Yesterday, OPM released its annual notice of FEHBP plan changes for 2012. OPM reminds agencies that if an employee is in a plan that is terminating or reducing its service area in a way that affects the employee, then that employee must choose another plan during the Open Season which begins November 12.  Annuitants are automatically transferred to another plan if they fail to elect new coverage in this circumstance under an OPM regulation.

OPM further advises that “Coverage under an enrollee’s new health plan will be effective the first day of the pay period beginning on or after January 1, 2012; for most employees this will be Sunday, January 1, 2012.” The Open Season change effective date for annuitants is always January 1. The Open Season change date for employees is that first day of their first pay period of the New Year. It’s unusual for the first federal employee pay period to begin on New Year’s Day. How auspicious!

A couple of loose ends discussed in Sunday’s post have been tied up. Congress has avoided a government shutdown by agreeing to adopt a continuing resolution that funds the the federal government through November 18. As the FEHBlog recalls, that’s shortly before the Super Committee must release its deficit reduction recommendations to Congress.

More importantly, from the FEHBlog’s perspective, OPM today released 2012 premiums for the FEHBP and FEDVIP. The premium tables are found here. OPM advised in a fact sheet that “the overall average FEHB premium increase for non-postal and annuitants will be 3.8% in 2012 [versus 7.3%. this year]. Based on previous experience, we expect that some enrollees will shift to more affordable plans which means the actual average increase may be lower than today’s estimate.” The number of plans participating in the FEHBP remains stable — 206 in 2012 versus 207 this year. The Federal Benefits Open Season will run from November 14 through December 12, 2012.

The Washington Post, Federal Times, Govexec, Federal News Radio, and Business Insurance all have reported on the good FEHBP news. This White House contrasted the FEHBP news with a Kaiser Family Foundation study which found relative high employer sponsored plan increases rhis year

Congress remains in session (notwithstanding plans for a recess this week) as the clock clicks down toward the end of the current federal fiscal year on Friday night. Unless Congress passes a continuing resolution before then, a government shutdown will occur on Saturday. Last Spring, OPM advised that the FEHBP would be status quo in the event of a shutdown due to  a lack of appropriations. Hopefully, cooler heads will prevail. Govexec’s story is here.

Beginning in 2014, the Affordable Care Act imposes a $3,000 annual penalty on employers, including the U.S. Government, for each employee who cannot afford the employer’s health insurance offering. Business Insurance reports 

The penalty would apply in cases where an employee’s health insurance
premium contribution exceeds 9.5% of household income, making them
eligible for federal premium subsidies to buy coverage through state
insurance exchanges.

A safe harbor provision that the Internal
Revenue Service unveiled this month for public comment to pass this
health care reform law requirement affirmed what benefit experts had
thought for some time: that the affordability test only will apply to
employee or self-only coverage.

Group health care plans would be
able to qualify for the safe harbor—shielding them from the $3,000 per
employee affordability penalty—so long as the premiums employees are
required to pay for self-only coverage in the least costly plan
available to them does not exceed 9.5% of their wages.

Excluding
dependent coverage from the affordability test in the IRS safe harbor
was deliberate because the affordability requirement applies only to
coverage of employees, experts say.

The IRS published this proposed guidance in IRS Notice No. 2011-73. The comment deadline is December 13, 2011.

The AMA News offers doctors advice on collecting co-payments and deductibles, which you wouldn’t expect to be difficult. However, the article notes that

The American Medical Association’s Code of Medical Ethics states that if
a co-pay is a barrier to necessary care and creates financial hardship,
physicians should forgive or waive it. The code also states that
medical practices need to consider that routinely waiving co-pays may
constitute fraud under state and federal law. Physicians may need to
consult an attorney or other practice management expert to ensure that
related policies are consistent with applicable regulations and with the
requirements of insurer agreements.

FEHB plan brochures state that routine waiver of co-payments is an inappropriate practice.

