The Federal Times reports that the President has signed into law a minibus appropriations bill that funds several departments and extends funding for other government agencies and programs, including the FEHBP, until December 16. Congress actually is hopeful that all appropriations matters will be wrapped up by that date. The law also further “defers a legally required $5.5 billion “prepayment” by the U.S. Postal
Service for retiree health care, this time until Dec. 16. That payment
was originally due Sept. 30; USPS officials said they don’t have the
money to cover it.”

Also the Labor Department, one of the Affordable Care Act regulators, published a new FAQ advising health plans that the obligation to issue four double sided page long summaries of benefits and coverage will be deferred until the final rule’s effective date. Obviously that will occur after the statutory effective date of March 23, 2012. According to a Business Insurance report, “This is great news for employers since the initial guidance left much
of how the (summary of benefits and coverage) would apply to large
employer plans unaddressed,” said Rich Stover, a principal with Buck
Consultants L.L.C. in Secaucus. N.J. The FEHBlog agrees.

The publication also includes FAQs about Mental Health Parity Act rule’s restrictions on so-called non-quantitative benefit limitations.

Also following up on this week’s posts, the FEHBlog thought that he had missed the publication of the annual FEHBP information technology report. But actually OPM announced the report the day after the FEHBlog mentioned it.

The Centers for Medicare and Medicaid Services have given health care providers an additional three months — until March 31, 2012, to start using the new HIPAA electronic transaction standards known as ANSI X 5010.  Health care providers generally are required to submit claims electronically to Medicare and Medicaid so this is a big deal.

Ihealthbeat provides several reactions to the American Medical Association’s stand against the ongoing ICD 10 conversion discussed in Wednesday’s FEHBlog post.

Joe Davidson of the Washington Post reported on the beginning of a quiet Federal Benefits Open Season (so described because the average premium increase is so low for 2012) Mr. Davidson reported from a health fair sponsored by the FEHBlog’s Congressman Chris Van Hollen. He observed that “People from health insurance companies, many with logo-laden swag, were available to answer questions about their products.” That’s a cheap shot. These health fairs have been around for decades and attendees expect a little “swag.” What’s wrong with that?  It’s fun.  It’s important to note the “swag” is not purchased with government funds.

OPM holds its last Open Season webinar tomorrow at 1:30 pm ET. Tomorrow’s webinar is on the topic of the FEHBP and Medicare. The previous webinars are available on YouTube. (Seriously.) The FEHBlog listened to Tuesday’s webinar about how to select the right health plan. OPM recommended three sources of information for comparing FEHB plans — OPM, Plan Smart Choice  (a tool which has improved over the years), and Consumers Checkbook.

The Administration made announcements today about reductions in improper payment rates in many high error programs such as Medicare and Medicaid.. You won’t hear the FEHBP’s name called here because the FEHBP has a low improper payment rate that will be disclosed soon in OPM’s FY 2011 financial statements. Carriers do a good job of managing their plans.

Business Insurance reports that according to a Mercer survey, the average cost of employer sponsored health insurance has cracked $10,000 in the U.S. That’s not good news particularly as we creep ever closer to the Affordable Care Act’s tax on health insurance premiums that takes effect in 2014 and its tax on high premium plans that takes effect in 2018. Of course, the U.S. Supreme Court announced on Monday that it will consider the constitutionality of the Affordable Care Act in a five and 1/2 hour long argument early next year that will consider the constitutionality of the individual mandate and the constitutionality of the law’s provisions expanding Medicaid and imposing significant new costs on States. The Court also will consider two related issues — whether the appeal is premature because the relevant provisions do not take effect until 2014 (a decision reached by the U.S. Court of Appeals for the Fourth Circuit) and whether these two challenged features of the law are severable from the rest of the law which would allow the law to remain in effect except for features that the Court finds unconstitutional. C-SPAN has asked the Supreme Court for permission to televise the argument according to the WSJ’s Law Blog. The Supreme Court has a web page on this important case here.

The Washington Post reports that OPM has been named one of the top ten places to work in the federal government. Kudos to OPM.

Finally, in a truth is stranger than fiction piece, Medscape reports that the American Medical Association’s Board of Governors wants the federal government to stop implementing the International Classification of Diseases 10 (ICD 10) code set because implementation will cost doctors too much money. (Oddly enough, the Chairman of the AMA’s Board of Trustees is Dr. Wah as in wah! wah!)

The International Classification of Diseases and Related Health Problems, 10th Revision, contains approximately 68,000 codes, and its implementation is slated for October 2013. ICD-10 will replace ICD-9, which has just 14,000 codes.

