The House of Representatives takes its Fourth of July break this week and the Senate takes its break next week. The debt ceiling negotiations continue. On June 23, the House Appropriations Committee approved the financial services and general government appropriations bill which provides funding for the FEHB Program. The bill now goes to the House floor.

OPM has encouraged plans to address never events that should never happen in a hospital and are preventable, such as wrong side surgery. Kaiser Health News posted an interesting story  indicating that efforts to reduce wrong side surgery have not been successful so far.

 “I’d argue that this really is rocket science,” said Mark Chassin, a former New York state health commissioner and since 2008 president of the Joint Commission, which has issued refinements to the 2004 directive. Chassin said he thinks such errors are growing in part because of increased time pressures. Preventing wrong-site surgery also “turns out to be more complicated to eradicate than anybody thought,” he said, because it involves changing the culture of hospitals and getting doctors — who typically prize their autonomy, resist checklists and underestimate their propensity for error — to follow standardized procedures and work in teams.

Many experts say that medicine needs standardized rules similar to those in aviation, which bar takeoff until a pilot and co-pilot complete a prescribed checklist without interruption. Airlines have a vested interest in a culture of safety that [Philip F.] Stahel [M.D.] says medicine lacks. In surgery “sometimes people say, ‘Well, this isn’t quite right, but someone else will address it.’ In aviation they don’t do that, because the plane will crash and they will all die,” he said.

 It’s really up to the doctors and hospitals to get their act together now.

OPM also encouraged FEHBP plans in this year’s call letter to take steps to address the problem of childhood obesity.  Last week  the U.S. Institute of Medicine issued a report making recommendations on steps that can help avoid early childhood obesity. According to a U.S. News and World Report article,

Recommendations include:

• Limiting young children’s television and other media use,

• Requiring child-care providers to promote healthy sleeping practices,

• Educating parents about age-appropriate sleep times and good sleep habits,

• Requiring child-care providers to provide opportunities and environments that encourage physical activity,

• Increasing efforts to promote breast-feeding,

• Requiring child-care facilities and preschools to follow the meal patterns established by the U.S. Child and Adult Care Food Program.

This is hardly new advice, and it’s difficult for the FEHBlog to see how health plans can help implement these sensible recommendations outside of perhaps their own work forces. Again the burden should be placed on the medical community.

In a surprising development, Google announced that it is shutting down its personal health record platform due to lack of interest according to techcrunch.com. The product will remain operational until the end of the year.  A commentary in the Washington Post suggests that the fee for service system is to blame. Microsoft’s competing Healthvault product “looks to be alive and kicking” according to techcrunch.com

FEHB  plans have two types of financing mechanisms — retrospective experience rating and community rating. Nationwide fee for service plans must use experience rating. HMO plans (known as comprehensive medical plans under the FEHB Act) can use experience rating or community rating. Community rating sets premiums based on prices while experience rating sets premiums based on costs.

OPM historically has required community rated carriers to provide the best price from its similarly sized subscriber group. OPM recently noted that this SSSG methodology has grown cumbersome and outdated. Yesterday, OPM released in the Federal Register a replacement approach that is based on the Affordable Care Act’s minimum loss ratio. This sensible decision will encourage continuing HMO participation / competition in the FEHB Program.

The Affordable Care Act (“ACA”) regulators issued an amended claims procedure rule in today’s Federal Register which impacts all FEHB plans. The Affordable Care Act required governmental plans like the FEHBP to adopt ERISA’s claims and internal appeals procedures with regulatory adjustments described in these ACA rules. The FEHBP’s external claims appeal process remains OPM’s responsibility under 5 U.S.C. Sec. 8902(j) and 5 C.F.R. Sec. 890.105. In today’s rule, the ACA regulators make some common sense changes to last year’s rule as discussed in this Business Insurance article.

While this is progress, the ACA regulators still are working on the four page summary of benefits that health plans are required to provide consumers. The regulation deadline had been March 23, 2011. This Kaiser Health Plan news article discusses the hang up – development of so-called cost of treatment labels which are now receiving the focus group feedback.

