Yesterday, the Government Accountability Office released its report on the Postal Service’s plan to withdraw from the FEHBP.  The GAO recognizes that the Postal Service plans to reduce its own employee health benefit costs by shifting expenses onto the already rickety Medicare program. GAO also notes the reaction of OPM officials that  “any time a large change occurs in the [FEHB] program there can be unintended and unforeseen issues that arise. FEHBP has not experienced a reduction in enrollment of this size in the past.”  Based on the FEHBlog’s 30 years of experience with the FEHBP, he could not agree more. The Washington Post, the Federal Times, and Govexec.com all have written about the GAO report. Tomorrow at 10 am Federal News Radio will discuss the GAO report and OPM’s proposal to add a self and one option to the FEHBP.

The US Preventive Services Task Force recommends recommends with a “B” rating that “women whose family history is associated with an increased risk for deleterious mutations in the BRCA1 or BRCA2 genes be referred for genetic counseling and evaluation for BRCA testing.”  The ACA regulators in ACA FAQ XII decided that when the medical counselor recommends BRAC testing, the plan must cover the test with no cost sharing when performed in-network. Now Cigna is changing its policy to require genetic counseling before the health insurer pays for extensive testing to determine if the [member] have genes associated with breast cancer [the BRAC test], ovarian cancer, colorectal cancer or a heart condition called Long QT syndrome” according to the Hartford Courant.  Bloomberg discusses the impact of the policy change on the manufacturer of the BRAC test.  In the FEHBlog’s view, Cigna’s approach reflects common sense.

A few business days ago, Standard & Poors released its latest health care cost indices:

Eight of the nine S&P Healthcare Economic Indices showed higher annual growth rates for June 2013 compared to May 2013. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.14% in June, up from 4.09% reported in May. Annual growth rates in Medicare costs increased by 1.27% in June, according to the S&P Healthcare Economic Medicare Index, up from a 1.22% rate recorded last month.
The Hospital Index’s growth rate posted 2.05% in June, up from 1.97% reported in May. The Hospital Medicare Index recorded a 2.17% annual rate in June, up from 2.09% posted last month. The Hospital Commercial annual growth rate posted 1.95% in June, up from 1.85% recorded last month.
The Professional Services Index annual growth rate was 3.86% in June, marginally up from the 3.85% May value. The Professional Services Commercial Index accelerated to 6.08% in June, up from 6.06% reported last month. The Professional Services Medicare annual growth rate hit a new low of -0.39% in June, down from -0.38% recorded in May.

Cost curve up!

Congress remains in its district work session / recess this week.

On Friday. OPM published its annual notice implementing the medically underserved area (“MUA”) provision of the FEHBA, 5 USC § 8902(m)(2). That provision requires fee for service FEHB plans to reimburse all State licensed provider for covered services rendered within the scope of their respective licenses in medically underserved states annually designated by OPM.  The provision expands the provider pool in medically underserved states.

Govexec.com reports that “Federal employees in Montana and South Dakota will no longer receive
special treatment for their health benefits coverage in 2014, the Office
of Personnel Management has announced” because those States are on the 2013 MUA list but are not on the 2014 MUA list. But surprise!  The Affordable Care Act has its own version of § 8902(m)(2) which applies nationwide. As the previously FEHBlog noted, in ACA FAQs XV, the ACA regulators discussed new Public Health Service Act § 2706 as follows:

[Under § 2706], to the extent an item or service is a covered benefit under the plan or coverage, and consistent with reasonable medical management techniques specified under the plan with respect to the frequency, method, treatment or setting for an item or service, a plan or issuer shall not discriminate based on a provider’s license or certification, to the extent the provider is acting within the scope of the provider’s license or certification under applicable state law. This provision does not require plans or issuers to accept all types of providers into a network. This provision also does not govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations.

Cavest: § 2706 technically does not apply to non-grandfathered plans but OPM in othe cases has applied these reforms, such as the “free” preventive care to all FEHB plans regardless of their grandfathered plan status (which is entirely within OPM’s discretion in the FEHBlog’s view.)

Federal Radio News reports that OPM has kicked off its bi-annual Federal Employee Benefits Survey (“FEBS”).  The acting OPM Director explained in a memorandum that

The main purpose of the survey is to measure the importance, adequacy and value of employee benefits to ensure that available benefits align with best practices and employee needs. The FEBS will also help to evaluate whether or not Federal employees understand the flexibilities and benefits available to them.  Additionally, based on the ongoing focus on health and wellness programs across all Federal agencies, the survey will capture information regarding employee perceptions of health status and healthy living. As was the case in 2011, the 2013 FEBS will contain a section about the fully covered tobacco cessation benefit offered by all Federal Employees Health Benefit (FEHB) Plans.

