The House of Representatives and the Senate return to work this week after a week long recess. The week, May 6 – 12, is Public Service Recognition week.

One of the multitude of Affordable Care Act mandates on health plans was to lower out-of-pocket costs for emergency room visits. This mandate kicked in for non-grandfathered plans for 2011. (Virtually all plans are non-grandfathered at this point.) Lo and behold, a recent survey from Highroads reports that “Employees and their families are making more trips to the emergency room (ER), urgent care facilities and specialists’ offices as relatively low co-pay costs are narrowing the gap between those and other services – notably primary care physicians.”

In this year’s benefit and rate call letter, OPM encouraged plans to eliminate elective deliveries before 39 weeks. This is part of HHS’s Strong Start initiative which, among other things, focuses on

early elective deliveries, which can lead to a variety of health problems for mothers and infants.  Up to 10 percent of all deliveries are scheduled as induced or surgical deliveries before 39 weeks that are not medically indicated. However, any early delivery, planned or spontaneous, can carry medical risks for mother and infant. According to research by organizations such as the American College of Obstetricians and Gynecologists (ACOG), the March of Dimes and others, elective deliveries before 39 weeks increase the risk of significant complications for mother and baby, as well as long-term health problems. 

The FEHBlog found support for this initiative in a recent March of Dimes and World Health Organization survey reported by WebMD which finds that the pre-term birth rates in the U.S. are higher than 130 other countries. WebMD reports that

Hyagriv Simhan, MD, chief of maternal-fetal medicine and medical director of obstetrical services at Magee-Womens Hospital of the University of Pittsburgh Medical Center, says the report is “incredibly valuable.”

The best way to minimize the risk of preterm birth is to plan pregnancy carefully, Simhan tells WebMD.

“Don’t wait until there is a complication to seek care, as then it is too late. Start planning even before conception, and make smart lifestyle choices, such as eating right and quitting smoking,” he says.

Also, babies should be spaced at least a year apart, Simhan says.

Finally, also on the preventive care front, the Los Angeles Times reports that “The number of baby boomers dying from a “silent epidemic” of hepatitis
C infections is increasing so rapidly that federal officials are planning a
new nationwide push for widespread testing.”  The government has been encouraging people at risk, e.g., those wbo used illegal injectable drugs in their youth or received blood transfusions before the AIDS crisis in the 1980s – be tested. Because doctors don’t usually asked older people about youthful indiscretions, Centers for Disease Control (“CDC”) is considering recommending that all people born between 1945 and 1965 be tested for this disease which is the leading infectious cause of cirrohisis and liver cancer in the U.S. The Times reports that

The CDC recommendation is coming in an era when safer, faster and more effective
drug treatments are becoming available, and more are being tested. The new
medications still have side effects but increase the odds of suppressing the
virus and its complications, according to research.
Health officials say
the new medications, although they aren’t cheap, are far less costly than liver
transplants and liver cancer treatment, which can climb into the hundreds of
thousands of dollars.
 

In 2014, the Affordable Care Act will subject health insurance companies operating in the health insurance exchanges and the FEHBP to a 2% premium tax.  The Sunshine State News reports on ongoing efforts to repeal that tax. Employers or employee organizations that self fund their health plans will not be subject to the tax. The Labor Department earlier this week issued its annual ACA required report to Congress on self-funded group health plans. Private sector group health plans that are self-funded also are exempt from state, but not federal, benefit mandates. Not surprisingly more and more private employers are looking at the feasibility of self-funding with the protection of stop loss insurance. Bloomberg Businessweek reports that on Tuesday the ACA regulating agencies issued a request for public input on that trend.  The agencies’ request explains that

It has been suggested that some small employers with healthier employees may self-insure and purchase stop loss insurance policies with relatively low attachment points to avoid being subject to these requirements while exposing themselves to little risk. This practice, if widespread, could worsen the risk pool and increase premiums in the fully insured small group market, including in the Small Business Health Options Program (SHOP) Exchanges that begin in 2014.

