The Federal Government issued its Spring 2011 semi-annual regulatory agenda today. The semi-annual regulatory agenda gives readers a heads-up on the Government’s regulatory plans. The agenda tells us that OPM has two FEHBP regulations in mind — one to implement the Affordable Care Act’s requirement to expand FEHBP coverage to employees of Indian Tribes and the other evidently to conform OPM’s disputed regulations (5 C.F.R. Sec. 890.105) to conform with the Affordable Care Act’s requirement that governmental plans comply with ERISA’s claim and internal appeal rules as enforced by the ACA regulators. This second requirement actually took effect at the beginning of 2011.

OPM requires carriers to report on NCQA’s Healthcare Effectiveness Data and Information Set measures. OPM explains that HEDIS is “a set of standardized performance measures designed to ensure that consumers have the information they need to reliably compare the performance of healthcare plans.” FEHBP HMOs report on all of the measures while FEHBP fee for service plans report on measure that are strictly based on claims data. This week NCQA announced HEDIS changes for 2012:

New MeasuresThe two new measures in the HEDIS 2012, Volume 2: Technical Specifications publication are:

• Human Papillomavirus Vaccine for Female Adolescents—This measure assesses the percentage of 13-year-old females who had three doses of the human papillomavirus (HPV) vaccine. The measure evaluates compliance with Centers for Disease Control and Prevention and Advisory Committee on Immunization Practices immunization guidelines.

• Medication Management for People With Asthma—This measure assesses the percentage of people 5–64 years of age who were identified as having persistent asthma and who received and remained on appropriate medications during their treatment period.

Retired Measure

The obsolete measure, which will be removed from HEDIS 2012, Volume 2, is Relative Resource Use for People With Acute Low Back Pain.

Back pain can be difficult to treat. Medscape reports this week that “Massage therapy may effectively reduce or relieve chronic back pain for 6 months or more, according to the results of a parallel-group, randomized controlled trial reported in the July 5 issue of the Annals of Internal Medicine  and “Spinal manipulative therapy is only minimally effective for chronic low back pain, according to the results of an update of a Cochrane review reported in the June 1 issue of Spine.”

The Department of Health and Human Services, in accordance with Congress’s desire to ramp up HIPAA privacy and security rule enforcement, has contracted with the Big 4 accounting firm KPMG to perform compliance audits of covered entities (health care providers who engage in electronic transactions, health care clearinghouses, and health plans) and their business associates. Health Data Management reports that “Under the contract, OCR expects KPMG to conduct 150 audits by the end of 2012.”  Any violations that KPMG finds could result in heavy penalties under the HITECH Act’s revised civil penalty scheme.

The Wall Street Journal reports about a study published in the AMA Journal finding that

About 600,000 angioplasty procedures, which almost always involve placement of a tiny metal tube called a stent, are done in the U.S. each year [at an average cost of $20,000 per procedure]. Roughly 70% of these procedures are performed on patients suffering symptoms of a heart attack and aren’t medically controversial. But the remainder are done on stable patients who are suffering mild symptoms or no symptoms at all. Of those, 50% are deemed appropriate, 38% uncertain and 12% inappropriate, the report says.
“One in eight is probably higher than we would like,” said Paul Chan, a cardiologist at Saint Luke’s Mid America Heart and Vascular Institute, Kansas City, Mo., and the study’s lead author.

The good news is that the cardiologists are studying their own practice patterns in order to improve them.

Because the FEHBlog adheres to Dirty Harry’s dictate, “a good man knows his limitations,” he has decided not to delve into the Avastin or Chantix controversies, but they are worth noting..

The AMA News (whose website is refreshed on Mondays) reports on the AMA legislative body’s views on health care reform.

Issue: The federal government is working to define what it will call essential health care benefits that must be covered by plans for sale in the state-based health insurance exchanges.

Proposed action: Rather than recommend a list of specific benefits, reaffirm existing policy stating that the coverage offered by the Federal Employee Health Benefits Program should be used as a “reference” when identifying whether a plan offers meaningful coverage for adults. [Adopted]

Yeah FEHBP!

