Happy Easter and Passover! The FEHBlog is back from travelling to Argentina. Highlights of the trip included mini-trekking on the Perito Moreno glacier in Patagonia, visiting the Recoleta Cemetery (excellent English speaking tour guide), and the food.

The process of creating the list of essential benefits continues. The Labor Department’s Secretary sent the Labor Department’s Secretary a required report on benefits typically offered by employer sponsored health plans. A statement from the HHS Secretary explains that

Beginning this fall, HHS will launch an effort informed by the [Institute of Medicine] IOM’s [to be released] recommendations to collect public comment and hear directly from all Americans who are interested in sharing their thoughts on this important issue. I’m confident that this process will ensure all Americans have a seat at the table and strengthen our health care system.”

Qualified health plans operating in the state based health plan exchanges will be required to offer the HHS mandated essential benefits. Employer sponsored plans, including FEHB plans, will not be permitted to place annual or lifetime dollar limits on HHS mandated essential benefits.

HHS issued a proposed rule governing Medicare Part A payments to inpatient hospitals effective for discharges on or after October 1, 2011, the beginning of the next federal government fiscal year. The proposed rule would create a 1.5% increase in diagnosis related group payments. Also

To provide hospitals with an incentive to improve care coordination, the Affordable Care Act directs CMS to implement a Hospital Readmissions Reduction Program that will reduce payments beginning in FY 2013 to certain hospitals that have excess readmissions for certain selected conditions.  Today’s proposed rule proposes measures for rates of readmissions for three conditions — acute myocardial infarction (or heart attack), heart failure, and pneumonia.  CMS is also proposing a methodology that would be used to calculate excess readmission rates for the program.  Additional conditions may be added in future rulemaking.  The payment adjustments will apply to hospital payments in FY 2013, beginning with discharges on or after Oct. 1, 2012.

HHS is accepting comments on the proposed rule until June 20, 2011, and the agency expects to issue the final rule on August 1, 2011.

On a related patient safety note, AHIP issued a white paper on ensuring quality through appropriate diagnostic imaging. “According to the paper, health plans are using a variety of tools to help improve the quality and affordability of care patients are receiving with respect to imaging tests.  These strategies emphasize “the use of standards to safeguard patient safety and promote imaging quality, physician education, and the use of evidence-based guidelines.” Also the Centers for Medicare and Medicaid Services published a report on its physician quality reporting and e-prescribing programs

CMS’s 2009 Physician Quality Reporting System and ePrescribing Experience Report states that 119,804 physicians and other eligible professionals in 12,647 practices who satisfactorily reported data on quality measures to Medicare received incentive payments under the Physician Quality Reporting System totaling more than $234 million—well above the $36 million paid in 2007, the first year of the program. Under the ePrescribing Incentive Program, CMS paid $148 million to 48,354 physicians and other eligible professionals in 2009, the first payment year for the program. Results show that participation in the Physician Quality Reporting System has grown at about 50 percent every year, on average, since the program began.

Last month, HHS issued a long awaited proposed rule governing the participation of accountable care organizations in the Medicare Program next year. The AMA News featured a report on provider reactions to the proposed rule captioned “Skepticism greets Medicare ACO shared savings program.”

Advocate Physician Partners, an alliance of 3,800 physicians in Illinois, is in the first year of a shared savings program with BlueCross BlueShield of Illinois. Officials are studying the CMS rule, but they are not sure if Advocate will participate as a Medicare ACO next year, said Mark Shields, MD, senior medical director of the Oak Brook, Ill.-based alliance.
“It’s a significant hurdle to succeed with the Medicare ACO program as the regs are now written,” Dr. Shields said. “It’s not the place for an organization that has not already done significant care reorganization.” For instance, the ACO proposal requires that 50% of the physicians are meaningful users of electronic medical records as defined by the Dept. of Health and Human Services.

AIS reports that private insurers may diverge in certain respects from the Medicare rules when forming their own ACOs.

The Labor Department’s ERISA Advisory Council issued a report on improving Health Care Literacy, an Affordable Care Act objective. The report included the following recommendations:

Seek consistency of health care-related terminology among Federal agencies, insured and self-insured plans. The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (“PPACA” or “Affordable Care Act”) requires the Department of Health and Human Services to develop consistent definitions of commonly used terms such as “copayment,” “coinsurance,” and “deductible.” The DOL should use these terms in its communications and encourage use of these standard definitions in all benefit communications.