The FEHBlog ran across this interesting web site about the U.S. Institute of Medicine’s round table on value and science-driven care.

The FEHBlog inaccurately predicted that 2012 FEHBP premiums and the government contribution change would be announced last week. The FEHBlog has stopped making predictions, but will be watching opm.gov.

Business Insurance reports that “Employers project that their group health care plan costs will increase
an average of 5.4% in 2012, a somewhat smaller increase compared with
recent years, according to a Mercer L.L.C. survey released Wednesday.” Soon we all should know about 2012 FEHB premiums and the 2012 changes to the government contribution.

Kaiser Health News discusses a cost cutting approach finding increasing favor with insurers and self-insured employers — “reference pricing.” The article explains

Sarah Gardner wants her company’s employees to be savvy medical shoppers. So this year, she rolled out a plan that sets limits on how much the
company will pay toward a range of tests and procedures, from MRIs to
hysterectomies. Workers at Buffalo-based Prodigy Health now know to call
their employee insurance plan to find a list of local doctors and
facilities that meet the price. Or they can choose to go to a
higher-price center elsewhere in the insurer’s network and pay the
difference themselves.

Safeway employees in the San Francisco Bay Area, for example, face higher payments
if they choose centers that cost more than $1,500 for a routine
colonoscopy. And in January, the giant California Public Employees’
Retirement System (CalPERS) said it would not pay more than $30,000
toward knee or hip replacement. Workers who choose a hospital that costs
more pay the difference. Next year, the program will be expanded to
outpatient colon cancer tests, as well as some surgeries, including
cataract repair for the 345,000 people enrolled in CalPERS’ preferred
provider plans.

In a piece of good news, the AMA News reports that

After years of doctors overprescribing antibiotics,
physicians are beginning to heed experts’ warnings to use the drugs more
judiciously in the face of increasing antibiotic resistance, a study
shows.

A Centers for Disease Control and Prevention study found that
antibiotic prescribing rates for patients 14 and younger who visited a
physician fell 24% from 1993-94 to 2007-08. During that period, the rate
dropped from 300 antibiotic courses per 1,000 office visits to 229
courses per 1,000 visits, said the study in the Sept. 2 issue of the
CDC’s Morbidity and Mortality Weekly Report.

Tomorrow is both the first day of Autumn and Falls Prevention Awareness Day.

According to the Centers for Disease Control and Prevention (CDC), one
in every three adults age 65 and older fall every year. Among this age
group, falls are the leading cause of injury death, with more than
18,000 older Americans dying each year from unintentional fall injuries.
The CDC also notes that 20 to 30 percent of those who fall suffer
moderate to severe injuries, including lacerations, hip fractures and
head traumas. Such injuries diminish an older adult’s mobility and
independence and can shorten overall life expectancy.

Based on recommendations and guidance from the CDCl and the National
Institute on Aging, UnitedHealthcare has recommended a dozen tips to create safer environments and otherwise reduce the risk of falls.: That’s good guidance for FEHB plans to share with their enrollees.  

The President released his deficit reduction proposals to the Super Committee yesterday. There was one FEHBP related proposal (p. 43) — one that was first raised in the President’s FY 2012 budget

Streamline Federal Employee Health Benefit (FEHB) pharmacy benefit contracting. The Administration is committed to the efficient administration of the FEHB program in order to get the best deal for Federal employees and their families, as well as for taxpayers. The FEHB program pays $40 billion per year for health coverage, and drugs represent about 30 percent of claims expenditures. Under current law, health plans participating in the FEHB program contract with pharmacy benefits managers who negotiate prices with drug manufacturers and pharmacies on behalf of their enrollees. This fragmented purchasing strategy does not take full advantage of the combined purchasing power of the nearly eight million enrollees in the FEHB program. Under the Administration proposal, the Office of Personnel Management would contract directly for pharmacy benefit management services on behalf of all FEHB enrollees and their dependents. This will allow the FEHB program to more efficiently leverage its purchasing power to obtain a better deal for enrollees and taxpayers. This proposal is projected to save $1.6 billion over 10 years.