The Department of Health and Human Services two years ago finalized a HIPAA rule requiring health plans to implement a new set of electronic billing transaction standards known as the ANSI X5010 by January 1, 2012, and implement the ICD-10 by October 1, 2013. Doctors and hospitals who want to bill health plans electronically must use the same transaction standards and code sets.

The ICD blew up in order to improve public health reporting which is not the purpose of electronic billing. The current ICD 9 works fine. However, while the FEHBlog shares the AMA’s sentiments, this train left the station two years ago and health plans have spent millions implementing the new requirements. The AMA’s only hope is Congress. We’ll see., but I would not bet the ranch on the AMA succeeding with this one.

The Federal Benefits Open Season starts tomorrow and ends on December 12.  During the Open Season, federal and postal employees and annuitants can switch their FEHB plans for 2012 without concern of for pre-existing conditions.

While surveying OPM’s Open Season web page, the FEHBlog ran across OPM’s annual report on the use of health information technology in the FEHBP. OPM finds robust use.

In an odd twist on the government’s efforts to incent the use of electronic health information technology (“HIT”), particularly by health care providers, the U.S. Institute of Medicine issued a report last week recommending that Congress create an independent agency similar to the National Transportation Safety Board that would investigate and attempt to curb patient safety problems created by HIT. According to the Federal Times, “The  [IOM} study cites reports of patient deaths and injuries due to “medication dosing
errors, failure to detect fatal illnesses and treatment delays due to
poor human-computer interactions or loss of data.” Modern Healthcare provides the HIT industry’s reaction to this study.

Congress is making progress on the appropriations bills for the current federal fiscal year. There is a House – Senate conference committee which is expected to complete work on a “minibus” appropriations bill “covering NASA and the Agriculture, Justice, Commerce, Transportation, and
Housing and Urban Development departments, along with a number of
smaller agencies” according to the Federal Times.  This bill will include an extension of the continuing resolution for the rest of the government and the moratorium on the Postal Service’s $5.5 billion pre-retirement health care funding obligation until mid-December.

We are ten days away from the deadline for the Joint Committee on Deficit Reduction a/k/a the Super (Duper?) Committee to submit its deficit reduction package to Congress. According to this Washington Post report, Committee members remain hopeful for a compromise that leads to submission of such a package.

On Tuesday morning, November 15, the Federal Workforce subcommittee of the House Oversight and Government Reform Committee will hold hearing titled “Back to Basics: Is OPM Fulfilling its Mission?” OPM’s Director and the agency’s Inspector General will testify. Joe Davidson from the Washington Post provided background on the hearing in a column last Thursday.

Federal News Radio reported on the AEI conference that I discussed in Wednesday’s FEHBlog post. Federal News Radio who had a reporter at the event did a good job capturing the concerns that the panelists made about the Administration’s proposal to carve out FEHBP prescription drug contracting from the carriers — who bear the underwriting risk — to OPM. The report further states that

The Office of Management and Budget did not respond to a request for comment on why it believes the FEHB proposal makes economic sense.

The American Federation of Government Employees supports the proposal because carving out the pharmacy benefits is the only way to get better prices because there is little competition and less transparency, said Jackie Simon, the union’s public policy director. She said in an email to Federal News Radio that statutory pricing is what the VA and DoD and Bureau of Prisons and the Indian Health Service have, and can do direct negotiations for maximum prices.

The FEHBlog wishes to assure that OPM contractually has imposed on fee for service plan carriers a transparent pricing initiative applicable to prescription drug pricing that just took effect this year. That initiative which is still being implemented is stronger than that found in the private sector.  Moreover, statutory pricing simply shifts costs to other employer sponsored plans and does not work unless the government clamps down on utilization.

Govexec.com picks up on FEHB expert Walt Francis’s opposition to the Postal Service’s effort to carve out its employees from the FEHBP. The Postmaster General has told Congress that he could cut USPS healthcare costs in half. That’s unlikely because the Postal Service’s demographics are worse than the Civil Service’s.  The Govexec.com article explains

If the Postal Service leaves FEHBP, its health care expenses would rise
by about 10 percent, Francis said, largely because of the agency’s aging
workforce, which currently benefits from being in the larger and more
age-diverse FEHBP pool.

What’s more the FEHBP’s competitive model has done a very good job controlling costs — 3.8% increase for 2012 versus Mercer’s 5.4% estimated increase for private sector employer sponsored plans. Group health insurance principles embraced by the FEHBP work over time. Caveat — the Postal unions have the right to collectively bargain a USPS only plan with the Postal Service. Everyone should respect that right.