It’s not clear what the regulators could do but the Businessweek article indicates that certain states are beginning to react by creating a minimum attachment point for stop loss insurance. The attachment point has been analogized to the annual deductible under an individual’s health insurance coverage.

In yesterday’s post, the FEHBlog discussed the ongoing spat between Walgreens and Express Scripts. The FEHBlog was pleased to read a Pittsburgh Post Gazette article reporting that Highmark Blue Cross, which recently invested in a large Pittsburgh hospital chain has settled its long term dispute with a competing hospital chain the University of Pittsburgh Medical Center.  The parties reached agreement on a new Highmark network contract for UPMC with higher reimbursement rates and a term that extends through 2014.

Finally, Medscape reports that most doctors are wary of the financial risk associated with Accountable Care Organizations, the ACA innovation that are intended to reward hospitals and doctors for improving the quality of care. “Only a handful of physicians are involved in alternative patient-care delivery models. About 3% participate with Accountable Care Organizations (ACOs) but another 5% say that they plan to become involved in the coming year.” 52% of the 3200 survey physicians expect ACOs to lower physician income. The article is further evidence that the ACA is encouraging risk averse physicians to adopt the employment model of practicing medicine.

Health plans have been paying attention to the Internal Revenue Service’s recent proposed rule on the Affordable Care Act required fee to fund the Patient Centered Outcomes Research Institute (“PCORI”).  PCORI’s Board of Governors recently announced amendments to its draft research agenda.

The Board, during a public teleconference/webinar, also authorized
$30 million in funding over two years for a slate of 50 pilot projects
that will address a broad range of questions about methods for engaging
patients in various aspects of the research and dissemination process.

A full final version of the National Priorities and Research Agenda,
including accepted revisions, will be posted May 21 after final Board
review and approval at its next public meeting, in Denver.

The FEHBlog noticed a news report suggesting that the enormous Walgreen’s pharmacy chain and the enormous Express Scripts prescription benefit manager would kiss and make up after Express completed its acquisition of Medco Health Solutions which occurred recently. But no reconciliation has occurred yet. The Chicago Tribune reports that  “Drugstore operator Walgreen Co.
said Thursday monthly revenue from stores open at least a year slipped
again in April largely due to its split with pharmacy benefits manager Express Scripts Inc.” On the flip side, Business Insurance reports that “CVS Caremark Corp. raised its full-year forecast on Wednesday after
reporting a sharp rise in first-quarter sales as the drugstore operator
and pharmacy benefits manager continued to win over former patrons of
Walgreen Co. stores.” The split has been official now for over one calendar quarter and as Business Insurance points out the longer that the former Walgreen’s patrons shop at CVS the more likely that they will remain CVS customers.

The FEHBlog keeps track of the monthly S&P Healthcare Indices which display the yawning gap between statutorily fixed Medicare payments and commercial insurer payments.  AMA News reports about the strain that low Medicare reimbursement rates are placing on physician practices.

The American Medical Association said there is a 20% gap between what
Medicare pays — a major factor in keeping down physician prices — and
what it costs physicians to treat patients.

“The cost of providing care is going up,” said Glen Stream, MD,
president of the American Academy of Family Physicians. “There’s a
downward pressure on physician payment. At some point, something is
going to break.”

The articles discusses this interesting consequence:

Analysts often cite the lag between practice revenues and costs as
the reason why many physicians are seeking what they view as the
financial stability of hospital employment over the pressures of owning
an independent practice.
In 2001, 3% of residents surveyed by physician recruiting firm
Merritt Hawkins & Associates wanted to work as hospital employees.
In 2011, that number was 32%.
A total of 91,282 physicians and dentists had full-time employment at
community hospitals in 2010, a 47% increase from 61,972 in 2001, and a
7% jump just from 2010, according to the American Hospital Assn.

