The Federal Employees Health Benefits Program became effective 50 years ago today as a result of Congress enacting the FEHB Act of 1959.  About ten years ago, Abby Block, who was then OPM’s Assistant Director for Insurance Programs, prepared an excellent presentation called FEHB Past Present Future which looks back at the early years of the FEHB Program. It’s hard for me to believe that I started working on FEHB Program matters back in 1983. Hopefully the FEHBlog will help you keep up to date.

Congratulations go out to FEHB Plan carrier GEHA (Government Employees Health Association) because the Department of Health and Human Services awarded GEHA which was awarded the third party administrator contract “for the 22 states that have requested that the federal government run their Pre-Existing Condition Insurance Plan.”  An HHS website explains that

Section 1101 of the {Affordable Care Act] establishes a “temporary high risk health insurance pool program” to provide health insurance coverage to currently uninsured individuals with pre-existing conditions.  This program will be known as the “Pre-Existing Condition Insurance Plan.”

The new Pre-Existing Condition Insurance Plan (PCIP) is a transitional program to make health coverage available to those who have a pre-existing condition and who have gone without coverage for at least six months.

The Government starts taking enrollment applications on July 1 and coverage will become available on
August 1.

Another Affordable Care Act Program — the Early Retiree Reinsurance Program — will begin to accept claims tomorrow. The Government’s website explains that

• Employers with self-funded and insured plans can apply, including private companies, state and local governments, nonprofits, religious organizations, unions operating employee benefit plans, and other employers.
• Applications are now available online at www.hhs.gov/ociio along with extensive application assistance materials and information on where to send the applications. Applicants are being accepted as of June 29.
• To participate in the program, employers must have their applications approved, be able to document claims, and implement programs and procedures that have or have the potential to generate cost savings for participants with chronic and high-cost conditions.

FEHB plans, however, are not eligible to participate in this Program. Business Insurance reports that “the Employee Benefit Research Institute projected that the $5 billion would run out sometime next year, long before the program expires at the end of 2013.”

OPM reports that its Retirement Operations Center in Boyers PA is celebrating its 50th anniversary.   This jogged my memory that our beloved Federal Employees Health Benefits Programs became effective on July 1. 1960. More to follow on Thursday.

While the doctors received a Congressional reprieve last week, Business Insurance points out that “Senate Democratic leaders on Thursday failed once again to win enough support to stop debate and bring to a floor vote a tax extenders bill, delivering another blow to backers on extending federal COBRA[/TCC] premium subsidies.” As a result, federal and postal employees who have been involuntarily terminated from employment since May 31 are not eligible for the 65% government subsidy of the temporary continuation of coverage (TCC) premium under the FEHBP.

On June 21, 2010, U.S. District Judge Kollar-Kotelly granted summary judgment to the Goverment in the Coalition for Parity case challenging the Government’s decision to issue an interim final rule implementing the Wellstone-Domenici mental health parity act of 2008 rather than issue a proposed rule. A copy of the Judge’s memorandum opinion is available here.  Over 5000 public comments were submitted on the interim final order which was published in the February 2, 2010, Federal Register.  Many comments suggested that the regulator’s delay the compliance date for one year from plan years beginning on or after July 1, 2010, to plan years beginning on or after July 1, 201.. As far as I can tell from reginfo.gov, the final version of the rule has not yet been submitted to the Office of Management and Budget (OMB) for its review.

Health Leaders Media quoted a fellow member of the bar who is predicting that Department of Health and Human Services (HHS) will release a set of important HIPAA regulations on July 8. The proposed rules which concern among other things the HITECH Act’s business associate provisions, currently are pending OMB approval according to reginfo.gov.

Speaking of regulations, the HHS, Labor Department, and the IRS interim final rule implementing several significant “immediate reforms” of the Affordable Care Act, which the FEHBlog mentioned on Wednesday, will be officially published in the Federal Register tomorrow. Here’s a link to that official regulation which already is available.

