  known as the Health System Measurement Project “that will make it easier for all Americans to
monitor and measure how the nation’s health care system is performing.” However, when the FEHBlog visited the site, he found a hearty endorsement for the Affordable Care Act’s increase of the child eligibility age to 26.

Today Standard and Poors announced 

The S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.68% over the 12-months ending March 2012. This is a modest deceleration from the +5.72% rate posted for February 2012. [However,] healthcare costs covered by commercial insurance plans increased by 7.84% over the year ending March

So the moderation apparently was produced by Medicare’s price controls.

The actuarial consulting firm Milliman released its annual Milliman Medical Index report yesterday.

The annual Milliman Medical Index (MMI) measures the total cost of
healthcare for a typical family of four covered by a preferred provider
plan (PPO). The 2012 MMI cost is $20,728, an increase of $1,335, or 6.9%
over 2011. The rate of increase is not as high as in the past, but the
total dollar increase was still a record. This is the first year the
average cost of healthcare for the typical American family of four has
surpassed $20,000.

The employee’s share including premiums and out of pocket costs is about 42% of the total cost.

Kaiser Health News reports about the activities of the State of Colorado, which is implementing an all payer claims database similar to what OPM is doing for the FEHBP. Colorado is one of 14 states that is using such a database to create an online application for  consumers.

[When the database is operational later this year, p]atients will be able to go online and see how much something is
actually going to cost them, and compare prices across hospitals and
doctors. They’ll be able to see how much variation there is in terms of
charges and costs. It will cover essentially all procedures, anything
that is billed and being paid for by an insurance company. 

OPM has expressed a concern in recent benefit and rate proposal call letters about rising prescription drug costs in the FEHBP. The AMA News reports that the cost curve could be brought down and patient safety could be increased if doctors adopted more conservative prescription habits. An article in the June 13 Annals of Internal Medicine  “makes several recommendations on how physicians can revamp
their prescribing habits, including considering other treatment options,
being more strategic about the prescriptions they write, being educated
about and aware of possible adverse effects, and being cautious of
prescribing new drugs.” Kudos to the authors.

Happy Mothers’ Day!!  Congress is in session this week. On Wednesday morning, the Senate Homeland Security and Governmental Affairs Committee will a hold a business meeting to consider among other items a bill (S 1910) that would extend FEHBP coverage to the same sex domestic partners of federal employees.

The Department of Health and Human Services trumpeted the announcement that it is “reduc[ing] unnecessary, obsolete, or burdensome regulations on American
hospitals and health care providers. These steps will help achieve the
key goal of President Obama’s regulatory reform initiative to reduce
unnecessary burdens on business and save nearly $1.1 billion across the
health care system in the first year and more than $5 billion over five
years.” Mind you these changes come on top of the recent announcement that the federal government has shelled out over $5 billion so far to fund the cost of electronic medical records systems for health care providers.

The FEHBlog has no problem with cutting red tape. What is notable, however, is that HHS contemporaneously heaped more red tape on health insurers by requiring them to their notify insureds that they are not required to  pay them a minimum loss ratio rebate for 2011.  Because the FEHBlog has been around for a while, he remembers when FEHB plans rebated reserves to insureds with OPM’s approval in the 1980s. They were rewarded with class action lawsuits over the rebate calculation methodology. No good deed, etc.

Speaking of electronic transactions, Thursday May 17 is the public comment deadline for the proposed rule that establishes a health plan identifier for those transactions (after 15 years) and extends the ICD-10 code set compliance date by one year to October 1, 2014. Modern Healthcare reports that the American Medical Association, whose complaints lead to the one year delay, wants a two year extension at a minimum. CMIO reports that two large medical information trade associations, AHIMA and CHIME, have also weighed in. AHIMA wants no extension, and CHIME is ok with the one year extension.

Following up on last week’s post about the IOM conference on the Nation’s obesity problem, Kaiser Health News reports that doctors and insurers are the key to fighting obesity.  Body Mass Index tracking already is included in the NCQA HEDIS measures and the Affordable Care Act made obesity counselling a free service. It strikes the FEHBlog that personal responsibility should be the first line of defense against this problem.

