Happy Labor Day!  The Senate Homeland Security and Governmental Affairs Committee has posted an updated witness list for tomorrow’s hearing that will address, among other important topics, the Postal Service’s ill-advised proposal to withdraw from the FEHB Program. The first panel now includes the OPM Director John Berry, a GAO representative, the Segal Group’s chief actuary, and the Postmaster General.  The second panel includes the American Postal Workers Union’s President Cliff Guffey, the National Association of Postal Supervisors :President Louis Atkins, and two mailer representatives. The hearing starts at 2 pm ET and can be viewed on the Committee’s website. A New York Times article previewed the hearing.

When the FEHBlog read last week that the Justice Department had filed an anti-trust action to block the merger of two large cell phone companies, AT&T and T-Mobile, his first thought was whether this aggressive action dooms the pending Express Scripts acquistion of Medco. Bloomberg reports that Express Scripts is continuing to trumpet the competitive benefits of the acquisition. However, Bloomberg and the Wall Street Journal report that the Federal Trade Commission;”has asked for more input from the companies, issuing what is known as a second request for information, according to a filing by Express. The request doesn’t indicate that the government will necessarily challenge a deal, but it suggests there are substantive antitrust issues that warrant further investigation. Around 4% of transactions received a second request in 2010, according to figures from the antitrust agencies.”

The Wall Street Journal reports that United Healthcare’s Optum unit is purchasing the management arm of Monarch Healthcare, a multi-specialty medical group with 2300 physician members located in Southern California. This is Optum’s third acquistion of a Southern California medical group’s management arm. According to the article, “Through various structures, Optum owns a physician group in Nevada and holds stakes in others elsewhere in the country. Optum, a fast-growing arm of United that provides services such as pharmacy-benefit management and data services to help improve care, is separate from United’s own health-insurance operation.” The Optum groups contract with “an array of insurers,” not exclusively United Healthcare.

The AMA News features an interesting article on Medicare’s new bundled payment initiative.

Under the initiative, created by the health system reform law,
physicians and hospitals would come up with a plan and submit a bid to
participate. Two of the bundled payment models focus on inpatient stays,
a third involves postdischarge services only, and a fourth combines
inpatient and postdischarge services. The earliest a group submitting a
winning bid could get started with the first inpatient-only model is
January 2012, said Richard Gilfillan, MD, acting director of the CMS
Innovation Center.

The AMA is studying the initiative.

The Senate Homeland Security and Government Affairs Committee will be holding a hearing on the U.S. Postal Service in Crisis – Proposals to Prevent a Government Shutdown at 2 pm next Tuesday September 6. The first panel will include the Postmaster General and OPM’s Director of Planning and Policy Analysis. The second panel includes the President of the American Postal Workers Union who according to the Postal Reporter will speak on behalf of all four Postal Unions. This hearing will give us an idea about Congressional receptiveness to the Postal Service’s proposal to withdraw from the FEHB Program. Live video of the hearing will be available on the Committee’s website.

One of OPM’s recent call letter initiatives was to ask FEHB plans to offer programs to combat the problem of childhood obesity. The National Business Group on Health recently announced that “it has updated its employer toolkit, Childhood Obesity: It’s Everyone’s Business, to include examples of family-focused wellness programs that four forward-thinking companies are doing to fight childhood obesity. The toolkit also includes a new section on how employers can design their benefit programs to ensure that they are in accordance with new screening guidelines required by PPACA and support obesity treatment options for children.”

Another focus of OPM concern has been patient safety. AHIP announced this week the release of a white paper called “Innovations in Patient Safety” This white paper “highlights 16 health plans’ efforts to prevent healthcare-acquired conditions, help patients transition smoothly from hospital to home, and manage chronic conditions effectively to avoid complications and preventable readmissions. In some cases, these innovations involve funding for hospital-based patient safety initiatives; in others, plans’ transitional care programs work directly with patients and their families to help reduce complications and hospital readmissions.”  Virtually all of those 16 health plans participate in the FEHB Program.