This consolidation outcomes seems to be an objective of the Affordable Care Act.

The House of Representatives and the Senate are in recess this coming week.

Also this week, May 1 marks the earliest effective date for FEHBP coverage of Indian tribal employees under the Affordable Care Act initiative that OPM is managing. The FEHBlog anticipates that most Tribal employers will elect to join at the beginning of a new plan year, typically January 1.

Speaking of ACA initiatives assigned to OPM, the George Washington University School of Public Health recently published an interesting research paper about the multi-state plans which OPM will create by contract similar to FEHB plans. However, these MSPs will participate in the state exchanges beginning in 2014, not the FEHBP. The authors, Trish Riley and Jane Hyatt Thorpe, observed that the MSPs may be a good landing place for members of Congress and their personal staff members whom the ACA kicked out of the FEHBP.  One of the tricky issues related to this transition is that federal employees, including the staff members, are entitled to FEHBP coverage into retirement if they have five years of FEHBP coverage preceding retirement. Personal staff members who are close to retirement age may be elect to retire before 2014 in order to preserve their FEHBP coverage.

On Wednesday, the Senate passed its postal reform bill (S. 1789).  Section 104 of the bill would allow the Postal Service an opportunity to negotiate a separate Postal Service health plan with its Unions. The debate now moves onto the House of Representatives.

Yesterday, the House Oversight and Government Reform Committee held a business meeting to find budget cuts as an alternative to the Defense Department sequestrations otherwise required by last August’s budget control act.  According to the Washington Post’s Federal Eye

Democrats raised but ultimately withdrew amendments seeking to centralize prescription drug purchasing in the Federal Employees Health Benefits Program and seeking to delete tax breaks for high-income individuals under the House budget plan.

As many experts have pointed out, this effort to move prescription drug contracting from the carriers to OPM is ill advised.

Yesterday, as Bloomberg reports, the federal judge hearing the trade associations’ anti-trust challenge to the no-completed  Medco — Express Script merger denied the associations’ motion for a preliminary injunction tha would somehow unscramble the egg. The judge’s decision was no surprise to the FEHBlog.

Finally, yesterday the IRS released the following Affordable Care Act related Notices


Minimum Value

Information Reporting on Health Insurance Coverage

Yesterday the Centers for Medicare and Medicaid Services announced that it is proposing to increase Medicare Part A payments to acute care hospitals by 0.9% for the 2013 federal government fiscal year which begins on October 1, 2012. Modern Healthcare reports on provider reaction to the proposed rule.

CMS’s Office of Oversight also recently released new technical guidance on the medical loss ratio regulation which took effect last year under the Affordable Care Act.

Health Data Management reports that “More than 1.1 million beneficiaries are served by Medicare accountable care organizations being ramped up under authority of the Affordable Care Act, the Centers for Medicare and Medicaid Services has announced.” The AMA News is delirious with joy over the fact that physicians tend to control the ACOs, rather than nasty insurance companies. AHIP has posted an article about why ACOs will not replace health insurers.

Congress remains in session this coming week.

On the health care quality front, Thomson Reuters announced its top 100 U.S. hospitals — the chart breaks down hospitals into teaching hospitals and community hospitals by size. Also, the Centers for Medicare and Medicaid Services announced that results from a “national survey that asks patients about their experiences with
Medicare-certified home health agencies are now available on the
agency’s Quality Care Finder (www.medicare.gov/quality-care-finder) website.”

On the health care fraud front, the Justice Department announced on Friday a settlement of a False Claims Act case against the Walgreen’s pharmacy chain.  Walgreen’s was offering a $25 gift card to customers who transferred a prescription from another pharmacy. The program expressly excluded customers with coverage under Medicare, Medicaid, and other government programs. The government alleged that Walgreen’s did not enforce this exclusion thereby permitting violations of the Medicare-Medicaid anti-kickback act. Walgreen’s agreed to pay the government $7.9 million to settle the case without conceding liability.

