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.

The Health and Human Services Department, the Labor Department, and the Internal Revenue Service did make the grandfathered plan regulation public yesterday. Here are links to the regulation, the Departments’ fact sheet, and the Departments’ questions and answers. Essentially grandfathering permits the plan sponsor, OPM in the case of the FEHB Program, to retain more control over its plan/program. The regulation was issued as an interim final rule. The Departments will be accepting public comments for sixty days from the date the regulation is published in the Federal Register.

Footnote 7 of the regulation’s preamble explains that

Independent of these rules regarding the impact on grandfather status of newly adopted or reduced annual limits, group health plans and group or individual health insurance coverage (other than individual health insurance policies that are grandfathered health plans) are required to comply with PHS Act section 2711, which permits restricted annual limits (as defined in regulations) until 2014. The Departments expect to publish regulations regarding restricted annual limits in the very near future.

This is the last piece of the 2011 puzzle.

Yesterday, CMS extended the hold on Medicare Part B claims processing through this Thursday in the hope the Senate will act on the doctor fix this week according to Kaiser Health News.

The FEHBlog recently explained that there are a lot of time consuming operational / computer programming issues associated with PPACA’s expansion of dependent children coverage.  AIS Health Plan Week adds support for the FEHBlog’s position.

Welcome to FEHBlog post number 1,000 counting from the time when I started this blog in April 2006.

The Senate returns to work on HR 4213 tomorrow. Yesterday President Obama and the minority leadership in Congress sparred over the Medicare “doc fix” according to Politico. From a practical standpoint, the ten business day hold that the Centers for Medicare and Medicaid Services placed on the processing of Medicare Part B claims incurred this month ends tomorrow. That means that unless CMS extends the hold (because work on HR 4213 will not be completed tomorrow), Medicare claims administrators on Tuesday June 15 will start processing Part B claims with the statutorily scheduled 21.3% cut in physician reimbursements. Medscape Medical News describes the impact on doctors. This dispute affects the FEHB Program because of the large number of annuitants over 65 who are FEHB Plan members. If the annuitant is enrolled in Medicare Part B, FEHB plan reimburements as secondary carrier will increase. If the annuitant is not enrolled in Medicare, FEHB plan reimbursemetns as primary carrier will increase because non-HMO FEHB plans are entitled by law to Medicare reimbursement rates on annuitants over 65 without Medicare Part B (5 U.S.C. Section 8904(b).

On Friday June 11, the Office of Management and Budget approved HHS’s interim final grandfathered plan regulation for publication in the Federal Register.  The Associated Press, among others, reports, that “an early version” of the regulation has been floating around lobbying firms unofficially. According to the AP,

The main issue in the 83-page regulation is how to deal with what the government calls “grandfathered” health plans.

Those are plans that predated the health care law and are exempt from many, but not all, of its consumer protections. Lawmakers created the special category to deliver on Obama’s promise that people can keep the coverage they have if they like it.

But health plans change frequently. Premiums and copayments keep rising. Coverage is expanded for some services and restricted for others. Lawmakers asked regulators to spell out how much an employer can change a plan and still claim it to be grandfathered, exempting it from closer federal regulation.
[James] Gelfand, the Chamber of Commerce expert, said the draft rules are too inflexible. Generally plans can lose their protected status by increasing copayments and deductibles above certain limits, and Gelfand said they’re too narrow.

But Maria Ghazal, health policy director for the Business Roundtable, said she saw signs that the administration is trying to be responsive to employers. For example, plans that only cover retirees would be exempt from the new regulatory requirements — an important clarification. “We think there is some recognition of the challenges ahead for employers,” she said.

We shall see.

Finally, the New York Times started a series of the ten anniversary of the successful mapping of the human genome.

The Senate continues to consider HR 4213, the Tax Extenders bill.  Yesterday, the Senate acting on a point of order defeated an amendment proposed by Sen. Ben Cardin (D Md) that could have accelerated the FEHB dependent child age increase into this year. As it stands, the dependent eligibility rules for the FEHB Program will change on January 1, 2011, at which point adult children up to age 26 will continue coverage under self and family enrollment regardless of marital status. This big change in the Program’s long standing eligibility rule  requires significant operations planning and computer program changes. The January 1, 2011 implementation date allows for that planning to occur.

OPM issued in today’s Federal Register its annual rule identifying the medically underserved states for 2011. The only change for next year is the addition of Oklahoma to the list. OPM explains that the FEHB Act, 5 USC Section 8902(m)(2), requires non-HMO FEHB plans to reimburse beneficiaries, subject to their contract terms, for covered services obtained from any licensed provider in these States.” The list of medically underserved states for this year includes Alabama, Arizona, Idaho, Illinois, Kentucky, Louisiana,
Mississippi, Missouri, Montana, New Mexico, North Dakota, South Carolina, South Dakota, and Wyoming.

Business Insurance reports that the interim final rule interpreting the Affordable Care Act’s ambiguous grandfathered plan provision will be made public soon.

Businessweek reports that the Caremark and Walgreens pharmacy chains, which also own prescription benefit managers, may be seeking a negotiated settlement of their dispute discussed in yesterday’s FEHBlog entry.

