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. 

Congress is out of session this week of Presidents’ Day.

The healthcare information trade association HIMSS is calling on the Health and Human Services Secretary to maintain the current October 1, 2013, implementation date for the ICD-10 code set. According to the association’s press release,

While HIMSS understands and recognizes that there are providers facing resource challenges to meet the compliance date, the conversion to ICD-10 code sets will affect more positive outcomes for patients. To that end, the Society offers a comprehensive and credible portfolio of ICD-10 related tools, resources, education, and community for health providers. Today, HIMSS and AHIMA will be releasing its “ICD-10 Critical Pathway to Getting Started – 2012 and Beyond.” This readiness tool is designed to help providers, just starting on the ICD-10 conversion effort, to achieve the October 1, 2013 deadline.

The solid point that HIMSS makes is that delaying the ICD-10 code set for some HIPAA covered entities but not for others will increase costs for those covered entities, such as health plans, that will have to employ both the ICD-9 and the ICD-10 code sets.

Earlier this month, the Food and Drug Administration issued “three guidance documents providing the FDA’s current thinking on key scientific
and regulatory factors involved in submitting applications for biosimilar
products to the agency.” Biosimilars are generic versions of specialty biologic drugs that are typically injectable and expensive. The European Union created such a pathway about ten years ago, and there are about a dozen biosimilar drugs on the market there according to the Wall Street Journal. It appears that the FDA will open a pathway here soon as authorized by the Affordable Care Act. The Wall Street Journal article points out that

Many of the knockoffs will be classified as comparable to branded biologics, but not copies that a pharmacist could automatically substitute. As a result, manufacturers expect they will have to do more than sell the therapies based on price, as companies do with traditional generics. They will have to promote biosimilars to doctors, as they do for brand-name drugs.

The essence is not going to be a typical generics business,” said Michael Kamarck, who’s heading Merck’s biosimilars effort. He said the brief history of biosimilars in Europe, where the medicines are approved, showed the need for “actively promoting” the medicines in order to get them used.

The Affordable Care Act created a 12 exclusivity period for biologic drugs. The Obama administration in its recent budget documents has sought to reduce that period to seven years to PhRMA’s dismay.

The Society for Human Resource Management discussed a recent CIGNA study of claims from 1.1 million insureds finding that “When American workers engage in health-smart habits offered in consumer-driven health plans (CDHPs), they reduced their health risks and lowered their total medical costs an average of $9,700 per employee over five years.”

The Washington Post reports that Congress has passed the tax extenders act that allows the payroll tax cut and the Medicare Part B patch to remain in place until the end of this year. It should be a humdinger of a lame duck session following the Presidential election.

OPM has posted its FY 2013 budget justification. This interesting document discusses OPM’s recent accomplishments and its plans for the future. Search for FEHB to find the points about our beloved program.

Speaking of planning, OPM announced three FEHBP related regulatory projects in the recent semi annual regulatory agenda:

As explained on OPM’s website and in the FY 2013 budget justification, OPM, pursuant to the Affordable Care Act, is opening the FEHBP to Indian tribe employers as soon as May 1, 2012.

HHS formally announced yesterday that it will take steps postpone the October 1, 2013, implementation date for the ICD-10 code sets “for certain health care entities.” HHS did not give details on the length but it did endorse the code set’s use. It looks like HHS will delay the ICD-10 code set for doctor’s offices but not for hospitals or health plans.

HHS also released yesterday for public comment model letters for insurers to use notify enrollees about the results of the minimum loss ratio testing for the prior year.  The letters are available on the CCIIO website.

The Postal Service unveiled a five year business plan that includes seceding from the FEHBP.

The big news tonight is that the House and Senate reportedly are close to a compromise to extend the payroll tax cut and the Medicare patch through the end of this year according to the Washington Post. If so it will be a very good day for the American Medical Association. Earlier today, the Acting Administrator of the Centers for Medicare and Medicaid Services announced that the Administration will reconsider the current timetable for implementing the ICD-10 code set according to this AMA News Report.  The FEHBlog should have known better than to underestimate the AMA’s clout, particularly in an election year.