The Senate Homeland Security and Government Affairs Committee held a business meeting today at which it marked up the 21st Century Postal Service Act (S. 1789) that the Chairman, Sen. Lieberman (D CT) and the Ranking Member, Sen. Collins (R Maine) introduced. The FEHBlog, who watched the meeting on the internet, was relieved when the Committee approved by an 11-6 vote a motion by Sen. Akaka (D Hawaii) to delete Section 103 which would have forced Postal Service retirees into a Medigap plan.

Section 103 would have refused employer health insurance coverage to Postal Service retirees who declined to purchase Medicare Part B. Sen. Akaka said at the meeting that OPM’s actuaries have opined that the bill’s Medigap plan would not produce the savings that the Postmaster General has projected and that it also would weaken the FEHBP. (The FEHBlog agrees and so did FEHBP expert Walton Francis at an AEI conference today that the FEHBlog also watched.) Sen Begich (D Alaska) asked Sen. Lieberman whether the Centers for Medicare and Medicaid Services has expressed its opinion on this significant cost shift to Medicare. The bill’s sponsors did not think that was necessary. Sen. Lieberman was not pleased with this result, and he said that he would raise the Medigap plan issue on the Senate floor.

The American Enterprise Institute (“AEI”) had a meeting today titled Dismantling the FEHBP at which two FEHBP experts Walt Francis and Jim Morrison and an AEI economist Joe Antos spoke. All of the speakers spoke out against the Administration’s proposal to carve out prescription benefit contracting from the carriers to OPM  Walt Francis described this initiative as a solution in search of a problem. In support of that position, the FEHBlog notes that the FEHBP’s 2012 premium increase is lower than the Mercer estimated projected 2012 increase for private sector employers.  Mr. Francis also pointed out that at a 2009 House Oversight Committee hearing he learned that TRICARE drug costs rose at a rate two times higher than FEHBP drug costs. The TRICARE drug program is managed and self-funded by the government while the FEHBP is managed and insured by the carriers.

AEI summarized Jim Morrison’s position as follows:

Health plans integrate pharmacy benefits with the medical benefits they provide; imposing one set of pharmacy benefits on all of the plans unwisely ignores the complex interaction between the benefit components of each plan.

He noted that there are several recent studies that find that carving out prescription drug benefit administration costs more money for this reason. The most recent study is one conducted by CIGNA and Health Partners that was released last February.

Here’s a link to this event where you can watch it (about 1 hour and 15 minutes) and read background materials.

Well, this is getting repetitive. Congress is in session this week. 12 days to go until the Continuing Resolution funding the Federal government’s operations expires and 17 days until the Super Committee must make its recommendations to Congress. The Washington Post reports on the status of the appropriations process — now featuring “minibuses.” Your guess about the outcome of the Super Committee discussions is as good as mine.

OPM is in the process of creating an all payer claims database for the FEHBP. A similar database has existed for the Medicare Program (and it doesn’t seem to have helped too much). The Medicare database is subject to Freedom of Information Act requests. Many moons ago, the American Medical Association obtained a federal court injunction stating that CMS cannot disclose the identities of physicians who receive Medicare payments when it answers those FOIA requests. Last year, the Wall Street Journal studied the data that it could obtain from the database and it found (SHOCK!) patters of Medicare fraud. On Friday, the Wall Street Journal reports that

A New York-area family-practice doctor [Dr. Emma Poroger] who was featured in a Wall Street Journal articleabout Medicare abuses last year was indicted by a federal grand jury this week for allegedly submitting more than $13 million of false claims to the program.

* * *
Dr. Poroger, 56 years old, is the second health-care professional cited in a series of Journal articles about Medicare abuses who has since been indicted. A Brooklyn physical therapist, Aleksandr Kharkover, pleaded guilty in May to submitting fraudulent claims to Medicare for services that were medically unnecessary and never performed.

Another doctor featured in the series, Theresa Rice, has been suspended by the Texas medical board. And a fourth, Portland neurosurgeon Vishal James Makker, is under investigation by the Oregon medical board and is no longer allowed to operate on patients without supervision.

The Journal has gone to court in an effort to overturn the AMA injunction.

Modern Physician reports that Sen Charles Grassley (R Iowa) is challenging the Health and Human Services Department’s decision to close public access to a separate data base known as the National Practioner Database that contains information on medical malpractice awards and sanctions against doctors.