“The law prohibits pharmacies from using their retail clout to lure
patients whose prescriptions are subsidized by the government,” said
Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. 
“Continuity with a pharmacist is important to detect problems with
dosages and drug interactions.  Patients should make decisions based on
legitimate health care needs, not on inducements like gift cards.”  

The FEHBlog levitated in his breakfast nook this morning when he read in the Washington Post that the local prescription benefit manager Catalyst Rx had been purchased by a competitor PBM SXC Health Solutions for $4.4 billion. According to the SXC press release, “Upon completion of the transaction [expected in the current quarter following regulatory approval], the combined  company will be an organization with $13 billion in revenue, which will be headquartered in Lisle, Illinois and will maintain a presence in Rockville, Maryland.” Clearly the parties assume that the Federal Trade Commission’s green light to the Medco merger into Express Scripts portends regulatory approval for this deal. These developments must be creating Defcon 4 for the drug store trade associations and others that oppose PBM mergers.

Standard and Poors released the February 2012 healthcare costs indices today. Healthcare costs covered by commercial health plans increased by 7.73% over the 12 month period ending that month as compared to a 7.03% increase reported for the 12 month period ending in January 2012. Hospital costs rose a much higher rate than physician office costs. Medicare claim costs increased by 2.73% up from 2.39% reported for January 2012.

“We observed further acceleration in healthcare costs annual growth rates in February,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “In keeping with the trends seen since the second half of 2011, February data signaled a general upward trend in healthcare costs, as measured by annual rates of change. Last month’s data, which was through January 2012, had shown a slight deceleration in most types of healthcare costs, but this was likely an anomaly in the actual trend. Over the past eight months or so, annual rates of change in per capita healthcare costs have generally been rising.

OPM gave testimony on the Federal Long Term Care Insurance Program before the Senate Special Committee on Aging today.  OPM reported that enrollment in this voluntary employee pay all program increased from 224,000 to 270,000 enrollees in the 2011 open season.

The Wall Street Journal had an interesting section yesterday about healthcare innovations. The lead article discussed how the medical profession is incorporating the quality of life improvement goals into treatment plans in order to encourage patient compliance.

The logic is simple. People are more likely to manage their condition
properly when they have more accessible, personal goals, like being able
to do more at work or keep up with their kids, instead of focusing only
on comparatively abstract targets like blood-sugar levels. And that, in
turn, leads to much better health.

The article explains that

The 2010 Affordable Care Act included $3 billion in funding for a new
Patient-Centered Outcomes Research Institute, which will use
quality-of-life measures as part of its evaluation of new treatments.
And in a report issued in January, the Institute of Medicine, an
independent group that advises the government on health policy, called
for a new national action plan to identify programs that help those with
chronic illness and the population as a whole “live well”—reflecting
“the best achievable state of health that encompasses all dimensions of
physical, mental and social well-being.”

The AMA News reports on the ABIM Foundation’s  Choosing Wisely campaign which encourages doctor and patients to make health care decisions based on medical evidence based recommendations. The program is endorsed my the AMA and many other medical associations. Here is a link to the program’s lists of specific, evidence-based
recommendations physicians and patients should discuss when the following types of health issues arise:

• When do you need an EKG or stress test for heart disease? (American Academy of Family Physicians)
• When do you need an imaging test for a headache? (American College of Radiology)
• When do you need antibiotics for sinusitis? (American Academy of Asthma, Allergy and Immunology)
• When do you need antibiotics for sinusitis? (American Academy of Family Physicians)

According to the program’s website, “several more specialty
societies have joined the campaign and will be unveiling their lists of
“Five Things Physicians and Patients Should Question” in fall 2012.” Now that’s a program that could bend the cost curve down.