The American Medical Association which is holding its annual meeting this week issued it fourth annual National Insurer scorecard. It’s no surprise that the report card bashes insurers.

According to the AMA’s latest findings, commercial health insurers have an average claims-processing error rate of 19.3 percent, an increase of two percent compared last year.

That is an absurd finding. Medpage Today reports AHIP’s response:

“Health plans are doing their part by collaborating [via e.g., the CAQH CORE program] with providers and investing in new technologies to improve the process for submitting claims electronically and receiving payments quickly,” said Robert Zirkelbach, a spokesman for AHIP. “At the same time, more work needs to be done to reduce the number of claims submitted to health plans that are duplicative, inaccurate, or delayed.”

In other words, the AMA should be taking the log out its eye first.

The FEHBlog jumped the gun with its concern about the House Energy and Commerce hearing on Medicare coordination of benefits today. From looking at the testimony which is now online the hearing is focusing on liability settlements. The FEHBlog recently attended a legal ethics seminar at which a speaker warned plaintiffs’ tort bar members about the importance of looping in Medicare before settling any negligence case involving a Medicare beneficiary as the plaintiff. The process is slow. The House Committee is interested in getting Medicare to be more responsive to the plaintiff’s bar.

Last year, the Walgreen’s pharmacy chain picked a fight with CVS Caremark. This year, Walgreen’s is fighting with another prescription benefits manager Express Scripts, Inc. The New York Times reports that

The Walgreen Company said on Tuesday that it was willing to walk away from more than $5 billion in annual revenue because the pharmacy benefits manager Express Scripts did not pay it enough to fill prescriptions.

The break would occur in January 1, 2012. A negotiated settlement is expected before then.

The AMA News reports that Senator Orrin Hatch (R UT) and Rep. Erik Paulsen (R Minn) have introduced

The Family and Retirement Health Investment Act of 2011 [which] would reduce or remove several limits on health savings accounts and flexible spending arrangements. The proposed changes include allowing:

• HSAs and FSAs to be used to purchase over-the-counter drugs without a prescription.

• HSAs and FSAs to be used to pay fees for retainer health care provided by primary care physicians, physician assistants and nurse practitioners.

• Medicare beneficiaries with hospital coverage to continue to contribute to HSAs.

• Individuals with FSAs to carry over up to $500 in the accounts to the following year.

• States to bring back Medicaid health opportunity accounts, in which states contribute to HSAs to be used for some medical services.

The FEHBlog bets that the OTC drug prescription requirement will be the next Affordable Care Act provision to be repealed.

Happy Fathers’ Day. The FEHBlog is enjoying Fathers’ Day on North Carolina’s Outer Banks.

The House and Senate are in session this week. On June 22, the Subcommittee on Oversight and Investigations of the House  Energy and Commerce Committee is holding a hearing that is ominously titled “Protecting Medicare with Improvements to the Secondary Payer Regime.” In 2007, Congress passed the “Section 111” provision that vastly improved the exchange of coordination of information between private sector carriers and Medicare. The only other shoe that can drop is to shift more Medicare costs onto private carriers, including FEHB plans, by changing the order of benefit payment rules.

The most likely candidate is the rule on coordination of benefits for persons who are eligible for Medicare based on end stage renal disease. Currently, the private sector carrier pays primary to Medicarer for the first 30 months of ESRD care (previously 24 months.) The FEHBlog can see 36 months or longer coming down the pipe.

CMS announced on Friday the implementation of  technology based anti-fraud measures that, as AHIP previously has pointed out, finally catch up to private sector carrier efforts. The new measures check for fraud before payment is made. To its credit, CMS also recognized the private sector’s role in this effort:

Northrop Grumman, a global provider of advanced information solutions, has been selected through a competitive procurement to develop CMS’ national predictive model technology format using best practices of both public and private stakeholders. Northrop Grumman has partnered with National Government Services (NGS) and Federal Network Systems, LLC, a Verizon company (FNS), to leverage the wealth of claims data and its information to fight health care fraud.   CMS used industry guidance, innovative ideas from private and provider entities and related data in developing the scope of work for this national fraud prevention program. Given the importance of this contract to CMS’ overall anti-fraud efforts, this contract is being implemented nationally and ahead of schedule.