The AMA News also reports on a Goldman Sachs investors conference that many health insurance executives attended.

Aetna’s President, CEO and Chair Mark Bertolini, speaking at the conference, said the economy is succeeding where insurers have not: cutting costs. “As much as we like to say we do really good work, as a company and as an industry, a good majority — more than half — of the decrease in utilization is associated with externalities versus what we’re doing.” In early 2011, he said, the company saw members return to doctors — normal for the winter cold and flu season — but not fill the prescriptions doctors wrote for them. He said that was probably because they couldn’t afford the out-of-pocket drug costs. “That’s an unusual trend,” he said.

Interesting observation.

Happy Fourth of July Weekend! Both the House and the Senate will be in session this week following the holiday.

On Friday, the Centers for Medicare and Medicaid Services issued three proposed rules concerning updates to Medicare payment policies for physicians, hospital outpatient departments and ambulatory surgical centers and dialysis centers for 2012. CMS projects the Medicare Part B payments to doctors will drop by 29.5% under the current statutory formula unless Congress acts before the end of the year. Interestingly, as it is the subject of litigation out in California,

CMS is also proposing some changes in how it adjusts payment for geographic variation in the cost of practice.   The Affordable Care Act made some temporary adjustments that would be in place for two years while CMS and the Institute of Medicine study these issues.  As part of this initiative, CMS is replacing some of the data sources—such as using data from the American Community Survey (ACS) in place of HUD rental data and also using ACS data in place of the data currently used for non-physician employee compensation—as well as making other adjustments called for in prior year public comments.  Although these proposals result in very little change to the indices, they show that the data Medicare has used in the past and is proposing to use in the future produce consistent results—suggesting past year adjustments have accurately reflected geographic variations in the cost of practice. 

The California litigation alleges that the geographic variation is unfair to rural providers. On average, CMS will increase hospital outpatient departments payment rates by 1.5%, ambulatory surgical center payment rates by 0.9%, and dialysis center payment rates by 1.8%.

The Washington Post and Kaiser Health News reports today on the trend that the FEHBlog has been following — health insurer acquisition of medical providers. While the FEHBlog thinks that this trend is driven by the Affordable Care Act which encourages integration and caps insurer profits and could bend the cost curve down which is an expressed objective of the ACA, the article’s reporters seem to consider this trend to be the end of the world.

The Las Vegas Sun reports that

A Las Vegas physician has agreed to pay $5.7 million plus interest to settle allegations that he submitted false claims to federal health care programs for various radiation oncology services, the Justice Department announced Thursday.

The government accused Rakesh Nathu of submitting improper claims to Medicare, TRICARE and the Federal Employees Health Benefits Plan from 2007 through 2009.

Yesterday, OPM reissued its interim final rule creating a new minimum loss ratio methodology for pricing community rated plans in the FEHB Program.

Today, the Department of Health and Human Services issued an interim final rule adopting common operating rules for electronic health plan eligibility verification and claim status checks. These operating rules which take effect on January 1, 2013, will make it easier for health care providers to engage in these electronic transactions with insurers. CAQH, a coalition of health insurers and providers, was developing these rules at the time Congress passed the Affordable Care Act. Congress decided to codify them which the FEHBlog views as a mistake because technology changes a lot faster than the law. Modern Healthcare reports that
“the rule will carry near-term costs for healthcare entities, including up to $5 billion for insurers and $800 million for providers over the first 10 years, according to an HHS spokesman.” This new requirements come on top of the existing mandates to adopt new electronic transaction standards and the ICD-10 code set over the next eighteen months.

In a very interesting development, a Highmark, a western Pennsylvania health insurer, is making a major investment in the West Penn Allegheny Health System which according to a Forbes article was poised to shut down its hospitals in September for lack of capital.  The parties explained in a press release that

Highmark Inc. and the West Penn Allegheny Health System (WPAHS) today announced their intentions to pursue an affiliation aimed at maintaining the health system as a high-quality choice for health care services to millions of Western Pennsylvanians.

