OPM released 2011 FEHBP and FEDVIP premiums on Friday. The Washington Post, the Federal Times, Govexec.com, Federal News Radio, Business Insurance, and the Federal Daily reported on the news. NARFE and NTEU issued press releases. Blue Cross FEP and GEHA have already posted information about their 2011 benefit offerings. Open Season is in the air.
The U.S. Office of Personnel Management today announced 2011 FEHBP and FEDVIP rates today in advance of the Federal Benefits Open Season that runs from November 8 through December 13, 2010.
The Federal Times identifies the health plans that are leaving and joining the FEHBP for 2011.
Congress has left town to campaign for re-election. Before leaving, Congress passed a continuing resolution to fund federal government operations through December 3, 2010. The Federal Times provides a helpful rundown of the specific funding measures included in the resolution.
Congress will return for a lame duck session on November 15, 2010. The AMA already is beating the drum for a new Medicare fix. Absent Congressional action, “On December 1 of this year, Medicare payments for physician services are scheduled to be cut by 23%. A 6.5% reduction is intended to follow on January 1, 2011.”
Thanks to yesterday’s Politico Pulse, I ran across the American Hospital Association’s 46 page summary of the Affordable Care Act’s health insurance reforms. The consulting firm Towers Watson issued a report on its second survey of employer reactions to these reforms. According to that report,
Not surprisingly, most respondents indicate that their current focus is on compliance with the law rather than on how it might affect their longer-term health care benefit strategies. However, respondents said their focus will shift to rethinking strategies and developing multiyear approaches in 2011. What’s more, some employers are making significant changes to their health benefit plans now.
Also of interest, many respondents said they plan to increase their efforts to encourage employee participation in health-related programs such as wellness programs, behavioral outcomes (e.g., management of target body mass index, weight loss) and health risk assessments.
FEHB plans are engaged in the same processes — trying to comply with the Affordable Care Act’s mandates within a very short tight frame and to cooperate with OPM’s efforts to improve the health and well being of federal and postal employees and annuitants.
Govexec.com reports that the Senate leadership has unveiled a continuing resolution to fund federal government operations at current fiscal year levels through December 3, 2010. The Senate may vote on the resolution tomorrow. However, according to the Politico, Sen. Mary Landrieu (D La) has placed a hold on Senate floor consideration of the nomination of Jacob “Jack” Lew to be Office of Management and Budget Director.
Hewitt Associates, the benefits consulting firm, published a survey of 350 large employers projecting “an 8.8 percent average [health benefits] premium increase for employers [in 2011], compared to 6.9 percent in 2010 and 6.0 percent in 2009.” OPM should be releasing 2011 FEHB premiums soon. The FEHBlog, who is not an actuary, found this fact surprising:
In 2010, Hewitt saw average cost increases of 7.8 percent for health maintenance organizations (HMOs), 6.9 percent for point-of-service (POS) plans and 6.3 percent for preferred provider organizations (PPOs).
For 2011, Hewitt forecasts that companies will have average cost increases of 8.5 percent for PPOs and POS plans. Companies will see an average cost increase of 9.4 percent for HMOs. That means from 2010 to 2011, the average cost per person for major companies will increase from $8,671 to $9,408 for PPOs; $9,373 to $10,254 for HMOs; and $9,747 to $10,575 for POS plans.
This may result from the fact that HMOs tend to be concentrated in higher cost urban areas. Hewitt reports that
In 2010, a few U.S. markets experienced rate increases significantly higher than the national average. Five major metropolitan areas in California, for example, experienced rate increases of 10 percent or higher: Los Angeles (10.2 percent), Orange County (10.6 percent), Sacramento (10.7 percent), San Diego (10.8 percent), and San Francisco (10.4 percent). Other U.S. cities experiencing higher-than-average rate increases included Charlotte (9.7 percent); Newark, NJ (10.8 percent); Philadelphia (10 percent); and Tampa (9.2 percent). Conversely, Columbus, Ohio (4.3 percent); Dallas/Ft. Worth (3.7 percent); Portland, OR (4.6 percent); and Washington D.C. (4.0 percent) experienced lower-than-average rate increases in 2010.
The Labor Department has posted on its EBSA website the 145 public comments submitted on the June 28 Affordable Care Act regulations implementing the patient protection provisions. Also posted there are the archives of the Labor Department’s webinar on the Affordable Care Act presented earlier this month. You’ll find them under the Webcasts heading on the upper right hand side of the page.
The House of Representatives and the Senate are closing to taking a break for the elections, and the federal government’s fiscal year expires on September 30. Govexec.com reports that both legislative bodies are working on a continuing resolution to maintain the funding of federal government operations, including the FEHB Program, past that date.