Permit flexibility in delivery of the summary of benefits and coverage explanation (often referred to as the “four page notice”) required under the Affordable Care Act. Plan sponsors will be required to provide this summary of essential group health plan benefits and coverage. The Council views this as a very good opportunity to promote health care literacy and believes that the DOL provide plan sponsors with flexibility to determine the most effective way to distribute this document to plan participants. 

The FEHBlog ran across the Standard & Poor’s website for its monthly healthcare economics indices for the United States. “The indices are calculated monthly, and published with a 6-8 week lag. The indices are released to the public at 9AM on the third Thursday of each month.” According to the most recent report for the month of February 2011,

Over the year ending February 2011, healthcare costs covered by commercial insurance rose by 7.97%, as measured by the S&P Healthcare Economic Commercial Index. Medicare claim costs rose at an annual rate of 3.22%, as measured by the S&P Healthcare Economic Medicare Index. This is the lowest annual rate of growth posted for the Medicare Index in its six-year history.

Well, the President gave his deficit reduction speech yesterday and there was no mention of converting the FEHBP to a premium support program as Ezra Klein of the Washington Post and the Federal Times at least hinted on Tuesday, The Federal Times now reports

Although President Obama’s deficit reduction plan unveiled April 13 does not include provisions cutting federal pay or benefits, changes to federal retirement plans are “on the table,” an Office of Management and Budget official said Thursday. “It’s not in the plan now, but it’s something we’re looking at,” the official said. Obama is not currently considering cuts to federal pay, the official said.

Congress approved the FY 2011 appropriations bill (H.R. 1473) today. The Wall Street Journal reports that “The House voted 260-167 for the measure. The Senate followed soon after, voting 81-19 for the deal.” Hopefully, this means there will be no government shutdown for at least five months, and after Congress returns from its Easter break, they can turn their attention to the FY 2012 appropriations and the debt ceiling issues, among others.

The FEHBlog, by the way, also will be taking an Easter break. My family and I will be visiting our younger daughter who is spending her semester abroad in Buenos Aires, Argentina. Her humorous blog about her adventures in South America can be accessed here.

In OPM’s call letter for 2012 benefit and rate proposals, OPM encouraged plans to reduce prescription drug expenses, which is not a simple task in a Program with 50% annuitants. Fortunately, there are a plethora of blockbuster prescription drugs that are going generic later this year and in 2012.

When a prescription drug goes generic, typically one generic manufacturer will gain rights to exclusive distribution for six months. In the case of Lipitor, which goes generic at the end of November, the lucky generic manufacturer is Ranbaxy Laboratories of India.  Lipitor, a statin used to reduce cholesterol. has recent U.S. sales of  $5.3 billion At the end of the six month exclusivity period,  school’s out. A Dow Jones story about Lipitor’s conversion to generic status notes that

Increased client sophistication on drug pricing isn’t the only factor that may limit generic Lipitor profits [by prescription benefit managers]. Experts note there’s uncertainty over how many generic competitors will enter the market, which also could affect profits. The more competitors, the lower the drug price and greater opportunity for fat margins.

In addition, Wal-Mart Stores Inc. launched a retail generics price war a few years ago when it introduced $4 prescriptions for hundreds of unbranded drugs. If enough generics manufacturers sell unbranded Lipitor, it could wind up on the $4 list, and that could pressure PBMs further, said economist Larry Abrams, who follows the pharmacy benefit management industry.

AIS Drug Benefit News featured a story on the blockbuster drugs like Plavix, Singulair, and Lexapro that will go generic next year.  According to the report,“Everyone characterizes this as a landmark event in our industry, and I think it’s real,” Robert Galle, COO of pharmacy benefit management for Aetna Inc. tells [us] “The number of drugs coming off patent will create an unprecedented amount of activity. It affects almost 20% of our total drug spend.”  The article also discusses new plan sponsor approaches to incenting plan member utilization of generic drugs.

In the call letter, OPM also encourages FEHB plans to offer their members wellness programs. Business Insurance helpfully reports that “The U.S. District Court for the Southern District of Florida dismissed a lawsuit alleging that financial incentives to participate in a voluntary wellness program as part of a health plan provided to employees by Broward County, Fla., violated the Americans with Disabilities Act.” There are other potentially tricky legal requirements around wellness programs and related health risk assessments under the non-discrimination rules of HIPAA and the Genetic Information Non-Discrimination Act (because family medical history is considered to be protected genetic information by the statute.)

Ezra Klein of the Washington Post is predicting that tomorrow the President will support the health care changes proposed by his deficit reduction commission last December which include accelerating implementation of the so-called Cadillac tax on high cost health plans from 2018 to 2014 and converting the FEHBP to a premium support plan. And the FEHBlog thought that putting off the Cadillac tax would facilitate its ultimate repeal.

