Congress is entering into its final week of the August recess. The Washington Post is reporting that “The Senate Homeland Security and Governmental Affairs Committee plans to hold a hearing on the postal proposals [to withdraw from the FEHB Program, etc.] Sept. 6.” No information on the hearing has been posted on the Committee’s website yet. 


The federal government has launched a new website performance.gov . The site provides a handly link to OPM’s performance and accountability report which the FEHBlog discussed last year when the report was issued. According to Govexec.com,  “the performance.gov site faces major performance challenges of its own. A last-minute deal between the Obama administration and House Republicans to avert a government shutdown in April cut fiscal 2011 funding for online open government initiatives by more than three quarters to just $8 million.”

Kaiser Health News featured a lengthy report on the efforts of self-insured employers and health plans to control the high cost of specialty or biologic drugs. Interestingly, the article does not discuss the Food and Drug Administration’s delay in creating the pathway to less expensive bio-similar drugs that the Affordable Care Act

The Washington Post and the Federal Times join Govexec.com and the FEHBlog in throwing cold water on the Postal Service’s ill advised proposal to withdraw from the FEHBP in favor of a stand alone program.

Reuters offers an interesting column discussing the cultural differences between Express Scripts and Medco that would have to be resolved if the federal antitrust regulators permit the deal to move forward. (Reuters recently reported that the current expert consensus is that a reasonable chance exists that the deal will clear anti-trust scrutiny.) A Towers Perrin health care consultant remarks in the Reuters article that

The issues that “keep employers up at night” about the merger include the fate of customer service, mail-order prescription turnarounds and claims accuracy under a combined company. “Employers want to ensure that the newly merged organization is not distracted by any of the challenges they face during the integration,” she added.

HR Morning reports on an important piece of EEOC informal guidance concerning the application of the Genetic Information Non-Discrimination Act (“GINA”) to wellness programs sponsored by health plans or employers.

It’s nice to have company. Yesterday, Govexec.com posted a report titled “Observers are leery of Postal Service plan to opt out of federal health and retirement programs.

Next month, we’ll learn about the changes to FEHB premiums and the Government contribution for 2012. Business Insurance reported on a National Business Group on Health survey of large employers which “estimate that the cost of their group health care plans will rise an average of 7.2% in 2012, comparable to the 7.4% rise they expect this year.” The NGBH press release adds

To help control those increases and begin driving down costs to avoid the Cadillac tax, employers are planning to use a wider variety of cost-sharing strategies. More than half of respondents (53%) plan to increase the percentage that employees contribute to the premiums, while 39% plan to increase in-network deductibles. Additionally, about one in four employers plans to increase out-of-network deductibles (23%) and out-of-pocket maximums (22%) next year. The survey, based on responses from 83 of the nation’s largest corporations, was conducted in June 2011.

The FEHBlog is not quite sure what to make of this but the AMA News is reporting that “A study in the August issue of Health Affairs found that it is becoming more common for primary care doctors and other nonpsychiatrist physicians to prescribe antidepressants for conditions other than anxiety and major depressive disorder.” The AMA News admirably recognizes that it’s up to the medical profession to reverse this trend.

Congress remains in recess. Last week, the Office of Management and Budget directed federal agencies to cut their Fiscal Year 2013 budget proposals by up to 10% according to the Federal Times and Govexec.com.

Business Insurance reports on industry reaction to the proposed Affordable Care Act rule on the summary of benefits and coverage template.

“There is just not enough here to tell us what to do,” said Rich Stover, a principal at Buck Consultants L.L.C. in Secaucus, N.J.  For instance, the examples make no distinction between costs employees would pay depending on whether the service was delivered in or out of network, said Gretchen Young, senior vp-health policy with the ERISA Industry Committee in Washington.

In addition, requiring employers to use government-set figures, which presumably would be national averages, could end up confusing employees if a particular employer’s costs are different, which is likely since costs vary greatly across the country.” This could end up confusing plan participants,” said Jennifer Henrikson, senior counsel with Aon Hewitt Inc. in Lincolnshire, Ill.