The 2013 FEBS will be administered confidentially via e-mail to a random sample of Federal Government employees. Agency supervisors should be advised that employees may complete the approximately 15-minute survey during work hours.  The survey will be available online for a period of four weeks with periodic reminders e-mailed to respondents. As with previous administrations of the FEBS, the results will be reported Governmentwide and will be used in the development of benefits policy and educational programs. 

Fedsmith.com recently conducted its own benefits survey which found the FEHBP to be quite popular.

Finally, the IRS now has a sporty new ACA website.

OPM decided to treat exchange plans are FEHB plans and make the government contribution on that basis. A surprising twist in the proposed rule is that while OPM does allow exchange coverage to count toward the five year requirement, the members of Congress and official staffers will have to receive their annuitant coverage in the exchanges. However, the exchanges are designed to cover people over 65 with Medicare coverage. That could change in the final rule.

The West Virginia Gazette reports that West Virginia Congresswoman Shelley Capito plans to refuse the Government contribution for exchange coverage and introduce a bill blocking members of Congress from receiving the Government contribution.  She could be a trendsetter.

A new political twist is that the OPM rule has generated an abortion coverage debate as explained in the AP story. Go figure.

The Wall Street Journal had a very encouraging story earlier this week about targeted cancer therapies. The article explains that just 10 years ago, doctors recognized two types of lung cancer — small cell and non-small cell. Now researchers have identified 15 genetic mutations representing 65% of lung cancer cases.  Drug companies are working furiously on targeted therapies to fix these mutations. The article discusses a 41 year old woman who was given three months to live in 2010 due to a lung cancer that had spread to her brain. Her doctor discovered that she has an indentified genetic mutation for which a targeted therapy exists. She is still alive today although long term effectiveness of the fix is not guaranteed. The article concludes that

Tests for mutations are less likely to be available in smaller doctors’ offices. Even many large centers are just putting in place systems to act on the information. “A lot of places can tell you they do this now, but few really have the people in place who know what to do,” says Roy Herbst, chief of medical oncology at Yale Cancer Center, New Haven, Conn., who is Ms. Carey’s current oncologist.
But rapid diagnostic advances are making it easier for any doctor to test for the newfound cancers. Tests now can hunt for more than 200 mutations—of lung and other cancers—in one biopsy.
Evidence that precision medicine works will likely broaden its use quickly. A June 2013 report on 1,007 patients with advanced lung cancer whose tumors were sequenced by a group of researchers called the Lung Cancer Mutation Consortium found that 62% had alterations suspected of being driver mutations.
The researchers reported that the 265 patients on the study treated with a targeted drug had a median survival of 3.5 years from diagnosis, compared with 2.1 years for the 361 patients for whom a mutation wasn’t identified.
“It opens up so many more doors for patients if you can find their target,” says Alice Shaw, an oncologist at Mass General in Boston.

The FEHBlog was saddened to learn yesterday from the Chicago Tribune that the American Medical Association is shutting down the AMA News on September 9, 2012, and the AMA News website at the end of this year. The FEHBlog has been a loyal subscriber of this publication for over a decade. The AMA News provides tremendous insights on the medical profession and it will be missed. But the FEHBlog plows on.

In this year’s call letter. OPM encouraged FEHB plans to take advantage of the Choosing Wisely campaign (which the FEHBlog had pitched before the call letter.)  “Choosing Wisely® aims to promote conversations between physicians and patients by helping patients choose care that is: Supported by evidence; Not duplicative of other tests or procedures already received; Free from harm, and Truly necessary.” These are the standard parts of any health plan’s medical necessity limitation.  The campaign’s principal sponsor, the ABIM Foundation, has announced that “In late 2013 and early 2014, leading medical specialty societies will release more than 30 new lists of specific tests or procedures they say are commonly ordered but not always necessary and could cause harm as part of the Choosing Wisely campaign.” Stay tuned.

Athena Healthcare released its annual physician sentiment index. The long and short of it is that physicians are not happy campers.

Another unhappy camper is Affinity Health Plan, Inc. which just agreed to pay the federal government $1,215,780 million to settle a HIPAA privacy and security rule complaint. The alleged violation arose when Affinity returned leased photocopiers to the lessor without wiping the hard drives included in photocopiers these days. The lessor then passed along one of the photocopiers to CBS News and the rest is history. According to the HHS press release,

Affinity estimated that up to 344,579 individuals may have been affected by this breach. OCR’s investigation indicated that Affinity impermissibly disclosed the protected health information of these affected individuals when it returned multiple photocopiers to leasing agents without erasing the data contained on the copier hard drives.  In addition, the investigation revealed that Affinity failed to incorporate the electronic protected health information (ePHI) stored on photocopier hard drives in its analysis of risks and vulnerabilities as required by the Security Rule, and failed to implement policies and procedures when returning the photocopiers to its leasing agents. 

