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 ….

The Senate is in session this week while the House is in recess. The AMA News and Modern Healthcare discuss the Medicare Part B payment mess that Congress will face following the Presidential election. The statutory sustainable rate of growth formula is projected to require roughly a 1/3 cut in Medicare Part B payments to doctors for 2013 unless Congress acts.

The excitement begins to build for the annual OPM AHIP FEHBP carrier conference which will be held at the end of this month. Around that time OPM issues its carrier letter calling for benefit and rate proposals for the next year known as the call letter. Proposals are due at the end of May.

OPM has posted more information on its website for tribal Indian employers who decide to join the FEHBP.

The Wall Street Journal is reporting this afternoon that the Federal Trade Commission appears increasingly unlikely to block the Express Scripts – Medco merger “though the FTC may still seek to impose conditions on the deal, according to person familiar with the matter.” As the FEHBlog noted last year, the merger agreement includes certain business divestment provision intended to ease anti-trust concerns. The FTC is asking other vocal opponents of the deal, such as the National Association of Chain Drug Pharmacies and the National Community Pharmacist Association, “how else their objections could be addressed without blocking the deal.” While the deadline for an FTC decision is next week, “the companies have agreed to give the agency more time while the two sides work toward a possible settlement, people familiar with the matter said.” But of course, it’s not over until it’s over.

In 2009 then New York Attorney General Andrew Cuomo reached a settlement with Ingenix to spinoff its schedule for pricing out of network doctor services to an as yet unformed non-profit group which is now FAIR Health. This week now Governor Andrew Cuomo’s administration issued a report titled an “Unwelcome Surprise — How New Yorkers are getting stuck with unexpected medical bills from out-of-network providers. The report chastises both insurers and health care providers. In the FEHBlog’s opinion, the best way to avoid a surprise without increasing healthcare costs is better communication with members / patients.

Kaiser Health News reports about a book titled “The Patient’s Checklist” by Elizabeth Bailey. The book provides 10 checklists that “many essentials of a hospital stay, including sections on what to bring with you, medication management, how to make your hospital safer and more comfortable, and planning for your discharge.”  This is the kind of helpful information that empowers patients and their families to coordinate their own care.

The AMA News writes about efforts to control the costs generated by the costliest 1% of the American population — more than 20% of all health care costs.

An individual in the costliest bracket typically receives much of his or her care in hospitals — sometimes in multiple hospitals in the same city. Lack of care coordination is a significant driver of this spending. These missed connections are “probably the primary reason why we cannot manage costs on people who have multiple morbidities,” said Ira Klein, MD, chief of staff to the chief medical officer at the insurer Aetna

The article discusses efforts to improve coordination efforts but the article concludes by pointing out the key role that the patient and his or her family members can play in coordinating care.

Dr. Albert said sometimes the level of family involvement in a patient’s care is the difference between a frequent hospital visitor and a person who stays healthy. One of his patients, an 85-year-old widower, has congestive heart failure, hypertension and diabetes. The man ends up in hospitals regularly in part because he has difficulty adhering to his medication regimen. He has relatives nearby, but they are not closely involved in his care.

But another patient of Dr. Albert’s — a man with similar health problems — stayed out of hospitals for three years in a row before he died at the age of 90. The extended run was possible because the man’s wife doggedly tracked his medications and health care needs and monitored his diet.

“We called her his little pharmacist, his little nurse,” Dr. Albert said.

Such personal responsibility plays a key role in health care and controlling health care spending.

The Washington Post reported yesterday about a study suggesting that the use of electronic medical records is not bringing down health care spending.  This morning I was with my 17 year old son who has had back pain. The doctor advised that the MRI was normal but he wanted to order at CT scan to rule out a stress fracture. I thought to myself here we go — more money down the drain. But the doctor explained what he noticed in the MRI which caused his to order the follow up test. It turned out that my son does have a stress fracture.  Good judgment by the doctor. The point is that the practice of medicine remains as much as art as it is a science, and electronic medical records won’t change that. However, it may improve record-keeping and care coordination,among other things.

Congress returns to work after a long weekend on Tuesday.

OPM continues to update its webpage that discusses the impending expansion of FEHB Program coverage to Indian tribal employers who elect that coverage for their employees. Here is a link to OPM’s helpful quick guide for tribal employers.