Finally, the Affordable Care Act regulators issued another round of FAQs on Friday (Part. IX (numbered like the Super Bowls)). This one focuses like FAQ Part VIII on the summary of benefits and coverage.

The AMA News has an interesting article about innovative ways to cut emergency room overuse.

There is no standard definition for what constitutes frequent emergency
department use, but researchers set four or more annual visits as a
cutoff. The 8% of patients who use the emergency department four-plus
times a year account for 28% of adult ED visits, according to a July
2006 Annals of Emergency Medicine study.

Not surprisingly, the article explains that coordinating care is critical which can be difficult to accomplish between medical and mental health providers.  The article identifies pilot programs that are underway to improve care coordination.

The Labor Department has created a mental health benefits parity web page and a new set of FAQs on understanding implementation of the Mental Health Parity and Addiction Equity Act of 2008. The new FAQs are not terribly enlightening. The most informative recent FAQs on this topic are labelled ACA FAQs VII.

The Food and Drug Administration’s external advisory panels have been meeting this week. News reports indicate that the panels are suggesting that the FDA approve a new over the counter, rapid response test for the HIV virus, the use of a drug called Truvada as a treatment for preventing HIV infection in people at risk for contracting AIDS, and a new anti-obesity drug called Lorquess. Final approval of these recommendations must come from the FDA itself.

For the past two years, OPM has asked FEHB plans to offer programs to reduce obesity in the annual benefit and rate proposal call letter. This week the Centers for Disease Control have been holding a Weight of the Nation conference to discuss national strategies to combat our obesity epidemic. Yesterday, a related Institutes of Medicine report was released. The IOM report

focuses on five critical goals for preventing obesity: integrating
physical activity into people’s daily lives, making healthy food and
beverage options available everywhere, transforming marketing and
messages about nutrition and activity, making schools a gateway to
healthy weights, and galvanizing employers and health care professionals
to support healthy lifestyles. The committee assessed more than 800
obesity prevention recommendations to identify those that could work
together most effectively, reinforce one another’s impact, and
accelerate obesity prevention.

Kaiser Health News advocates a more aggressive approach which relies on class action litigation.  The FEHBlog would like to give the IOM approach a chance.

The Washington Times reports that America’s Health Insurance Plans (“AHIP”) has weighed in on  a Food and Drug Administration initiative to create a new Goldilocks category of drugs in between prescription drugs and over the counter drugs. Prescription drugs by definition requires a doctor’s oversight to assure safe use, and OTC drugs do not. The new third category which the FDA has not yet approved would be known as safe use drugs.  “Patients wouldn’t need a prescription for safe use drugs but neither could they obtain them
over the counter. Instead, people could only buy the drugs after
diagnosing their ailments online or in the pharmacy.” Pharmacists rather than doctors would supervise the process. The American Medical Association is not keen on this aspect of the idea. AHIP generally supports the idea but suggests that there are questions that need to be addressed before the initiative is launched. This could lower the health care cost curve.

The AMA News reports that the AMA is keen on repealing the puzzling Affordable Care Act requirement that health plans, health care flexible spending accounts, and health savings accounts may only reimburse over the counter drugs that have been prescribed by a doctor. (Health plans generally do not cover OTC drugs.)  The FEHBlog is surprised that this provision has not been repealed yet.

The House of Representatives and the Senate return to work this week after a week long recess. The week, May 6 – 12, is Public Service Recognition week.

One of the multitude of Affordable Care Act mandates on health plans was to lower out-of-pocket costs for emergency room visits. This mandate kicked in for non-grandfathered plans for 2011. (Virtually all plans are non-grandfathered at this point.) Lo and behold, a recent survey from Highroads reports that “Employees and their families are making more trips to the emergency room (ER), urgent care facilities and specialists’ offices as relatively low co-pay costs are narrowing the gap between those and other services – notably primary care physicians.”