The FEHBP already takes defined contribution approach to the Government contribution; the Government pays 72% of the enrollment weighted average premium capped at 75% of the selected plan’s premium (5 U.S.C. § 8906). In other words, the minimum employee contribution toward FEHBP coverage is 25% and the Government’s share of the premiums rises with the tide. In contrast, under a premium support approach, the Government would contribute a flat amount and that amount would be adjusted by general inflation. In other words, the Government contribution likely would cover a low cost plan’s premium in full. This could encourage lower income employees to join the FEHB Program, but it likely would be very disruptive, in the FEHBlog’s view. Of course, we don’t know what the President will propose and it’s a long way from a Presidential proposal to law, particularly in this Congress.

The FEHBlog is gratified that, according to Business Insurance. other experts took the same dim view of the free choice voucher provision of the Affordable Care Act that will be repealed under the FY 2011 budget deal.

According to an HHS press release, “Health and Human Services Secretary Kathleen Sebelius, joined by leaders of major hospitals, employers, health plans, physicians, nurses, and patient advocates, today announced the Partnership for Patients, a new national partnership that will help save 60,000 lives by stopping millions of preventable injuries and complications in patient care over the next three years.  The Partnership for Patients also has the potential to save up to $35 billion in health care costs, including up to $10 billion for Medicare.  Over the next ten years, the Partnership for Patients could reduce costs to Medicare by about $50 billion and result in billions more in Medicaid savings.  Already, more than 500 hospitals, as well as physicians and nurses groups, consumer groups, and employers have pledged their commitment to the new initiative.”  Here’s a link to a fact sheet on the new initiative. The pledge for health plans and other health care payors reads as follows:

As those who purchase health care on behalf of American consumers and provide information to help support them in their efforts to get better care we pledge to:

• Use market-based incentives, that may include payments, to promote improvements in safety and other dimensions of quality and value;

• Work with other private payers, states and the federal government to align our efforts to measure performance on quality and safety – so that patients and clinicians have the best possible information and the burden on hospitals and other providers is minimized; and

• Share information with our employees, members or beneficiaries so they can engage as active partners in getting better, safer care.

Health plans can take the pledge here.

Wow. Not only did Congress reach a compromise to avoid a government shutdown (at least for a few months), but the budget deal also will repeal one of the most potentially disruptive provisions in the Affordable Care Act, the so-called free choice voucher provision, according to a Wall Street Journal report.

Here’s how the free choice voucher would have worked. Under § 10108 of the Affordable Care Act, employees whose income is at or below 400% of the federal poverty line (approximately $45,000 for an individual and $90,000 for a family of four this year) would have received beginning in 2014 a “free choice voucher” if the employee contribution toward his or her employer sponsored coverage represented from 8% to 9.8% of his or her household income. The free choice voucher would have given the employee the value of the employer contribution that employee could have used to purchase stated based health insurance exchange coverage. If the exchange plan’s premium is less than the value of the free choice voucher, the employee would have received the balance of the free choice voucher in cash. The portion of the voucher used to purchase Exchange coverage would have been tax free.

What’s so bad about that? The free choice voucher had the potential to shred the risk pools in employer based plans, including the FEHBP.  For example, the younger employees, who weren’t covered under their parents’ coverage, could have opted into a young invincible plan in the exchange. FEHBP enrollees in living in lower cost states may have found lower cost plans in their state exchanges. (Fee for service plans in the FEHBP must offer nationwide premium rates.) In both cases, the enrollee would pocket any resulting savings which potentially could have cost employers, including the federal government, a lot of money. There will be enough changes in 2014 without this additional disruption.  

Following up on the release of an HHS strategy to reduce health disparities, AHIP’s coverage blog discusses the steps that health plans are taking to reduce health disparities — an objective that OPM shares according to its 2012 call letter.

Finally, although the FEHBlog was aware of CMS’s Hospital Compare and Nursing Home Compare websites, I just ran across this healthcare.gov website that consolidates links to all four CMS provider comparison website. There’s also a home health compare and a dialysis provider compare website. What is really cool about these very helpful websites is that the quality information reflects the entire patient base at the facility, not just the Medicare patient base.

OPM has posted updated information on the impact of a partial government shutdown which may occur tomorrow unless an FY 2011 budget deal is reached. OPM also has posted its own agency furlough contingency plan. The FEHB Program is expected to run on a normal basis in the event of a partial government shutdown.