Speaking of AMA clout, ihealthbeat reports that last week a federal judge in New York City approved a plan to distribute the $350 million that United Healthcare agreed to pay in a settlement with the AMA over the Ingenix usual reasonable and customary fee schedule that insurers used to price out of network claims. It took three years for the doctors to agree on how to split up the money. $50 million went to the lawyers.

Here’s a link to the Office of Personnel Management section of the President”s FY 2013 budget proposal that was released yesterday. The budget includes OPM’s proposal to “streamline” FEHBP prescription benefit contracting, a change that requires Congressional approval.

Business Insurance reports that

The president’s budget proposal for fiscal year 2013 seeks a total of
$364 billion in health care savings over 10 years, which the White House
hopes to achieve by cutting Medicare and Medicaid payments to health
care providers, raising costs on future Medicare beneficiaries and
cracking down on waste and fraud.

Unfortunately, these cuts generally shift costs onto private sector insurers, including FEHB plans.

The Wall Street Journal reports on two health insurer technology initiatives involving “big data”:

UnitedHealth Group
Inc.[‘s Optum unit] plans to launch a new cloud-computing platform aimed at
health-care providers and insurers, one of a growing number of efforts
to allow more sharing of medical data among industry players. * * * Optum plans to take another page from technology firms’ books by opening
up its cloud environment to outside developers, which will be able to
offer “apps” in much the same way they can through Apple Inc.’s well-known app store.

In another move, a group of insurers [lead by Independence Blue Cross] and a health-technology company
said they will buy a digital network that is currently used mostly to
send administrative and financial communications between providers and
health plans. The companies—Highmark Inc., Horizon Blue Cross Blue
Shield of New Jersey, Independence Blue Cross and Lumeris Corp.—plan to
use NaviNet Inc.’s network to help doctors and hospitals integrate
different health data. One goal will be to allow health insurers to more
closely tie doctors’ and hospitals’ reimbursement to quality and cost
measures.

Good luck with these initiatives that have the potential to bend the cost curve down.

Congress is in session this coming week, and the President will be releasing his Administration’s Fiscal Year 2013 budget tomorrow.

Business Week is reporting that the Federal Trade Commission may take action on the Express Scripts – Medco merger next month.

Express Scripts is expected to certify to the
Federal Trade Commission [tomorrow] that it’s finished providing the
necessary information for the antitrust review, said the people, who
declined to be identified because the matter isn’t public. Under
antitrust law, the agency is required to act on a merger request within
30 days of the certification.

The agency’s options then include clearing the
deal, suing to block it or negotiating a settlement. It could also agree
with the company to extend the 30-day period. The company and the
agency aren’t engaged in discussions about a settlement or extension,
the people said. The FTC isn’t expected to decide on the deal until the
beginning of March, one of the people said.

America’s Health Insurance Plans commented in a press release that health plans need more time and flexibility is needed to  implement the summary of benefits and coverage rule that was finalized last week. The National Association of Insurance Commissioners developed the SBC form with individual health insurance in mind.  It would be helpful for HHS to recognize, for example, basic differences between group and individual health insurance and fully insured and self funded arrangements in the forms.

The Affordable Care Act regulators released the final summary of benefits and coverage (“SBC”) and uniform glossary rule today. FEHB plans will be required to distribute this SBC for the first time during the 2013 Open Season, which begins in November 2013. This four doubled sided page summary is intended to help consumers select a health plan. However, the ACA regulators are not requiring that the SBC display the premium. Of course, the premium information could accompany the SBC.

The ACA regulators did not make substantive changes to the form or the uniform glossary on first glance other than to reduce the number of coverage examples from three to two. Here’s a link to the HHS Fact Sheet. All of the SBC templates and instructions can be found on this DOL website.

The ACA regulators also released FAQs for employers concerning several ACA provisions that kick in for 2014 – the automatic enrollment provision for new full time employees of employers with more than 200 employees, such as the U.S. Government, the employer shared responsibility provision, and the waiting period provision. Most of the FAQs focus on the question of defining a full time employee. The ACA regulators are accepting public comments on these issues until April 9, 2012.

