On Friday OPM issued a benefits administration letter to government payroll offices with an attachment that explain Affordable Care Act driven changes to the FEHB Program for 2011. The guidance focuses on how to add dependent children between age 22 and 26  (and married children under age 26) to self and family FEHB coverage. Here are two important points made in the letter:

First point

Be aware: The effective date of coverage for your newly eligible children depends upon the event used to enroll or change enrollment.

* * *

If you are an employee who gets paid biweekly (this applies to most Federal employees) or you are an Office of Workers’ Compensation (OWCP) recipient, and you want you child covered on January 1, 2011, then you must enroll or change your enrollment as a “change in family status” – qualifying life event (QLE). The qualifying life event code to use on the SF 2809 is ‘1C’ for employees and ‘2B’ for OWCP recipients.

You may change your enrollment from 31 days before to 60 days after January 1, 2011. Your change to Self and Family will take effect on the first day of the pay period that includes January 1, 2011. Your child will be covered on January 1, 2011. If you make your QLE change after January 1st, your child will be covered retroactively to January 1, 2011 and you will pay retroactive premiums back to the effective date of the enrollment or change.

If you enroll or change your enrollment as an Open Season change, it will take effect on the first day of the first pay period that begins in 2011. For most employees, this will be January 2, 2011. For the Office of Workers’ Compensation, this will be January 16, 2011. For a few other agencies, the date may be different.

* * *

For United States Postal Service employees, CSRS/FERS annuitants, Temporary Continuation of Coverage (TCC) enrollees and former spouses, an enrollment or change in enrollment made either as a “change in family status” QLE or as an Open Season change will provide coverage of eligible children on January 1, 2011. This is also true for other agencies and other retirement systems with a pay period that begins on January 1, 2011.

If you have a Self Only enrollment and would like your newly eligible child to be covered, you must change to a Self and Family enrollment. If you do not change to a Self and Family enrollment as a “change in family status” QLE or an Open Season change then your child will not be covered.

Read the letter and its attachments for the complete details

Second point

The [Affordable Care Act]  Act has made no changes to the Federal Employees Dental and Vision Insurance Program (FEDVIP), the Federal Employees’ Group Life Insurance Program (FEGLI) or the Federal Long Term Care Insurance Program (FLTCIP). Health care reform does not extend coverage for children until age 26 or provide coverage for married dependent children under these programs.

Thanks for the guidance, OPM.

Congress resumes its work this week following the August recess. As previously discussed in the FEHBlog, Congress is expected to vote on modifying or repealing the expanded IRS Form 1099 reporting requirement included in the Affordable Care Act. The Federal Times reports that Congress is not expected to tackle 2011 fiscal year appropriations before the mid-term election recess at the beginning of October.

“I’m expecting very little action on the appropriations bills because Congress simply won’t be in long enough to make significant progress,” said Brian Riedl of the Heritage Foundation think tank. Like other analysts, Riedl thinks the Defense appropriations bill stands the best chance of winning final approval in the next few weeks. Otherwise, he predicts most agencies will be saddled with stopgap continuing resolutions that keep federal spending at 2010 levels at least into November. And many experts expect that the spending bills will be bundled into a massive omnibus appropriations package that will be approved in a lame-duck session before year’s end.

FEHB Program appropriations are included in the financial services appropriations bill (S. 3677).

Finally, Kaiser Health News reports that

A study released Thursday [by Dartmouth researchers] challenges two widely-held assumptions about medical care: that people who see a primary care physician will end up healthier than those who don’t, and that having more primary care doctors in an area guarantees better access for patients.

The U.S. Office of Personnel Management released updated today its guidance on coverage of dependent children in 2011. Based on guidance from the Health and Human Services Department, the Internal Revenue Service, and the Labor Department, OPM has concluded that it does not have to change its definition of foster child next year. According to OPM’s FEHB Handbook:

Wow. Modern Healthcare reports that “Medical malpractice costs average about $55.6 billion annually, or 2.4% of annual healthcare spending, according to a Health Affairs analysis.”