In the FEHBlog’s opinion, the Federal Times misinterprets this proposal to mean that OPM plans to directly contract with drug manufacturers and pharmacies. As the FEHBlog reads the proposal, OPM would contract with one prescription benefits manager similar to the practice in TRICARE which uses Express Scripts. A 2009 GAO report compared the approaches that the FEHB, TRICARE, and Medicare Part D take in contracting for prescription drugs.

The FEHBlog notes that while prescription drug costs represent 30% of the FEHBP’s benefit spend, that’s a result of the fact that there is a large cadre of FEHB annuitants with Medicare primary coverage. Medicare pays the hospital bills for those enrollees while the FEHBP pays their drug costs. If the FEHB was responsible for those hospital expenses, the FEHBP’s drug spend percentage would be more in line with other employer sponsored programs.

Speaking of Express Scripts, Modern Healthcare reports on today’s House Judiciary subcommittee hearing on that company’s deal to acquire Medco Health Solutions.

Getting back to the President’s recommendations, the Administration did offer its approach to helping out the Postal Service. That approach did not adopt the Postmaster General’s proposal to withdraw for the FEHBP which is good news for the FEHBP. The Federal Times discusses the Administration’s approach here.

Kaiser Health News reports that four major health insurers — Aetna, Humana, Kaiser Permanente, and United Healthcare — have agreed to provide their claims data to the brand new Health Care Cost Institute  

The Health Care Cost Institute (HCCI) is a new non-profit research
institute and a unique and unprecedented health research partnership.
Its mission is to promote independent research and analysis on the
causes of rising US health spending, to provide policy makers,
consumers, and researchers with better, more transparent information on
what is driving health care costs, to help ensure that, over time, the
nation is able to get greater value from its health spending.

The Kaiser Health News article adds that

To avoid violating patient privacy laws, anti-trust rules and
confidentiality provisions between insurers and providers, the institute
will not release data so detailed that anyone could identify specific
hospitals, doctors’ groups and, of course, patients. And because it’s
insurance data, it doesn’t necessary capture what’s really going on
medically for patients to the degree that electronic medical records do,
some audience members said.

Still, many of the researchers found
the allure of the new data, well, dreamy. “The usefulness of this data
is only going to be limited by the imagination,” said Harvey Fineberg, president of the Institute of Medicine. 

There’s a good chance that OPM will announce the 2012 FEHBP premiums and the change in the government contribution this coming week.

Of course, Congress is in session this week. The House will consider a continuing resolution (H. J. Res. 79) to fund federal government operations from October 1, 2011, the beginning of the new federal fiscal year, until November 18, 2011.  Section 124 of the continuing resolution would extend from September 30, 2011, to November 18, 2011, the payment date for the $5.5 billion that the Postal Service owes to pre-fund its retiree health care obligations. The OPM Director informed Congress that the Administration’s proposal to assist the Postal Service would be included in the President’s deficit reduction proposal to the Super Committee which is expected this week.

The prescription benefit manager’s trade association, the Pharmaceutical Care Management Association (PCMA), recently sent the Super Committee a set of recommendations to reduce prescription drug spending by $100 billion over the next decade. The recommendations include expediting the approval of bio-generic drugs and eliminating the tax deduction for direct to consumer marketing.

GAO issued a report (No. 11-711) on early experiences with the minimum loss ratio which found that

From 2006 through 2009, traditional MLRs on average generally exceeded  PPACA MLR standards. This is even without the additional components in the new PPACA MLR that will generally increase MLRs. However, traditional MLRs  also varied among insurers. Traditional MLRs within the individual market varied  more than those within the small and large group markets, and a larger proportion of individual market insurers generally had lower MLRs. Additionally, traditional MLRs varied more among smaller insurers than among larger insurers in all three markets. Some components of the PPACA MLR requirements may mitigate the implications of some of these variations. 

