The Government Accountability Office yesterday released a report on health reimbursement arrangements, a type of consumer driven plan that has been offered in the FEHB Program since 2003. The report indicates that

[B]ased on data from the Office of Personnel Management (OPM)—the agency that administers the Federal Employees Health Benefits Program (FEHBP)—about 57,000 of the nearly 8 million enrollees in the FEHBP were enrolled in CDHPs in 2009. About 42,000 of these FEHBP enrollees were in HRAs and about 15,000 were in HSA-eligible plans.

Those enrollees are concentrated in the APWU, Aetna, GEHA, and MHBP consumer driven options. HRA plans typically feature a higher annual deductible, a personal spending account (or health reimbursement account) and generous preventive care, the idea being to give enrollees some skin in the game. According to the report, “Spending and utilization for enrollees in HRAs generally increased by a smaller amount or decreased compared with those in traditional plans that GAO reviewed.” The GAO also suggested that these options attract better risks than traditional plans.

Congress is now out of session until mid-September. (The Senate returned briefly last week to pass a border security measure.)

The public comment deadline passed last week on the interim final rule implementing the Affordable Care Act’s mandate to cover children up to age 26. Very few of the comments currently are posted on the regulations.gov website. The next Affordable Care Act implementing rule comment deadlines are for the grandfather plan rule (August 16) and the patient protection rules (August 27).

The National Association of Insurance Commissioners is holding its summer meeting this coming week in Seattle. Business Insurance reports today that President Obama changed his schedule and will not be speaking about Affordable Care Act implementation at that meeting.

The NAIC will be discussing Affordable Care implementation at the meeting, in particular, its  recommendations to HHS on the minimum medical loss ratio (“MLR”) now under development. Congressional leaders sent HHS Secretary Sibelius their post-enactment views on the taxes which may be excluded from the calculation.  The Congress leaders want the ratio’s denominator to include federal and state taxes that health insurers currently pay. Modern Healthcare.com reports that the NAIC group looking at the issue reached the opposite conclusion (which in my view is consistent with the express language of the law, new Public Health Service Act Section 2718). 

The House of Representatives returned from vacation today for the purpose of passing a bill that will continue increased federal spending on State Medicaid programs. Modern Healthcare reports that the House took the anticipated action and the President signed the bill into law. The House is in adjournment until September 14.

The Office of Personnel Management released the results of its annual employee survey. This survey looks at job satisfaction, not employee benefits.

The Wall Street Journal is reporting that health insurers, including Aetna, Humana, and United Healthcare, are jumping into the “feeding frenzy” to provide healthcare providers with meaningful electronic healthcare record technology.  “It is an opportunity for insurers to diversify their operations as the federal health overhaul presents new challenges to their core business of collecting premiums and paying claims. In some cases, it is also an opportunity to link doctors more closely to systems to aid in reimbursement or disease management.”

Business Insurance reports on the results of a Hewitt Associates study that

Fifty-one percent of employers with self-funded plans expect their plans to lose grandfathered status in 2011, and 21% expect that to happen in 2012. Forty-six percent of employers with fully insured plans expect to lose grandfathered status in 2011, and 18% expect that in 2012. 

Interestingly the Hewitt press release notes that employers are opting to give up grandfathering in order to have more control over benefit design. That’s not what I expected when the law passed but it’s understandable given the strict regulatory interpretation of grandfathered plan status. The FEHB Program will likely reflect this pattern.

The Senate recessed this week after confirming Elena Kagan as a Supreme Court justice and passing a bill that will provide increased Medicaid funding, among other things. The American Hospital Association is very pleased by this Medicaid development.  House Speaker Nancy Pelosi is calling back the House in order to send this bill to the President for signature, according to the Washington Post.