Business Insurance reports that the Internal Revenue Service issued guidance today implementing the one of the Affordable Care Act’s limitations on flexible spending accounts, such as FSAFeds, health reimbursement accounts, and healthcare spending accounts, such as those offered by consumer driven FEHB plans. The IRS explains that 

Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.

HHS’s Office of Consumer Information and Insurance Oversight released official guidance to group health plans on how to obtain waivers from the Department’s restriction on annual limits imposed on essential health benefits under the Affordable Care Act. Given the fact that 2011 FEHB plan benefit and rates will be announced in the new few weeks, this guidance will likely be of little value to FEHB plans.

The Los Angeles Times reports that “After 40 years of continual declines, the smoking rate in the United States has stabilized for the last five years, with one in every five Americans still lighting up regularly, the Centers for Disease Control and Prevention said Tuesday.”  At OPM’s request, FEHB plans will be offering enhanced smoking cessation programs next year.

Happy Labor Day weekend.

BNA published an  interesting report on the public comments submitted about the Affordable Care Act rule implementing various immediate reforms, including the provisions ultimately prohibiting annual and lifetime dollar limits, restricting rescissions, and expanding out of network coverage of emergency services performed at a hospital. Not surprisingly, the American Medical Association and the American Hospital Association pushed for changes that would bend the health care cost curve up. According to the AMA, for example, “The best default standard for out-of-network emergency services should be a professional’s billed charge based on the professional’s current schedule of retail fees for emergency medical services, AMA said.”  In other words, the sky’s the limit. The article also provides links to comments submitted by the Blue Cross Blue Shield Association and America’s Health Insurance Plans, both of which make useful points.

Bloomberg reports that “Almost half of Americans took at least one prescription drug per month in 2008, an increase of 10 percent over the past decade, a U.S. study found.”

The Annals of Internal Medicine recently published a White House report describing ten ways that the Affordable Care Act will likely affect the practice of medicine:

•  Focusing care around exceptional patient experience and shared clinical outcome goals.
• Expanding the use of electronic health records with capacity for drug reconciliation, guidelines, alerts, and other decision supports.
• Redesigning care to include a team of nonphysician providers, such as nurse practitioners, physician assistants, care coordinators, and dietitians.
• Establishing, with physician colleagues, patient care teams to take part in bundled payments and incentive programs, such as accountable care organizations and patient-centered medical homes.
• Proactively managing preventive care—reaching out to patients to assure they get recommended tests and follow-up interventions.
• Collaborating with hospitals to dramatically reduce readmissions and hospital-acquired infections.
• Engaging in shared decision-making discussions regarding treatment goals and approaches.
• Redesigning medical office processes to capture savings from administrative simplification.
• Developing approaches to engage and monitor patients outside of the office (e.g., electronically, home visits, other team members).
• Incorporating patient-centered outcomes research to tailor care appropriate for specific patient populations.

What’s interesting is that the White House is encouraging doctors to practice in larger groups or as hospital employees. Currently, most doctors operate in small practices like Dr. Welby on television many years ago. Medscape Medical News reports that “Some leaders of organized medicine, however, are objecting to the government message. “We’re not ready to write off the small practices,” J. Fred Ralston Jr, MD, president of the American College of Physicians, told Medscape Medical News. “We think there needs to be more than one delivery model.”

The HHS Office of Consumer Information and Insurance Oversight has created a website for the Early Retiree Reinsurance Program.  This Affordable Care Act program provides group health plans with reinsurance for claims incurred by retirees aged 55 and older who are not eligible for Medicare. The stop loss threshold is $15,000 and the cap is $90,000, but the appropriated funding is limited. OCIIO also announced the 2,000 successful applicants for participation in the EERP.  The list contains many state and local government plans, but no FEHB plans because HHS barred FEHB plans from EERP participation in its interim final regulation. The FEHBlog tries not to be bitter.