In this year’s benefit and rate call letter, OPM encouraged plans to eliminate elective deliveries before 39 weeks. This is part of HHS’s Strong Start initiative which, among other things, focuses on

early elective deliveries, which can lead to a variety of health problems for mothers and infants.  Up to 10 percent of all deliveries are scheduled as induced or surgical deliveries before 39 weeks that are not medically indicated. However, any early delivery, planned or spontaneous, can carry medical risks for mother and infant. According to research by organizations such as the American College of Obstetricians and Gynecologists (ACOG), the March of Dimes and others, elective deliveries before 39 weeks increase the risk of significant complications for mother and baby, as well as long-term health problems. 

The FEHBlog found support for this initiative in a recent March of Dimes and World Health Organization survey reported by WebMD which finds that the pre-term birth rates in the U.S. are higher than 130 other countries. WebMD reports that

Hyagriv Simhan, MD, chief of maternal-fetal medicine and medical director of obstetrical services at Magee-Womens Hospital of the University of Pittsburgh Medical Center, says the report is “incredibly valuable.”

The best way to minimize the risk of preterm birth is to plan pregnancy carefully, Simhan tells WebMD.

“Don’t wait until there is a complication to seek care, as then it is too late. Start planning even before conception, and make smart lifestyle choices, such as eating right and quitting smoking,” he says.

Also, babies should be spaced at least a year apart, Simhan says.

Finally, also on the preventive care front, the Los Angeles Times reports that “The number of baby boomers dying from a “silent epidemic” of hepatitis
C infections is increasing so rapidly that federal officials are planning a
new nationwide push for widespread testing.”  The government has been encouraging people at risk, e.g., those wbo used illegal injectable drugs in their youth or received blood transfusions before the AIDS crisis in the 1980s – be tested. Because doctors don’t usually asked older people about youthful indiscretions, Centers for Disease Control (“CDC”) is considering recommending that all people born between 1945 and 1965 be tested for this disease which is the leading infectious cause of cirrohisis and liver cancer in the U.S. The Times reports that

The CDC recommendation is coming in an era when safer, faster and more effective
drug treatments are becoming available, and more are being tested. The new
medications still have side effects but increase the odds of suppressing the
virus and its complications, according to research.
Health officials say
the new medications, although they aren’t cheap, are far less costly than liver
transplants and liver cancer treatment, which can climb into the hundreds of
thousands of dollars.
 

In 2014, the Affordable Care Act will subject health insurance companies operating in the health insurance exchanges and the FEHBP to a 2% premium tax.  The Sunshine State News reports on ongoing efforts to repeal that tax. Employers or employee organizations that self fund their health plans will not be subject to the tax. The Labor Department earlier this week issued its annual ACA required report to Congress on self-funded group health plans. Private sector group health plans that are self-funded also are exempt from state, but not federal, benefit mandates. Not surprisingly more and more private employers are looking at the feasibility of self-funding with the protection of stop loss insurance. Bloomberg Businessweek reports that on Tuesday the ACA regulating agencies issued a request for public input on that trend.  The agencies’ request explains that

It has been suggested that some small employers with healthier employees may self-insure and purchase stop loss insurance policies with relatively low attachment points to avoid being subject to these requirements while exposing themselves to little risk. This practice, if widespread, could worsen the risk pool and increase premiums in the fully insured small group market, including in the Small Business Health Options Program (SHOP) Exchanges that begin in 2014.

It’s not clear what the regulators could do but the Businessweek article indicates that certain states are beginning to react by creating a minimum attachment point for stop loss insurance. The attachment point has been analogized to the annual deductible under an individual’s health insurance coverage.

In yesterday’s post, the FEHBlog discussed the ongoing spat between Walgreens and Express Scripts. The FEHBlog was pleased to read a Pittsburgh Post Gazette article reporting that Highmark Blue Cross, which recently invested in a large Pittsburgh hospital chain has settled its long term dispute with a competing hospital chain the University of Pittsburgh Medical Center.  The parties reached agreement on a new Highmark network contract for UPMC with higher reimbursement rates and a term that extends through 2014.

