This is the last FEHBlog post of 2010. Oy vey, it has been a hectic year with the enactment of the Affordable Care Act.  The FEHBlog wishes all of our readers a happy and prosperous 2011, and our one resolution is to keep this puppy rolling for another year.

You know it’s a slow news week when the Washington Post runs a story on the problems with the title of the healthcare reform law.  The FEHBlog started out calling the Patient Protection and Affordable Care Act “Pea – Packa” but now the FEHBlog defers to the Government’s preferred shorthand “Affordable Care Act” or ACA.  Shortening the name, however, does not reduce the length of the statute.

The ACA regulators issued in today’s Federal Register a “request for information on how group health plans and health insurance issuers can employ value-based insurance design in the coverage of  recommended preventive services.” The comment deadline is February 28, 2011. The Washington Post and Kaiser Health News published an article on value based insurance design “pros and cons” last month. OPM in the past has encouraged FEHB plans to adopt value based designs in its annual call letters for benefit and rate proposals.

The IRS on December 23 issued additional guidance on the new ACA restriction limiting health plan, health reimbursement account, health flexible savings account and health savings account reimbursement of over the counter drug costs to purchases supported by a doctor’s prescription (except for insulin). The new guidance concerns the use of a health plan issued debit card. “The new guidance modifies previous guidance to permit taxpayers to continue using FSA and HRA debit cards to purchase over-the-counter medications for which the taxpayer has a prescription. Effective after Jan. 15, 2011, in accordance with the new guidance, this use of debit cards must comply with procedures reflecting those that pharmacies currently follow when selling prescribed medicines or drugs.” This new requirement creates more work for doctors and pharmacists, but where’s the offsetting benefit??

Another one of the ACA regulators, the Labor Department’s Employee Benefits Security Administration is inviting folks to join them for a live web chat on January 4, 2011, at 2 pm. The topic of discussion will be EBSA’s regulatory agenda.

Health Leaders Media reflects  on the impact of the HITECH Act — enacted in February 2009 — on enforcement of  the health information privacy and security rules issued under the Health Insurance Portability and Accountability Act of 1996 — another mouthful of a title but folks quickly became accustomed to calling it HIPAA (hip – aah).

The FEHBlog hopes that all of our readers are enjoying the holidays. The FEHBlog certainly enjoyed the Redskins win today.

In contrast, AHIP President Karen Ignagni was not pleased with HHS’s proposed rule implementing the Affordable Care Act’s “unreasonable” premium rate review process, and the FEHBlog can’t blame her notwithstanding the FEHBlog’s holiday giddiness over the regulation’s exemption for FEHB plans and other large group insured plans. As Ms. Ignagni points out,

“The public policy discussion on health care costs has focused on health insurance premiums, while ignoring the root causes that are driving up the cost of coverage, including soaring medical prices, new benefit mandates and changes to health plans’ risk pools. At a time when health care costs are a crushing burden on families and employers, the American people deserve to know the facts.

“For example, data from the state of Oregon show that prices of many medical services have increased at an average annual rate exceeding 10 percent. California data show that prices for a hospital stay increased by more than 150 percent between 2000 and 2009—an average annual growth rate of 11 percent. Trends likes these are being seen across the country.

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“It is also important to remember that the new federal law already caps health plans’ administrative costs and profits.”

Well put.

Last week, URAC released new pharmacy management accreditation standards. According to URAC’s press release,

In addition to revisions to several key standards, URAC has introduced new performance measures including dispensing accuracy, medication adherence, generic dispensing rates, prescription turnaround time, and overall consumer satisfaction.  The revisions are specifically designed to collect data on Mail Service and Specialty Pharmacy processes and outcomes considered critical for the evolution of professional practices in these areas.

OPM encourages FEHB plans to use processes and vendors, including prescription benefit managers, that are accredited by national accrediting services such as URAC and NCQA.