In the FEHBlog’s view, use of a national average makes sense particularly when you are dealing with plans that are nationwide or cover multiple states, like many FEHB plans. The last thing that plans would need is to have to issue the summaries based on zip code so that the pricing estimate is accurate (isn’t that a non sequitur?). The template needs to be more flexible.

Speaking of provider pricing, the Wall Street Journal reports on websites that help consumers determine their out of pocket costs.

The best place to start is usually your health plan’s website or your human-resources department’s online destination. Big insurers like Aetna, UnitedHealth Group, WellPoint and Cigna offer some pricing information. Typically, these prices have gaps, but the companies say they’re working to enhance the detail.

At the national level, you can at least find averages or Medicare rates for services in your geographic area, which you can use as a starting point. Then you can call individual providers to ask about their charges and, potentially, try to haggle over pricing.  Here are some places to look: Fairhealthconsumer.org has figures that are supposed to represent typical rates in various locations, as well as estimates of what consumers might spend to go out of their insurers’ medical networks. HealthcareBlueBook.com offers what the company calls a “fair price” for services in a given area. The American Medical Association has a site where you can look up what Medicare pays for doctor services.

Good advice.

The FEHBlog is pleased to see that NARFE, an organization for federal employees and retirees, has expressed its opposition to the Postal Service’s ill-advised proposed to pull its employees and annuitants out of the FEHB Program and the federal retirement programs.

Standard and Poors announced today that “Data released today by S&P Indices for the S&P Healthcare Economic Composite Index indicate that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.61% over the 12-months ending June 2011. Since posting its lowest annual growth rate in its more than six-year history – +5.37% in April 2011 – the rate for this index accelerated in both May and June.”

The FEHBlog ran across an interesting Stanford Medical School blog called Scope. The FEHBlog had read articles this week about legal pressure being placed on insurers to cover an experimental autism treatment called applied behavioral analysis. A posting in this blog recounts these developments and observes “The stakes in these cases are pretty high as the cost for covering all requests for ABA would be a substantial sum. There is, of course, no cure for autism, and until there is, many families will be demanding these services.” Sad, but true.

Yesterday, the Affordable Care Act regulators proposed a rule governing the four [double sided] page summary of benefits and glossary of health insurance terms that health plans must prepare once the rule is finalized and make available to plan participants and beneficiaries.  The Labor Department’s Affordable Care Act website provides all of the documentation, including the template for the summary of benefits and related instructions.

The FEHBlog is still reviewing the regulation and sub-regulatory guidance which run over 200 pages. At first blush, the glossary appears to duplicate what’s already found in health plan brochures / summary plan descriptions. The FEHBlog wonders why Congress didn’t require the medical community to create a
glossary for patients.

America’s Health Insurance Plans, the health insurers’ trade association, commented that

Health plans increasingly provide user-friendly online tools and clear materials to make sure that consumers understand the benefits and costs of their health insurance policies. The benefits of providing a new summary of coverage document must be balanced against the increased administrative burden and higher costs to consumers and employers. For example, since most large employers customize the benefit packages they provide to their employees, some health plans could be required to create tens of thousands of different versions of this new document—which would add administrative costs without meaningfully helping employees.  Moreover, given that the final regulation is delayed, the implementation date also should be pushed back to give health plans sufficient time to make the operational and administrative changes needed to create these new documents.  We will be submitting detailed comments and look forward to working with regulators to mitigate potential unintended consequences of this new requirement.

The Affordable Care Act required the ACA regulators to issue this template no later than March 23, 2011. Given the five month delay, the ACA regulators should give plans at least five months of extra time. The implementation timing for group health plans should align with the calendar year based open season — fourth quarter 2012. Kaiser Health News reports that

Many employers are already required to provide health plan information, said Steve Wojik, vice president for public policy for the National Business Group on Health, which represents 330 large employers, most of which have self-insured health plans. Complying with the new health law rules would mean preparing two sets of plan information for next year. Pushing back the March 2012 deadline would avoid the duplicative effort, he said.