Fool me once, etc.

Congress is out until after Labor Day. Before heading out of town, the House Energy and Commerce Committee approved 51-0 a legislative fix to the broken sustainable rate of growth formula that sets Medicare Part B reimbursements. The AMA News features a full report.

The AMA News also offers a tool to allow doctors and health plans know which screenings should be offered with no-cost sharing in 2014. The list can be broken down by gender and age group. (Technically the ACA only applies this requirement to non-grandfathered plans but OPM has directed all FEHB plans to comply with the requirement.)

AHIP issued a report on health plan efforts to improve health literacy. Illustrating the great ying and yang of life, Kaiser Health News reports on health insurer use of Twitter to improve customer service.

“Social media gives us a tremendous opportunity to learn what the community needs,” said Carissa O’Brien, social media director at Aetna.

She works with six people to address the approximately 250 people who seek help through social media with claims or other services each month. O’Brien said the team tries to respond within an hour to users, who tend to be between 35 and 54 years old.

The FEHBlog particularly enjoys following Twitter while watching sporting events on television.

Finally, in a bit of good litigation news, the American Lawyer reports that  a federal district court in Maryland ruled against the Equal Employment Opportunity Commission in a case challenging Freeman Inc’s use of credit history and criminal background checks.

In his opinion Friday, Judge Roger Titus wrote that while “some specific uses of criminal and credit background checks may be discriminatory and violate the provision of Title VII, the EEOC bears the burden of applying reliable expert testimony and statistical analysis that demonstrates disparate impact stemming from a specific employment practice before such a violation can be found.”

The judge was derisive of the EEOC’s evidence. This is an important decision because the HIPAA Security Rule encourages, if not requires, the use of such background checks on health plan employees who have access to protected health information.

The FEHBlog has always been intrigued by the PBM business. The Motley Fool has a video about a PBM newcomer Catamaran. The teaser explains that

Catamaran (NASDAQ: CTRX  )  is becoming a serious contender in the pharmacy benefits management, or PBM, industry.  The company reported quarterly results last week that crushed expectations.  Revenue was up 101%, and net income shot up 132% in year-over-year comparisons.  

Of course there has been an explosion of smartphone and tablet applications. The Privacy Rights Clearinghouse warns that

After studying 43 popular health and fitness apps (both free and paid) from both a consumer and technical perspective, it is clear that there are considerable privacy risks for users – and that the privacy policies for those apps that have policies do not describe those risks. However, these apps appeal to a wide range of consumers because they can be beneficial, convenient, and are often free to use.
Consumers should not assume any of their data is private in the mobile app environment—even health data that they consider sensitive.

(The Clearinghouse does not identify the apps that it reviewed.)  The AMA News warns doctors not to recommend apps unless they confirm that the app offers adequate privacy protections. That’s good advice for insurers too.

Finally the AMA News reports on a new trend of doctors using physicians assistants to conduct scripted telehealth calls to certain post-op patients. “Consultants said that although most insurers don’t pay doctors for phone calls, new payment models that reward physicians based on quality and efficiency of care might provide a boost to the idea of phone-based follow-ups.”

Robert Pear in the New York Times has an interesting piece today discussing the consequences of OPM’s decision to provide Members of Congress and their official staff members with a government contribution for health insurance exchange coverage beginning next year. As Mr. Pear points out, a defect in the law and related regulation is the expectation these all of these folks to receive exchange coverage. However the exchanges are designed and priced to cover people under age 65. This cadre no doubt includes many people over age 65. The ACA anticipates that people aged 65 and older will receive Medicare coverage. Time will tell.

Earlier this year, the ACA regulators created a transitional safe harbor for complying with the ACA’s new out-of-pocket maximums.  The regulators are permitting plans that use a separate prescription manager, for example, to have separate out-of-pocket maximums for medical and prescription drug benefits. The consumer groups objected to the decision. Modern Healthcare reports that the ACA regulators have told the consumer groups to pound sand.

Modern Healthcare also is reporting that CMS is increasing pressure on health insurers to comply with the HIPAA 270 and 271 standard electronic transactions which are eligibility inquiries. Apparently there is a large insurer that is not cutting the mustard, as they say.

Finally voluntary.com has posted a Healthpocket.com list of the top 10 procedures not covered by health insurance. No big surprises in the list.

This morning OPM issued a proposed rule together with a Fact Sheet, Qs & As and a Benefit Administration Letter which “details how Members of Congress and Congressional Staff will be insured through the Health Insurance Exchanges” in 2014. OPM will continue to make a pre-tax government contribution toward exchange coverage based on FEHBA, rules and affected individuals can carry their exchange coverage over into retirement with the government contribution. OPM will allowed Congressional offices flexibility in designating personal (or official) staff members subject to this requirement.