Speaking of AHIP, the AMA News reports on an AHIP study that finds growing consolidation of hospital systems, which is being driven by the Affordable Care Act.  The AMA retorts that health plans also have been consolidating. Of course, unlawful monopolization typically is alleged against sellers, who are trying to raise prices, not to purchasers, who are trying to bring down prices.

On Thursday, June 16, the Office of Personnel Management issued a request for information related to its Affordable Care Act responsibility to contract for multi-state plans to operate in the State health insurance exchanges. The RFI basically asks interested carriers to identify themselves and explain why they are interested and how they could fulfill the requirements for a multi-state plan carrier . The response deadline is August 2, 2011.

Yesterday, the Office of Personnel Management issued two new systems of records notices — one for the Inspector General’s existing FEHBP claims data warehouse and the other for OPM’s new warehouse. The FEHBP claims data will flow from the Inspector General’s warehouse to OPM’s warehouse under an Economy Act agreement. OPM explains that “the primary purpose” behind creating this new warehouse “is to provide a central database from which OPM may analyze the FEHBP to support the management of the program to ensure the best value for the enrollees and taxpayers.” Computer World reports on this development here. OPM plans to implement the systems of records on July 15, 2011, “unless comments are received that would result in a contrary determination.”

Standard & Poors released its latest monthly healthcare economic indices today. “Over the year ending April 2011, healthcare costs covered by commercial insurance increased by 7.13%, as measured by the S&P Healthcare Economic Commercial Index. Medicare claim costs rose at an annual rate of 2.48%, as measured by the S&P Healthcare Economic Medicare Index. With April’s data, the Medicare Index posted another record low annual growth rate in its six-year history.” In other words, Medicare continues to shift costs onto the private sector.

HHS released a National Prevention and Health Promotion Strategy today . Modern Healthcare explains 

Authorized in the Patient Protection and Affordable Care Act, the National Prevention Strategy is based on the view that good health comes not just from good medical care, but also from things such as clean air and water, safe outdoor spaces for physical activity, safe worksites, healthy food and violence-free environments. It centers on four strategies: building healthy and safe community environments, expanding quality preventive services in both clinical and community settings, helping people make healthy choices and eliminating health disparities.

Happy Flag Day! OPM Director John Berry spoke to the Society of American Indian Government Employees today. His remarks included the following points about the FEHB Program:

OPM’s Director of Healthcare and Insurance, John O’Brien, is up in Milwaukee at National Congress of American Indians this week to engage in meaningful consultations about how we bring tribal employees into our Federal Employee Health Benefits Family, and I’ll say more on that in a moment.

We’ve launched a new innovation era in the Federal Employees Health Benefits Program, which is nine million members strong – and growing. We’re excited to add Tribal employees – even before the state-operated insurance markets, for the general public, go live. We have a real opportunity here to provide Tribes and their employees with a vital service. Our presence at NCAI is just one part of our process of meaningful consultation. And of course, any member can get self and family coverage for children up to age 26.

We’re getting FEHBP’s insurance companies to cover preventive care with no co-pay and introducing other far-sighted reforms. Nudging them to make these investments in the long term health of their members will also benefit the government as an employer.

It’s worth adding that according to a Twin Cities bizjournals.com report, Congress has just created a Wellness Caucusthat will investigate and share ways for companies to support employee health and wellness.

America’s Health Insurance Plans today released its annual health savings account / high deductible health plan survey finding that HSA / HDHP coverage among large employers jumped 26% last year. 11.4 million Americans are now covered by these consumer drived plans. AHIP warned that the Affordable Care Act could impair future growth.