FEHB plans fall into the large group market.

Last Thursday, Standard and Poors released its health care economic indices for the 12 month period ending July 2011

Data released today by S&P Indices for the S&P Healthcare Economic Composite Index indicate that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.71% over the 12-months ending July 2011. This index has seen a modest acceleration in annual growth rates for three consecutive months – with readings of +5.34%, +5.55% and +5.59% in April, May and June, respectively.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance increased by 7.73% over the year ending July 2011. Medicare claim costs rose at an annual rate of 2.35%, as measured by the S&P Healthcare Economic Medicare Index. With July’s data, the Medicare index reached yet another low in its six-and-one-half year history. The index is 5.67 percentage points below its high annual growth rate of +8.02%, recorded in November 2009.

The Washington Post reports on the activities of the Super Committee’s work to craft a package of budget cuts totalling $1.5 trillion before Thanksgiving.. The Federal Times reports that the Federal Workers Alliance, which is composed of 22 labor unions, has prepared a white paper for the Super Committee opposing the Deficit Commission’s proposal to shift the FEHBP to a premium support or voucher program.

The Healthcare Leadership Council is recommending Medicare changes to the Super Committee that include creating a Medicare exchange, gradually raising the Medicare eligibility age from 65 to 67, means testing Medicare’s beneficiary cost sharing structure, and legislating medical malpractice reforms — as opposed to taking the traditional approach of cutting provider reimbursements.  The Washington Post observes that

There’s a pretty simple explanation for why hospitals and some insurers would favor raising the eligibility age: Hospitals receive higher payments from private insurance than they do from Medicare. The payments that hospitals receive from private insurers are 28 percent above the break-even point for providing treatment, according to a recent report from the Blue Cross Blue Shield Association. Medicare pays only 91 percent of what it costs a hospital to provide care.

As discussed here, the Medicare Part B reimbursement patch expires at the end of this year, threatening doctors with a 29% pay cut from Medicare. The Ways and Means Health Subcommittee will hold a hearing about this big dollar issue next Wednesday at 2 pm. Medicare reimbursement policy and Medicare eligibility issue directly impact the FEHBP because of the large cadre of Medicare eligible folks participating in the FEHBP.

Kaiser Health News reports that Medicare Advantage premiums will fall by 4% on average for 2012. FEHB premiums for 2012 and the government contribution change likely will be announced next week.

This means that the Federal Employee Open Season is right around the corner. Yesterday, it was announced that ADP has acquired Asparity Decision Solutions which offers federal and postal employees and annuitants an online tool to compare FEHB plans during Open Season.

Following up on last Sunday’s post, the House Judiciary Committee’s website does show that a hearing on “The Proposed Merger between Medco and Express Scripts” is scheduled for September 20th at 3:30 pm before the Subcommittee on Intellectual Property, Competition, and the Internet.” The Wall Street Journal accurately observes that “Members of Congress have no role in deciding whether the proposed merger is granted antitrust approval, but they can shape the public debate about the deal.”

HHS Secretary Sebelius announced that she has appointed Leon Rodriguez to be the new director of HHS’s Office for Civil Rights. This Office is responsible for enforcing the HIPAA Privacy and Security Rules. Mr. Rodriguez “most recently served as chief of staff and deputy assistant attorney general for the Department of Justice Civil Rights Division.”

Government Health IT reports that the National Coordinator for Health Information Technology has launched a campaign to encourage patients to use available technology to get more involved with their own health care. For example, HHS issued a proposed rule that would modify the federal laboratory regulations and the HIPAA Privacy Rule to permit laboratories to release test results to patients — not just doctors — upon request.  The National Coordinator and the Federal Trade Commission has released a template for a model privacy notice for electronic personal health records. The article also explains that

Many healthcare organizations that hold patient data like hospitals and payers are pledging to make the information more easily available.
“Many are using Blue Button and others are using secure health email through the Direct protocols to deposit individuals’ information into their secure accounts,” Mostashari said.
Blue Button is a method for individuals to download their health information in simple ASCII text format into their personal health records. It has been available to military, veteran and Medicare beneficiaries. The Direct Project uses standards and services for secure email.
“Among those prepared to make Blue Button available are payers Aetna and UnitedHealthcare. Other healthcare organizations said they would continue to improve the sharing of health information through their patient portals and PHRs, including Kaiser Permanente, Children’s Hospital of Boston, Cleveland Clinic, and Palo Alto Medical Foundation Clinic.”