Tomorrow marks 15 months after the last day (May 31, 2010) that unemployed people could become eligible for the federal subsidy covering  65% of COBRA continuation coverage (or in the FEHBP TCC) premiums, a program that began in 2009. Because the subsidy last for 15 months, the subsidy generally will be sunsetting tomorrow. The Labor Department has posted FAQs about this change.

Health Data Management has posted a slide show on the bundled payment initiatives that the Centers for Medicare and Medicaid Services announced to health care providers last week. Meanwhile Kaiser Health News reports on a newly published study that casts doubt on the efficacy of accountable care organizations and a recent survey that indicates that employees don’t have much stomach for health plan changes such as narrow networks that would generate lower premiums. Time will tell.

On the health care fraud front, the Federal Times reports that “New government statistics show federal health-care fraud prosecutions in the first eight months of 2011 are on pace to rise 85 percent over last year due in large part to ramped-up enforcement efforts under the Obama administration.” The FEHBlog is in the process of rewatching the Sopranos on HBO GO, and the early episodes of that program makes it clear that health care fraud was around in 1999. Also the AMA News raises the alarm that an Affordable Care Act initiative is causing CMS gradually to send out “revalidation requests by mail to more than 1.4 million health professionals — more than half of whom are doctors — between now and March 23, 2013,”  According to the article, this revalidation process is cumbersome and time consuming and may be overkill at least with respect to doctors. The industry-supported Council for Affordable Quality Care has a common credentialling database for private sector health plans to reduce these headaches.

Congress is entering into its final week of the August recess. The Washington Post is reporting that “The Senate Homeland Security and Governmental Affairs Committee plans to hold a hearing on the postal proposals [to withdraw from the FEHB Program, etc.] Sept. 6.” No information on the hearing has been posted on the Committee’s website yet. 


The federal government has launched a new website performance.gov . The site provides a handly link to OPM’s performance and accountability report which the FEHBlog discussed last year when the report was issued. According to Govexec.com,  “the performance.gov site faces major performance challenges of its own. A last-minute deal between the Obama administration and House Republicans to avert a government shutdown in April cut fiscal 2011 funding for online open government initiatives by more than three quarters to just $8 million.”

Kaiser Health News featured a lengthy report on the efforts of self-insured employers and health plans to control the high cost of specialty or biologic drugs. Interestingly, the article does not discuss the Food and Drug Administration’s delay in creating the pathway to less expensive bio-similar drugs that the Affordable Care Act

The Washington Post and the Federal Times join Govexec.com and the FEHBlog in throwing cold water on the Postal Service’s ill advised proposal to withdraw from the FEHBP in favor of a stand alone program.

Reuters offers an interesting column discussing the cultural differences between Express Scripts and Medco that would have to be resolved if the federal antitrust regulators permit the deal to move forward. (Reuters recently reported that the current expert consensus is that a reasonable chance exists that the deal will clear anti-trust scrutiny.) A Towers Perrin health care consultant remarks in the Reuters article that

The issues that “keep employers up at night” about the merger include the fate of customer service, mail-order prescription turnarounds and claims accuracy under a combined company. “Employers want to ensure that the newly merged organization is not distracted by any of the challenges they face during the integration,” she added.

HR Morning reports on an important piece of EEOC informal guidance concerning the application of the Genetic Information Non-Discrimination Act (“GINA”) to wellness programs sponsored by health plans or employers.

It’s nice to have company. Yesterday, Govexec.com posted a report titled “Observers are leery of Postal Service plan to opt out of federal health and retirement programs.

