The House and the Senate are now in recess for two weeks, and tomorrow is National Employee Benefits Day.

Over the next week we could see the Federal Trade Commission rule on whether or not the proposed merger of two large prescription benefit managers Express Scripts and Medco comply with federal antitrust laws. The parties intelligently included provisions in their deal that would spin off certain businesses in order to satisfy the regulators. Press reports indicate that the FTC asked the parties objecting to the deal if there were other changes that could be made to satisfy them. In other words, the deal may look somewhat different if the FTC rules  in favor of the deal. 

Forbes reports that “the Express Scripts–Medco merger may go through very soon, there is fresh speculation that the Walgreen’s drug store chain may enter into a new deal with Express Scripts” within the next month or two. As noted in the FEHBlog Walgreens and Express Scripts had a contract spat last year that lead Walgreens to stop serving Express Scripts members. (This explains why your local CVS pharmacy has signs reading “Welcome Express Scripts members.” Walgreens lost quite a bit of business as a result of the breakup.

As the FEHBlog has noted several state attorneys general are contemplating a lawsuit if the FTC approves the merger, and drug store trade associations are not leaving anything to chance. The Wall Street Journal reports that the trade associations are seeking a temporary restraining order in federal court against the merger.  The Journal also reports that legal experts predict that the associations will have a very tough row to hoe if the FTC approves the deal.

Happy New Year! OPM kicked off the new FEHBP contracting year yesterday by issuing the annual call letter for benefit and rate proposals at the OPM AHIP FEHBP carrier conference. OPM’s Healthcare and Insurance Director John O’Brien gave the keynote speech. Carriers have until the end of May to submit their benefit and rate proposals for 2013. Mr. O’Brien announced that he expects ten new plans to join the FEHBP for 2013.

Mr. O’Brien also discussed the new minimum loss ratio based pricing methodology for community rated FEHB plans (except for those using traditional community rating). This methodology replaces the similarly sized subscriber group or SSSG methodology that has been in use for decades. OPM issued a final rule implementing this change, which was tested for the current plan year. The rule, which will be published in the Federal Register on Monday is available here.

Earlier this week, the FEHBlog noticed press reports that the Federal Trade Commission might issue a decision approving the Express Scripts Medco merger (with changes) by today. The order has not been forthcoming. The news, however, evidently did provoke trade associations of drug stores to bring their own anti-trust lawsuit against the two PBMs in a federal court located in Pittsburgh PA. The Legal Newsline reports that “A coalition of public interest groups and leading competition advocates are calling on state attorneys general to block [this proposed merger.”

Federal News Radio, among other sources, reports on the House Federal Workforce Subcommittee hearing concerning the Postal Service’s plan to withdraw from the FEHBP.  The hearing was held yesterday  morning. The report describes the lawmaker’s reaction as skeptical. The FEHBlog suggest reading Walton Francis’s testimony before the Committee which places the issue in perspective and explains the skepticism.

Last year, a federal employee sued OPM in federal court to force the agency to cover her same sex spouse. OPM had declined the request based on the Defense of Marriage Act. The federal court which sits in San Francisco (which is not a crack because the Judge is a George W. Bush appointee) held that the Defense of Marriage Act is unconstitutional as applied to this case. The Court ordered OPM to grant the federal employee’s request. Although the case has been appealed to the Ninth Circuit, no party sought to stay this order, and the Washington Post reported yesterday that OPM appropriately has complied with the order. The U.S. Court of Appeals for the First Circuit, which sits in Boston, will consider the same issue in arguments to be made before the entire court (rather than a three judge panel) on April 4.

The Federal Trade Commission did release its consumer privacy framework on Monday. “The final report calls on companies handling consumer data to implement recommendations for protecting privacy, including:

• Privacy by Design – companies should build
  in consumers’ privacy protections at every stage in developing their
  products. These include reasonable security for consumer data, limited
  collection and retention of such data, and reasonable procedures to
  promote data accuracy;
• Simplified Choice for Businesses and Consumers
  – companies should give consumers the option to decide what information
  is shared about them, and with whom. This should include a
  Do-Not-Track mechanism that would provide a simple, easy way for
  consumers to control the tracking of their online activities.
• Greater Transparency – companies should
  disclose details about their collection and use of consumers’
  information, and provide consumers access to the data collected about
  them.”

Closer to home, Fierce Health IT reports that the mega-rule implementing the 2009 HITECH Act’s changes to the HIPAA Privacy and Security Rules applicable to FEHB plans, other health plans, health care providers, healthcare clearinghouses, and their business associates has been sent to the U.S. Office of Management and Budget for its final review before the rule is published in the Federal Register.

[The rule] combines four separate rulemakings: the changes to HIPAA’s privacy and
security rules mandated by the HITECH Act; the new enforcement
requirements and higher penalty requirements; the final regulations of
HITECH’s breach notification rule; and changes to HIPAA to incorporate
the Genetic Information Nondiscrimination Act (GINA). OCR also will
release guidance to help entities implement the changes, including an
updated business associate agreement.