The Wall Street Journal reports that UnitedHealth care is switching over to a new system for compensating network doctors that rewards doctors financially for avoiding hospital readmissions and doing a good job managing chronic illnesses.

In the last decade, the American Medical Association attacked the Ingenix usual, reasonable and customary fee schedule which health plans had used for decades as a benchmark for pricing out-of-network benefit payments. Ultimately, the New York State Attorney General joined the crusade. UnitedHealth which owned Ingenix settled the AMA lawsuit and New York investigation by agreeing to pay $300 million dollars and turn over its UCR fee schedules to a new non-profit called Fair Health. Health plans and insurers switched to another benchmark — the resource based relative value schedule that Medicare uses to reimburse doctors under Medicare Part B. (The dollar factor in this formula is adjusted by the statutory sustainable rate of growth formula that Congress always needs to patch and may now replace).  In the FEHBlog’s view, this was a good call because the AMA would be hard pressed to challenge the legality of the RBRVS. This week, the Kaiser Health News is reporting to its chagrin hat the RBRVS approach controls costs.

The AMA News is reporting that Rite Aid’s in store medical clinics are allowing customers to speak with a doctor over a video monitor — combining the retail clinic and telemedicine concepts.
 

A few years ago a group of federal retirees who were becoming for Social Security eligible sued for the right to opt out of Medicare Part A in order to remain eligible to contribute to a health savings account in their FEHB plan. Today, the U.S. Court of Appeals for the D.C. Circuit, affirming the lower court, held that people must accept Medicare Part A as a condition to receiving Social Security benefits, which was the federal government’s position. While this decision is a bit of a head scratcher (the FEHBlog has not read it yet), but the FEHB Program has dodged a bullet because Medicare Part A covers the hospital bills of most FEHBP annuitants over age 65.

Here’s a true tidbit for you — a Washington Post blogger put up a NARFE pie chart that breaks down the agencies where federal employees work. Over 50% of feds work at Defense, Veterans Affairs, and Homeland Security/

Here’s another tidbit. We all know that the “cloud” is a popular technology buzzword. Government Computer News tells us that a trending technology phrase is “Big Data.”  There are technies who now specialize in Big Data. GCN provided the following examples of Big Data–

Already, a variety of federal agencies are using big data
applications. The Office of Personnel Management is using a SAS analytic suite to scan data records from more than 400 health insurance
companies participating in the Federal Employees Health Benefits Program
for fraudulent claims and other irregularities. The SAS software is
also being used to analyze the millions of records in the CMS Chronic
Condition Data Warehouse, a repository for Medicare and Medicaid
research data.

GCE Federal is currently working on a project that will combine and
make searchable procurement data across the entire federal government. 
“Imagine if you could combine procurement data from every agency in the
government in one big database and have tools on top of it that would
allow stakeholders — from public users to government organizations — to
be able to go in there and slice and dice through procurement data in a
highly intuitive fashion,” said GCE Federal CEO Ray Muslimani.

From the sublime to the …..  The New York Times reports that the Congressional parties are battling over how to pay for an extension of the Medicare Part B patch or a replacement to the sustainable rate of growth formula. The current deadline is February 29. On March 1, a 27.4% cut in Medicare Part B payments to doctors occurs absent legislation. That’s a big hit to the doctors and the FEHB Program which would be subjected to a large cost shift due to the sizable cadre of annuitant enrollees with Medicare Part B coverage. Stay tuned.

The FEHBlog enjoyed the Super Bowl and hopes that everyone else did too. Congress is in session this week and the Presidents FY 2013 budget will be released next Monday.

While researching for this post, the FEHBlog ran across the comments that Essential Health Benefits Coalition sent to HHS last Monday. The FEHBlog previously has noted the Stop the Health Insurance Tax coalition, which recently advertised on the Politico Pulse, and the coalition seeking to repeal the Affordable Care Act’s medical device tax. The medical device tax and the $2500 annual cap on health care flexible spending accounts both take effect next year. The health insurance tax takes effect in 2014.  The Affordable Care Act has been good to the association industry.