The Wall Street Journal reports that the Affordable Care Act regulators will release a rule describing the new  summary of benefits form that health plans must distribute to consumers beginning next year. The article  explains that

The summary form has often been compared to the food-nutrition label, though it is substantially longer, and at six pages the draft offers considerable detail. For instance, it would not only tell consumers their overall deductibles, or the amount they must pay before coverage kicks in, but would also explain deductibles for specific categories, such as drug coverage. In addition to flagging the limit on a consumer’s out-of-pocket expenses, the form would lay out which expenses don’t count toward that limit.

A list of medical events and associated services, such as home health care and emergency transportation, would likely be shown along with the consumer’s costs for each. The summary would also explain the consumer’s possible expenses for three common situations: having a baby, treating breast cancer and managing diabetes.

The FEHBlog is a bit confused because Affordable Care Act states that the form must use a specific font size and not exceed four pages. It will be interesting to figure out how this new rule will or won’t mesh with OPM’s new Going Green initiative on FEHB plan brochure distribution.

The FEHBlog notes that FAIR Health has gone live with its website that estimates the cost of medical and dental care for consumers who use out of network health care providers.

Yesterday, the IRS released temporary regulations and a proposed rule governing the imposition of an annual fee ($2.5 billion in 2011) on branded prescription drug manufacturers. No doubt this fee will be passed along to health plans.

The New York Times reports that “Medicaid gets much deeper discounts on many prescription drugs than Medicare, in part because Medicaid discounts are set by law whereas Medicare prices are negotiated by private insurers and drug companies, federal investigators said Monday in a new report.” The law requires branded prescription drug manufacturers to give their best price to Medicaid. Prescription benefit managers negotiating for FEHB plans and other employer sponsored plans cannot negotiate a price below that floor because if they could, the floor would drop. Medicare Part D plans are permitted by law to negotiate a price below the Medicaid floor without causing the floor to drop. But what would happen to the drug manufacturers if they gave the same enormous discounts to Medicare and Medicaid. Oh wait, the FEHBlog forgets. The manufacturers can price shift to the FEHB and other employer sponsored plans.

The AMA News reports that “When it comes to hospitals and their financial health, they are either thriving or wheezing — with no in-between.” and that the Affordable Care Act is encouraging the haves to gobble up the have nots.

Congress remains in recess. The U.S. Court of Appeals for the Eleventh Circuit created a split in the circuits by deciding that the Affordable Healthcare Act’s individual mandate is unconstitutional as discussed at the Scotusblog. That blog points out that the the U.S. Supreme Court already has been asked to review the U.S. Court of Appeals for the Sixth Circuit’s opinion unholding that provision’s constitutionality (No. 11-117). Consequently, the odds appears good that the Supreme Court will rule on the issue before the 2012 Presidential election.

The Washington Post reports that “Unions reacted furiously Friday to a proposal by the Postal Service to lay off 120,000 workers by breaking labor contracts and to shift workers out of the federal employee health and retirement plans into cheaper alternatives.” (The reaction is understandable.) The Post also has provided a link to the white paper discussing the Postal Service’s vision for withdrawing from the FEHB Program. The FEHBlog seriously doubts that the Postal Service successfully will create a cheaper alternative to the FEHBP.

Why? It’s the demographics. Both the FEHBP and the Postal Service have older work forces and large cadres of annuitants (over 40% of the groups). The annuitants break down into three subgroups– early retirees (before age 65) who use more health care services than younger employees (those under 50), retirees over 65 with Medicare (Medicare Part A and B moderate the cost of this subgroup), and retirees who retired from the federal government or the Postal Service before 1983 and are not eligible for Medicare (this subgroup is the most expensive by far).

The FEHBP, utilizing group health insurance principles, successfully pools all of the employees and retirees together.  According to the white paper, the Postal Service proposes to break them out into three groups (without mentioning the pre-1983 retirees).

On Friday, the Affordable Care Act regulators issued another set of proposed rules intended to help states establish  the health insurance exchanges that will become operational in 2014. Business Insurance reports that the employer community is encouraged by the Internal Revenue Service’s announcement that “it will develop new rules that will make it easier for employers to determine if their health care plans are ‘affordable’ and exempt from a stiff financial penalty mandated by the health care reform law.”