Businessweek reports that investors are expecting the Federal Trade Commission to approve the merger between the two large prescription benefit managers, Express Scripts and Medco Health Solutions.

The gap between Medco’s share price and the value of Express Scripts’ cash-and-stock bid narrowed to $4.41 this week, the smallest since the deal was announced in July, according to data compiled by Bloomberg. The transaction, valued at $71.71 a share yesterday, is still offering about a 90 percent annualized premium if it wins the Federal Trade Commission’s approval by the end of a 30-day review period that wraps up in two weeks, enabling the takeover to close as early as March 31, estimates Westchester Capital Management Inc. That’s the highest return among deals in the U.S. and Canada over $5 billion.

Here’s something to do over the weekend. GAO has created a Watchdog podcast on its recent report evaluating research on savings from generic drug use.

Meanwhile “industry insiders” are telling AIS Health that “the potential expense and length of time required to bring biosimilars to market under the [Food and Drug Administration’s] “conservative” regulatory draft guidance [recently mentioned in the FEHBlog] is giving some drug manufacturers pause. According to the AIS article these industry insiders are concerned that the FDA is not taking advantage of the fact that fourteen biosimilar drug applications already have been approved by the European Union. The FEHBlog assumes that the industry insiders are thinking that the FDA should provide a shortcut approval on these drugs.

Ihealthbeat reports that the National Institutes of Health announced on Wednesday the launch of its web-based Genetic Testing Registry.  The Registry, which is still under development, is intended “to serve as a centralized public resource for clinicians, researchers, and consumers to access information about the availability and scientific basis of numerous genetic tests.”

Finally, Business Insurance reports on a new National Business Group on Health survey finding that employers are continuing to ramp up the use of wellness incentives with their employees. “Just under 73% of employers used incentives in 2011 as part of their health improvement programs. The average incentive value was $460, up from $430 in 2010 and $260 in 2009.”

Shocker! Healthcare IT News reports that “A majority of respondents to a new survey from Edifecs, which develops technologies for regulatory compliance and data exchange, says an ICD-10 postponement would do little to improve readiness – but could have significant adverse effects.” Unquestionably delaying the compliance date for some covered entities but not others will increase costs for health plans. What will be the American Medical Association’s next target for disruption?

Speaking of the AMA, the AMA News reports that health insurers are branching out into businesses that don’t have minimum loss ratios / profit ceilings — a trend that the FEHBlog has been following with interest.

Kaiser Health News discusses another trend of interest to the FEHBlog — health insurers are opening retail stores in shopping malls. The stores are “a reaction to the shift from wholesale to retail in insurance sales,” says Paul Ginsburg, president of the Center for Studying Health System Change. “In wholesale sales, employers were the buyers. Now insurers are recognizing that retail will be more important.” Retail has been a sales focus in the FEHBP for over 50 years.  Not surprisingly therefore, Robert Krughoff, Walton Francis, and Robert Ellis have written in the Health Affairs Blog about how health insurers can learn marketing lessons from FEHBP Open Seasons.

Modern Healthcare reports that spurred by OPM’s requirement that FEHB plans offer “blue button” technology to their members, Health Level Seven announced that “by April 2012 it will have a file conversion tool and user’s guide to adapt its Continuity of Care Document message transport specification to the Blue Button format developed by the U.S. Veterans Affairs Department.”

Finally, Drug Store News reports that “The Food and Drug Administration on Tuesday announced it will hold a public hearing on March 22 and 23 to discuss how technology can expand which drug products can be switched from prescription to over-the-counter status.”  The FEHBlog recalls when a public outcry, rather than the manufacturer, pushed the FTC to move the antihistamine Claritin to over the counter status. Over the counter drugs typically are not covered by health plans so conversions can bend the health care cost ruler down.

The House of Representatives and the Senate are back in session this week following the Presidents’ Day recess.

Business Insurance offers a gallery of the ten health plan sponsors that took the most cash out of the now depleted Early Retiree Reinsurance Program created by the Affordable Care Act. The big winners are large businesses and state governments. The FEHBP likely dodged a political bullet by being excluded from this program.

NCQA is seeking public comment on proposed changes to its HEDIS measures for 2013.  HEDIS measures are intended to measure health plan quality. The major changes appear to involve the CAPHS member survey associated with the HEDIS measures.  The new measures concern treatment of schizophrenia. The one terminated measure concerns call center abandonment.