The Kaiser Family Foundation released its Employer Health Benefits 2010 Annual Survey today. According to the Foundation’s press release,

Workers on average are paying nearly $4,000 this year toward the cost of family health coverage – an increase of 14 percent, or $482, above what they paid last year, according to the benchmark 2010 Employer Health Benefits Survey released today by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET).

The jump occurred even though the total premiums for family coverage, including what employers themselves contribute, rose a modest 3 percent to $13,770 on average in 2010, the survey found.  In contrast, the amount employers contribute for family coverage did not increase.

Preferred Provider Organizations (PPOs) continue to dominate the employer market, enrolling 58 percent of covered workers.  Average PPO family premiums topped $14,000 annually in 2010.

TRICARE announced the launch of a Retired Reserve program for retired Armed Forces Reservists and National Guardsmen under age 60.

Retired Reservists may qualify to purchase TRR coverage if they are under the age of 60 and are not eligible for, or enrolled in, the Federal Employees Health Benefits (FEHB) program. They must also be members of the Retired Reserve of a Reserve component and qualified for non-regular retirement. For instructions on how to qualify for and purchase TRR go to

About ten years ago, TRICARE created a TRICARE for Life program that attracted thousands of FEHB Program enrollees, harming the FEHBP risk pool and increasing TRICARE costs. It’s nice to see that TRICARE learned from that experience by excluding FEHBP enrollees from this new program.

The U.S. Office of Personnel Management released guidance to plan carriers today on how the Affordable Care Act changes dependent child coverage rules in the FEHB Progam generally “effective January 1, 2010.” Currently, at a high level, the FEHB Act provides for coverage of unmarried dependent children up to age 22 if the employee or annuitant enrolls for self and family coverage. Here is a summary of the major Affordable Care Act changes outlined in the carrier letter:

• Children between the ages of 22 and 26 are eligible for coverage under their parent’s Self and Family enrollment up to age 26.
• Married children (but NOT their spouse or their own children) are eligible for coverage up to age 26. This is true even if the child is currently under age 22.
• Children who are eligible for or have their own employer-provided health insurance are eligible for coverage up to age 26.
• Stepchildren do not need to live with the enrollee in a parent–child relationship to be eligible for coverage up to age 26.
• Children who are incapable of self-support because of a mental or physical disability that began before age 26 are eligible to continue coverage.
• Beginning January 1, 2011, to add a foster child to a Self and Family enrollment, the foster child must be placed with the enrollee by an authorized placement agency or by judgment, decree or other order of any court of competent jurisdiction.  [OPM] will provide information on the coverage of current foster children in a future carrier letter.

Last Friday was the comment deadline for the June 28 Affordable Care Act implementing interim final rule governing annual and lifetime limits, pre-existing conditions, rescissions and patient protections. The federal government maintains a website where the public can access such comments. The website appears to be a little overloaded because there are only a few comments posted on the age 26 dependent coverage regulation but 400 posted on the grandfathered plan rule — the vast majority of which appear to be in support of the American Chiropractic Association’s comments. But of course we all know that democracy is messy.

Here are interesting comments on the age 26 dependent coverage rule submitted by the Blue Cross Blue Shield Association, Wellpoint, Aetna, the U.S. Chamber of Commerce, and the National Business Group on Health. Hewitt Associates, the benefit consulting firm, have posted on their own web site the comments which that firm submitted on the June 28 regulations.

Business Insurance reported on a United Benefit Advisors health plan survey finding that enrollment in health maintenance organizations has been growing faster than enrollment in consumer driven plans. “Preferred provider organization plans have nearly two-thirds of all enrolled employees, growing to 65.7% this year from 63.9% last year.” FEHB Program enrollment similarly is concentrated in PPO plans.