The House and Senate will be session this week. The Federal Workforce subcommittee of the House Oversight and Government Reform Committee will hold a hearing on Tuesday morning at 10 am about whether a stand alone Postal Service health plan would solve the Postal Service’s financial crisis. The witnesses will be the Postmaster General and Walton Francis, an expert on the FEHBP.

On Thursday and Friday of this week, OPM and AHIP will hold the annual FEHBP carrier conference. OPM traditionally makes the call letter for 2013 benefit and rate proposals public at this conference. The FEHBlog will be in attendance.

Of course, the U.S. Supreme Court will hold three days of arguments this week on the constitutionality of the Affordable Care Act.  The FEHBlog gave up on predicting Supreme Court decisions about five years ago. The Court is expected to issue its decision in late June.

Modern Healthcare reports that the Federal Trade Commission will issue a privacy framework tomorrow at 11 am. “A key issue in the report could be the FTC’s position on the role of
consent in the sharing or trading of an individual’s personally
identifiable information.”

Cardiology Today reports on the Food and Drug Administration’s hearings last week about ways to expand the definition of over the counter drugs.   Pharmacists argued that greater pharmacist involvement would facilitate the expansion. The AMA was not so sure. Interestingly,

[One] idea generated included an algorithm available through a store kiosk or
the Internet that would allow consumers to find out whether a specific
medication would be right for them. The algorithm would include
questions about sex, age and chronic disease history and provide
information about the medication that would help consumers with
self-diagnosis.

It’s somewhat surprising that the Department of Health and Human Services (“HHS”) has not yet defined what it meant by stating that “certain health care entities” would be given an ICD-10 code set compliance date beyond October 1, 2013. Which health care entities and how long of a delay?

Iheathbeat reports on a scholarly Health Affairs article which makes the following conclusion

Instead of moving toward ICD-10 standards, the authors recommended that the health care industry move toward implementing ICD-11 code sets. They note that ICD-11 standards are closely linked with the Systematized Nomenclature of Medicine-Clinical Terms, which is a key part of the meaningful use Stage 2 criteria.

Under the 2009 federal economic stimulus package, health care providers who demonstrate meaningful use of certified EHR systems can qualify for Medicaid and Medicare incentive payments. The authors recommended that federal officials allow a grace period for compliance with the ICD-10 code sets or push back the compliance deadline by one to three years.

Of course, the HHS mandate is being issued under HIPAA, a 1996 law intended to facilitate the electronic payment of health plan claims. The law has nothing to do with public health, but public health reporting concerns are the foundation for switching to the ICD-10.  The FEHBlog expects that a lot of money could be saved by repealing HIPAA and letting the health care industry set these payment standards.

Speaking of electronic recordkeeping, CIO includes an article with the eye popping number from a Ponemon Institute study finding that “the average organizational cost per [electronic] data breach was $5.5 million in 2011, down
24 percent from $7.2 million in 2010. Additionally, the cost per compromised
record fell to $194 per record, down $20 (10 percent) from 2010.” The article adds this interesting tidbid

While the decline in costs should benefit businesses, the reason for the
decline may not be so reassuring.

“I think the root cause is that people are maybe becoming a little numb to
the notification,” Dr. Ponemon says when asked to speculate on the driver for the decline in lost
business costs. “Maybe most of us by now have received one if not more
notifications. Over time, if you don’t become a data breach victim as a result
of the event, it begins to lose its impact. These notifications are becoming
almost ubiquitous. It’s hard to determine which ones I should care about.”

The FEHBlog hopes that HHS reads this study as it certainly supports the interim HIPAA unsecured PHI breach notice rule’s harm prerequisite to issuance of such a notice.

On Monday, the Affordable Care Act regulators issued their eighth set of Frequently Asked Questions about the law, which is celebrating its second anniversary. These FAQs provide helpful and suprisingly flexible guidance to health plans about the new summary of benefits and coverage requirement. The new requirement made the FEHBlog think — wouldn’t it be nice if providers provided patients with standard information about their billing practices and networks in which they participate?

In that regard, the AMA News reports on readily available resources to improve health care literacy.

The FEHBlog noticed that the HHS rule on health insurance exchanges creates a role for paid “navigators.”  Not surprisingly, health insurance agents who have been squeezed by the minimum loss ratio rule, see this as a bone. More interestingly to the FEHBlog, the AMA News is reporting that health insurers are hiring companies that provide health system navigation services to consumers. “Most notably, Highmark, a Pittsburgh-based Blue Shield plan that has nearly 5 million members, will provide a call-in service. Highmark hired Health Advocate, based in Plymouth Meeting, Pa., to provide myCare Navigator, a service available to all members.” Highmark’s press release is here.

Modern Healthcare reports on a WEDI study on the state of ICD-10 code set implementation which according to MH suggests that delaying implementation beyond October 13, 2013, is a good call.

Finally, the FEHBlog noticed a Fierce Health article about the unnecessary costs of using general anesthesia with gastroenterological diagnostic procedures like colonoscopies and endoscopies. This is where public health cost estimates get so slippery. Yes those procedures could be done under local anesthesia. But if local anesthesia is required, how may patients would opt out of routine procedures which might avoid a deadly colon cancer. The FEHBlog would think twice.