Finally, the Federal Times reports that “President Obama signed an executive order Wednesday December 22 implementing a two-year pay scale freeze in 2011 and 2012 for executive branch employees.”

The Affordable Care Act regulators released a boatload of FAQs yesterday concerning that law, the 2008 Mental Health Parity Act, and nondiscrimination based on health and wellness programs. The FAQs most relevant to the FEHB Program are the following


Automatic Enrollment in Health Plans

Q5: My group health plan normally charges a copayment for physician visits that do not constitute preventive services. The plan charges this copayment to individuals age 19 and over, including employees, spouses, and dependent children, but waives it for those under age 19. Is this permissible?

Yes. The Departments’ regulations implementing PHS Act section 2714 provide that the terms of a group health plan or health insurance coverage providing dependent coverage of children cannot vary based on age (except for children who are age 26 or older). While this generally prohibits distinctions based upon age in dependent coverage of children, it does not prohibit distinctions based upon age that apply to all coverage under the plan, including coverage for employees and spouses as well as dependent children. In this case, the copayments charged to dependent children are the same as those charged to employees and spouses. Accordingly, the Departments will not consider the arrangement described in this question (including waiver, for individuals under age 19, of the generally applicable copayment) to violate PHS Act section 2714 or its implementing regulations.

As predicted in Sunday’s FEHBlog, the Health and Human Services Department (“HHS”) released today a proposed rule implementing the Affordable Act provision authorizing HHS to review unreasonable health insurance premium increases (defined to be an increase of 10% or more). HHS is applying the requirement only to policies issued in the individual and small employer markets (1 to 50 employees). Consequently, the FEHB Program is exempt from this review requirement, which makes sense.

Govexec.com reports that Congress passed a continuing resolution funding the federal government through March 4, 2011. “The measure begins a two-year pay freeze for federal civilian employees that President Obama sought.”

The Centers for Medicare and Medicaid Services offers useful Hospital Compare and Nursing Home Compare websites. These sites allow you to compare the quality of care and pricing at facilities across the country. What’s more the quality information is based on all patient data, not just Medicare eligible patient data. The FEHBlog learned this week that the Affordable Care Act requires CMS to create a Physician Compare website effective January 1, 2011. Government Health IT reports that

Initially, CMS will post information about physicians enrolled in the Medicare program and those participating in the Physician Quality Reporting System (PQRS), through which CMS pays incentives for providers who meet various quality marks. CMS will add in January 2013 physician performance information based on 2012 quality reporting it receives. 

PwC, the consulting firm, released a report identifying the top health industry issues for 2011, including  health information technology, ACOs, and mergers and acquistions.

Federal News Radio reports Congress extended the continuing resolution funding the federal government through Tuesday December 21, which, according to NASA, also happens to be the first occasion that a lunar eclipse (shown at left) occurs on the winter solstice in 564 years.  CNN reports that the Congressional leaders from both parties have agreed upon a further extension of the continuing resolution into March so that the new Congress may consider the issue.

Last Friday, the Office of Management and Budget cleared for publication a Health and Human Services Department proposed rule governing the Affordable Care Act’s unreasonable health insurance premium review process. Logically, the rule should exclude the FEHB Program from this process because a government agency, the Office of Personnel Management, approves those FEHBP premiums. Based on recent experience, I expect that HHS will hold a press conference on Monday or Tuesday to announce the rule.

Speaking of HHS rules, the Congressional Research Service released a report on the Affordable Care Act rulemaking process. Since March 23, 2010, the Affordable Care Act regulators have issues eighteen final rules implementing the new law.

Modern Healthcare.com reports that “Blue Cross Blue Shield of Michigan asked a federal judge Friday to dismiss the U.S. Justice Department’s antitrust lawsuit accusing the state’s leading health insurer of discouraging competition by engaging in practices that result in higher hospital prices for other insurers and patients.”

The Washington Post reports tonight that the government funding issue has not been resolved and signs point toward another extension of the continuing resolution, perhaps into the new Congress. The witching hour occurs at the end of Saturday December 18.