Business Insurance reports that “The U.S. Government Accountability Office has appointed 19 members of a new center for comparative effectiveness research [known as the Patient-Centered Outcomes Research Institute] established by the Patient Protection and Affordable Care Act.” According to GAO’s press release which includes the appointees’ biographies
PCORI [is] a non-profit organization to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by carrying out research projects that provide quality, relevant evidence on how diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed. The Act directs the Comptroller General to appoint 19 of the 21 members of the PCORI Board of Governors. In addition to these 19 members appointed today, the Director of the Agency for Healthcare Research and Quality and the Director of the National Institutes of Health, or their designees, are the other two members who will serve on the PCORI Board.
The FEHBlog understands that the PCORI Board is one of the Affordable Care Act initiatives intended to bend the health care cost curve down. Unfortunately, however, as interpreted by the National Association of Insurance Commissioners last week, costs that health insurers incur to actually hold down costs such as utilization review and anti-fraud measures do not count as medical expenses. Draft regulation, p. 31. If an insurer does not spend at least 85% of premiums on medical expenses (for group insurance — 80% of individual insurance), the difference between the spend and this minimum percentage must be rebated.
Yesterday, the FEHBlog noticed a road sign stating that our nearby hospital Suburban Hospital is a member of the Johns Hopkins Medicine. The Washington Post reported today that Johns Hopkins Medicine has its eye on acquiring another local hospital, Sibley. According to this report
The acquisitions are part of a wave – particularly in the mid-Atlantic region – of consolidations leading to fewer independent hospitals and doctors, a trend that many industry executives say will grow because of the health-care overhaul.
The action in the mid-Atlantic is being watched closely, with experts saying consolidation in other parts of the country has led to higher health-care prices – size is power, and commanding market share can give hospitals an edge in negotiations with insurers.
Last week, “CAQH® [an industry coalition of health insurers and health care providers] released the results of a landmark study to assess the quality and accuracy of data reported by providers about their professional credentials and practice information at its 2010 Administrative Simplification Conference.” This data is part of CAQH’s Universal Provider Datasource (“UPD”). CAQH explains that “By streamlining data collection electronically, UPD is reducing duplicative paperwork and millions of dollars of annual administrative costs for more than 800,000 physicians and other health professionals, as well as over 550 participating health plans, hospitals and healthcare organizations.” According to its press release.
The results showed that the sampled UPD data was 93.9% accurate. Based on the study findings, CAQH has initiated an array of system edits, adjustments to data fields and respondent prompts to make instructions clearer for providers. These system refinements will improve UPD provider data quality: accuracy is expected to increase to 97% or more. This will strengthen the utility of UPD for enterprise-wide adoption by health plans, hospitals, healthcare delivery organizations, healthcare information exchanges, and state and federal governments.
Good news.
The President signed the Patient Protection and Affordable Care Act into law six months ago today. OPM posted on its website today a benefits administration letter that explains the Affordable Care Act driven changes to the FEHB Program that take effect January 1, 2011.
The Department of Health and Human Services (HHS), the Department of Labor, and the Internal Revenue Service principally are responsible for implementing the Affordable Care Act. The FEHB Program is subject to their Affordable Care Act regulations. Historically in accordance with the FEHB Act, the Program has operated under OPM regulations. However, for the past decade or so, Congress has modified the FEHB Program by amending the Public Health Service Act which HHS administers.
HHS has delegated to OPM responsibility for administering the fall back Pre-existing Condition Insurance Plan administrator contract, which is held by a FEHB plan carrier, GEHA. More recently, HHS delegated to OPM responsibility for handling external claim appeals from insureds covered under health insurance policies issued by insurance companies in states which don’t have a federally approved external appeal program as of today.
The National Association of Insurance Commissioners released a draft regulation implementing the Affordable Care Act’s minimum medical loss ratio provision which applies to all health insurers next year. The NAIC will consider the draft next month and then will send it off to HHS for actual rule-making. The Wall Street Journal reports that the draft is a mixed bag for insurers.
Govexec.com reports that the Senate Budget Committee today approved the Jacob “Jack” Lew’s nomination to be Director of the Office of Management and Budget. The full Senate now can consider the nomination, possible before it adjourns on October 8 for the elections. “If confirmed, Lew said he would conduct an exhaustive review of every federal agency to trim waste and inefficiencies.”
The Senate Homeland Security and Governmental Affairs approved the nomination of Jacob “Jack” Lew to be Office of Management and Budget Director by a 9-0 vote today. The Washington Post reports that the Senate Budget Committee also must vote on the nomination before the full Senate can consider confirmation.