• Restrictions on Over-the-Counter Medications: Starting this year, HSA funds can no longer be used to purchase over-the-counter (OTC) medications without a prescription.  This requirement reduces consumers’ access to common OTC drugs, such as allergy medications, and instead provides an incentive to use higher-cost prescription drug alternatives.
• Medical Loss Ratio: The medical loss ratio (MLR) regulation is particularly problematic for HSA-eligible plans.  By Congressional design, these plans are intended to provide consumers with a high-deductible, low-premium coverage option along with the ability so save for health care expenses through an HSA.  While these plans typically have lower benefit costs, they are not necessarily less costly to administer on a per-enrollee basis, and, as a result, naturally have lower loss ratios.  Policymakers should recognize the unique nature of HSA plans to preserve consumers’ access to this important coverage option.
• Minimum Actuarial Value Requirement: Effective in 2014, insurance coverage sold in the individual and small-group markets must meet certain minimum actuarial values for each level of coverage provided: bronze, silver, gold, and platinum.  The lowest level, bronze, must have a minimum 60 percent actuarial value, which is the dollar value of the average expected benefits paid out by the plan.  The ACA directs the HHS Secretary to establish the process for determining actuarial values and states that the Secretary “may” include the amount of the annual employer HSA contributions toward the actuarial value calculation.  Including employer HSA contributions in the actuarial value calculation significantly increases the likelihood that HSA plans will meet the minimum requirement and will help ensure consumers continue to have access to the high-quality, affordable coverage they rely on today. 

The AMA News reports this week on a new study confirming that adverse drug events “send millions back for care.”

Both Houses of COngress are in session this coming week. The FEHBlog has noticed several interesting business developments.

Thomson Reuters announced last week that it will be selling off its healthcare business. That business “provides data, analytics and performance benchmarking solutions and services to companies, government agencies and healthcare professionals.” United Healthcare has its Ingenix division which provides similar services. Will a major health insurer (as opposed to IBM or GE) snap up this opportunity?

Wellpoint,  a major health insurer, announced last week its purchase of Caremore, “a senior focused health care delivery program that includes Medicare Advantage plans and 26 clinics designed to deliver [managed] health care [to 54,000 Medicare Advantage plan members] in select California, Arizona, and Nevada markets. Wellpoint plans to expand the Caremore model inside and outside this region.

The New York TImes reflects that “The transaction should turn heads in the deal world because health care mergers and acquisitions have slowed as a result of the uncertainty surrounding President Obama’s health care overhaul and its effect on the managed care sector, especially Medicare organizations The FEHBlog reflect that this is a smart business move because the Affordable Care Act imposes profit limits on health insurers but not on health care providers or health care information services.

Last week was the deadline for comments on the HHS rules implementing accountable care organizations. AHIP, the health insurers’ trade association, submitted thoughtful comments – suggested that the government should build on private sector initiatives, avoid Medicare’s fee for service platform and take steps to control provider consolidation.

Imitation is said to be the sincerest form of flattery. The FEHBlog is visiting East Haven, CT, the town where he grew up this weekend, and he noticed that Yale New Haven Hospital has built an urgent care center to compete with the MinuteClinics as discussed in this New London Day article. But does Yale charge MinuteClinic prices or ER prices?

The Federal Times reports that NARFE, among other organizations, is concerned that Congress will pick up on the Presidential deficit reduction commission’s recommendation that the FEHB Program provide premium support instead of the current defined contribution. Currently, the government pays 72% of the enrollment weight average premium capped at 75% of the selected plan’s premium. Under premium support, the government would give employees and annuitants a voucher to purchase health insurance. If the plan’s annual premium falls under the voucher amount, there’s no employee contribution. However, if the plan’s annual premium exceeds the voucher amount, the employee must pay the difference. And the voucher amount usually is adjusted using a measure that reflects cost changes in the general economy rather than the health care industry. Unquestionably, the premium support approach would push employees to enroll in low premium plans.

