OPM announced yesterday that the agency is revising the Privacy Act system of records notice, initially published on October 5, concerning the FEHB Program claims data warehouse that it intends to create in order to improve the FEHB Program. OPM explained that

Based on the comments we have received since we published the initial notice, OPM is considering revisions to the systems notice to, among other things, provide greater specificity regarding the authorities for maintaining the system, clarify its intent to significantly limit the circumstances under which personally identifiable records may be released, and provide a more detailed explanation of how the records in this system will be protected and secured. If OPM publishes a revised systems notice, the public will have the opportunity to comment on the revised notice before OPM begins operating the system.

OPM will continue to accept comments on the October 5 notice until December 15, 2010.

The FEHBlog on Sunday discussed generic drug savings. Business Insurance reports today that “Health care plans have reduced pharmaceutical costs by dispensing generics more often, but they could do a better job of monitoring whether plan members take their medication as prescribed, a report by the National Business Coalition on Health concludes.”  This is just one of the findings in the Coalition’s annual eValue8 report.

CMS announced today that it has

established the new Center for Medicare and Medicaid Innovation (Innovation Center). Created by the Affordable Care Act, the Innovation Center will examine new ways of delivering health care and paying health care providers that can save money for Medicare and Medicaid while improving the quality of care.  CMS also announced the launch of new demonstration projects that will support efforts to better coordinate care and improve health outcomes for patients. 

According to the press release the new demonstration projects will test the “health home” and “medical home” concepts which are designed to strengthen primary care and better coordinate care for patients.

Well, as we enter the second week of the Federal Benefits Open Season, Congress returns for its lame duck session and Medicare starts its annual Open Season for Medicare Advantage and prescription drug plans.

The Federal Times reports that

More than six weeks after the Oct. 1 start of the fiscal year, agencies are operating off a continuing resolution that generally leaves spending at fiscal 2010 levels. The [continuing] resolution [that Congress passed before the November 2 election] expires Dec. 3; the question is whether lawmakers will belatedly approve a dozen fiscal 2011 spending bills — possibly as a catch-all “omnibus” package — or punt a final decision into next year by passing another continuing resolution.

In addition to appropriations, Congress may consider the American Medical Association’s request to keep the Medicare Part B reimbursement “patch” in effect through the end of next year. Absent Congressional action, Medicare Part B reimbursements will be cut by 23% on December 1.

Business Insurance reports that “Senate Finance Committee Chairman Max Baucus, D-Mont., said Friday that he will introduce legislation to repeal a[n Affordable Care Act] requirement that employers furnish 1099 statements if they do more than $600 in business with a corporate vendor.” A similar effort failed in September.

The Hill reports that “An employer-backed group [called Save Flexible Spending Plans] is pressing the new leaders in Congress to alleviate restrictions placed on flexible spending accounts by the health reform law. The group is demanding that Congress delay or repeal the Affordable Care Act’s requirement — effective next year — that flexible spending account (and group health plan) participants must obtain a doctor’s prescription for over the counter drugs (except insulin) in order to receive plan reimbursement. The OPM presenters discussed this change in last week’s webinar. According to the Hill, the group’s chairman, Joe Jackson, “called the provision ‘an utter waste of consumers’ and physicians’ limited time’ that will only increase healthcare costs.

Speaking of drugs, Reuters reports that “The U.S. healthcare system will reap at least $70 billion in savings over the next four years as brand-name medicines become available as lower-cost generics.”

The healthcare system has become ever more efficient at driving patients to generics. When a generic alternative is available, doctors prescribe it 93 percent of the time, up from 83 percent in 2003, according to IMS.

Among the high-profile drugs losing U.S. patent protection during the 2011-2014 period are the world’s two top-selling medicines: Pfizer Inc’s (PFE.N) Lipitor cholesterol treatment and the blood-clot preventer Plavix, sold by Bristol-Myers Squibb (BMY.N) and Sanofi-Aventis (SASY.PA).  Other widely sold medicines set to see generic competition include Eli Lilly’s (LLY.N) Zyprexa schizophrenia drug and Merck’s (MRK.N) Singulair asthma treatment.

In contrast to low priced generics, the New York Times reports about a

controversial review by the Centers for Medicare and Medicaid Services [CMS] to determine whether to pay for Provenge, which costs $93,000 per patient and extended lives by about four months in clinical trials. Medicare advisers will meet next Wednesday  [November 17] to discuss the drug, which was developed by Dendreon, a Seattle-based biotechnology company.

Provenge is the first so-called therapeutic cancer vaccine – meaning it works by training the patient’s immune system to attack the tumor – to win F.D.A. approval. The treatment is made for each patient from his own blood. Sales have been small so far because Dendreon’s manufacturing capacity has been limited.