Finally, Medscape reports that most doctors are wary of the financial risk associated with Accountable Care Organizations, the ACA innovation that are intended to reward hospitals and doctors for improving the quality of care. “Only a handful of physicians are involved in alternative patient-care delivery models. About 3% participate with Accountable Care Organizations (ACOs) but another 5% say that they plan to become involved in the coming year.” 52% of the 3200 survey physicians expect ACOs to lower physician income. The article is further evidence that the ACA is encouraging risk averse physicians to adopt the employment model of practicing medicine.

Health plans have been paying attention to the Internal Revenue Service’s recent proposed rule on the Affordable Care Act required fee to fund the Patient Centered Outcomes Research Institute (“PCORI”).  PCORI’s Board of Governors recently announced amendments to its draft research agenda.

The Board, during a public teleconference/webinar, also authorized
$30 million in funding over two years for a slate of 50 pilot projects
that will address a broad range of questions about methods for engaging
patients in various aspects of the research and dissemination process.

A full final version of the National Priorities and Research Agenda,
including accepted revisions, will be posted May 21 after final Board
review and approval at its next public meeting, in Denver.

The FEHBlog noticed a news report suggesting that the enormous Walgreen’s pharmacy chain and the enormous Express Scripts prescription benefit manager would kiss and make up after Express completed its acquisition of Medco Health Solutions which occurred recently. But no reconciliation has occurred yet. The Chicago Tribune reports that  “Drugstore operator Walgreen Co.
said Thursday monthly revenue from stores open at least a year slipped
again in April largely due to its split with pharmacy benefits manager Express Scripts Inc.” On the flip side, Business Insurance reports that “CVS Caremark Corp. raised its full-year forecast on Wednesday after
reporting a sharp rise in first-quarter sales as the drugstore operator
and pharmacy benefits manager continued to win over former patrons of
Walgreen Co. stores.” The split has been official now for over one calendar quarter and as Business Insurance points out the longer that the former Walgreen’s patrons shop at CVS the more likely that they will remain CVS customers.

The FEHBlog keeps track of the monthly S&P Healthcare Indices which display the yawning gap between statutorily fixed Medicare payments and commercial insurer payments.  AMA News reports about the strain that low Medicare reimbursement rates are placing on physician practices.

The American Medical Association said there is a 20% gap between what
Medicare pays — a major factor in keeping down physician prices — and
what it costs physicians to treat patients.

“The cost of providing care is going up,” said Glen Stream, MD,
president of the American Academy of Family Physicians. “There’s a
downward pressure on physician payment. At some point, something is
going to break.”

The articles discusses this interesting consequence:

Analysts often cite the lag between practice revenues and costs as
the reason why many physicians are seeking what they view as the
financial stability of hospital employment over the pressures of owning
an independent practice.
In 2001, 3% of residents surveyed by physician recruiting firm
Merritt Hawkins & Associates wanted to work as hospital employees.
In 2011, that number was 32%.
A total of 91,282 physicians and dentists had full-time employment at
community hospitals in 2010, a 47% increase from 61,972 in 2001, and a
7% jump just from 2010, according to the American Hospital Assn.

This consolidation outcomes seems to be an objective of the Affordable Care Act.

The House of Representatives and the Senate are in recess this coming week.

Also this week, May 1 marks the earliest effective date for FEHBP coverage of Indian tribal employees under the Affordable Care Act initiative that OPM is managing. The FEHBlog anticipates that most Tribal employers will elect to join at the beginning of a new plan year, typically January 1.

Speaking of ACA initiatives assigned to OPM, the George Washington University School of Public Health recently published an interesting research paper about the multi-state plans which OPM will create by contract similar to FEHB plans. However, these MSPs will participate in the state exchanges beginning in 2014, not the FEHBP. The authors, Trish Riley and Jane Hyatt Thorpe, observed that the MSPs may be a good landing place for members of Congress and their personal staff members whom the ACA kicked out of the FEHBP.  One of the tricky issues related to this transition is that federal employees, including the staff members, are entitled to FEHBP coverage into retirement if they have five years of FEHBP coverage preceding retirement. Personal staff members who are close to retirement age may be elect to retire before 2014 in order to preserve their FEHBP coverage.