Modern Healthcare reports on a further Federal Trade Commission extension of the compliance date for its Red Flag rule which is intended to combat identity theft.  “On June 25, it was announced that the FTC had reached a joint legal stipulation with three medical societies that had filed a lawsuit against the agency stating that it would not pursue enforcement of the rule until after the U.S. Court of Appeals in Washington reviews a trial court decision in which the American Bar Association successfully blocked implementation of the rule for legal offices.” The earliest compliance date is January 1, 2011.

Kaiser Health News featured an interesting article on how health care reform may prompt consolidation of health insurers and medical offices (currently doctors tend to practice in solo or small practices.)

Modern Healthcare reports that the House passed the Senate doc fix bill this afternoon by a 415-1 vote.
The bill creates a 2.2% increase in Medicare Part B reimbursements to doctors from June 1, 2010,
through November 30, 2010.

Congress has not yet resolved the Medicare cut issue. House Speaker Nancy Pelosi demanded that the Senate act on the tax extenders bill as a precondition to resolution of the Medicare cut issue. The Washington Post reports that the Senate has not been making much visible progress. Meanwhile Medicare continues to process Part B physician claims with the statutorily mandated 21.2% reduction. ABC News estimated that 50 million Medicare claims have been affected.

The White House released another major healthcare reform regulation on Tuesday.  That interim final regulation concerns elimination of pre-existing condition limitations, elimination of aggregate lifetime and annual dollar limits, anti-rescission, and certain patient protections applicable to plans which are not grandfathered under the regulation released last Thursday.

The New York Times reported this week on insurer efforts to implement the patient centered medical home concept.

CQ Politics reports that “House Democratic leaders said Monday that they will not take up a Senate-passed six-month patch to Medicare provider payments unless the Senate moves to pass certain jobs measures.”

On Friday afternoon, the Senate approved by unanimous consent a 2.2% increase in Medicare Part B reimbursements to doctors for the period June 1 through November 30, 2010, at which point the sustainable rate of growth (SGR) formula will kick in again absent a longer fix. The Senate bill has to be approved by the House which will return to session on Tuesday evening June 22.  Modern Healthcare reports that CMS nevertheless directed its Part B claims administrators to begin processing the claims with the 21.2% SGR cut that took effect on June 1. If the House approves the Senate action, these claims will have to be reprocessed.

Speaking of bending the health care curve up, Fair Health Inc. which at the direction of the NY State Attorney General will replace http://www.blogger.com/post-create.g?blogID=26107310Ingenix as the PHCS and MDR usual reasonable and customary database administrator announced last week that it will be releasing its first set of benchmarking products early next year. The UCR databases are used to price out of network claims. According to its announcement, “FAIR Health’s product modules in 2011 will mirror Ingenix’s existing product modules and our release schedule for each module should be identical to the schedule to which Ingenix has been adhering. With customer input and advance notification, we plan to introduce in late 2011 additional and revised product offerings for distribution in 2012.”  It’s worth providing a link to the America’s Health Insurance Plan’s (AHIP) 2009 survey on the role of out of network charges in bending the cost curve up.

The American Medical Association, which pressed hard for this UCR change, released last week its third annual national health insurer report card. Not surprisingly given the AMA’s unfriendly attitude toward insurers, the report card finds the health insurers make a processing error in one out of five claims, which strikes me as way too high.  I therefore appreciated the retort from America’s Health Insurance Plans:

Health plans and providers share the responsibility of making the innovations and investments needed to improve efficiency in our health care system. A recent AHIP survey found that nearly one-fifth of all provider claims are not submitted to health plans electronically, and more than 1 in 5 claims are submitted by providers at least 30 days after the delivery of care.
“Health plans are investing in cutting-edge technologies to make it easier for providers to submit claims electronically and receive payment quickly. For example, health plans are working with providers in New Jersey and Ohio to implement portals that would simplify administrative processes and enable doctors in these states to spend more time with their patients.
“Government data show that soaring medical costs – not health plan administrative costs – are the key drivers of rising health care costs. In fact, the percentage of premiums going toward health plans’ administrative costs has declined for six straight years.”