The AMA News published an interesting report analyzing why diagnostic errors happen. The article concludes with the appearance of our old friend Common Sense.

While research continues into figuring out how to track and ultimately prevent diagnostic errors, experts said physicians could benefit from the simple step of opening clear lines of communication with their patients.

“This problem is going to require a partnership with the patient,” said Dr. Schiff, noting that doctors should tell patients if they are uncertain about a diagnosis and ask them to report symptoms that could signal a misdiagnosis. “Diagnosis is not just something that doctors make and patients consume. Diagnosis is something that they produce together.”

HHS Secretary Sebelius and Attorney General Holder announced today that

CMS will issue a solicitation for state-of-the-art fraud fighting analytic tools to help the agency predict and prevent potentially wasteful, abusive or fraudulent payments before they occur.  These tools will integrate many of the Agency’s pilot programs into the National Fraud Prevention Program and complement the work of the joint HHS and Department of Justice Health Care Fraud Prevention and Enforcement Action Team (HEAT).

Good luck with that effort.

It’s worth keeping an eye on the AHIP Research Center for useful studies and reports. Recently that Center released a “comprehensive study of financial activity in health savings accounts (HSAs). Data collected from three large banks contain detailed account information of more than 1.2 million HSA accounts open as of December 31, 2009.” The report shows that consumers use HSAs primarily to pay their medical expenses, not as a tax advantaged savings vehicle.

U.S. District Judge Henry Hudson ruled yesterday in Virginia v. Sebelius that Congress has no Constitutional authority to impose a mandate on individuals to purchase health insurance as the Affordable Care Act requires beginning in 2014.  This is the first court (of three) to rule against the legislation’s constitutionality. Other lower federal court decisions are expected. Business Insurance reports on Judge Hudson’s opinion and on the Government’s unsurprising decision to take an appeal to the U.S. Court of Appeals for the Fourth Circuit. Thus the wheels are set in motion for the Supreme Court to consider this issue. A Supreme Court decision might arrive in the 2012 Presidential election year.

The AMA News reflects on one of the goofier provisions of the Affordable Care Act — beginning next year group health plans, flexible spending accounts, health reimbursement accounts, and health savings account can only reimburse members for over the counter drugs (excluding insulin) that have been prescribed by a doctor. However, by definition, an over the counter drug is safe enough that a consumer can use it without physician oversight. Doctors and pharmacists understandably are freaking out over the additional time burden that the law creates. FEHB plan members, for example, will need a prescription next year to purchase over the counter smoking cessation drugs at a pharmacy. The article reports that an effort is underway to repeal this provision.

OPM is announcing in the Federal Register tomorrow that it will be issuing a revised Privacy Act system of records notice for the FEHBP claims data warehouse that it plans to create for Program management purposes. “The revised notice will provide more detailed information regarding OPM authorities for maintaining the system, systems security measures that will be taken to protect the records, and the circumstances under which records will be released from the system.” OPM will permit another public comment period on the revised notice before that notice takes effect.

OPM is requiring fee for service plans to adopt transparent or pass through contracting methods with prescription benefit managers. The Society for Human Resource Management discusses a report,The Value of Alternative Pharmacy Networks and Pass-Through Pricing, researched and written by the actuarial and consulting firm of Milliman Inc.

Milliman’s findings show that, depending on the benefit design, an employer’s overall costs could be reduced by up to 13 percent by using a limited, preferred pharmacy benefit design and pass-through pricing model rather than a traditional model that includes most retail pharmacies. For example, the study showed that by adopting a closed network, where coverage is only through network pharmacies, an employer with approximately 10,000 members could save up to $845,000 annually. Additional savings could be earned with plan changes that encourage member use of generic drugs over branded drugs.

An American Bar Association committee annually asks various government agencies questions about employee benefit issues. EBIA reports back on the Qs and As with HHS’s Office for Civil Rights, the agency responsible for enforcing the HIPAA Privacy and Security Rules. For example, “the officials indicated that OCR expects to issue updated sample language for business associate agreements when final HITECH regulations are issued.”