A Washington Post report predicts that the CMS review panel will approve Medicare coverage of Provenge. According to the Post, “most private insurers already pay for Provenge, and Medicare patients can receive it while the government conducts its review.”

OPM held a very useful webinar for federal benefits enrollees on Wednesday. For about 20 minutes OPM presenters discussed the principal Affordable Care Act changes to the FEHB Program and FSAFeds. Of course the principal FEHB Program change is the expansion of dependent children coverage to age 26. OPM announced that the Powerpoint slides from webinar will be posted to OPM’s federal benefits website  next week. OPM  also post a set of child eligibility Frequently Asked Questions (FAQs) to on the agency website shortly.


The OPM presenters explained that if you are a federal or postal employee who needs to convert from self only to self and family coverage in order to re-enroll a child over age 22 but under age 26 (an aged out child) or who will be switching plans during the current Open Season, you should make this change using the Qualifying Life Event (QLE) process rather than the Open Season change process. 


The QLE change process will permit the child’s coverage to resume on January 1, 2011. In contrast the Open Season change process will cause the child’s coverage to resume on January 2, 2011 (or in certain circumstances January 8).  The Open Season change effective date for annuitant enrollees is January 1 so annuitants don’t face this timing quirk. 


Employed and annuitant enrollees who have self and family coverage now and are not changing plans this Open Season can add back an aged out child by notifying the Plan in accordance with the Plan’s instructions (not by using an SF 2809). The process will be seamless for children who will not reach their 22nd birrthday before the end of this year. Those children will receive extended coverage to their 26th birthdays. For complete information, consult OPM’s benefit administration letter.

Computerworld reports that OPM likely will delay the scheduled November 15 launch of its new systems of records intended to create a warehouse of FEHB plan claims data. “Harley Geiger, policy counsel for the CDT, said on Monday that the OPM had informed the CDT that it will soon be releasing more detailed information on the database, and on the privacy and security controls that will be put into place to protect the data.”

Many FEHBP enrollees also have Medicare coverage. Last week, the Centers for Medicare and Medicaid Services announced that in 2011 

the Medicare Part A deductible for inpatient hospital care will be $1,132 in 2011, an increase of $32 from this year’s $1,100 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 $283 per day for days 61 through 90 in 2011, and $566 per day for hospital stays beyond the 90th day in a benefit period. [Medicare provides a lifetime reserve of sixty days of inpatient care for confinements lasting beyond the 90th day] For 2010, the per-day payment for days 61 through 90 was $275, and $550 for beyond 90 days. 

The Medicare Part B deductible for physician care will be $162 in 2011. When FEHBP coverage is primary to Medicare, FEHB plans typically will pay these amounts.

The standard Medicare Part B monthly premium will be $115.40 in 2011, a $4.90 increase (or 4.4-percent) over the 2010 premium. The premium is income adjusted. The majority of Medicare beneficiaries will continue to pay the same $96.40 premium amount they have paid since 2008 because there will be no cost of living adjustment to Social Security benefits in 2011. Federal annuitants who receive a CSRS annuity are not eligible for the hold harmless protection. NARFE is attempting to get a legislative fix to this problem when Congress returns for its lame duck session next week.

The AHIP staff reports that

While the agenda for this lame duck session is somewhat uncertain, it may also address a Medicare physician payment “fix,” data security legislation, an extension of the 2001 and 2003 tax cuts, and possibly any recommendations that are agreed to by the National Commission on Fiscal Responsibility and Reform.

Completing the annual appropriations process, possibly through an omnibus spending bill, will be the top priority when Congress reconvenes in mid-November. To date, Congress has not approved any of the annual appropriations bills for fiscal year 2011. Instead, in late September, Congress passed a “continuing resolution” (H.R. 3081) that provides temporary funding for federal programs and agencies – including those within the Department of Health and Human Services (HHS) – from October 1, 2010 through December 3, 2010. Most programs are being funded at fiscal year 2010 levels during this time period.

The American Medical Association supported by the White House supports a 13 month long patch to the Medicare Part B physician reimbursement formula. The patch would postpone the impending 25% cut that begins to phase in on December 1, 2010, absent legislation. According to California Healthline,

Lawmakers have not yet proposed offsets for the 13-month fix, which is expected to cost an estimated $17 billion to $20 billion. According to Senate aides, the lawmakers’ hesitation on offsets makes passage of the 13-month fix by Thanksgiving unlikely.