HHS, “with several key
initial partners, today launched Million Hearts, an initiative that aims
to prevent 1 million heart attacks and strokes over the next five
years.” AHIP stated that the “Initiative builds on findings that a concerted focus
on four interventions called the ABCS – Aspirin Use, Blood Pressure
Control, Cholesterol Control and Smoking Cessation – could save hundreds
of thousands of lives per year.” The FEHBP has been active in promoting these interventions.

Congress remains in session. Focus will now turn to a continuing resolution to fund federal government operations, including the FEHBP, in the new fiscal year which begins on October 1. It is expected that Congress will reach a bipartisan agreement on at least the first continuing resolution without rancor.

The U.S Court of Appeals for the Fourth Circuit issued opinions last week favoring the Administration’s position supporting the Constitutionality of the Fourth Circuit’s individual mandate — here and here.  The Fourth and Sixth Circuits have ruled in the Administration’s favor and the Eleventh Circuit has ruled against the Administration. The appellants in the Sixth Circuit case already have asked the Supreme Court to review the decision. In the FEHBlog’s view, it’s likely that the Supreme Court will take the case in time for it to render a decision before next July.

The Health Subcommittee of the House Ways and Means Committee held a hearing last Friday on consolidation in the health care industry, which is a necessary outcome of Affordable Care Act initiative’s such as accountable care organizations or ACO’s. Modern Healthcare reports that “Although healthcare experts testifying at the hearing generally agreed
that provider consolidation is increasing, they differed over whether
ACOs will exacerbate it.”

On October 18, America’s Health Insurance Plan is holding a conference about health plan efforts to create ACOs that are more flexible and inviting to healthcare providers than the Teutonic model created by CMS. AHIP reports that “New health care delivery and payment models in the private sector are
being shaped by active collaboration between health insurance plans and
providers, according to a new study by AHIP that appears in the September edition of Health Affairs.”

The September issue of Health Affairs focuses on rising healthcare costs. Kaiser Health New reports that “The culprits, many of the studies conclude, are hospitals and doctors
more than insurers or patients, despite the political rhetoric to the
contrary.”  What a surprise. The following paragraph in a recent Wall Street Journal article did surprise the FEHBlog:

An analysis released in 2010 and performed for the Medicare Payment
Advisory Commission, or MedPAC, a Congressional watchdog, calculated how
much American doctors would make if all their work was paid at Medicare
rates. It found that the primary-care category did the worst, at around
$101 an hour. Surgeons were at $161. Specialists who did nonsurgical
procedures, such as dermatologists, did the best, averaging $214;
radiologists would make $193.

Although the FEHBlog touted watching the Senate Homeland Security and Governmental Affairs Committee hearing on the internet, it turned out that the live streaming was quite choppy at least on my computer. Fortunately, the New York Times filled in the gaps for me with this article and the Committee posted all of the Senator’s statements and the prepared testimony on its website during the course of the three and a quarter hour long hearing.

The OPM Director in his testimony stood up for the FEHB Program. He explained that the Postal Service’s proposal to withdraw from the FEHB Program requires careful study. He advised the Committee that the Administration’s plan for helping the Postal Service with of its current financial problems would be included with the President’s deficit reduction proposal to be submitted to Congress in the next two weeks.

Also in the next two weeks, OPM should release the 2012 premiums for the FEHB Program, including the change in the government contribution which currently is the 72% of the enrollment weighted average premium capped at 75% of the selected plan’s premium.