The agencies responsible for implementing the Affordable Care Act — Health and Human Services, Labor, and the Internal Revenue Service — have issued a set of frequently asked questions that address a variety of compliance issues. Business Insurance reports on the new guidance.
The Federal Times reports on a proposed Centers for Medicare and Medicaid Services rule to aggressively combat Medicare fraud and abuse by health care providers. Among other initiatives, the proposed rule would cause CMS to “rate all types of medical providers by their risk for engaging in fraud. Those at highest risk would undergo fingerprinting and criminal background checks. New home-health agencies and suppliers of home-health equipment that are not publicly traded companies would initially get this increased screening.”
A FEHBlog reader recently commented on rising FEHB plan premiums for former spouses. There’s no doubt that FEHB plan premiums have been rising — in my view due principally to the group’s demographics and rising medical costs. Before Congress approved self-pay COBRA continuation coverage for private sector health plans in 1986, Congress provided self-pay FEHB continuation coverage for certain former spouses. In contrast to COBRA continuation coverage which lasts 36 months for former dependents, FEHB former spouse coverage can last for the individual’s lifetime. Former spouse coverage is explained at this OPM website. Congress later extended self-pay continuation coverage rights to former employees and former dependents, including ex-spouses who are ineligible for former spouse coverage. This is known as temporary continuation coverage or TCC and it’s very similar to COBRA. Both former spouse and TCC enrollees have Open Season rights like federal and postal employees and annuitants. They can elect lower cost plans during the Open Season if desired.
The Senate Homeland Security and Government Affairs Committee will consider President Obama’s nomination for Office of Management and Budget Director Jacob “Jack” Lew on September 21. Govexec.com reported on Mr. Lew’s confirmation hearing before that Committee last week. The Federal Times reports that
If he gets the job of Office of Management and Budget director, Jacob Lew will push the Office of Personnel Management to respond to findings that the U.S. Postal Service overpaid its pension obligations by tens of billions of dollars, according to a written answer he provided on a Senate Homeland Security and Governmental Affairs Committee questionnaire.
Barron’s posted a Caris & Co.’s review of the pharmacy benefit manager (“PBM”) pricing environment.
In general, our conversations confirmed that there is not a meaningful step-down in industry pricing. However, increased scrutiny on the provisions and language included in PBM contracts could negatively impact margins in the future. Much of the focus is on “pass-through” contracts, which represent a small portion of PBM contracts (approximately less than 20%).
Pass through contracts is precisely the focus that the U.S. Office of Personnel Management established for the FEHB Program earlier this year.
FAIR Health, Inc., which has taken responsibility from Ingenix for managing two usual reasonable and customary databases for pricing out-of-network provider claims (as the result of a settlement with the New York Attorney General), offered an update on its efforts last month.
It has been a busy summer at FAIR Health. Our team has been working diligently to continue our progress in transferring Ingenix’s MDR and PHCS databases to FAIR Health, working with the Syracuse University-led Upstate Health Research Network (UHRN) on the initial methodologies for analyzing our claims data and producing our 2011 benchmark products, building FAIR Health’s Consumer Website, and putting in place the IT and operational infrastructure that will support all of our activities. I am proud to report that we remain on schedule for the launch of our new claims database and the testing and demonstration of our innovative Consumer Website by fall 2010. The first set of data products derived from the new database will be released to customers on schedule in January 2011.
The AP reports that the Senate failed yesterday to pass an amendment modifying or repealing the Affordable Care Act’s changes to the IRS Form 1099 MISC reporting requirement, which has become quite a big political football.
Skimming through my BNA publications, I ran across two recent studies of interest:
I also subscribe to the AMA News. Here are two AMA News articles that caught my attention:
House Majority Leader Steny Hoyer (D MD) spoke before the NARFE group today. According to the Federal Times, he told them not to expect Congress to increase the government contribution toward FEHB Program coverage or extend the premium conversion program to annuitants in the near term. The FEHBlog appreciates the Congressman’s candor.
OPM should be releasing 2011 FEHB premium information soon. The Government contribution for federal employees and annuitants is set by statute at 72% of the enrollment weighted average premium capped at 75% of the selected plan’s actual premium. 5 U.S.C. Sec. 8906.
The FEHBlog does not believe that Congress [from a political standpoint] can allow federal annuitants to pay their FEHB premiums with pre-tax dollars (the premium conversion program available to employees) without extending the same right to private sector retirees, and that would cost a lot of tax dollars.