The Wall Street Journal reports that momentum is building on both sides of the aisle in Congress to repeal or water down the Affordable Health Care Act provision that will vastly expand the IRS 1099-MISC reporting obligation on businesses. The current 1099 reporting requirement generally is limited to reporting purchases of services from individuals and partnerships over $600 in a tax year. Expanded reporting is required for health plan payments to health care providers and business payments to lawyers. The Politico reports on the dueling bills that will taken up shortly after the Senate returns on September 13.

Last year, First Databank implemented a class action settlement under which it agreed to stop publishing the Average Wholesale Prices (AWP) of prescription drugs in September 2011.  AWP is the pricing benchmark that prescription benefit managers often use in their contracts with retail pharmacies and health plans. Since then stakeholders have been evaluating other benchmarks to replace AWP.  AIS Drug Business News reports that

The search to find a replacement for controversial average wholesale price (AWP) data just became a little less urgent, as one of the major drug compendia has decided it will continue publishing the pricing benchmark because of a lack of consensus on possible alternatives.

Wolters Kluwer Health, Inc., publisher of the Medi-Span drug pricing database, has pledged to continue publishing AWP “until relevant industry or governmental organizations develop a viable, generally accepted alternative.” The company says that discontinuing AWP before an industrywide accepted alternative is found “could create significant customer problems and confusion or disruption” throughout the entire industry.

Affordable Care Act implementation grinds on. On August 5, the National Association of Insurance Commissioners (“NAIC”) offered an update on its efforts to make recommendation to the HHS Secretary on implementing the minimum medical loss ratio requirements of the new law. The MLR require the health insurers and HMOs make rebates if the percentage of premium dollars spent on benefits and quality efforts fall below 80% in the individual market and 85% in the group market, which includes the FEHB Program.

Here’s a link to the NAIC’s Affordable Care Act implementation page. (Even the IRS has an Affordable Care Act implementation page.)  Posted on that page is a lengthy, draft memorandum on the work of an NAIC actuarial workgroup that is trying to decipher the MLR provision. The NAIC plans to offers its recommendations to HHS later this month.

I was out of town over the weekend so I am doing the weekend update this evening.  Hey, it’s the summertime.

The House of Representatives has begun its August recess while the Senate remains in session. It takes up Elena Kagan’s Supreme Court nomination tomorrow.

Last week, the Centers for Medicare and Medicaid Services announced a new prospective payment system for end stage renal disease facilities. Medicare provides coverage to people with end stage renal (kidney) disease without regard to the patient’s age. In the early 1970’s Congress decided to test expansion of Medicare coverage to catastrophic illnesses. End stage renal disease was the first and last test case because the expansion caused costs to explode as discussed in this American Society of Nephrologists journal article from 2009.  When Medicare squeezes on doctors and health care facilities, the providers shift costs to the private sector, including the FEHB Program.

Following up on last week’s Wall Street Journal article about shrinking health care expenses discussed in Thursday’s FEHBlog, Kaiser Health News reports on the growing practice of consumers to ask providers for discounts.

Healthcare IT News predicts that HHS’s withdrawal of its final rule on the HITECH Act’s nationwide requirement to provide notice of breach of unsecured protected health information (also discussed in last  Thursday’s FEHBlog) may mean the end of the current interim rule’s sensible harm standard. The harm standard means that a plan or provider does not have to alarm a person with a breach notice unless there’s a risk of financial or reputational harm to that person.

Today, a federal judge denied the federal government’s motion to dismiss the Commonwealth of Virginia’s challenge to the Affordable Care Act’s individual coverage mandate according to Business Insurance. A copy of the opinion is available here.

The U.S. Office of Personnel Management announced yesterday that this year’s Federal Benefits Open Season, which runs from Monday, November 8, 2010 through Monday, December 13, 2010. The Open Season allows federal and postal employees and annuitants to select a different FEHB or FEDVIP plan or change a FedFlex option for 2011.  Beginning in 2011, the Open Season will be the month of November.