Medcity News included a column by Dr. John Halamka from Harvard discussing why the healthcare industry has been slow to automate its processes. Dr. Halamka alludes to the key obstacle in the FEHBlog’s view — HIPAA. HIPAA was enacted almost 15 years ago and the HHS Department still has not issued all of the electronic transactions standards that Congress contemplated in 1996. Law and technology simply do not mix. Technology is flexible while the law is not. Moreover, Congress required only one side of the transaction — the health plans — to implement the standards. The approach of if you build it they will come only worked in a movie. (Congress later modified the approach to require larger providers to submit transactions electronically to Medicare). But the FEHBlog appreciates the fact that this is one horse that is unlikely to be lead back into the barn particularly as Congress doubled down with the HIPAA changes in the HITECH Act and the Affordable Care Act.

The Federal Times and the Washington Post are reporting that the Postal Service is asking Congress to permit it to layoff over one hundred thousand employees and pull its employees and retirees out of the FEHB Program and the federal employees retirement programs — in violation of its collective bargaining agreements with the Postal unions. According to the Federal Times,

The Postal Service said the Federal Employees Health Benefits Program doesn’t meet its needs, and said it will ask Congress for permission to pull its 600,000 active employees and 480,000 retirees out of the program. The Postal Service would set up its own health plan instead, which it said would be simpler, more cost effective, and more in line with the private sector.

The Postal Service forms about 27% of the FEHB Program’s  total enrollment. Pulling the Postal Service out of the FEHBP likely would create two relatively weaker health benefits programs in the FEHBlog’s view. This proposal is a big bowl of wrong.

FEHB plans will unveil their 2012 benefit designs and premium rates later next month. AIS Health reports on employee health plan benefit design trends for 2012 — in particular the growing interest in narrower provider networks and higher employee cost sharing.  These trends, however, are not rapidly adopted in competitive models like the FEHB Program where employees select their coverage.  In the program that the Postal Service evidently is contemplating for its employees, the employer can adopt aggressive approaches like these because there is no employee choice (other than declining coverage).

Reuters reports that there continues to be a substantial 24% spread between Medco’s stock price and the value of the Express Scripts acquisition deal “as contract concerns for Medco and the shaky stock market compound worries that the deal will fail to pass antitrust muster.”

The Government Accountability Office recently issued a report on the Federal Long Term Care Insurance Program. The report considers why more carriers are not attracted to bidding for the business.

Here’s a link to a comprehensive CMS actuarial projection of health care costs over the remainder of this decade that recently was published in Health Affairs. The AMA News comments on the report here. (Spoiler — The report projects increase spending on doctors so the AMA News is happy. However, the AMA News understandably is freaking out over the fact that the Medicare Part B physician reimbursement patch expires at year end — the same time that Congress is obligated to consider its “Super Committee’s” debt reduction package

CNN Money is reporting that the Walgreen’s pharmacy chain is planning to start selling health insurance in its stores “through a private insurance exchange.” According to the article, Walgreen’s is neither confirming nor denying the report.

CMS is holding a conference call tomorrow beginning at noon to discuss the Affordable Care Act’s funding opportunity for so-called CO-OP plans.

Kaiser Health News reports on the seven U.S. hospitals with the worst readmission rates for patients suffering from heart attack, heart failure or pneumonia:

The hospitals were:

• San Juan VA Medical Center in San Juan, Puerto Rico

• Florida Hospital in Orlando

• Franciscan St. James Health in Olympia Fields, Ill.

• Our Lady of the Resurrection Medical Center in Chicago

• Beth Israel Deaconess Medical Center in Boston

• Barnes Jewish Hospital in St. Louis, Mo.

• Brookhaven Memorial Hospital Medical Center in Patchogue, N.Y.

Their rates ranged between 20 percent and 31 percent of patients being readmitted within 30 days of discharge.

Another 54 hospitals had worse-than-expected rates for two of the three types of patients, and 231 hospitals had worse-than-expected readmission rates for one of the three categories.

The readmission rates are posted on the CMS Hospital Compare website.