A similar game changing event occurred in the early 1980’s when the incoming Reagan administration mandated an across the board benefit cut that had a smaller impact on the lower cost plans. The Reagan adminstration’s change shook up the Program and so would a switch to premium support. However, to adopt premium support, Congress must amend the FEHB Act and according the Federal Times article, “Republican staffers on the House Oversight and Government Reform Committee, which oversees federal employee issues, and the House Budget Committee, which Ryan chairs, say they’re interested in the FEHBP proposal, although they aren’t pursuing it now.”

Barron’s reported this afternoon that “Shares of health insurance giants Aetna (AET) and Cigna (CI) jumped today amid growing speculation that the two companies should merge.”

Drugstore News reports that “Moody’s Investors Service compared the three largest pharmacy benefit managers — CVS Caremark, Express Scripts and Medco Health Solutions — in a report issued Tuesday. While it maintained a positive view of all three, it gave CVS Caremark the highest credit rating.” Moody’s gave Caremark a higher rating because of the diversity of its business — combining a retail pharmacy chain with a PBM — which until recently was a knock on the company.

Kaiser Health News offers a lengthy report on the regulatory controversy over Food and Drug Administration approval of medical devices. Here’s a snippet:

The device industry has launched an aggressive campaign to avoid tighter Food and Drug Administration rules that would help generate the information needed to show whether newer devices are actually superior to the ones they replace. The latest devices – from heart valves and defibrillators to artificial knees and hips – are usually significantly more expensive than older devices, and the intense marketing surrounding the introduction of new devices has become a major driver of rising health care costs.

Many medical specialists say tighter rules are needed to ensure newer devices are safe and effective, which could help hold down costs. “Better regulation of medical devices has the potential to reduce health care costs,” said Steve Nissen, chairman of cardiovascular medicine at the Cleveland Clinic. “New devices are often more complex and expensive than existing products, but may not offer any improvements in health outcomes. The current regulatory approach allows these devices to reach the market with little or no clinical data.” * * *

After health-care reformers targeted the industry for higher taxes to help pay for covering the uninsured, Democratic leaders in Congress asked the prestigious Institute of Medicine (IOM) to convene a blue-ribbon panel to determine if the industry needed tougher regulations to ensure the safety and effectiveness of its products. With the IOM’s final report due later this month, the industry is mounting a major public relations offensive to blunt calls for stronger oversight.

Speaking of Affordable Care Act fees, the Internal Revenue Service’s website announces that

The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute and that the institute be funded by the Patient-Centered Outcomes Research Trust Fund. The institute will assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by advancing clinical effectiveness research. The Trust Fund is to be funded in part by fees to be paid by issuers of health insurance policies and sponsors of self-insured health plans. IRS Notice 2011-35 requests comments regarding how the fees to fund the institute should be calculated and paid, including several possible rules and safe harbors.

 It puzzles the FEHBlog that health care providers (the “clinicians”) are not required to kick into this fund.

As previously noted in the FEHBlog, a doctor who works for Medco spoke about advances in personalized medicine at the OPM AHIP carrier conference back in March. The Wall Street Journal lead yesterday’s paper or I-pad) with a report that “New research is signaling a major shift in how cancer drugs are developed and patients are treated—offering the promise of personalized therapies that reach patients faster and are more effective than other medicines.” The FFHBlog was startled to read that “Massachusetts General Hospital and MD Anderson Cancer Center are among institutions beginning to offer routine genetic profiling of tumors for every patient, moving into clinical practice a strategy reserved only for research just a year or two ago and unheard of a decade ago.” Now, that’s progress.

The AMA News reports that the Affordable Care Act’s accountable care organization initiative is giving second life to independent practice associations or IPAs. “IPAs are organizations in which physicians retain their practice’s independent corporate status, but become part of a separate organization with other practices to contract as a group to provide services.” IPAs are becoming attractive because ACOs must treat at least 5,000 patients under the Medicare rule currently being finalized by HHS. However, the IPAs went broke in the 1990s because they could not operate successfully under HMO capitated rates. The ACO rule is much more complicated. Good luck with that.