Business Week reports that at least five large states –Georgia, New York, Pennsylvania, Ohio, Texas and California — are considering filing lawsuits to challenge the Express Scripts / Medco merger if the Federal Trade Commission approves the deal, presumably with required changes.

Two pharmacy groups opposing the acquisition said last week the FTC asked them to suggest ways to revise the deal so it wouldn’t harm competition. The request may indicate the agency will approve the deal with conditions, said Jeffrey Schmidt, a former director of the FTC’s Bureau of Competition. 

The states could seek a temporary delay in the acquisition’s close and a court order to permanently prevent the deal’s consummation, said Billy Vigdor, an antitrust lawyer with Vinson & Elkins LLP in Washington who represents investors with an interest in the deal.

The article notes that 25 states plus the FTC are scruntizing the deal.

Last week, Standard and Poors that its monthly healthcare economic composite index  (covering both commercial insurance and Medicare) increased by 5.21% in January 2012, which as a decline from the 5.30% growth rate in December 2011. The gap between the increase in commercial insurance vs. Medicare costs is striking, as usual.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 7.05% over the year ending January 2012, down from the +7.11% reported for December 2011. Growth rates in Medicare claim costs rose by 2.40%, as measured by the S&P Healthcare Economic Medicare Index, down from the +2.52% reported for December. 

Looking at the narrower sub-indices, the Professional Services Medicare Index hit a two-year low of +3.32% in January 2012, down from +3.73% in December 2011. The Hospital Medicare annual growth rate increased in January at +1.56%, it was up from its +1.48% December level. The Professional Services Commercial Index decelerated to +6.02% in January from +6.15% in December; and the Hospital Commercial Index marginally decreased to +7.84% in January from +7.85% in the previous month.

Following up on Wednesday’s post, the FEHBlog noticed Blue Cross Blue Shield of Tennessee’s press release about the $1.5 million settlement with HHS over the data breach. The FEHBlog has no interest in piling on BCBST because there but by the Grace of God go all of us. However, the FEHBlog noticed that the stolen hard drives included data that BCBST was under no legal obligation to maintain — “audio and video recordings related to customer service telephone calls from
providers and members” and the total bill to date has been $17 million. “The company’s response to the crime included the encryption
of all its at-rest data—a voluntary effort which goes above and beyond current
industry standards.” Remember to destroy protected health information in accordance with the HHS rules.

Not surprisingly, CMS yesterday further extended from March 31, 2012 to June 30, 2012, the deadline by which providers must submit electronic claims to Medicare on the new X 5010 electronic transaction format. That format can accomodate the ICD-10 code set which has one more digit per code than the existing ICD-9 codeset. According to a CMS bulletin reported by Healthcare IT News,

• The Medicare Fee-for-Service (FFS) program is currently reporting successful receipt and processing of over 70 percent of all Part A claims and over 90 percent of all Part B claims in the Version 5010 format.
• Commercial plans are reporting similar numbers.

Yesterday a group of Republican Senators, led by Sen. Rand Paul of Kentucky introduced a Medicare reform plan — called the Congressional Health Care for Seniors Act (S. 2196) — that would transitions seniors into the FEHBP. The press release explains that

In order to ensure low premiums and prevent plans from cherry-picking patients, the CHCSA creates a new “high-risk pool” for the highest cost patients within the FEHBP. The federal government will directly reimburse health care plans for enrolling the costliest 5 percent of patients, which keeps premiums low while allowing high-risk patients to get the same high-quality health care as every other enrollee – federal employees and seniors alike.

Govexec.com reports that the proposal was not well received by the federal employee unions or NARFE because the seniors would be in the same risk pool as the federal employees and annuitants which would increase premiums for the FEHBP enrollees, even with the high risk pool.

On Monday, the Department of Health and Human Services issued the final rule governing the establishment and operation of State based health insurance exchanges and the small business oriented program known as SHOP. A fact sheet on the final rule is available here. Although the FEHBP is considered to be a consumer choice model among employer sponsored plans, this exchange rule appears to create a system that is more administratively complicated and much more technology dependent than the FEHBP.  For example, Business Insurance reports on how the rule requires the exchanges to inform employers that an employee has applied for exchange coverage and is eligible for a premium subsidy. The FEHBlog recognizing the limitations of technology hopes that the agency is not overreaching.

The Congressional Budget Office released updated health care cost projections yesterday. Modern Healthcare reports that CBO projects that Medicare’s costs will double over the next decade and that Medicaid’s costs will grow at an even faster rate.

Blue Cross Blue Shield of Tennessee agreed to pay the federal government a $1.5 million penalty under the HITECH because 57 unsecured hard drives including protected health information were stolen from one of its facilities.  According to the HHS press release, “OCR’s investigation indicated BCBST failed to implement appropriate
administrative safeguards to adequately protect information remaining at
the leased facility by not performing the required security evaluation
in response to operational changes. In addition, the investigation
showed a failure to implement appropriate physical safeguards by not
having adequate facility access controls; both of these safeguards are
required by the HIPAA Security Rule.” A word is to wise ….