Next month, we’ll learn about the changes to FEHB premiums and the Government contribution for 2012. Business Insurance reported on a National Business Group on Health survey of large employers which “estimate that the cost of their group health care plans will rise an average of 7.2% in 2012, comparable to the 7.4% rise they expect this year.” The NGBH press release adds

To help control those increases and begin driving down costs to avoid the Cadillac tax, employers are planning to use a wider variety of cost-sharing strategies. More than half of respondents (53%) plan to increase the percentage that employees contribute to the premiums, while 39% plan to increase in-network deductibles. Additionally, about one in four employers plans to increase out-of-network deductibles (23%) and out-of-pocket maximums (22%) next year. The survey, based on responses from 83 of the nation’s largest corporations, was conducted in June 2011.

The FEHBlog is not quite sure what to make of this but the AMA News is reporting that “A study in the August issue of Health Affairs found that it is becoming more common for primary care doctors and other nonpsychiatrist physicians to prescribe antidepressants for conditions other than anxiety and major depressive disorder.” The AMA News admirably recognizes that it’s up to the medical profession to reverse this trend.

Congress remains in recess. Last week, the Office of Management and Budget directed federal agencies to cut their Fiscal Year 2013 budget proposals by up to 10% according to the Federal Times and Govexec.com.

Business Insurance reports on industry reaction to the proposed Affordable Care Act rule on the summary of benefits and coverage template.

“There is just not enough here to tell us what to do,” said Rich Stover, a principal at Buck Consultants L.L.C. in Secaucus, N.J.  For instance, the examples make no distinction between costs employees would pay depending on whether the service was delivered in or out of network, said Gretchen Young, senior vp-health policy with the ERISA Industry Committee in Washington.

In addition, requiring employers to use government-set figures, which presumably would be national averages, could end up confusing employees if a particular employer’s costs are different, which is likely since costs vary greatly across the country.” This could end up confusing plan participants,” said Jennifer Henrikson, senior counsel with Aon Hewitt Inc. in Lincolnshire, Ill.

In the FEHBlog’s view, use of a national average makes sense particularly when you are dealing with plans that are nationwide or cover multiple states, like many FEHB plans. The last thing that plans would need is to have to issue the summaries based on zip code so that the pricing estimate is accurate (isn’t that a non sequitur?). The template needs to be more flexible.

Speaking of provider pricing, the Wall Street Journal reports on websites that help consumers determine their out of pocket costs.

The best place to start is usually your health plan’s website or your human-resources department’s online destination. Big insurers like Aetna, UnitedHealth Group, WellPoint and Cigna offer some pricing information. Typically, these prices have gaps, but the companies say they’re working to enhance the detail.

At the national level, you can at least find averages or Medicare rates for services in your geographic area, which you can use as a starting point. Then you can call individual providers to ask about their charges and, potentially, try to haggle over pricing.  Here are some places to look: Fairhealthconsumer.org has figures that are supposed to represent typical rates in various locations, as well as estimates of what consumers might spend to go out of their insurers’ medical networks. HealthcareBlueBook.com offers what the company calls a “fair price” for services in a given area. The American Medical Association has a site where you can look up what Medicare pays for doctor services.

Good advice.

The FEHBlog is pleased to see that NARFE, an organization for federal employees and retirees, has expressed its opposition to the Postal Service’s ill-advised proposed to pull its employees and annuitants out of the FEHB Program and the federal retirement programs.

Standard and Poors announced today that “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 5.61% over the 12-months ending June 2011. Since posting its lowest annual growth rate in its more than six-year history – +5.37% in April 2011 – the rate for this index accelerated in both May and June.”

The FEHBlog ran across an interesting Stanford Medical School blog called Scope. The FEHBlog had read articles this week about legal pressure being placed on insurers to cover an experimental autism treatment called applied behavioral analysis. A posting in this blog recounts these developments and observes “The stakes in these cases are pretty high as the cost for covering all requests for ABA would be a substantial sum. There is, of course, no cure for autism, and until there is, many families will be demanding these services.” Sad, but true.

Yesterday, the Affordable Care Act regulators proposed a rule governing the four [double sided] page summary of benefits and glossary of health insurance terms that health plans must prepare once the rule is finalized and make available to plan participants and beneficiaries.  The Labor Department’s Affordable Care Act website provides all of the documentation, including the template for the summary of benefits and related instructions.