As part of the initial arrangement, Highmark is immediately providing a $50 million grant to the WPAHS, enabling the health system to sustain and strengthen its West Penn and Forbes Regional hospitals while assuring the continued delivery of quality medical services by the entire system. Highmark is making a total financial commitment of up to $475 million over four years, including $75 million to fund scholarships for students attending medical schools affiliated with WPAHS, and to support other health professional education programs. The management and boards of directors of Highmark and WPAHS will continue discussions in the weeks ahead with the goal of finalizing a definitive agreement.

The Wall Street Journal reports that

Govexec.com reports on privacy advocate reactions to the OPM system of records notices for its FEHBP claims data warehouses published in the June 15, 2011, Federal Register.

The AMA News reports on an Archives of Internal Medicine article that is provocatively titled “The Principles of Conservative Prescribing.” “The article makes several recommendations on how physicians can revamp their prescribing habits, including considering other treatment options, being more strategic about the prescriptions they write, being educated about and aware of possible adverse effects, and being cautious of prescribing new drugs.” Here’s another situation where doctors just need to change their thought processes in order to lower the cost curve and increase patient safety.

Bloomberg reports on another Archives on Internal Medicine study finding that “Physicians were willing to accept about 88 percent of patients who had private insurance in 2008, down from 93 percent in 2005, the study released today found.” The FEHBlog appreciated AHIP’s comments:

A reason that doctors may be accepting fewer patients is that some insurers have shrunk the network of doctors and hospitals they contract with to improve quality and value, said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans. 

“Health plans are selective in who they contract with, so that their members have access to doctors and hospitals that provide safe, high quality care,” Zirkelbach said in a telephone interview.

While insurers have increased their scrutiny of medical claims to try to keep down costs, doctors also must do a better job of filing requests for payment correctly and on time. Too few use electronic records, and many file claims late or inaccurately, he said. “It’s a two-way street,” Zirkelbach said. 

Narrow, high performance networks do bring down the cost curve and increase quality as explained in this receCalifornia Healthline article.

The House of Representatives takes its Fourth of July break this week and the Senate takes its break next week. The debt ceiling negotiations continue. On June 23, the House Appropriations Committee approved the financial services and general government appropriations bill which provides funding for the FEHB Program. The bill now goes to the House floor.

OPM has encouraged plans to address never events that should never happen in a hospital and are preventable, such as wrong side surgery. Kaiser Health News posted an interesting story  indicating that efforts to reduce wrong side surgery have not been successful so far.

 “I’d argue that this really is rocket science,” said Mark Chassin, a former New York state health commissioner and since 2008 president of the Joint Commission, which has issued refinements to the 2004 directive. Chassin said he thinks such errors are growing in part because of increased time pressures. Preventing wrong-site surgery also “turns out to be more complicated to eradicate than anybody thought,” he said, because it involves changing the culture of hospitals and getting doctors — who typically prize their autonomy, resist checklists and underestimate their propensity for error — to follow standardized procedures and work in teams.

Many experts say that medicine needs standardized rules similar to those in aviation, which bar takeoff until a pilot and co-pilot complete a prescribed checklist without interruption. Airlines have a vested interest in a culture of safety that [Philip F.] Stahel [M.D.] says medicine lacks. In surgery “sometimes people say, ‘Well, this isn’t quite right, but someone else will address it.’ In aviation they don’t do that, because the plane will crash and they will all die,” he said.

 It’s really up to the doctors and hospitals to get their act together now.

OPM also encouraged FEHBP plans in this year’s call letter to take steps to address the problem of childhood obesity.  Last week  the U.S. Institute of Medicine issued a report making recommendations on steps that can help avoid early childhood obesity. According to a U.S. News and World Report article,

Recommendations include:

• Limiting young children’s television and other media use,

• Requiring child-care providers to promote healthy sleeping practices,

• Educating parents about age-appropriate sleep times and good sleep habits,

• Requiring child-care providers to provide opportunities and environments that encourage physical activity,

• Increasing efforts to promote breast-feeding,

• Requiring child-care facilities and preschools to follow the meal patterns established by the U.S. Child and Adult Care Food Program.

This is hardly new advice, and it’s difficult for the FEHBlog to see how health plans can help implement these sensible recommendations outside of perhaps their own work forces. Again the burden should be placed on the medical community.

In a surprising development, Google announced that it is shutting down its personal health record platform due to lack of interest according to techcrunch.com. The product will remain operational until the end of the year.  A commentary in the Washington Post suggests that the fee for service system is to blame. Microsoft’s competing Healthvault product “looks to be alive and kicking” according to techcrunch.com

FEHB  plans have two types of financing mechanisms — retrospective experience rating and community rating. Nationwide fee for service plans must use experience rating. HMO plans (known as comprehensive medical plans under the FEHB Act) can use experience rating or community rating. Community rating sets premiums based on prices while experience rating sets premiums based on costs.

OPM historically has required community rated carriers to provide the best price from its similarly sized subscriber group. OPM recently noted that this SSSG methodology has grown cumbersome and outdated. Yesterday, OPM released in the Federal Register a replacement approach that is based on the Affordable Care Act’s minimum loss ratio. This sensible decision will encourage continuing HMO participation / competition in the FEHB Program.

The Affordable Care Act (“ACA”) regulators issued an amended claims procedure rule in today’s Federal Register which impacts all FEHB plans. The Affordable Care Act required governmental plans like the FEHBP to adopt ERISA’s claims and internal appeals procedures with regulatory adjustments described in these ACA rules. The FEHBP’s external claims appeal process remains OPM’s responsibility under 5 U.S.C. Sec. 8902(j) and 5 C.F.R. Sec. 890.105. In today’s rule, the ACA regulators make some common sense changes to last year’s rule as discussed in this Business Insurance article.

While this is progress, the ACA regulators still are working on the four page summary of benefits that health plans are required to provide consumers. The regulation deadline had been March 23, 2011. This Kaiser Health Plan news article discusses the hang up – development of so-called cost of treatment labels which are now receiving the focus group feedback.

The American Medical Association which is holding its annual meeting this week issued it fourth annual National Insurer scorecard. It’s no surprise that the report card bashes insurers.

According to the AMA’s latest findings, commercial health insurers have an average claims-processing error rate of 19.3 percent, an increase of two percent compared last year.

That is an absurd finding. Medpage Today reports AHIP’s response:

“Health plans are doing their part by collaborating [via e.g., the CAQH CORE program] with providers and investing in new technologies to improve the process for submitting claims electronically and receiving payments quickly,” said Robert Zirkelbach, a spokesman for AHIP. “At the same time, more work needs to be done to reduce the number of claims submitted to health plans that are duplicative, inaccurate, or delayed.”

In other words, the AMA should be taking the log out its eye first.

The FEHBlog jumped the gun with its concern about the House Energy and Commerce hearing on Medicare coordination of benefits today. From looking at the testimony which is now online the hearing is focusing on liability settlements. The FEHBlog recently attended a legal ethics seminar at which a speaker warned plaintiffs’ tort bar members about the importance of looping in Medicare before settling any negligence case involving a Medicare beneficiary as the plaintiff. The process is slow. The House Committee is interested in getting Medicare to be more responsive to the plaintiff’s bar.

Last year, the Walgreen’s pharmacy chain picked a fight with CVS Caremark. This year, Walgreen’s is fighting with another prescription benefits manager Express Scripts, Inc. The New York Times reports that

The Walgreen Company said on Tuesday that it was willing to walk away from more than $5 billion in annual revenue because the pharmacy benefits manager Express Scripts did not pay it enough to fill prescriptions.

The break would occur in January 1, 2012. A negotiated settlement is expected before then.

The AMA News reports that Senator Orrin Hatch (R UT) and Rep. Erik Paulsen (R Minn) have introduced

The Family and Retirement Health Investment Act of 2011 [which] would reduce or remove several limits on health savings accounts and flexible spending arrangements. The proposed changes include allowing:

• HSAs and FSAs to be used to purchase over-the-counter drugs without a prescription.

• HSAs and FSAs to be used to pay fees for retainer health care provided by primary care physicians, physician assistants and nurse practitioners.

• Medicare beneficiaries with hospital coverage to continue to contribute to HSAs.

• Individuals with FSAs to carry over up to $500 in the accounts to the following year.

• States to bring back Medicaid health opportunity accounts, in which states contribute to HSAs to be used for some medical services.

The FEHBlog bets that the OTC drug prescription requirement will be the next Affordable Care Act provision to be repealed.

Happy Fathers’ Day. The FEHBlog is enjoying Fathers’ Day on North Carolina’s Outer Banks.

The House and Senate are in session this week. On June 22, the Subcommittee on Oversight and Investigations of the House  Energy and Commerce Committee is holding a hearing that is ominously titled “Protecting Medicare with Improvements to the Secondary Payer Regime.” In 2007, Congress passed the “Section 111” provision that vastly improved the exchange of coordination of information between private sector carriers and Medicare. The only other shoe that can drop is to shift more Medicare costs onto private carriers, including FEHB plans, by changing the order of benefit payment rules.

The most likely candidate is the rule on coordination of benefits for persons who are eligible for Medicare based on end stage renal disease. Currently, the private sector carrier pays primary to Medicarer for the first 30 months of ESRD care (previously 24 months.) The FEHBlog can see 36 months or longer coming down the pipe.

CMS announced on Friday the implementation of  technology based anti-fraud measures that, as AHIP previously has pointed out, finally catch up to private sector carrier efforts. The new measures check for fraud before payment is made. To its credit, CMS also recognized the private sector’s role in this effort:

Northrop Grumman, a global provider of advanced information solutions, has been selected through a competitive procurement to develop CMS’ national predictive model technology format using best practices of both public and private stakeholders. Northrop Grumman has partnered with National Government Services (NGS) and Federal Network Systems, LLC, a Verizon company (FNS), to leverage the wealth of claims data and its information to fight health care fraud.   CMS used industry guidance, innovative ideas from private and provider entities and related data in developing the scope of work for this national fraud prevention program. Given the importance of this contract to CMS’ overall anti-fraud efforts, this contract is being implemented nationally and ahead of schedule.

Speaking of AHIP, the AMA News reports on an AHIP study that finds growing consolidation of hospital systems, which is being driven by the Affordable Care Act.  The AMA retorts that health plans also have been consolidating. Of course, unlawful monopolization typically is alleged against sellers, who are trying to raise prices, not to purchasers, who are trying to bring down prices.

On Thursday, June 16, the Office of Personnel Management issued a request for information related to its Affordable Care Act responsibility to contract for multi-state plans to operate in the State health insurance exchanges. The RFI basically asks interested carriers to identify themselves and explain why they are interested and how they could fulfill the requirements for a multi-state plan carrier . The response deadline is August 2, 2011.

Yesterday, the Office of Personnel Management issued two new systems of records notices — one for the Inspector General’s existing FEHBP claims data warehouse and the other for OPM’s new warehouse. The FEHBP claims data will flow from the Inspector General’s warehouse to OPM’s warehouse under an Economy Act agreement. OPM explains that “the primary purpose” behind creating this new warehouse “is to provide a central database from which OPM may analyze the FEHBP to support the management of the program to ensure the best value for the enrollees and taxpayers.” Computer World reports on this development here. OPM plans to implement the systems of records on July 15, 2011, “unless comments are received that would result in a contrary determination.”

Standard & Poors released its latest monthly healthcare economic indices today. “Over the year ending April 2011, healthcare costs covered by commercial insurance increased by 7.13%, as measured by the S&P Healthcare Economic Commercial Index. Medicare claim costs rose at an annual rate of 2.48%, as measured by the S&P Healthcare Economic Medicare Index. With April’s data, the Medicare Index posted another record low annual growth rate in its six-year history.” In other words, Medicare continues to shift costs onto the private sector.

HHS released a National Prevention and Health Promotion Strategy today . Modern Healthcare explains 

Authorized in the Patient Protection and Affordable Care Act, the National Prevention Strategy is based on the view that good health comes not just from good medical care, but also from things such as clean air and water, safe outdoor spaces for physical activity, safe worksites, healthy food and violence-free environments. It centers on four strategies: building healthy and safe community environments, expanding quality preventive services in both clinical and community settings, helping people make healthy choices and eliminating health disparities.