On a related note the Privacy, Technology and the Law subcommittee of the Senate Judiciary Committee will be holding a hearing Wednesday afternoon about protecting potected health information in a digital world.

AHIP announced last week that

A new technical analysis by Oliver Wyman estimates that the new health insurance tax in the Affordable Care Act (ACA) “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.”

Ironically this tax, which takes effect in 2014, will fall predominately on the insured plans in the health insurance exchanges that serve individuals and small business. It also adversely impacts insured FEHBP plans like the Federal Employees Plan and the HMOs participating in the Program. Self-insured plans, Medicare, and Medicaid, are exempt from the tax.

The American Enterprise Institute will be holding an expert panel discussion on the Administration’s proposal to carve out FEHBP prescription benefit administration to one prescription benefits manager under contract with OPM. The discussion will be held next Wednesday November 9 at 9:15 am and you can watch it remotely on the internet.

Fortunately the AEI session does not conflict with OPM’s Federal Benefits Open Season webcasts. It will however, conflict with the Senate Homeland Security and Governmental Affairs Committee’s markup of the 21st Century Postal Service Act that a bipartisan group of Senators introduced on Wednesday. The American Postal Workers Union website summarizes the bill’s provisions. The provisions impacting the FEHBP would

Authorize the Postal Service to enter into negotiations with the unions to develop a USPS healthcare plan inside or outside of the Federal Employee Health Benefits Program (FEHBP)., and

Require Medicare-eligible retirees to enroll in Medicare Parts A and B and require the Postal Service to develop Medigap-like plans that offer comparable benefits within the Federal Employee Health Benefits Program for retirees and their dependents [whether or not the unions agree to a USPS healthcare plan].

The U.S. Office of Personnel Management begins to hold a series of five Federal Benefits Open Season webinars beginning tomorrow. Of course the first session is an introduction to the Open Season. OPM advises that

• Each webcast will be viewable starting at 1:30pm Eastern Time. To view the webcast online, you must use a broadband (high-speed) internet connection.
• The webcast stream will become active 24 hours before the
  webcast is scheduled to begin. Be sure to test the webcast stream
  during that 24 hour window. To test the webcast stream, click on the
  link below.
• The link to view the webcast is http://pointers.audiovideoweb.com/stcasx/il83winlive3146/play.asx.
  • You will need Windows Media Player 9.x or higher to view the webcast.
• If you miss one of our shows, or if you need to see part of one again, you can watch a recording of each webcast at www.opm.gov/insure/openseason/videos.asp. The recordings will be posted the same day that they are broadcast.

The Centers for Medicare and Medicare Services announced the sustainable rate of growth formula driven change to Medicare Part B physician reimbursement in 2012 — a 27.4% reduction instead of the initially estimated 29.4% reduction. The announcement explains certain adjustments that are being made to the geographic factor in the resource based relative value schedule that Medicare Part B uses. This factor has been a hot bed of litigation and contention between urban and rural areas. Also,

In the CY 2012 final rule, CMS is expanding the potentially misvalued
code initiative, an effort to ensure Medicare is paying accurately for
physician services and more closely managing the payment system.  This
year, CMS is focusing on the codes billed by physicians in each
specialty that result in the highest Medicare expenditures under the
MPFS to determine whether these codes are overvalued.  In the past, CMS
has targeted specific codes for review that may have affected a few
procedural specialties like cardiology, radiology or nuclear medicine
but has not taken a look at the highest expenditure codes across all
specialties. This effort results in increased payments for primary care
services that have historically been undervalued by the fee schedule.

Modern Healthcare reports on the industry’s take on this annoucement. As the FEHBlog has explained, Congress has to dig the physicians out of this hole and soon.

Following up on last Thursday’s post, here’s a link to a better chart discussing the changes to the Medicare Parts A and B deductibles and premiums for 2012. With respect to Medicare Part A which provides inpatient coverage

The Part A deductible paid by a beneficiary when admitted as a hospital
inpatient will be $1,156 in 2012, an increase of $24 from this year’s
$1,132 deductible.  The Part A deductible is the beneficiary’s cost for
up to 60 days of Medicare-covered inpatient hospital care in a benefit
period. Beneficiaries must pay an additional $289 per day for days 61
through 90 in 2012, and $578 per day for hospital stays beyond the 90th
day in a benefit period. For 2011, per day payment for days 61 through
90 was $283, and $566 for beyond 90 days. For beneficiaries in skilled
nursing facilities, the daily co-insurance for days 21 through 100 in a
benefit period will be $144.50 in 2012, compared to $141.50 in 2011.