Finally, Modern Healthcare reports that President Bill Clinton told an AHIP conference today that “Americans tend to blame insurers for problems that may be caused by providers,” to applause from the audience.

The Senate continues to consider the tax extenders bill (HR 4213).  I was under the impression that the version of this bill that the House of Representative passed on  May 28 extended the COBRA/TCC subsidy program from May 31, 2010, through the end of November, 2010. I was wrong.  The House bill did not extend that program which expired at the end of last month due to its $8 billion price tag. As a result employees who are involuntarily terminated from employment after May 31 generally are ineligible for the 65% government subsidy toward the COBRA/TCC premium. The Senate leadership version of the tax extenders bill followed the House lead on this issue. Business Insurance reports that Sen. Robert Casey (D Pa) has proposed an amendment to the bill which would create the extension to November 30. We’ll see.

Walgreen’s Pharmacy and CVS Caremark are at war, and consumers may be caught in the middle. On Monday, Walgreen’s announced that it would no longer fill prescriptions for participants in plans that initiate or renew a contract with the CVS Caremark PBM. Today, CVS Caremark announced that its CVS pharmacies will be terminating their participation in Walgreen’s retail pharmacy network for its PBM operation effective July 9 (or later if contractually or legally required). The Business Journal of Milwaukee notes that The two companies have a history of conflict: they fought over California-based Longs Drug Stores in 2008, with CVS emerging the eventual victor. Jeffrey Rein quit as CEO of Walgreen Co. after that company lost the battle for Longs.”

Looking forward, the Senate resumes its session tomorrow and the House on Tuesday following the a district work period that coincided with the Memorial Day holiday. The most pressing order of business for the Senate are the bills which the House passed just before the holiday that extend the COBRA/TCC subsidy program until the end of November and avoid a scheduled 21.3% cut in Medicare Part B payments to doctors. The Hill newspaper reports that the American Medical Association “is pressing seniors to call their senators and urge them to approve legislation preventing a 21.3 percent cut to Medicare payments. AMA on Thursday launched a multi-million dollar TV, radio and print ad campaign on the issue.” Medicare contractors are expected to implement the reduction next week if the Senate fails to act.

Speaking of Medicare, the Congressional Research Service published a report on the Affordable Care Act’s plethora of provisions affecting the Medicare program. Meanwhile, National Underwriter reports that “Congressional Democrats who voted for big cuts in Medicare Advantage spending now are asking regulators to keep the cuts from affecting MA rates and benefits.”  This reminds me of a family story. My Dad owned a small boiler cleaning business. He always owned old trucks. One day, he was driving through town one day and the transmission dropped out of his truck. A police officer drove up and told my Dad to move the truck. Dad replied “How?” Medicare Advantage plans must submit their 2011 benefit and rate proposals tomorrow. FEHB plan carriers submitted their 2011 proposals to the Office of Personnel Management on June 1.

Reginfo.gov alerts us that the Department of Health and Human Services has submitted for Office of Management and Budget final review it “Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan under the Patient Protection and Affordable Care Act.” This is a major rule making as the grandfathering provision of the Affordable Care Act (Sec. 1251) is chock full of ambiguities.

NorthJersey.com reports that a New Jersey pharmacist plead guilty to bilking the FEHB Program out of $28,000 using fake prescriptions.

The U.S. Office of Personnel Management today in accordance with a Presidential Memorandum extended various fringe benefits to same sex domestic partners of federal employees. OPM explains that

While the Presidential Memorandum directs agencies to provide benefits to federal employees’ same sex domestic partners to the extent permitted by law, there are a number of important employment benefits that cannot be extended without legislative changes such as those being proposed in the Domestic Partnership Benefits and Obligations Act, which is supported by the President. These include health insurance benefits under the Federal Employee Health Benefits Program, as well as retirement benefits.

Business Insurance reports that the Department of Health and Human Services has posted a draft application for benefits available to employers under the new Early Retiree Retiree Insurance Program. This program, however, is not open to FEHB plan carriers according to HHS’s implementing regulations. The final version of the application is scheduled to be posted by the end of this month.Business Insurance also reports that “Richard Popper, a former Maryland health insurance official, has been named to run [this very same] federal program created by the health insurance reform law that will provide claims reimbursement to employers that offer early retiree health insurance coverage.” It is anticipated that this program will run out of its $5 billion of funding very quickly so if you are an eligible employer don’t tarry with your claims submissions.Finally, HHS announced today that

HHS Secretary Kathleen Sebelius and Institute of Medicine President Harvey Fineberg [have] launched a national initiative to share a wealth of new community health data that will drive innovation and lead to the creation of new applications and tools to improve the health of Americans.To help citizens, clinicians and local leaders use data to improve health and value of health care, the Community Health Data Initiative (CHDI) is turning to Web application developers, mobile phone applications, social media, and other cutting-edge information technologies to “put our public health data to work.” * * *At the heart of the Initiative, increasing amounts of federally generated community health data will be made publicly available, in easily accessible and useful formats. Secretary Sebelius announced that by the end of 2010, a new HHS Health Indicators Warehouse will be deployed online, providing currently available and new HHS data on national, state, regional, and county health performance – on indicators such as rates of smoking, obesity, diabetes, access to healthy food, utilization of health care services, etc. – in an easy-to-use “one stop data shop.” The Warehouse will also include information on proven ways to improve performance on particular indicators. Users will be able to explore all of this data on the Warehouse Web site, download any and all of it for free, and integrate it easily into their own Web sites and applications.

