Following up on Friday’s post about the CDC’s Solving the Outbreak app, the FEHBlog has learned that the app is only available for the Ipad. You can’t play it on your smart phone.

Last week, Standard & Poors released its latests Healthcare Economic Indices:

All nine S&P Healthcare Economic Indices posted deceleration in their annual growth rates in December 2012. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 5.39% over the year ending December 2012, down from +6.19% reported for November 2012. Annual growth rates in Medicare claim costs rose by 1.20%, according to the S&P Healthcare Economic Medicare Index, down from +1.81% recorded in November 2012. It is the lowest growth rate in the history of the Medicare Index.

Following along with the healthcare costs topic, the FEHBlog ran across this California Healthline story about a series of Congressional Budget Office reports with health care cost projections.

Business Insurance reports that Aetna and CIGNA announced the results of studies finding that employers
sponsoring consumer-directed health plans have been substantially more
successful in controlling medical costs than traditional HMO and PPO
plans over the past several years.

Not surprisingly as well Modern Healthcare reports that the mental health parity act caused mental health care treatment costs to increase according to a Healthcare Cost Institute study. “The results, an analysis of five years of mental health and substance abuse spending by four giant insurers, found hospitalization for mental illness increased 5.9% in 2011 from the prior year. Substance abuse hospital stays increased 19.5% in the same period.”

Finally Truven Health Analytics released its report of the 100 top hospitals in the U.S. Two hospitals in the Washington DC metropolitan area, Virginia Hospital Center and Fair Oaks INOVA Hospital, made the list.

Both Houses of Congress will be in session this coming week. The Hill’s closer look at next week is here.  The Senate Homeland and Govermental Affairs Committee recently announced its subcommittee structure. Here’s the blurb on the subcommittee with FEHB Program oversight responsibilities:

The Subcommittee on the Efficiency and Effectiveness of Federal Programs and the Federal Workforce, under the Chairmanship of Jon Tester (D-Mont.) and Ranking Member Rob Portman (R-Ohio), will oversee the management, efficiency, effectiveness and economy of all agencies and departments in the federal government, including the federal workforce and federal programs. The subcommittee has a broad authority for conducting oversight across the federal government and for seeking to improve the efficiency of federal programs. In addition, the Subcommittee is responsible for exploring policies that promote a skilled, efficient and effective federal workforce which will, in turn, work to ensure efficient and effective management of federal programs.

The full Committee will hold an organizational business meeting on Tuesday.  On the House side, the Energy and Commerce Health Subcommittee will hold a hearing this Wednesday on fostering innovation to curb fraud, waste, and abuse in health care.

Federal News Radio reported last week that OPM Associate Director for Human Resources Nancy Kichak resigned last month. Ms. Kichak for many years was the FEHB Program’s chief actuary and she performed admirably in that capacity. The FEHBlog is sure that OPM will miss her.

Finally, take a look at this AMA News article about the difficulties that doctors face in getting patients to adopt good health care habits. The article describes a technique called “motivational interviewing.”

The FEHBlog hopes the everyone enjoys the FEHBlog’s new look and its updated / corrected links. Following up on the mid-week post, here’s a link to the CMS press release about the essential benefits rule. The press release illustrates the fact that the rule covers a lot of ground beyond essential health benefits. HHS released more ACA rules today that principally concern the individual and small group markets.

The FEHBlog wishes to clarify that the out of pocket maximum discussed in the last post applies only to in-network coverage.  This OOP maximum applies to all in-network deductibles, co-payments, and co-insurance – including Rx benefits, but not premiums. The ACA’s OOP maximum is in fact the same OOP maximum that currently applies to high deductible health plans. The 2013 HDHP maximums are $6250 self only and $12,500 self and family. The IRS will update these amounts for 2014 in May 2013.

The IRS’s latest ACA FAQ XII issued on Wednesday also addresses the scope of the ACA’s often vague preventive care mandate. For example,

Q15: Do the HRSA Guidelines include contraceptive methods that are generally available over-the-counter (OTC), such as contraceptive sponges and spermicides?
Contraceptive methods that are generally available OTC are only included if the method is both A15 FDA-approved and prescribed for a woman by her health care provider. The HRSA Guidelines do not include contraception for men.

Fierce Health.com featured an interesting story headlined “Patients opt for expensive care when given a choice.