In a related development, Sen. Tom Coburn removed the hold that he had placed on Senate consideration of the President’s nominee for OPM Director, Katherine Archuleta, according to the Federal Times.

Congress has adjourned until the week after Labor Day when it returns to address appropriations for the federal fiscal year that begins on October 1.  Before leaving DC, the Chairman and Ranking Member of the Senate Homeland Security and Governmental Affairs Committee, Sens. Tom Carper (D Del) and Tom Coburn (R Okla) introduced a postal reform bill .  Federal New Radio reports on highlights of the bill, which include changes that affect the FEHBP.

Reginfo.gov informs us that OPM submitted its 2014 Congressional coverage proposed rule (mentioned in Friday’s post) to OMB on Friday August 2.  OMB has at least 30 days to conduct its review but this puppy is on track to be issued this week as the White House was involved in developing the rule.

Also on Friday CMS released its final Medicare Part A inpatient prospective payment system (“IPPS”) rule for fiscal year 2014.  This massive rule making details the changes in the Medicare program’s payments to hospitals beginning October 1, 2013. “The final rule would increase IPPS operating rates by 0.7 percent after accounting for inflation and other adjustments required by the law.”  The rule also changes the readmission penalty program as follows:

In October 2012, Medicare began encouraging to hospitals with excess 30-day readmissions to lower 30-day readmission rates for heart attack, heart failure, and pneumonia patients by reducing a portion of the hospital’s payments by up to one percent, depending on their performance on key readmissions measures. As required by law, the FY 2014 IPPS rule increases the maximum reduction of payments to up to two percent.  It adds hip and knee surgery and chronic obstructive pulmonary disease to the list of conditions used to determine the reduction, effective in FY 2015.  CMS has increased the number and types of planned readmissions that no longer count against a hospital’s readmission rate.  

Kaiser Health News details the impact of the penalty program on hospitals. The total penalty is $227 million for the next federal fiscal year.  The penalty will be imposed on 2,225 hospitals, about the same number as last year.  The average penalty will drop nationally from .42% to .38%.  “Unlike other new programs created by the federal health law, the
readmissions program offers hospitals no rewards for improvements or the
opportunity to opt out.”  

The IPPS rule also implements a change in approach to coverage of hospital observation services. Those services generally are considered outpatient care covered by Medicare Part B. Under the new rule certain observation stays spanning two midnights will be considered an inpatient stay covered by Medicare Part A. BNA and Kaiser Health News report on an HHS Inspector General report on this practice issued last week.

Following up on the mid-week update, the New York Times (and Politico) reports today that

The Obama administration told Congress on Thursday that it would allow the federal government to continue paying a large share of the cost of health insurance for members of Congress and their aides, averting a problem for many who work on Capitol Hill.
However, under the arrangement, lawmakers and many of their aides will have to get coverage through new health insurance marketplaces, or exchanges, being set up in every state.

This means that over 10,000 FEHBP enrollees will be leaving for the exchanges in January. Congress will not lose all interest in the FEHBP because the FEHBlog expects that the OPM rule will allow these people being booted out of the FEHBP to retain their right to FEHBP coverage at retirement (assuming five years of FEHBP or exchange coverage immediately pre-retirement). .

OPM is expected to issue a proposed rule next week.   Reginfo.gov does not show the rule having arrived at OMB for review yet but these ACA rules can move through OMB quickly plus the White House was involved in this matter.

Better late than never. The ACA regulators finally have issued their 2013 CLAS County Data List. The introduction to the list explains that

PHS Act section 2719 requires non-grandfathered group health plans and health insurance issuers offering non-grandfathered health insurance coverage to provide relevant notices in a culturally and linguistically appropriate manner. The regulations implementing section 2719 require these plans and issuers to make certain accommodations for notices sent to an address in a county meeting a threshold percentage of people who are literate only in the same non-English language. This threshold percentage is set at 10 percent or more of the population residing in the claimant’s county, as determined based on American Community Survey (ACS) data published by the United States Census Bureau. 26 C.F.R. § 54.9815-2719T, 29 C.F.R. § 2590.715-2719, and 45 C.F.R. § 147.136.

It would be more helpful if the list identified changes from 2012. In any event, nationwide plans tend to provide these translation services nationwide.

Finally, Mass Device reports that a “Washington, D.C., cardiologist was hit with a $17 million [False Claims Act] judgment after being found [liable for] submitting false claims for nuclear imaging tests to Medicare and state health programs — plus our beloved FEHBP! Here’s a link to the U.S. Attorney’s press release.

Have a good weekend.