Business Insurance reports that a McKinsey consulting survey predicts that 30% of employers who currently provide employee health benefits will cancel their plans and put their employees in the state health insurance exchanges.  Although the FEHB Program will still be here in 2014 and beyond, the FEHBlog will not be surprised if a large percentage of employers, particularly small employers drop coverage in 2014.  The ACA’s generous premium and cost sharing subsidies available to people with income under $90,000 will create plenty of opportunities for employers to [legally] game the system. While the ACA’s penalties on employers are higher for employees who are subsidized in the exchanges, the FEHBlog doesn’t think that the penalties will come close to current health plan premiums. 2014 will be a very interesting year. 

The House is holding a constitutent work week this week while the Senate is in session. The FEHBlog cannot find any committee activities of note for the coming week.

The FEHB Act, 5 U.S.C. Sec. 8902(m)(2), requires FEHB fee for service plans to expand their coverage of different types of providers in medically underserved states. Last week, OPM announced in the Federal Register that for 2012 South Carolina will leave, and Alaska will join, the list of medically underserved states. 15 states currently are on the list.

The FEHBlog was reminded last week that there are two OPM websites — the regular site and the open site.  The open website is soliciting public comments the agency’s preliminary plan for retrospective review of its existing regulations. On OPM’s review list is the similarly sized subscriber group methodology used to price community rated plans. OPM is developing a new approach based on the Affordable Care Act’s minimum loss ratio. The comment deadline is July 1.

Last week the Centers for Medicare and Medicaid Service (“CMS”) announced a final rule that 

prohibits States from making payments to providers under the Medicaid program for conditions that are reasonably preventable.  It uses Medicare’s list of preventable conditions in inpatient hospital settings as the base (adjusted for the differences in the Medicare and Medicaid populations) and provides States the flexibility to identify additional preventable conditions and settings for which Medicaid payment will be denied.  The final rule is effective July 1, 2011 but gives States the option to implement between its effective date and July 1, 2012.

Kaiser Health News reports that

Some physician groups have concerns about the new policy. “Simply not paying for complications or conditions, that, while extremely regrettable, are not entirely preventable, is a blunt approach that is not effective or wise for patients or the Medicare or Medicaid program,” Dr. Michael Maves, CEO of the American Medical Association, said in written comments to CMS in March.

He said the medical association has “grave concerns” about states extending the non-payment policy beyond the conditions considered by Medicare. The American Hospital Association expressed similar reservations.

Finally, CMS offers excellent websites that provide quality of care data on hospitals. nursing homes, home health agencies, dialysis facilities, and soon doctors. The websites are based on care rendered to both Medicare and non-Medicare patients. CMS announced on Friday “proposed rules that will enable consumers and employers to select higher-quality, lower-cost physicians, hospitals and other health care providers in their area.” More specifically,

CMS would provide standardized extracts of Medicare claims data from Parts A, B, and D to qualified entities.  The data can only be used to evaluate provider and supplier performance and to generate public reports detailing the results. ·        The data provided to the qualified entity will cover one or more specified geographic area(s).
·        The qualified entity would pay a fee that covers CMS’ cost of making the data available.
·        To receive the Medicare claims data, qualified entities would need to have claims data from other sources.  Combining claims data from multiple sources creates a more complete and accurate picture about provider and supplier performance.
·        Publicly reporting the results calculated by the qualified entity is important for transparency in health care and consumer empowerment.  To prevent mistakes, qualified entities must share the reports confidentially with providers and suppliers prior to their public release.  This gives providers and suppliers an opportunity to review the reports and provide necessary corrections.
·        Publicly released reports would contain aggregated information only, meaning that no individual patient/beneficiary data would be shared or be available.
·        During the application process, qualified entities would need to demonstrate their capabilities to govern the access, use, and security of Medicare claims data.  Qualified entities would be subject to strict security and privacy processes.
·        CMS would continually monitor qualified entities, and entities that do not follow these procedures risk sanctions, including termination from the program.  

The proposed rules will be published in the June 8 Federal Register and CMS will accept comments for six days from that date.