Based on interviews with 22 focus groups of insured people, researchers found four barriers to patients considering lower-cost care options, according to the study abstract:

• Patient preference for what they perceive as the best care, regardless of expense
• Inexperience with making trade-offs between health and money
• Disinterest in costs borne by insurers and society as a wholePeople’s tendency to act in their own self-interest despite recognizing they are depleting limited resources

That’s disturbing. Thank heavens then for the Choosing Wisely campaign which applies evidence based medicine to encourage doctors to eliminate unnecessary tests and procedures. Choosing Wisely came out with a new set of recommendations. For example one of those recommendation is to not to automatically use CT scans to evaluate children’s mild head injuries (observe first) and another is to schedule non-medically indicated inductions or C-sections before the 39th week of pregnancy, which also is an OPM initiative   Good work. Moreover, the Leapfrog Group reported yesterday that

the national rate of early elective deliveries dropped for the second year, according to data submitted to its annual Leapfrog Hospital Survey.

 Early elective deliveries – performing elective inductions or cesarean procedures prior to 39 completed weeks gestation without medical necessity – have been decreasing since 2010 when the Leapfrog Group became the first to publicly report hospital rates. This year, 46% of the 773 reporting hospitals met Leapfrog’s early elective deliveries target rate of less than 5%, an increase from 39% in 2011. Data from the Leapfrog Hospital Survey is the only national source of this data by hospital.

Finally, if you have some free time this week, you might want to try out the CDC’s new “’Solve the Outbreak’” app which allows mobile device gamers to fight one of three fictional outbreaks as an investigator in the agency’s Epidemic Intelligence Service,” according to Modern Healthcare. Now there’s a sequestration target for you.

Following up on Sunday’s FEHBlog about the sequestration, the Washington Post’s Federal Eye published a column discussing the latest Simpson / Bowle’s recommendations on cutting the deficit. Former Sen. Alan Simpson and Clinton White House chief of staff Erskine Bowles chaired a Presidential Commission in 2010 whose report was ignored but they keep trying. Anyway, the Federal Eye comments on the first report’s proposal to try out the premium support approach with the FEHBP.  Simpson / Bowles and House Budget Chairman Paul Ryan also have suggested using the defined premium approach for Medicare.

The FEHBP has used a defined contribution approach to setting the Government contribution in one form or other since its inception. Until about 15 years ago, the FEHB Act included a so-called Big Six formula which was 60% of the average of the Big Six plans (two government wide plans, two largest employee organization plans, and two largest HMOs). Since the FEHBA Act has included a so-called Fair Share formula which is 72% of the enrollment weighted average premium. The difference between premium support and the status quo is that premium support would be adjusted by an economic inflation factor rather than a plan premium adjustment factor. The outcome of premium support would be to accelerate the move of enrollees into lower cost plans.

2014 continues to be shaping up to be a year of steep premium increases for all health plans, including FEHB plans, due to Affordable Health Care Act mandates.  HHS unveiled the latest mandate yesterday — the final essential health benefits rule. The Wall Street Journal reports that

If anything, the final regulations released Wednesday beefed up the requirements for certain services beyond what regulators proposed in November. Neil Trautwein, a vice president at the National Retail Federation, said language regarding the scope of mental-health service that insurance plans must cover appears stronger than previously proposed.
“Just because you require an insurance plan to cover it doesn’t mean you can buy that coverage,” said Katie Mahoney, executive director, health policy at the U.S. Chamber of Commerce. Insurance plans offered by most large employers aren’t affected by the requirements.

While employer sponsored plans including the FEHBP are directly subject to these requirements. Those plans cannot impose annual or lifetime dollar limitations on those essential benefits.  The FEHBP already is in compliance with this rule. However, brand new DOL ACA FAQ XII explains that the rule turns the screw a little tighter by apply a new out of pocket maximum to all group health plans for 2014.

The Washington Post’s head scratching tribute to President James A. Garfield this morning caused the FEHBlog to think let’s pay tribute to the great American leader (WWII General of the Armies and President) who signed the Federal Employees Health Benefits Act into law in 1959, President Dwight D. Eisenhower (Sept. 28, 1959, Pub. L. No. 86–382).  A short, practical law that has stood the test of time.

Federal employees have tomorrow off but Congress has given itself the whole week off to celebrate Presidents’ Day. The Hill’s Floorwatch reports that Congress has only four legislative days left to avoid the sequester that begins on March 1. The Hill also reports that the defense industry has resigned itself to the sequester starting but hopes for a grand bargain before the continuing resolution funding federal government operations expires on March 27. The sequester will hit Medicare (as the AMA wails) but it will not impact the FEHB Program according to a September 2012 report from the Office of Management and Budget (OMB, see page  134). That’s due to the fact the FEHBP is funded from a separate trust fund in the U.S. Treasury (Employee Health Benefit Fund).  Of course, whenever Medicare gets hit directly, the FEHBP gets hit indirectly as providers shift their sequestration and other Medicare related losses onto the FEHBP and other employer sponsored health plans.