Reuters reports that CVS Caremark and Walgreen Pharmacies have settled their eleven day long feud. The parties have entered into a new “multi-year” PBM pharmacy agreement that will allow Caremark members to fill prescriptions at Walgreen Pharmacies.  Reuters notes that “Walgreen operates about 7,500 stores out of the 64,000 pharmacies served by Caremark’s network.”

Politico reports that the Senate tonight failed to break a filibuster over the Tax Extenders bill which now includes a 2.2% increase in Medicare Part B reimbursements to doctors through November and does not include an extension of the COBRA/TCC subsidy program which expired on May 31, 2010.  This means that CMS contractors will begin to process Medicare Part B physician claims incurred in June with the statutorily prescribed 21.3% cut.  With respect to the COBRA/TCC subsidy program, Business Insurance reports that

An amendment to the tax bill proposed by Sen. Robert Casey, D-Pa., would extend the subsidy to employees laid off through Nov. 30. But the Senate has not yet taken up the Casey amendment, which faces an uphill battle to win approval as Senate Democratic leaders look for ways to reduce the cost of the overall bill.

There’s a good chance that the COBRA/TCC subsidy program is over.

I learned from a Wall Street Journal article that the feud between CVS Caremark and Walgreen’s Pharmacies continues.

The two pharmacy giants have been publicly quarreling for more than a week, following Walgreen’s announcement last Monday it was pulling its 7,500 stores from CVS Caremark’s network of 64,000 pharmacies beginning next year. But two days later CVS Caremark said it planned to drop Walgreen by July 9.

If no compromise between the two is struck before then, most CVS Caremark patients would be blocked from filling their prescriptions at Walgreen’s and its recently acquired Duane Reade stores. Medicare plans would be affected starting in January.

Don’t overlook this Bloomberg Businessweek article which reports on a RAND study which found that “Cuts in Medicare payments to doctors who administer outpatient chemotherapy drugs actually led to an increase in treatment rates among Medicare recipients.”

Thomson Reuters Healthcare published a paper making recommendations on how to control waste in the U.S. health care system. The paper discusses “five proven, market-tested strategies — engaging consumers, coordinating care, managing disease and maintaining wellness, designing for patient safety and quality, and reducing opportunities for fraud.”

PriceWaterhouseCoopers published its Medical Trends Report for 2011 . Acccording to the AP, the report predicts the medical costs will rise 9% next year and that most employees will encounter calendar year deductibles of $400 or more. “Two years ago, only 25 percent of companies participating in the annual survey said they asked employees to pay deductibles of $400 or more. That grew to 43 percent in 2010 and is expected to pass 50 percent next year.”

The AHIP HiWire  published an interesting article on the development of value based insurance design, an initiative which OPM has supported in its recent benefit and rate proposal call letters to FEHB plan carriers.

“There is substantial underutilization of high-value health services,” including wellness, screening, diagnostic testing, various therapies, and monitoring, said A. Mark Fendrick, MD, codirector, Center for Value-Based Insurance Design, at the University of Michigan.

“The current approach to cost sharing is predominately based on the cost – not value – of medical services,” he said. For example, generic drugs require the lowest co-pay and non-preferred brands the highest. Yet, this “one size fits all” cost shifting does not recognize that some non-preferred brands may have high value in controlling a chronic illness

There is no logic for requiring the same co-pay for a toenail fungus drug as for a drug that controls asthma, he said.

Research has shown that high co-pays reduce adherence to appropriate medication use. Up to 60 percent of chronically ill patients have poor adherence to evidence-based treatment, with costs from poor adherence estimated to exceed $100 billion annually, Fendrick said.