The U.S. Office of Personnel Management (“OPM”) finalized a regulation today that permits same sex domestic partners to participate in the employee pay all Federal Long Term Care Insurance Program. The rule change takes effect on July 1, 2010. OPM’s instructions to payroll offices on this change is available here.

The Washington Post reported on the personnel who are filling the key slots in the new Health and Human Services Department’s Office of Consumer Information and Insurance Oversight. The Office is responsible for implementing many of PPACA’s immediate reforms, such as the high risk pool.  The new director Jay Angoff, according to the Post, “was most recently head of the insurance litigation department, which sues insurers on behalf of consumers, for the Washington-based law firm Mehri & Skalet.”

EBRI published a report on consumer driven health plans over the period 2006 – 2009. Here are a few of the key findings:

ASSET LEVELS GROWING: In 2009, there was $7.1 billion in consumer-driven health plans (CDHPs), which include health savings accounts (or HSAs) and health reimbursement arrangements (or HRAs), spread across 5 million accounts. This is up from 2006, when there were 1.2 million accounts with $835.4 million in assets, and 2008, when 4.2 million accounts held $5.7 billion in assets.
AVERAGE ACCOUNT BALANCE LEVELING OFF: Increases in average account balances appear to have leveled off. In 2006, account balances averaged $696. They increased to $1,320 in 2007, a 90 percent increase. Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively.
TYPICAL ENROLLEE: The typical CDHP enrollee was more likely than traditional plan enrollees to be young, unmarried, higher-income, educated, and exhibit healthy behavior. No differences were found between CDHPs enrollees and traditional plan enrollees with respect to gender, race, and presence of children.

Happy Memorial Day weekend everyone. I remember most my cousin Army Capt. Eric T. Paliwoda, 4th Infantry Division, West Point Class of 1997, who was killed in combat in Iraq on January 2, 2004.

Blogger Keith Hennessey lead me to this May 26, 2010, PowerPoint presentation by Congressional Budget Officer Director Douglas Elmendorf which begins with the following “Challenge”:

Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond. In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.

While, according to Reuters, Secretary of Health and Human Services Sebelius continues her close watch on health insurers who are trying to bend the cost curve down, Congress and the American Medical Association continue their effort to bend that curve up.

Modern Healthcare reports that on Friday, May 28, the House of Representatives passed this a bill replacing the 21.2% cut in Medicare Part B payments with a 2.2% increase for the remainder of this year and a further 1.0% increase next year. That bill now goes to the Senate, which has adjourned for the Memorial Day recess but returns June 7.  Because the current moratorium ends today, CMS has directed its contractors to hold Medicare Part B claims incurred in June for ten business days. It remains to be seen whether this gives Congress sufficient time to act.

Business Insurance reports that the House also approved on Friday a bill which extends the COBRA/TCC subsidy program from May 31, 2010, through November 30, 2010. That bill also awaits Senate action which is likely to be retroactive.

The FTC further delayed the Red Flags rule compliance date from June 1 to December 31, 2010, in order to allow Congress to consider legislation that would exempt physician, attorney and accounting offices with fewer than 20 employees from having to comply.  “The [Red Flags] Rule was developed under the Fair and Accurate Credit Transactions Act, in which Congress directed the FTC and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.” The FTC has been trying to implement this rule since November 1, 2008.

Finally, the Federal Times reported last week on an Obama administration initiative to “post online the full texts of federal contracts, task orders and delivery orders as a way to advance government transparency.” FEHB plans are created by government contracts between OPM and the plan’s carrier. At this time, the Obalma administration is seeking public input on this initiative according to a May 13, 2010, Federal Register notice.

Athena Health released its 2010 health insurer ratings today. Athena identified the following trends

• Payer performance improved across the board in 2009. Top performers included payers from across a variety of groups, signaling healthy competition.
• High performing Regional and Major national payers are neck and neck – are standard transactions equalizing the playing field?
• National Commercial payers (Aetna, Cigna, Humana, and United Healthcare) set the pace
• Medicare continues its role as the steward of electronic transaction compliance.

Also continuing this week’s focus on the “doc fix” bill pending in Congress, Modern Healthcare reports that “House leaders are eyeing a legislative package that would increase physician Medicare payments over the next 19-months—until the end of 2011— [rather than 3 1/2 years as initially proposed] but trim back some benefits for safety net health programs.”  The Wall Street Journal concurs with Modern Healthcare and adds that “Democratic leaders also trimmed the extension of unemployment benefits and Cobra health-insurance subsidies by one month, so that those programs would now be extended through the end of November 2010, according to a House Democratic aide.” The objective, of course, is to reduce the cost of the package.