Speaking of Medicare, the Hill reports that HHS has shared with OMB a proposed rule applying an 85% minimum loss ratio to Medicare Advantage and Medicare prescription drug plans effective next year. These plans reported also will be hit by a 2% sequester in the current fiscal year, just like doctors. The Gorman Health Group has explained that  “The Part D cuts will affect the direct subsidy and not low income subsidies or reinsurance.  We would expect plans to submit higher bids next year to make up the difference.  MA plans that include drugs will have a double hit.”

In Affordable Care Act News, last Friday was the deadline for states to announce whether or not they would create their own health insurance exchange or marketplaces next year. Kaiser Health News reports that

The Obama administration will be running new health insurance marketplaces in half the states— including the major population centers of Texas, Florida and Pennsylvania.
The federal government had hoped more states this week would agree to
form a partnership exchange—the deadline to apply was Friday—but the
offer was largely rebuffed. New Jersey, Ohio and Florida, several of the
biggest states that had not declared their intentions, officially said
no late in the week. * * *
For consumers, it should make little difference whether the new Internet
sites are run from state capitals or Washington, D.C. But federal
regulators hoped states would shoulder some of the work and stakeholder
groups such as hospitals and insurers wanted states to help as well. The
exchanges will open for business Oct. 1. 

Also the Washington Post reported that “Obama administration officials said Friday that the state-based “high-risk pools” set up under the 2010 health-care law will be closed to new applicants as soon as Saturday and no later than March 2, depending on the state.  But they stressed that coverage for about 100,000 people who are now enrolled in the high-risk pools will not be affected.” Congress appropriated $5 billiion for these pools in the ACA.

Following up on the last FEHBlog post, the Wall Street Journal reported Wednesday that “Investors reacted with surprise to WellPoint Inc.’s  choice of hospital executive Joseph R. Swedish as its new chief executive, sending the company’s shares down 4.6% Wednesday as many scrambled to learn more about the incoming leader of the second-largest health insurer.” Again illustrating that the choice was bold. (Not to mention the fact that Mr. Swedish is 61.)

The Wall Street Journal also published an interesting interview with the head of Deloitte’s Center for Health Care Solutions about the impact of the Affordable Care Act on individuals, employers, States, and healthcare providers. One of his observations which the FEHBlog has noted is that the law pushes health care providers to consolidate and that tends to raise prices.  The article concludes that “The next couple of years will bring the biggest changes to the American health-care system since the advent of Medicare and Medicaid in 1965. We’re about to find out if they’re for the better.”  Hey, it’s the FEHBlog’s job to belabor the obvious.

Mobile Health News reports on an Inmedica study finding that in anticipation of a flood of new patients next year. “the American telehealth market is predicted to grow by 600 percent between 2012 and 2017. While there are currently 227,000 US telehealth patients, according to InMedica, that figure is forecast to reach up to 1.3 million patients in 2017. US telehealth revenues, meanwhile, will jump from $174.5 million last year to $707.9 million in 2017.” it will be interesting to see how health insurers react to this development.

Finally, AHIP reports on a bipartisan bill introduced in Congress to repeal the health insurer tax or fee. This is a particularly insane provision of the Affordable Care Act that will saddle health insurers with a fee that starts next year at $ billion and ramps up tp $14.3 billion in 2018 and keeps rising after that.. To add insult to injury, the law does not permit insurers to deduct the fee as a business expenses on their corporate tax returns. This double whammy will cost “an average family will pay over $300 in higher premiums, seniors
enrolled in Medicare Advantage will face $220 in reduced benefits and higher
out-of-pocket costs, and state Medicaid managed care plans will incur an
additional $80 in costs for each person covered.”   Cost curve up.

The federal government has created a Healthmap vaccination provider finder to help people find out where to get vaccinated. For the FEHBlog’s neighborhood the #1 choice is a local CVS MinuteClinic. That can’t make the AMA happy.

CAQH, an alliance of health insurers, has announced

[T]he launch of a new, universal electronic funds transfer (EFT) enrollment tool for providers that facilitates the use of electronic payments between payers and providers by offering a single point of entry for adopting EFT. By streamlining and automating the EFT enrollment process, the tool creates efficiencies and cost savings for both payers and providers by eliminating the need for providers to enroll in EFT separately for each health plan in which they participate.

Beginning January 2014, all payers will be mandated to offer EFT under the requirements of the Patient Protection and Affordable Care Act (ACA) and Medicare will only reimburse providers through EFT. However, the Department of Health and Human Services (HHS) reports that only 32 percent of healthcare claims were paid electronically in 2010, partially due to the current cumbersome and burdensome enrollment processes which require that providers enroll separately with each payer. The switch to EFT for provider reimbursement will eliminate the need for redundant paperwork, reduce the time spent on printing, mailing and receiving checks, lower lockbox fees, as well as enable tighter security on monetary transactions. 