Congress reconvenes on Nov. 15 for one week prior to the Thanksgiving recess. Lawmakers then return on Nov. 29 — two days before the Medicare cuts are scheduled to take place — for the session’s final weeks. Julius Hobson — senior policy adviser with Polsinelli Shughart — said lawmakers might opt for a one-month fix for reimbursements, which would buy them time to consider the 13-month patch during the final weeks of the legislative calendar before Christmas. 

Here’s OPM’s announcement. The FEHBlog will be listening.

OPM’s Federal Benefits Open Season, which encompasses the Federal Employees Health Benefits Program, the Federal Employees Dental and Vision Insurance Program, and the Flexible Spending Accounts for Federal Employees (FSAFEDS) starts tomorrow and runs through December 13. The FEHBlog discovered today that OPM has an extensive set of frequently asked questions about federal employment and federal employee benefits.

OPM offers a health benefits plan comparison tool on its web site, and Asparity Decision Solutions offers its own web based tool that considers your estimated health care expenses.

Govexec.com offers a timely report on the wide range of plan choices available to federal employees, and
Tammy Flanagan of the National Institute for Transition offers her advice on coordinating FEHBP and Medicare coverage.  Ms. Flanagan will be interviewing FEHB plan executives on upcoming episodes of  the radio program “For Your Benefit” on Monday mornings at 10 a.m. ET on federalnewsradio.com (listen online) or on WFED AM 1500 in the Washington metro area.

• Nov. 8: Jane Overton, GEHA Federal Health Plan (Fee-for-service plan and HDHP)
• Nov. 15: John Patrick, Kaiser Federal Health Plan (HMO)
• Nov 22: Tom Bernatavitz, Aetna Federal Health Plan (HMO/consumer-driven plan and HDHP).
• Nov 29: Walt Wilson, SAMBA Federal Employee Benefit Association (Fee-for-service plan)

Of course, in the mid-term elections held on Tuesday the Republicans gained control of the House of Representatives and increased their number in the Senate but falling short of a majority there. Before that change occurs in January the current Democratically controlled Congress will hold a lame duck session. (The FEHBlog likes Daffy Duck who is not lame.)  The AMA News explains that

Daffy Duck

Physicians are slated to get hit with a 25% reduction in Medicare payments over two months, according to the final 2011 physician fee schedule released Nov. 2 by the Centers for Medicare & Medicaid Services. CMS revised that downward from its original estimate of a 29.5% cut. Pay is still slated to go down 23% on Dec. 1 but would go down 2% — rather than 6.5% — on Jan. 1, 2011, assuming Congress takes no action.

The medical community is pushing for the lame duck Congress to pass a 13 month patch to allow for negotiations with the new Congress. That should be really interesting, given the new budget cutting environment on Capitol Hill.

Reuters reports on the third quarter results of the other two leading prescription benefits managers — CVS Caremark (bearish outlook) and Express Scripts (bullish) outlook).

 Finally, Computerworld reports that the Center for Democracy and Technology and fourteen other privacy advocacy groups submitted comments to OPM on the October 5, 2010, Federal Register notice announcing a new system of records under the Privacy Act in connection with a FEHBP health claims data warehouse. The CDT’s press release explains that

OPM has launched its 2010 Federal Benefits Open Season website. The Open Season begins next Monday November 8.

Modern Healthcare reports that the journal Health Affairs in its November issue addresses the topic of value based insurance design — “the strategy of lowering copayments for services relative to their costs.”  

At a briefing about the articles, Karen Ignagni, president and CEO of America’s Health Insurance Plans, referred to the articles as “very, very thoughtful papers” and talked about the importance of aligning incentives with medication adherence. Ignagni also said more information is needed about comparative-effectiveness research with regard to drugs and procedures; that cost should be a consideration; and that groups should work collaboratively in this effort.

The Health Affairs blog provides a helpful summary of these articles.

The Wall Street Journal’s Health Blog points out that the Food and Drug Administration (“FDA”) is holding today and tomorrow a public hearing on biosimilar drugs. According to the FDA’s website, the hearing’s purpose is to obtain public input on “issues and challenges associated with the implementation of the Biologics Price Competition and Innovation Act of 2009 (BPCI Act). The BPCI Act establishes an abbreviated approval pathway for biological products that are demonstrated to be “highly similar” (biosimilar) to, or “interchangeable” with, an FDA-licensed biological product.”  Generic drugs are the small molecule drug analog to biosimilars. (Small molecule drugs are the pills in your medicine cabinet while biologic drugs are typically administered at a facility or doctor’s office.) The WSJ Health Blog concludes with the observation that  “Biosimilars have waited a long time to make their debut in this country.  If the disagreement between the pro and con speakers at the 2-day FDA event is any indication, biogenerics have some more time to get ready for their close-up.” That’s not good news for those interested in lowering health care costs.