One of the topics in OPM’s recent 2012 call letter was patient safety. The National Journal reports on three recent patient safety studies.

“There are some examples of excellence–we have many [intensive-care units] that have eradicated central line infections. But surrounding those examples of excellence we have serious adverse events going on,” said Dr. Mark Chassin, president of the Joint Commission, a nonprofit organization that accredits health care programs. 

“Every week in the United States, up to 40 patients undergo a procedure meant for somebody else or the wrong body part. We have fires that occur during operations and routine processes where patients acquire infections and have medication mix-ups.”

Although insurers can help by refusing to cover charges for hospital acquired conditions, it’s really up to the medical community to solve this problem.

Another topic is reducing health disparities. Today, the Department of Health and Human Services announced the

launch [of] two strategic plans aimed at reducing health disparities. 

The HHS Action Plan to Reduce Health Disparities outlines goals and actions HHS will take to reduce health disparities among racial and ethnic minorities. 

HHS also released the National Stakeholder Strategy for Achieving Health Equity, a common set of goals and objectives for public and private sector initiatives and partnerships to help racial and ethnic minorities and other underserved groups reach their full health potential. The strategy, a product of the National Partnership for Action (NPA), incorporates ideas, suggestions and comments from thousands of individuals and organizations across the country. The NPA was coordinated by the HHS Office of Minority Health.

The strategies are available here.

The FEHBlog successfully predicted that the University of Connecticut (my alma mater)/ Team of Destiny would win the NCAA men’s basketball championship, but the FEHBlog is in no position to predict whether or not there will be a partial government shutdown on Saturday. The FEHBlog hopes for the best and notes the OPM posted shutdown guidance for federal employees on its website today.

Business Insurance reports that the Senate today joined the House of Representatives in repealing the Affordable Care Act’s expanded IRS Form 1099 reporting requirement against which large and small businesses rebelled.

The Washington Post reports on recent Justice Department anti-trust actions against health care providers and insurers. The actions are of interest because the violations arise out of provider network contracting actions in the context of a business with alleged monopoly power.

The FEHBlog moves from provider network contracts to out of network payment arrangements. The FEHBlog has discussed the New York State Attorney General’s (now Governor’s) settlement with Ingenix which lead to Ingenix handing over its out of network reimbursement databases to a new non-profit company called Fair Health, Inc. Fair Health has launched a new website which will give consumers estimated costs for medical and dental procedures by zip code. The site currently offers dental procedure pricing and in August 2011 it will provide medical procedure pricing.

The American Medical News ran an interesting story about the ongoing development of the essential benefits package which health insurance exchange plans must offer. The following paragraph is noteworthy for its praise of the FEHBP:

The AMA recommends that HHS strike a balance by using an existing model — the Federal Employees Health Benefits Program — as a reference when setting essential benefits. FEHBP plans cover hospital, physician, medical and surgical care, even though the program does not specify a standard benefit package, said Gerald E. Harmon, MD, a member of the AMA Council on Medical Service. Participating plans follow evidence-based guidelines for preventive care and are required to cover additional benefits, including childhood immunizations, prescription drugs and mental health services. Dr. Harmon emphasized that the definition of essential benefits must allow for a range of health plan options with a variety of benefits, cost-sharing levels and other features to ensure adequate consumer choice.

The current continuing resolution funding the Federal government’s operations expires on Friday April 8. The Washington Post accurately describes this week as crunch time.  On Friday, House Speaker John Boehner Let’s keep our fingers crossed for a resolution.

On Friday, April 1. OPM Director John Berry testified about his agency’s FY 2012 budget request before the financial services and general government subcommittee of the House Appropriations Committee. Govexec.com reports that

Berry drew praise from Republicans and Democrats for OPM’s health and wellness initiatives for federal employees, the agency’s efforts to increase diversity within the government workforce, effective administration of the Federal Employees Health Benefits Program, and Berry’s push to boost federal hiring of veterans, which resulted in an executive order.

The Affordable Care Act’s (“ACA”) regulators issued their sixth set of Frequently Asked Questions about ACA implementation. These FAQs focus on how to maintain grandfathered plan status. That train has basically left the station for the FEHBP.

OPM’s recent FEHBP call letter asked plans to focus on patient safety.   Modern Healthcare reports that over the objection of the American Hospital Association, the Centers for Medicare and Medicaid Services have posted a spreadsheet captioned “Hospital Acquired Condition calculations for IQR 2011”

containing facility-specific information on eight hospital-acquired conditions [per 1,000 discharges], including blood incompatibility, air embolisms and two types of healthcare-associated infections. The agency declined to comment on the data, but a CMS spokesman said more clarification of the HAC data would be available soon. The file is also scheduled to be posted on Hospital Compare, the CMS’ site for consumers, on April 21.