The FEHBlog is surprised that Congress has not yet repealed the Affordable Care Act requirement that health plan members obtain a prescription in order to obtain reimbursement, e.g., from a flexible spending account, for an over-the-counter drug purchase. Of course, there’s a coalition to advocate for a repeal of that requirement, which doesn’t make a lot of sense to the FEHBlog, but the requirement has been in effect since January 1, 2011.

Health plans beware. The New York State Attorney General is on the warpath again. Last time, his target was the Ingenix system for setting out of network reimbursement rates. Now the target is out of date in network provider directories. The AMA News reports that  

In response to complaints from patients who were
frustrated by out-of-date physician directories, New York Attorney
General Eric Schneiderman has ordered a group of health plans [New York State subsidiaries of Wellpoint, EmblemHealth, and United Health Group] of to improve
their listings and pay back patients who were unexpectedly faced with
paying out-of-network rates.

The Medical Society of the State of New York “views this action by
the AG favorably,” said Moe Auster, the association’s vice president for
legislative and regulatory affairs. He said MSSNY members adopted a
resolution in 2010 calling on the state to require insurers to make
timely updates to their directories and penalize insurers for inaccurate
listings.

The article explains that the health plans expect cooperation from the providers to keep the directories up to date, but no matter.

Govexec.com reports on OPM’s problems in processing federal retirement claims. The other day, the FEHBlog was speaking with a veteran Congressional staffer who is expecting a wave of staffer retirements next year on Capitol Hill because Congress and many staffers shift to the health insurance exchanges in 2014. Retiring in 2013 will allow them to preserve their FEHB coverage.

Kaiser Health News has a brief survey of comments submitted to HHS on the Essential Health Benefits bulletin. Quite a hash.

Modern Healthcare reports that the AMA is appealing to HHS Secretary Sebelius to back off on ICD-10 code set implementation. The AMA complains that doctors are facing an onslaught of regulatory mandates. The AMA suggests that HHS has an opportunity to ease the burdens on physician practices by halting the implementation of ICD-10 and calling on appropriate stakeholders, including physicians, hospitals, payers to assess an appropriate replacement for ICD-9 within a reasonable time frame. Hey the ICD-11 is coming out in 2014! But seriously the problem is that Congress decided in HIPAA to embed technology in law. However, that ship has sailed. If the AMA prevails on this one, it would be a sea change (to continue the analogy).

Today was the deadline for commenting on the HHS Essential Benefits Bulletin, and AHIP submitted an interesting comment letter. The FEHBlog was puzzled by the Bulletin’s statements that state benefit mandates don’t add that much to health plan costs. The AHIP comments blow that statement out of the water. Fortunately, federal law exempts FEHB plans from those state benefit mandates. FEHB plans, of course, are subject to federal mandates, such as those created by the Affordable Care Act.

OPM has informed agencies to consult a recent IRS notice giving employers a heads up on compliance with the Affordable Care Act requirement that 2012 W-2s include a block informing the employee about the cost of employer-sponsored health care coverage, including FEHBP coverage.

Modern Healthcare reports about a sobering Congressional Budget Office report projecting that federal healthcare outlays will double over the next decade.

A Wellpoint press release today announced that  “Medical and pharmacy benefits managed by Wellpoint’s affiliated [Blue Cross Blue Shield] health plans are linked to lower medical costs of $8 to $16 per employee monthly compared to those without an integrated pharmacy program, according to an independently verified analysis of members in WellPoint’s health plans.”  This is latest study militating against OPM’s legislative proposal to carve out FEHBP prescription dru contracting to the agency.

Two articles tickled the FEHBlog’s funny bone:

• The Wall Street Journal’s Health Blog points out that doctors represent a large percentage of the the fabled 1% that the Occupy Wall Street movement has assailed.  “Fully 27% of doctors are     1%ers — the highest percentage of all occupations, including lawyers.
• The AMA News reports about the one diagnosis that patients miss — “cyberchondria.” In other words, the 1% is growing frustrated with the members of the 99% who attempt to self diagnosis their illnesses on the internet.