Business Insurance reports on prescription benefit manager Medco Health System’s latest earnings report. “Medco CEO David Snow said [traditional, small molecule] generics would contribute to profits consistently through 2020, perhaps surprising some investors who thought the generic benefits would die down around 2015.”

Happy Halloween!  We are now a week away from the 2010 Federal Benefits Open Season . OPM has fired up its Open Season page on Facebook for the second year. Govexec.com predicts a “robust” open season. The Federal Times has a column with Open Season background.

The regulatory agencies implementing the Affordable Care Act (Labor Department, Health and Human Services Department, and the IRS) issued three new frequently asked questions and answers on Friday. The FAQs while noteworthy are not particularly relevant to the FEHB Program.

HHS’s Agency for Healthcare Research and Quality solicited public comment on the development of a National Health Care Quality Strategy and Plan (“National Quality Strategy”). BNA provided links to the comments submitted by the Blue Cross Blue Shield Association, America’s Health Insurance Plans, the American Medical Association, and the American Hospital Association, which are worth reading.

The Brookings Institution recently held a conference about the Center for Medicare and Medicaid Innovation created by the Affordable Care Act.  According to BNA, CMS Administrator Donald Berwick referred to the CMI as the “jewel in the crown” of the new law “because projects launched by the center hold the promise of lowering health care costs while increasing quality.” Hope springs eternal.

Healthcare IT News reports that  “Anthem Blue Cross has announced the launch of a new website in California designed to provide reliable, up-to-the-minute information to women about health issues specific to them.” Here’s a link to the new site.

It’s so much easier to find FEHBlog worthy material when Congress is in session. There’s still a few more weeks until November 15 when the lame duck session starts. Of course, the Congressional election is Tuesday. Healthcare IT News reports on a speech by AHIP President Karen Ignani to the Nashville Healthcare Leadership Council. Her speech emphasized the importance of quality, productivity, and cost to successful healthcare reform. 

In [Ms Ignani’s] view, it’s futile to worry about the political identity of the next Congress.

“We need all stakeholders to get out of their comfort zone and participate in finding solutions,” Ignagni said. “Healthcare costs are still crushing the country. We have to go beyond the mindset of ‘my cost containment is somebody else’s revenue deprivation.’

Amen to that.

Meanwhile, Leavitt Partners, which is headed by the former HHS Secretary and former Utah Governor Mike Leavitt, is making predictions about how the new and as yet unelected Congress might change the Affordable Care Act according to this Hill article. The Leavitt firm describes their predictions as healthcare reform bracketology.

Health Leaders Media is reporting that the final HHS rules implementing the HITECH Act, which were proposed this past summer, are likely to be finalized by the end of this year or early next year. This includes the unsecured protected health information breach notification rule and the business associate rule.

AIS published a useful report on the difficulties that insurers are facing in applying the new preventive care guidelines applicable to non-grandfathered plans (effective 2011 for non-grandfathered FEHB plans). Non-grandfathered plans must provide certain in-network preventive care services with no cost sharing. The government regulations identify those services by reference to treatment guidance to providers which doesn’t necessarily translate to claims payment rules. Hopefully, the regulators will straighten this problem out over time.

The Wall Street Journal reported  on the problems that outpatient surgery patients face in managing their own rehabilitation process.

Surgery is easier and faster than ever before: Nearly 65% of all surgeries don’t require an overnight hospital stay, compared to 16% in 1980. Hospitals that once kept patients for three weeks after some major operations now discharge them within a matter of days. But the body still heals at its own pace, and reduced time in hospital care means patients are assuming more responsibility for their own recovery—and more risks.

Patients not only have to perform rehabilitation regimens at home, but they are more often caring for their own incision wounds and dressings and having to watch for signs of infections and blood clots. They also may be managing drains, implanted IV ports and pumps, all of which can be difficult and stressful.

The move to speedier surgeries is largely the result of new minimally invasive techniques, improvements in anesthesia and cost-cutting by insurance companies and hospitals. Surgical procedures now often use smaller incisions, cut less muscle, and result in less blood loss. Newer anesthetics allow patients to regain consciousness quickly or not go to sleep at all. Pain medications are more effective.

At the same time, concern about rising health care costs has led to changes in Medicare and insurance plans that have encouraged the development of outpatient surgical centers and created financial incentives for hospitals to shift less complex surgery to their own outpatient facilities. So, many types of surgeries previously performed in hospitals with overnight stays are now being done on an outpatient basis: The number of freestanding surgery centers grew from about 240 in 1983 to more than 5,000 now.