Last year, the Department of Health and Human Services issued an interim final rule implementing the HITECH Act’s nationwide notice of unsecured protected health information breach rule. HHS solicited comments on the interim final rule and on May 14, 2010, HHS submitted a “final” final rule for Office of Management and Budget review, the final step before publication in the Federal Register. Today, HHS announced today that it had withdraw that final final rule from OMB consideration.”for further consideration, given the Department’s experience to date in administering the regulations.” The FEHBlog finds this development unsettling.

The Wall Street Journal reported today that Americans are consuming less health care services. This was an objective of consumer driven health care which came into vogue about eight yeears ago when the IRS approved healthcare reimbursement arrangements. Consumer driven health care gives people a financial incentive to control their health care spending and the know how to do it through the internet and other tools. The FEHBlog finds this development encouraging.

Rite Aid Pharmacies agreed to pay $1 million to settle HHS and Federal Trade Commission complaints that the company had committed HIPAA Privacy Rule violations by dumping in the trash prescriptions and pill bottles bearing protected heath information on their labels according to this government press release.

The AMA News reports that the Health Net, a health plan now owned by United Healthcare, agreed to pay $250,000 to settle Connecticut attorney general charges that it had violated the HIPAA Privacy Rule as a result of the disappearance of a portable disk drive with protected health information.

Take aways — The federal and state governments are serious about their HIPAA enforcement efforts and the 2009 HITECH Act greatly strengthened their authority. HIPAA covered entities and business associates should be careful to encrypt portable electronic storage devices.

Yesterday, HHS clarified its guidance on submission of health plan claims to the Early Retiree Reinsurance Program established by the Affordable Care Act. HHS is not allowing the FEHB Program, which covers loads of early retirees, to participate in this Program.

Belaboring the obvious (my job as a lawyer), the Generic Pharmaceutical Association (GPhA) released a report on the tremendous savings created by small molecule generic drugs. It will be interesting to see five or ten years from now whether similar claims will be made about large molecule generic drugs or bio-generics. The Affordable Care Act authorized the Food and Drug Administration to create a regulatory pathway for approval of bio-generics. It’s interesting to note that the GPhA found the ACA’s provision inadequate. Time will tell.

Last Thursday and Friday, the National Association of Insurance Commissioners committee working on Affordable Care Act implementation issues met in Washington, DC.  National Underwriter reports that the battle of the minimum medical loss ratio (“MLR”) definitions was a hot topic at the meetings.  Under the Affordable Care Act, health insurers, including those sponsoring or underwriting FEHB plans, must spend at least 85% of premiums on medical expenses and health care quality efforts.  FEHB plans generally meet this requirement. The tricky part will be how the regulators will treat plan efforts to build or re-build reserves. This requirement takes effect with the 2011 plan year.

According to National Underwriter, “America’s Health Insurance Plans (AHIP) put out a paper listing its goals for the MLR effort. AHIP says the rules adopted should:

Ensure that existing efforts to improve quality are allowed to continue and new initiatives to support the goals of PPACA are not discouraged.

Recognize that quality improvement efforts will be advanced by ICD-10 implementation.

Include fraud prevention and detection activities in the definition of activities that improve health care quality. 

Implement a plan for transitioning from the existing state system to the new federal standards to maximize consumer choice.” 

California Healthline reports that the NAIC may complete its work next month. The NAIC will be making recommendations to the Health and Human Services Department.

Congress is now hurtling toward its August recess. The Senate Homeland Security and Governmental Affairs Committee will be holding a business meeting on Thursday. No FEHBP issues are on the agenda.

The Affordable Care Act regulators issued another rule today.  This time it was the rule implementing the Act’s requirements for internal and external disputed claim procedures.  This rule is applicable to non-grandfathered group health plans, including FEHB plans, beginning with the first plan year following September 23, 2010. Business Insurance highlights the differences between this rule and the Labor Department rules currently applicable to ERISA governed plans which Congress deemed to be the gold standard in the new law: