The ACA regulators came out with FAQ XV yesterday which included a bit of a bombshell. Many years ago, the FEHB Act, 5 U.S.C. § 8902(m)(2), established a medically underserved areas policy. OPM’s web site explains that

If you live in a medically underserved area and are enrolled in a fee-for-service plan, your plan must pay benefits up to its contractual limits, for covered health services provided by any medical practitioner properly licensed under applicable State law.  Each year, before the FEHB open season begins, OPM determines which states qualify as medically underserved areas for the next calendar year. OPM announces the results of this determination before each open season in a public notice in the Federal Register. The medically underserved areas are listed in each fee-for-service plan’s brochure and on OPM’s Plan Information page.

Well, a new ACA provision, Public Health Service Act § 2706(a), extends this sensible FEHBP policy to all states whether or not medically underserved according to FAQ XV, Q&A 2. The one difference is that “nothing in PHS Act section 2706(a) prevents “a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures.” That caveat may be helpful to fee for service plans. (The FAQs announced that there will be no implementing regulation for this provision.)  Nevertheless. The chiropractor community is overjoyed — see here and here. Cost curve up.

HHS’s Centers for Medicare and Medicaid Services is proposing to increase Medicare Part A payments to hospitals by 0.8% for the federal fiscal year that begins on October 1, 2014.  CMS also is proposing changes to its hospital readmissions control program:

CMS currently assesses hospitals’ readmission penalties using three readmissions measures endorsed by the National Qualify Forum (NQF): heart attack, heart failure, and pneumonia. For FY 2014, CMS proposes a revised methodology to take into account planned readmissions for these three existing readmissions measures.  CMS also proposes to add two new readmission measures, which would be used to calculate readmission penalties beginning for FY 2015: readmissions for hip/knee arthroplasty and chronic obstructive pulmonary disease. 

Furthermore, CMS explained that

Section 3008 of the Affordable Care Act required CMS to establish a financial incentive for IPPS hospitals to improve patient safety by imposing financial penalties on hospitals that perform poorly with regard to hospital-acquired conditions (HACs).  HACs are conditions that patients did not have when they were admitted to the hospital, but that developed during the hospital stay.  This proposed rule outlines a general framework for the HAC Reduction Program for the FY 2015 implementation.
Under this program, hospitals that rank in the lowest-performing quartile of hospital acquired conditions would be paid 99 percent of what they would otherwise be paid under the IPPS beginning in FY 2015.  To determine this quartile, CMS is proposing quality measures and a scoring methodology as well as a process for hospitals to review and correct their data. 

On a related note, Kaiser Health News reports that efforts to coordinate healthcare still have a long way to go. Based on recent personal experience the FEHBlog agrees.

Finally, HHS’s Office for Civil Rights has posted a variety of guidance materials for consumers about the HIPAA Privacy and Security Rules here.

Congress is teleworking this week. Both the House and Senate are having home district work sessions. Before leaving and in furtherance of the kerfluffle discussed in last Thursday’s post, Rep. Bill Cassidy (R La.) introduced a bill (H.R. 1735) that would require the President, Vice President, and Cabinet Secretaries to join members of Congress and their personal staff members in the exchanges next January. The Hill reports that House Ways and Means Committee Chairman Dave Camp (R Mich.) introduced a bill (H.R. 1780) that would require not only the executive branch leaders but also all of the executive branch employees to leave the FEHBP and join the exchanges. The bills were referred to the House Oversight and Government Reform Committee and the Energy and Commerce Committee.

Last week, the House Energy and Commerce Health Subcommittee held a hearing on the impact that the HIPAA Privacy Rule has on mental health care. The Des Moines Register has an interesting background story on the hearing.

Ron Honberg, legal director for the National Association on Mental Illness, attended Friday’s hearing. In a phone interview afterward, he said the stories told there showed how frayed the country’s mental health system is. Honberg said that too often, care providers use HIPAA “as a crutch” to avoid talking to patients’ families. “I call it hiding behind the veil of HIPAA,” he said. “It’s kind of like, ‘Wow, I’d really like to talk to you, but HIPAA won’t let me.’ ” Honberg said he could see tweaking the law to make clear that talking to families is encouraged. 

The FEHBlog has heard the director of the agency responsible for enforcing that rule say that the rule is “a valve, not a blockage.”  Perhaps the valve should be opened further so that families can more easily participate in the mental health care of loved ones.

Modern Healthcare reports that “After sifting through 2,000 pages of public comments, staff members for the Senate Finance Committee say the healthcare industry wants clearer rules, fewer redundant audits and more focus on proactive healthcare fraud prevention.” Ah, common sense rears its lovely head.

OPM has been encouraging FEHB plan carriers to adopt value based benefit design.  The National Business Group on Health explains that

Value-Based Benefit Design is the explicit use of plan incentives to encourage enrollee  adoption of one or more of the following:
• appropriate use of high value services, including certain prescription drugs and  preventive services;
• adoption of healthy lifestyles, such as smoking cessation or increased physical  activity, and
• use of high performance providers who adhere to evidence-based treatment  guidelines.
Enrollee incentives can include rewards, reduced premium share, adjustments to  deductible and co-pay levels, and contributions to fund-based plans, such as a Health  Savings Accounts.
VBBD grew out of the recognition that some medical services are of greater value to specific individual enrollees than to others when three factors are considered: 1) medical  evidence of the effectiveness of a particular treatment, 2) the cost of the treatment, and  3) the resulting benefit of the treatment. 

Business Insurance reports that employer adoption of value based health plan design is low due to insufficient price transparency and lagging health management accountability. Indeed, measures of value based plan adoption receded last year.  Business Insurance notes that “A key obstacle providers and employers said they must overcome is the widespread lack of consumerism and accountability for health management among individual employees.”  Of course, Rome was not built in a day, but the Affordable Care Act does not greatly encourage such consumerism and accountability.

Two weeks ago, the House Federal Workforce Subcommittee held its FEHBP oversight hearing. House Oversight and Government Reform Committee chairman Darryl Issa (R CA — the big chairman)  and Rep. Eleanor Holmes Norton asked OPM Assistant Director Jonathan Foley for his insights on an upcoming change of bipartisan interest — the Affordable Care Act requires members of Congress and their personal staff members (somewhere around 10,000 people) to leave the FEHBP in favor of exchange coverage. Mr. Foley declined because OPM is developing regulations to implement the change. Chairman Issa was not pleased and said he would take the discussion off line as they say.

Today there was a barrage of news articles about this impending change. The Politico reported this morning that Congress secretly was preparing to exempt itself for the exchanges (/ stay in the FEHBP??0.  Ezra Klein from the Washington Post rather indignantly disagreed with Politico. By this evening the Politico was backing off on its morning report, but Congress is planning on clarifying the law, which makes sense.  The Hill and the Washington Examiner also weighed in.

Congress does need to legislate for the purpose of  creating a government contribution for the exchange coverage and explain how this change impacts eligibility for retiree coverage under the FEHBP. OPM can draw the regulatory line between those up on Capitol Hill who leave the FEHBP and those who don’t.

The ACA requires health plans to fund a patient centered outcomes research institute with millions and millions of dollars. Modern Healthcare reports that the PCORI will be spending some of those millions on national patient-powered networks.

OPM is encouraging FEHB plans to be more creative in offering coverage to treat obesity. The AMA News has suggestions from the medical community.

Addressing obesity is “challenging in terms of the time required to do it right and the lack of coverage” by most insurers, said Yul David Ejnes, MD, a Cranston, R.I., internist and past chair of the Board of Regents of the American College of Physicians.

Although Medicare covers a series of primary care visits for obesity counseling among patients with a body mass index of 30 kg/m2 or greater, such appointments are not covered by most other insurance companies, said Scott Kahan, MD, MPH, director of the National Center for Weight and Wellness. The multidisciplinary obesity treatment center is based in Washington. As a result, physicians often must squeeze complicated discussions on improving diet, boosting physical activity and changing eating behaviors into short appointments that are scheduled for a separate health problem.

Kaiser Health News reports that a robotic surgical tool called DaVinci that health plans generally cover and that adds cost to procedures is not uniformly cost effective. Shocker!

Modern Healthcare also provided a link to an HHS Office for Civil Rights PowerPoint discussing the results of the first round of Privacy and Security Rule compliance audits of HIPAA covered entities. “Security was overwhelmingly an area of concern,” the OCR presenter said, noting that 47 of the [61 audited] providers had not done a complete and accurate risk assessment for potential data problems.” That’s a big bowl of wrong.

The House and the Senate are in session this week as the Hill reports. The House “will take up legislation that would take $3 billion from a preventive
health fund created by the 2010 healthcare law and use it to fund the [same law’s] Pre-existing Conditions Insurance Plan (PCIP). The Obama administration
stopped enrollment in that program earlier this year.” The FEHBlog has expected that additional funding will be provided to the PCIP but the debate will be over the source of the funding.

The House Energy and Commerce Committee will hold several healthcare related hearing this week according to its press release.

The Supreme Court will hear a case tomorrow morning (Hillman v. Maretta) that concerns the scope of the Federal Employees Group Life Insurance Program’s state law preemption provision.  The FEHBlog will be in attendance for this oral argument because the FEHBA’s state law preemption provision is similar to FEGLI’s. It’s a second bounce of the ball thing.

Standard and Poors announced last week that

All nine of S&P Healthcare Economic Indices showed slower annual growth rates for February 2013 compared to January 2013. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.62% in February, down from +5.41 % reported for January . Annual growth rates in Medicare claim costs increased by 0.78%, according to the S&P Healthcare Economic Medicare Index, down from + 1.40 % recorded last month.

Local police departments in cooperation with the Drug Enforcement Administration will be collecting unused / expired prescription and over the counter drugs next Saturday as a part of  its National Takeback Initiative.

Medpage Today reports on two interesting studies —

• Better surgical outcomes significantly reduce hospital revenues, and 
• Doctors become cost sensitive when they know the prices of the diagnostic tests they are ordering (duh!),

Federal News Radio had the most informative article about the FEHBP oversight hearing held last week. The FEHBlog remains puzzled by claims that the Program needs to be modernized — refined perhaps but not modernized.  As the FEHBlog has previously mentioned the law relies on the participating carriers to keep the Program modern and they have. For example, Blue Cross executive Bill Breskin noted at the hearing that by the end of 2013 the Blue Cross Federal Employees Plan will offer its enrollees in all 50 states and DC the opportunity to join a patient centered medical home.

The FEHBlog has discovered that the Congressional Research Service on February 13, 2013, issued a report on the evolution of the FEHBP.   By the way. the FEHBlog learned something else tonight. He thought that the FEHBA’s comprehensive medical plan provisions in 5 U.S.C. § 8903 were added when Congress passed an HMO law in the early 1970s. However, the staff model and individual practice model CMP provisions are found in the original law. Since enactment of the law in 1959, Congress did recognize a new type of comprehensive medical plan (the mixed model plan) . Live and learn.

Congress also added a new type of employee organization plan in the mid-1980s (5 U.S.C. § 8903a). About a dozen employee organization plans joined the Program at that time. With the benefit of the retrospectoscope, we now know that the mid to late 980s was a time of sharp health care cost increases (due in the FEHBlog’s view to Medicare’s prospective pricing system for hospital claims that kicked in around 1985 — big time cost shifting there.)  That’s not a good environment in which new health plans to grow.  All of those plans eventually dropped out of the program. The last of those plans, the Secret Service Association Plan, merged into SAMBA in the middle of the last decade.

It’s worth noting though that employee organizations that left the FEHBP can ask OPM for permission to rejoin the Program after they have been out of the Program for three years under a change to the law that Congress made 15 years ago (5 USC § 8903b). But no employee organization plan has rejoined the program under this authority.

Congress will be in session again this week as the Hill’s Floor Watch explains.

OPM Director John Berry’s term of offfice ends today. Executive Gov reports that the interim OPM Director will be Elaine Kaplan who has been serving as OPM’s General Counsel during Mr. Berry’s directorship.  President Obama recently nominated Ms. Kaplan to a judgeship on the U.S. Court of Federal Claims.

The Washington Post reported on last week’s FEHBP oversight hearing  as did Fierce Healthpayer.com. The Post article notes that “Rep. Darrell Issa (R-Calif.) [who chairs the House Oversight and Government Reform Committee that oversees the FEHBP] and Del. Eleanor Holmes Norton (D-D.C.) both expressed concern about cherry-picking by regional PPOs if those plans are allowed to participate in the benefit program.”  The FEHBlog heard Mr. Issa suggest at the hearing that OPM initiate a pilot program. 


Govexec.com reports that the federal employee unions are lambasting the President’s budget proposals relating to federal employment compensation and benefits.  Of course, the President’s FEHBP budget proposals were a topic of discussion at the oversight hearing last week. The article notes that 

Obama’s budget would shift costs of the Federal Employees Health Benefits Program to require employees to pay more in order to save the government $8.4 billion over a decade while also seeking to modernize the program. The Office of Personnel “would be given authority to make adjustments to premiums based on an enrollee’s tobacco use and/or participation in a wellness program,” the proposal said. Union officials said they worried the government could charge higher rates to sick or obese employees.