The AP via Businessweek reports that prescription benefits manager Express Scripts has issued its annual Drug Trend Report. Express Scripts announced that “spending increased 2.7 percent in 2011, the lowest growth recorded in 18 years of measuring the statistic” due to the introduction of generic substitutes for blockbuster drugs like Lipitor. The FEHBlog found very interesting the fact that “diabetes treatments now make up the largest spending category for
prescription drugs [according to Express Scripts]. Diabetes spending per member per year rose 7 percent
to top cholesterol and high blood pressure or heart disease medicines.”

To tie this all together, the Wall Street Journal’s innovation section also discussed a United Healthcare lifestyle program which uses YMCAs to help control diabetes costs for health plans. “The YMCA gets reimbursed by insurance companies and employers for people
who enroll in the yearlong diabetes-prevention course. If class
enrollment goals are reached, and if participants lose 5% to 7% of their
body weight over the year, the Y gets additional payments.” The FEHBlog first heard about this innovative program at the OPM AHIP FEHBP carrier conference last month.

The House and Senate return from their Easter recess this week. Modern Healthcare reports that “members of Congress are already discussing the likelihood that they will
return soon after the polls close [in November] for an extensive lame duck session to
resolve numerous high-profile issues, such as (yet another) looming
Medicare physician reimbursement cut.”

Following up on Thursday’s post about anti-trust issues, the AMA News confirms that

Hospitals are merging or being bought and sold at an increasing rate,
according to recent reports. Data released Feb. 28 by Irving Levin
Associates indicated that 86 hospital merger or acquisition deals were
done in 2011, the highest number in the past decade. Seventy-five
happened in 2010 and 51 occurred in 2009. A report issued March 8 by
Moody’s Investors Service said these trends will continue but did not
predict how many mergers would take place.

The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute [“PCORI”]. Funded by the Patient-Centered Outcomes Research
Trust Fund, the institute will assist patients, clinicians, purchasers
and policy-makers in making informed health decisions by advancing
clinical effectiveness research. The trust fund will be funded in part
by fees paid by issuers of health insurance policies and sponsors of
self-insured health plans [beginning later this year. The fee will be $1 per covered life for the first year and $2 per covered life in subsequent years ending in 2019.

On April 12, 2012, the IRS and the Treasury Department issued proposed regulations
on this fee. The IRS and Treasury request comment on the proposed
regulations by July 16, 2012. Comments may be submitted electronically,
by mail or hand delivered to the IRS. Additionally, a public hearing is
scheduled for August 8, 2012. The preamble to the proposed regulations
provides instructions on how to submit comments and participate in the
public hearing.

The fee is expected to generate $2.6 billion in revenues through 2019.  Here’s the rub reported by LifeHealth Pro

To dispel fears that the “comparative effectiveness research” (CER)
institute will be a care rationing “death panel,” PCORI is supposed to
influence health care solely by publishing its findings and letting
physicians and hospitals decide for themselves how to use the
information. Insurers are not supposed to use PCORI’s work as the basis
for making specific coverage decisions.

 The PCORI Executive Director quoted a Board of Governors member as follows:

“Ultimately, we’re going to be listening to a lot of stakeholders but
our true North is going to be … patients and their caregivers … for whom
the consequences of a [health care] decision is the greatest,” he said.
“Help us frame a new way of thinking about how the health care system
ought to operate.”

 Time will tell the PCORI’s value.

Privacy officials for HIPAA covered entities and health plans must read this AIS interview with the HHS Office for Civil Rights Director Leon Rodriguez. OCR is responsible for enforcing the HIPAA Privacy and Security Rules. The article begins with the chilling sentence —  “The $1.5 million settlement that the Office for Civil Rights recently
reached with BlueCross BlueShield of Tennessee heralds a new era of
“monetary enforcement” by the agency, in contrast to its long-standing
approach of what OCR Director Leon Rodriguez termed ‘hand-holding.’” Bear in mind here that BCBST was a crime victim in this situation but that did not stop the government from imposing the sanctions for inadequate security. The times they are a changin.