Kaiser Health News reports on a new federal government effort to improve patient safety called HENS.

Recent research by the HHS Office of the Inspector General (OIG) and
others has found a much higher rate of harm. A Medicare patient today
has a one-in-seven chance of suffering harm in the hospital, a risk about four-to-seven times greater than in the IOM report.

Moreover, nearly 9 out of 10 incidents are never reported,
the OIG concluded, even including incidents that led to patient deaths.
“If you measure all-cause harm, you find it in about one-third of
patients,” says the University of Utah’s Dr. David Classen, lead author
of a 2011 study that appeared in Health Affairs.

Why aren’t the hospitals and doctors leading this effort on their own?

Earlier this week, a federal judge in San Francisco issued a permanent injunction enjoining the Office of Personnel Management from interfering with the enrollment of Karen Golinski’s sex wife under her self and family FEHB coverage. Ms. Golinski and her wife had married during the period when California permitted same sex marriages. In reaching this conclusion, the judge held the Defense of Marriage Act (“DOMA”) unconstitutional as applied to the case. As you may recall, about one year ago. the Justice Department announced that it would no longer defend DOMA’s constitutionality and since then the House of Representatives (majority side) has been defending the law in court. That “BLAG” has now appealed the decision to the U.S. Court of Appeals for the Ninth Circuit according to the Hill.  The same issue is pending before the U.S. Court of Appeals for the First Circuit in Boston.

The Federal Times reports on OPM’s efforts to contract for at least two multi-state plans that will participate in the Affordable Care Act’s health insurance exchanges beginning in 2014.

Modern Healthcare reports that the healthcare industry generally was pleased with the proposed HHS rule establishing guidance on Stage 2 of the meaningful use requirements that underpin the program subsidizing electronic health records purchased by health care providers. The FEHBlog took note that the requirements ramp up the use of encryption particularly on mobile devices according to Information Week. That’s good advice.

Today the Health and Human Services Department announced start up funding totaling $639 million for seven new CO-OP health plans authorized by the Affordable Care Act.  The CO-OP plans which hopefully will not be the Solyndras of the ACA will be able to offer health plans inside and outside the health insurance exchanges beginning in 2014. Kaiser Health News reports that

Some experts are skeptical that these fledgling health plans can
compete effectively against large, established insurers. They warn of
the difficulties of recruiting experienced insurance executives and of
quickly signing up a large enough and healthy enough membership to make
the plans financially viable. Many nonprofit insurance plans launched
under federal initiatives in the past 40 years went bust or were sold or
converted to for-profit status.

“It’s comforting to say that existing plans are wasteful and are
driving costs up for selfish reasons,” said Peter Kongstvedt, a
Virginia-based health care consultant. “The truth is it’s not easy to
get costs down. It’s hard for me to believe [co-op plans] can be more
efficient and effective.”

Speaking of health care costs, the Standard & Poors healthcare index rose for the most recently reported month December 2011.

Across the board, healthcare costs as measured by annual rates of change went up in the last month of the year. 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 5.28% over the 12-months ending December 2011. This was an increase from the +4.85% annual growth rate posted for November 2011.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 7.11% over the year ending December 2011, moving up from the +6.63% reported for November. Growth rates in Medicare claim costs rose by 2.51%, as measured by the S&P Healthcare Economic Medicare Index, up from the 2.15% reported for November. The broad Hospital and Professional Services Indices annual growth rates also posted increases from their November 2011 rates; they increased 4.99% and 5.34%, respectively, from their December 2010 levels. These are above the +4.69% and +4.76% respective annual rates posted in November 2011.

HHS announced last week that the government has expended over $3.1 billion to fund electronic healthcare record systems for hospitals and doctors. Why don’t the providers have any extra cash to handle the ICD-10 upgrade? In this regard, the AMA News reports that doctors are very concerned about the impending April 1, 2010, deadline for use of the ANSI 5010 electronic transaction standards to submit Medicare claims. The 5010 standards are the prerequisite for ICD-10 implementation.

The FEHBlog wraps up this Tuesday with two more ACA tidbits

• Business Insurance reports that the ACA’s early retiree reinsurance fund (initially funded with $5 billion in 2010) has been exhausted.
• CCIIO (great acronym) issued FAQs on the essential health benefits bulletin last week, evidently in response to some of the comments submitted at the end of January.