The FEHBlog is still reviewing the regulation and sub-regulatory guidance which run over 200 pages. At first blush, the glossary appears to duplicate what’s already found in health plan brochures / summary plan descriptions. The FEHBlog wonders why Congress didn’t require the medical community to create a
glossary for patients.

America’s Health Insurance Plans, the health insurers’ trade association, commented that

Health plans increasingly provide user-friendly online tools and clear materials to make sure that consumers understand the benefits and costs of their health insurance policies. The benefits of providing a new summary of coverage document must be balanced against the increased administrative burden and higher costs to consumers and employers. For example, since most large employers customize the benefit packages they provide to their employees, some health plans could be required to create tens of thousands of different versions of this new document—which would add administrative costs without meaningfully helping employees.  Moreover, given that the final regulation is delayed, the implementation date also should be pushed back to give health plans sufficient time to make the operational and administrative changes needed to create these new documents.  We will be submitting detailed comments and look forward to working with regulators to mitigate potential unintended consequences of this new requirement.

The Affordable Care Act required the ACA regulators to issue this template no later than March 23, 2011. Given the five month delay, the ACA regulators should give plans at least five months of extra time. The implementation timing for group health plans should align with the calendar year based open season — fourth quarter 2012. Kaiser Health News reports that

Many employers are already required to provide health plan information, said Steve Wojik, vice president for public policy for the National Business Group on Health, which represents 330 large employers, most of which have self-insured health plans. Complying with the new health law rules would mean preparing two sets of plan information for next year. Pushing back the March 2012 deadline would avoid the duplicative effort, he said.

The Wall Street Journal reports that the Affordable Care Act regulators will release a rule describing the new  summary of benefits form that health plans must distribute to consumers beginning next year. The article  explains that

The summary form has often been compared to the food-nutrition label, though it is substantially longer, and at six pages the draft offers considerable detail. For instance, it would not only tell consumers their overall deductibles, or the amount they must pay before coverage kicks in, but would also explain deductibles for specific categories, such as drug coverage. In addition to flagging the limit on a consumer’s out-of-pocket expenses, the form would lay out which expenses don’t count toward that limit.

A list of medical events and associated services, such as home health care and emergency transportation, would likely be shown along with the consumer’s costs for each. The summary would also explain the consumer’s possible expenses for three common situations: having a baby, treating breast cancer and managing diabetes.

The FEHBlog is a bit confused because Affordable Care Act states that the form must use a specific font size and not exceed four pages. It will be interesting to figure out how this new rule will or won’t mesh with OPM’s new Going Green initiative on FEHB plan brochure distribution.

The FEHBlog notes that FAIR Health has gone live with its website that estimates the cost of medical and dental care for consumers who use out of network health care providers.

Yesterday, the IRS released temporary regulations and a proposed rule governing the imposition of an annual fee ($2.5 billion in 2011) on branded prescription drug manufacturers. No doubt this fee will be passed along to health plans.

The New York Times reports that “Medicaid gets much deeper discounts on many prescription drugs than Medicare, in part because Medicaid discounts are set by law whereas Medicare prices are negotiated by private insurers and drug companies, federal investigators said Monday in a new report.” The law requires branded prescription drug manufacturers to give their best price to Medicaid. Prescription benefit managers negotiating for FEHB plans and other employer sponsored plans cannot negotiate a price below that floor because if they could, the floor would drop. Medicare Part D plans are permitted by law to negotiate a price below the Medicaid floor without causing the floor to drop. But what would happen to the drug manufacturers if they gave the same enormous discounts to Medicare and Medicaid. Oh wait, the FEHBlog forgets. The manufacturers can price shift to the FEHB and other employer sponsored plans.

The AMA News reports that “When it comes to hospitals and their financial health, they are either thriving or wheezing — with no in-between.” and that the Affordable Care Act is encouraging the haves to gobble up the have nots.