HHS released the long awaited proposed accountable care organization (“ACO”) rule today.  Now it’s off to the races for hospitals, doctors, and insurers to create these new creatures which are intended to provide higher quality care without locking patients into the provider network like the mean old HMOs. Kaiser Health Care has a helpful FAQ on the ACO rule and it’s always interesting to read the AMA News take on the proposed rule which logs in at 429 pages.  The FEHBlog appreciates AHIP President Karen Ignani’s comment that

We remain concerned that ACOs could accelerate the trend of provider consolidation that drives up medical prices and result in additional cost-shifting to families and employers with private coverage.  However, we appreciate that CMS, the Department of Justice, and the Federal Trade Commission recognize the potential for consumer harm and are taking steps to address this issue with proposed guidelines for evaluating ACOs and their potential impact on consolidation within the marketplace.”  

The proposed rule will be open for public comment during the 60 days following its publication in the Federal Register on April 7.

Tomorrow OPM Director testifies before the House Appropriation’s financial services subcommittee in support of his agency’s FY 2012 budget proposal.

Govexec.com now features a government shutdown countdown on its home page, and the USA Today reports that the government remains on radio silence about the consequences of a shut down.  The Christian Science Monitor and other press outlets report that a compromise is in the works that would avoid a shutdown.

Yesterday, the Labor Department issued its first annual report on self-insured health plans which is an ACA requirement.  Business Insurance informs us that “According to the report, just more than 82% of private-sector employers with at least 500 employees self-insure at least one of their health care plans, compared with nearly 26% for employers with 100 to 499 employees and 13.5% for employers with less than 100 employees.” Contrary to HHS, the FEHBlog anticipates that the ACA will incent more employers to self insure their plans in order to avoid, for example, the onerous fees imposed on health insurance carriers beginning in 2014. It’s worth noting that the federal government does not self insure its FEHBP. Instead the risk is borne by the carriers which include health insurers, like the Blue Cross Blue Shield Association, employee organizations like GEHA and Mail Handlers, and HMO carriers like Aetna.

Congressional Quarterly offers an update on the FY 2011 budget negotiations. The negotiators still have ten days to avoid a Government shutdown on April 9. Both the President and the House leadership have stated that they do not want another short term extension; they want closure on an issue that should have been resolved last year. A complicating factor is the new House leadership’s pledge to make bills be made public for at least 72 hours before the House votes, but hope springs eternal.

Thomson Reuters Healthcare released its 2011 U.S. hospital ratings.  The Wall Street Journal reported on the Veterans’ Affairs Departments VA Hospital Compare which sets the bar for quality reporting. Of course the VA manages the health system but the agency deserves credit for this high level of transparency. It’s unfortunate that other health care organizations do not engage in the same level of self-policing. VA Hospital Compare should be helpful to the many federal employees and annuitants who are veterans. Thank you for your service.

On a related note, the Wall Street Journal reports on its efforts to unveil the practice patterns of unscrupulous physicians by mining the Medicare claims database.  However, since 1979, a federal court acting at the request of the American Medical Association has enjoined the public from using this database to identify Medicare claims payments information to doctors by name.  The Journal has tried to work around this limitation while bringing a lawsuit to terminate the injunction.                      

Finally, the FEHBlog learned in a BNA publication about a Deloitte consulting report on healthcare value based purchasing, an objective of the Affordable Care Act. “Value-based purchasing (VBP) is a payment methodology that holds health care providers accountable for the quality and cost of the services they provide by a system of rewards and consequences, conditional upon achieving pre-specified performance measures.”  The report, among other topics,

• Looks ahead to VBP implementation under health care reform legislation;
• Reviews commercial health plans’ response to VBP and other payment reforms;
• Discusses potential challenges of implementing VBP;
• Provides key takeaways for health care providers, employers, health plans, state and federal government, and consumers

Odds of a government shutdown on April 9, 2011, are increasing according to the Washington Post. Govexec.com reports that “With the Obama administration officials remaining tight-lipped about their preparations for a potential shutdown, the American Federation of Government Employees is taking a proactive approach in its planning, offering its members a detailed explanation of what the union sees as their rights and protections. According to the AFGE, “benefits provided through the Federal Employees Health Benefit Program should also continue uninterrupted” during a shutdown.