The CAQH press release indicates that Aetna and Cigna currently are making the new tool available. Quicker access to cash – that could improve relations between the Hatfield and McCoys too.

Following up on the last two FEHBlog posts on hospital readmissions, Kaiser Health News reports that

Writing in the Journal of the American Medical Association, researchers found no relationship between readmissions and mortality rates for Medicare patients who had heart attacks or pneumonia between 2005 and 2008. The paper did find a “modest” inverse relationship between readmissions and death rates for heart failure patients, where hospitals with low death rates tended to have somewhat higher readmission rates. But that was only for a small portion of hospitals and not strong even then.

“I feel we’ve dispelled the notion that your performance in mortality will dictate your performance in readmission,” said Dr. Harlan Krumholz of Yale University School of Medicine, the lead author of the study. “This result says they appear to be measuring different things, they’re not strongly related to each other and you can clearly do well on both.”

In other words, readmissions are not a sign of quality care.

Finally, the FEHBlog read with interest the report of a $50 million class action against a Long Island hospital whose patients were victimized by an identity theft ring.

Terence Lynam, spokesman for Great Neck, N.Y.-based North Shore-LIJ, confirmed in an e-mail that two people have been convicted and “multiple” other people have been arrested for operating “a widespread identity theft ring that victimized a number of organizations and about 1,000 individuals throughout the Northeast, including about 200 North Shore University Hospital patients.”

The victims say the 11-hospital system failed to notify them that their information had been compromised, even as thieves traveled the country opening credit lines and bank accounts in patients’ names, buying iPhones, maxing out patients’ existing credit cards and even filing bogus tax returns using victims’ information

This will be an interesting case to follow.

The House of Representatives and the Senate are both in session this week. On Thursday, the House Energy and Commerce Committee is holding a hearing about repealing and replacing the sustainable rate of growth formula discussed in Friday’s FEHBlog entry.

Modern Healthcare featured a detailed AP story about the myriad of efforts underway to reduce the “epidemic” of hospital readmissions, a topic in which OPM recently has shown interest.

There is no single solution. But what’s clear is that hospitals will have to reach well outside their own walls if they’re to make a dent in readmissions.
Otherwise a slew of at-home difficulties — confusion about what pills to take, no ride to the drugstore to fill prescriptions, not being able to get a post-hospital check-up in time to spot complications — will keep sending people back.
“This is a team sport,” says readmissions expert Dr. Eric Coleman of the University of Colorado in Denver. It requires “true community-wide engagement.”

Last year an underregulated compounding pharmacy in Massachusetts caused a string of deaths due to tainted medicine.  The Washington Post reported last week that

Shoddy practices and unsanitary conditions at three large-scale specialty pharmacies have been tied to deaths and illnesses over the past decade, revealing that the serious safety lapses at a Massachusetts pharmacy linked to last fall’s deadly meningitis outbreak were not an isolated occurrence, records and interviews show.

The AMA News reports this morning on the litigation fall out from the this catastrophe. Litigation is impacting the prescribing doctors on negligence and product liability theories because the compounding pharmacy quickly was shut down. . .

The sustainable rate of growth formula has been a political football for almost a decade. The SGR is a statutory formula that is used to annually adjust the reimbursement formula (known as the resource based relative value schedule) that Medicare Part B uses to pay doctors. Every year for the past eight or nine years the SGR has called for a sharp reduction in Medicare payments to doctors, and every year Congress defers the cut which is too painful to doctors and the Medicare beneficiary community. There is a concern that a sharp cut in Medicare reimbursements will cause doctors to leave Medicare in droves and with the looming expansion of the insured population next year that’s a very real threat. There won’t be enough doctors already according to many reports (and common sense).  However, the Washington Post’s Wonkblog recently took the contrary position.

The SGR debate is relevant to the FEHBP because the FEHBP has a large cadre of Medicare eligible annuitant members. FEHB plans pay secondary to Medicare so when Medicare cuts payments, FEHB plans pick up the slack. That would happen for example when the statutory sequestration kicks in on March 1 and cuts Medicare payments to doctors by 2%.  Also pursuant to the FEHBA (5 USC § 8904(b)) fee for service plans pay doctors using Medicare reimbursement rates for annuitants over 65 who have declined Medicare Part B coverage.

The current SGR fix lasts until the end of this year. Medpage Today and the Hill’s Health Watch report on Congressional activity to repeal and replace the SGR this year. The FEHBlog was most intrigued by the AMA News article about how health insurers who are not bound by statutory reimbursement formulas are testing out new approaches such as shared savings, medical homes, and performance contracts. Time will tell.