The regulatory agencies implementing the Affordable Care Act have released promised guidance on the federal external appeal process applicable to non-grandfathered group health plans, typically ERISA governed health plans, effective for plan years beginning on or after September 23, 2010.  For the past 25 years, the FEHB Program has had a successful external appeal process — prescribed by the FEHB Act, 5 USC Section 8902(j) — that culminates in OPM review. The Affordable Care Act gives the Secretary of Health and Human Services the authority to deem existing external review processes compliant with the Act, but this guidance does not even mention the FEHB Program or the status of its external appeal process. That is disappointing to the FEHBlog. Here’s a link to a Business Insurance article on the guidance.

Business Insurance reports today on an Aon Consulting survey of employers with 500 employees or more indicating that “Just over one-third of respondents said their group health care costs rose at least 5% but less than 10% this year, while 18% said costs climbed at least 10% but less than 15%. Twenty-four percent, though, said cost increases were less than 5%, while 5% said cost increases were at least 15% but less than 20%.”  AHIP offers a useful website that brings together various resources explaining why health care costs are increasing (hint — the population is aging and health care providers are raising prices).

A New York Times report earlier this week anticipates that the Health and Human Services Department pulled back the final rule governing notices of breach of unsecured protected health information because the Department plans to remove the common sense harm threshold. The current interim regulation required health care providers, health plans, and their business associates to provide affected individuals of a breach of unsecured protected health information if the breach creates a likelihood of financial or reputational harm to the individual. This threshold is found in the 2007 Office of Management and Budget guidance to federal government agencies on how to handle data breaches. OMB explained then that a harm threshold avoids unnecessarily alarming people. That makes sense to the FEHBlog, but not to the privacy zealots.

The Centers for Medicare and Medicaid Services (CMS) announced last Wednesday that “Based on the bids submitted by [Medicare] Part D [prescription drug] plans for the 2011 plan year, CMS estimates that the average monthly premium that beneficiaries will pay for standard Part D coverage will be $30 — a $1 increase from the current year (2010) average premium of $29.” OPM should announce 2011 FEHB plan premiums in the middle of next month.

Earlier this month, the Congressional Research Service issued a report on the history of the Sustainable Growth Rate (SGR) formula that Congress adopted in the 1990s to annual adjust the Medicare Part B reimbursement formula for physicians. Since 2002, the formula has produced a negative update which Congress has overridden except in the first year, 2002.  The AMA News notes that according to the Medicare trustee’s August 5, 2010, upbeat report on the Medicare program’s solvency

Projected annual spending growth for Part B is estimated to average only 5.3% during the next five years, about the same as the GDP growth rate, the report said. But this assumes deep physician pay cuts will take effect. Unless Congress steps in, physician rates are scheduled to decline 23% on Dec. 1, an additional 6.5% in January 2011 and 2.9% in 2012.

It’s unclear whether Congress will have the opportunity to reevaluate the SGR formula when it returns from recess next month for a short work session before the No fullyvember elections. Congress may kick the SGR can down the road again.

The National Association of Insurance Commissioners at its summer meeting held in Seattle approved the “blanks” that insurers will use to report financial information that state regulators will use to decide whether the insurer is complying with the Affordable Care Act’s new minimum loss ratio requirement.  This is just one of the pieces of this particular Affordable Care Act puzzle. AHIP expressed concerns about the substance of the blanks, but not the process. This provision’s impact on the FEHBP remains foggy.

The National Business Group on Health (“NBGH”) released a report on the results of a survey of 72 large employers which projected their 2011 health care plan costs. Business Insurance reports that the survey finds that employers expect that their costs will increase 8.9% next year compared to 7% this year. The large employers are opting to waive grandfathered plan status under the Affordable Care Act in order to have more flexibility in making benefit changes. According to the Business Insurance report

The NBGH survey of 72 member employers found that 70% will have to amend their plans to eliminate lifetime limits, 26% will have to remove annual dollar limits and 13% will have to remove pre-existing condition exclusions for children under age 19 to comply with the law.
NBGH President Helen Darling estimates that one percentage point of that 8.9% increase projected for 2011 is due to changes required by the law. Cost increases also are being fueled by unabated rate hikes by medical providers, Ms. Darling said.