This horse, however, already as left the barn as the Affordable Care Act permits exactly such adjustments to be made to group and individual health insurance premiums. The ACA regulators recently issued proposed regulations implementing this law for 2014 which healthcare.gov trumpets as protecting the interests of consumers.

Reuters reports a very troubling development. Reuters reports that a Nevada jury socked United Healthcare affiliates with a $524 million damages judgement in a case brought by two women who contracted Hepatitis C due to the unsafe injection practices of their gastroenterologist.  United Healthcare was drawn into the case because the doctor was in a UHC affilates’s provider network. Counsel and Heal News notes that  “The defense of the insurance companies was hurt when the judge refused to let them show evidence that their administrators had not uncovered any proof of wrongdoing in the doctor’s office or that the administrators had followed accepted practices.” Bloomberg News further reports that the defendants could not introduce evidence that the doctor is being put on trial for second degree murder. Bad cases do make bad law. Health plans need to proclaim the independent contractor relationship that exists between their network providers and themselves and publicize their accreditation procedures. (For all I know UHC took these steps but cases like this should lead health plans to engage in risk management analysis.)

The FEHBP oversight hearing testimony is available at the Committee’s website. The full committee’s chairman Darrell Issa (R CA) took an active role in the hearing. Kaiser Health News and Govexec.com  offer their perspectives on the hearing. The FEHBlog will be sure to keep an eye out for fallout from the hearing.

The President’s Budget describes the following legislative initiatives for the FEHBP:

EMPLOYEES AND RETIRED EMPLOYEES HEALTH BENEFITS FUNDS
(Legislative proposal, subject to PAYGO)

The health insurance marketplace has changed significantly since the FEHBP was enacted in 1959 and the current governing statute leaves little flexibility for the program to evolve with the changing market. The 2014 Budget proposes that beginning in 2015: 

(1) employees would be given the option to enroll in a self plus one coverage option rather than being limited to just self or family options [Note — the FEDVIP statute provides for three tiers — because the family size in FEHBP enrollment is not large — the savings from three tiers may be small];
(2) domestic partners of Federal employees and new retirees would be eligible for health benefits [Note — even if the Supreme Court strikes down the Defense of Marriage Act, the majority of States do not recognize same sex marriage currently];
(3) OPM would be authorized to contract with modern types of health plans rather than being limited to the current four statutorily-defined plans reflective of the 1950s insurance market;
(4) OPM would be authorized to contract separately for pharmacy benefit management services; and
(5) OPM would be given authority to make adjustments to premiums based on an enrollee’s tobacco use and/or participation in a wellness program [Note — the Affordable Care Act (“ACA”), HIPAA, and the genetic non-discrimination act permit this latitude in the private sector].

In the FEHBlog’s view it is erroneous to suggest that the FEHBP is outdated as it served as a model for the ACA’s exchanges and it operates under a flexible law that — in contrast to traditional Medicare — historically relied on the carriers to keep the Program up to date through private sector initiatives. The carriers continue to offer their initiatives, but the ACA has shifted much control over insurers to the government.

There is a lot of misunderstanding about the FEHBP which the House oversight hearing hopefully will clear up tomorrow. For example, the Federal Times reports today that

The budget would enable OPM to strike is own deals with pharmacy benefit managers, or PBMs, for prescription drugs. PBMs are companies that negotiate prescription drug prices with pharmaceutical companies on behalf of FEHBP’s insurance providers. But PBMs are not considered subcontractors, and as a result, OPM has little oversight of them and cannot be sure they pass on rebates to FEHBP enrollees.

In fact the trend among private sector employers is to carve in their prescription drug program because of the importance of coordinating care, particularly expensive specialty drugs.  In any event, while OPM does not consider PBMs to be subcontractors, it does consider them to be large providers whose contracts are subject to OPM audit. Moreover, OPM amended the experience rated plan contracts in 2011 to require fully transparent pricing and 100% return of rebates and other manufacturer payments to the FEHBP. Around 80% of FEHBP enrollees participated in experience rated contracts like Blue Cross, GEHA, NALC, APWU, Mail Handlers, and SAMBA.