HHS issued yesterday a “new Strategic Framework on Multiple Chronic Conditions ― an innovative private-public sector collaboration to coordinate responses to a growing challenge. More than a quarter of all Americans ― and two out of three older Americans ― have multiple chronic conditions, and treatment for these individuals accounts for 66 percent of the country’s health care budget. These numbers are expected to rise as the number of older Americans increases.”

The Federal Benefits Open Season is scheduled to end tomorrow, December 13, and we will wish good bye to OPM’s Federal Benefits Open Season Facebook page for another 11 months.

Congress continues its lame duck session this week, and while national attention is focused on the Congressional debate over the Bush tax cut issues, the FEHBlog focuses its attention on what Congress will do with the continuing resolution funding the federal government which runs through Saturday December 18.

The New York Times featured an interesting interview with Aetna’s retiring CEO Ronald A. Williams.

One of Mr. William’s major concerns is that many of the newly insured will still have a hard time finding a doctor to treat them. “I don’t see the system creating an adequate supply of primary care doctors in that amount of time,” he said.

Instead, he said, states and the federal government need to be creative about allowing the expanded use of other health care professionals like nurses and physician assistants.

Still, Mr. Williams is also a staunch defender of his company and the industry. “Health care would cost a lot more if we did not exist,” he said, “and the quality of health care is a lot better than it would be.”

During the debate, Mr. Williams frequently emphasized the need to control the underlying costs of medical care that he said were fueling the increase in insurance premiums. “He was very important in capturing the importance of cost,” said Karen Ignagni, the chief executive of America’s Health Insurance Plans, a trade association.

Mr. Williams makes excellent points in the FEHBlog’s view. AHIP now has a useful website “intended to share information about health care costs – what’s contributing to them and what can be done to put them back on a sustainable path.”

Mr. Williams expresses concern about Congress repealing the Affordable Care Act’s individual mandate. Insurers understandably concerned that the Affordable Care Act’s elimination of pre-existing condition limitations in 2014 will wreak financial havoc on insurers without the individual mandate. The Washington Post reports that a federal district judge in Alexandria VA is expected to rule tomorrow on Commonwealth of Virginia’s Constitutional challenge to the Affordable Care Act’s individual mandate. Of course, even if the Judge strikes down the mandate, nothing will happen until the Supreme Court hears the case which is bound to happen. There are about two dozen cases raising a constitutional challenge to the Affordable Care Act. The key cases are in the ones brought by State attorney generals pending in Virginia and Florida.

Earlier this year, OPM announced a proposed rule advancing the Federal Benefits Open Season time frame from from (a) the Monday of the second full workweek in November through the Monday of the second full workweek in December to (b) November 1st through November 30th of each year. Today, after considering public comments, OPM revealed its decision not to change the Open Season time frame which ends this year next Monday December 13.

In today’s announcement, OPM also finalized a rule change permitting FEHB plans, with the exception of the government wide service benefit plan (Blue Cross FEP), to offer three options beginning in 2012.  Currently, FEHB plans may offer a third option only if the third option is a high deductible health plan with a health savings account. That limitation will be removed for 2012, except for the government wide service benefit plan.

The American Medical News reports that Congress today passed a law extending the Medicare Part B physician reimbursement patch through the end of 2011.  The new law keeps Medicare physician pay at its present level, including the 2.2% increase that physicians received when Congress overrode an SGR-mandated pay cut in June 2010. Absent this change, doctors would have seen a 25% cut on January 1, 2011. Congress will have to revisit this issue next year.

iHealthBeat features an article by Center for Democracy and Technology policy counsel Harley Geiger comparing and contrasting OPM’s plan for a centralized FEHB Program claims data warehouse with the distributed approach to data analysis that the Food and Drug Administation uses to monitor the safety of FDA approved drugs and medical devices.