Speaking of waste and abuse, Kaiser Health News reports that primary care doctors are running up the Nation’s health care bill to the tune of $6.8 billion in 2009 by ordering unnecessary tests and procedures in connection with routine visits, which now are cost sharing free to patients thanks to the Affordable Care Act.

For many adults, a routine visit to a primary care physician might
involve blood tests, a urinalysis, an electrocardiogram, maybe a bone
density scan. Too often, however, these tests are inappropriate and they
cost a bundle, according to a recent study,  not only for the health care system but also for individuals, who are increasingly footing more of the bill for their care.

The study, led by physicians from the Mount Sinai Medical Center and
the Weill Cornell Medical College in New York, was published online in
October in the Archives of Internal Medicine. The researchers examined
the cost of common primary care practices that were identified as being overused earlier this year in a study by another group of physicians, known as the Good Stewardship Working Group.

The newest study, using data from federal medical surveys, estimated
that 12 of those unnecessary treatments and screenings accounted for
$6.8 billion in medical costs in 2009. The activity most frequently
performed without need was a complete blood cell count at a routine
physical exam. In 56 percent of routine physicals, doctors
inappropriately ordered such tests, accounting for $32.7 million in
unnecessary costs. In terms of dollars, the biggest-ticket item by far
was physicians ordering brand-name statins before trying patients on a
generic drug first: That accounted for a whopping $5.8 billion of the
$6.8 billion total.

But let’s wrap things up with good news, the AMA News reports, much to the medical profession’s chagrin that

The number of visits patients make to physicians in a
given month — a vital sign for the whole health care economy — has
been declining consistently, according to multiple tracking studies,
companies and researchers.

Analysts say those numbers may not bounce back, even with health
system reform. That’s because a struggling economy, higher insurance
deductibles, and the efforts by health plans and others to reduce
utilization have altered patient patterns, perhaps permanently. Patients
now often seek office visits — or any interaction with the health
system — only when a problem can’t be ignored.

The cost curve bends down for once!

Happy Halloween! The FEHBlog missed the regular weekend update yesterday as he was travelling back from New York City. The FEHBlog will be back on track this weekend.

We are now 18 days from the end of the current continuing resolution funding the federal government and 23 days from the due date for the Super Committee’s deficit reduction recommendations to Congress.

Both the House and the Senate are in session this week. The Hill reports that the House majority is working on a 30 day extension of the continuing resolution.

We are two weeks away from the start of the Federal Benefits Open Season, which starts on November 14 and ends on December 12.  During the Open Season, federal and postal employees and retirees can change FEHB plans without any pre-existing condition limitation — an historic feature of the FEHBP. The Federal Times reports today that

The Office of Personnel Management, which runs FEHBP, said in an e-mail that about 10 percent of active federal employees and 4 percent of retirees change health plans each year — usually selecting a less expensive program. Those shifts help hold down premium costs by about 1 percent, OPM said. Feds in the Washington area, for example, can choose from 27 different plans, and OPM said the wide assortment of choices leads directly to movement among plans.

“One of the unique advantages of the FEHB is the large number of plans from which enrollees can choose,” Jonathan Foley, OPM’s director of planning and policy analysis, said in an Oct. 20 e-mail. “In a given open season, the net effect of enrollee movement is a reduction in total premium increase when compared to the increase that would have resulted from a static population.”

November should be an interesting month.

Govexec.com reports on the improvements to disease management and wellness programs that FEHBP expert Walton Francis is finding in the 2012 benefit packages of FEHBP plans. As mentioned in the FEHBlog earlier this week, OPM has posted information about those benefit packages on its website. Of course you can find more information on the individual plan websites.

The FEHBlog has been following the efforts to repeal the sustainable rate of growth formula that the Centers for Medicare and Medicaid Services must use to determine Medicare Part B reimbursements to doctors. If Congress does not repeal and replace the SRG by the end of this year, the statutory formula will generate a 29% cut in Medicare reimbursements to doctors. Congress has the alternative of extending the current patch but you never know what’s going to happen with the Super Committee in the mix.

Earlier this month the federal Medicare Payment Advisory Commission or MedPAC offered its proposal to replace the SRG formula with a new formula that holds reimbursements to primacy care physicians steady and cuts reimbursements to specialists 6% annually for several years according to the Hill. Needless to say the medical societies for specialists are outraged.

Whatever happens should ease the cost shift to employer sponsored plans and the disruption to Medicare that would occur if the SGR driven reduction kicks in on January 1, 2012.