Modern Healthcare and The Hill provide us with their updates on the progress of the bill discussed in last Sunday’s blog entry that would address the 21.2% cut in Medicare Part B reimbursements to doctors and would extend the COBRA/TCC subsidy program until the end of this year. The Hill reports trouble in paradise for the American Medical Association.

Speaking of the AMA, Healthleaders Media reports on the organization’s demand that its brand new, 10 point Code of Conduct be enforced against health insurers. “The physician group says it hopes to publish a scorecard showing which plans play by these rules in a few years.”  Isn’t PPACA enough??

Speaking of PPACA, Reuters reports that the National Association of Insurance Commissioners announced that it will need at least another month (until July 1) to provide the Department of Health and Human Services with its guidance on implementing new Public Health Service Act section 2718 which imposes a minimum medical loss ratio on health insurers.

Last week, America’s Health Insurance Plans announced survey findings that ten million Americans are now covered by Health Savings Accounts / High Deductible Health Plans (HSA/HDHPs), a 25% increase over the prior year. This innovation, which was first authorized in 2004, gives consumers an incentive to manage their own health care costs.

Yesterday, according to Business Insurance, the Internal Revenue Service announced that HSA maximum contributions, HDHP minimum deductibles, and HDHP out of pocket limits will remain unchanged in 2011 due to the CPI-U remaining flat from one year to the next.  Here’s a link to IRS Revenue Procedure 2010-22.

The principal legislative focus this week from the FEHBlog’s standpoint is H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010. Last Thursday, the Chairmen of the Senate Finance and House Ways and Means Committees released a set of mutually acceptable changes to this bill.  The House Rules Committee takes up the bill tomorrow.

The revised bill will extend the COBRA / TCC subsidy program through the end of 2010. Absent this amendment, the program will sunset on May 31. The current Labor Department model COBRA notices are available here.

The revised bill also would address the 21% cut in Medicare Part B reimbursement to physicians that will occur on June 1, 2010, under the statutory sustainable growth rate (SGR) formula absent Congressional action. The bill would provide a fix through the end of 2013. The Politico reports that

Under the [SGR] changes, physicians would get a 1.3 percent raise this year and an additional 1 percent raise in 2011. In 2012 and 2013, primary care and preventive services doctors would get an additional raise equal to the gross domestic product at the time plus 2 percent. Other doctors would get a raise of GDP plus 1 percent.

Politico points out that this would be the first time that the SGR formula would distinguish between primary care providers and specialists. Modern Healthcare adds “But the formula backtracks to current law in 2014, setting physicians up with a possible 27% cut, according to one healthcare lobbyist.”  Federal budget issues, e.g., the eye popping impact of repealing the SGR formula, complicate the creation of a permanent fix.

Not all is well with the healthcare provider community. According to Modern Healthcare, the American Hospital Association is objecting to a provision in the bill that would modify “a Medicare policy known as the ’72-hour rule’, amounting to about a $4.5 billion hit to the hospital sector.”
 
A colleague called my attention to the fact that a May 11, Congressional Budget Office letter to Congress discussing the costs of implementing PPACA/the Affordable Care Act notes that 

Costs to HHS, especially the Centers for Medicare and Medicaid Services, and the Office of Personnel Management for implementing the changes in Medicare, Medicaid, and the Children’s Health Insurance Program, as well as certain reforms to the private insurance market. CBO expects that those costs will probably total at least $5 billion to $10 billion over 10 years.

The private insurance market reforms referenced in this quote certainly include the multistate plans contracts that OPM will negotiate for insertion into PPACA’s state based heath insurance exchanges under PPACA Section 1334.

On Wednesday, the House Armed Services Committee approved the Fiscal Year 2011 Defense Authorization bill HR 5136). According to Govexec.com, one of the bill’s provisions would increase the TRICARE maximum dependent child eligibility age from 24 to 26. The Committee summary of the bill states

Earlier this year, the President signed into law a bill to overhaul America’s health care system. Because TRICARE is already such a good program, it already would have met all of the minimum requirements of health care reform. However, Congressional leadership made and kept a promise to ensure that TRICARE was not impacted in any way by the health reform bill. Unfortunately, this means that TRICARE beneficiaries are not currently able to extend health coverage to their adult dependent children up to age 26 like the rest of the country. To make sure that TRICARE beneficiaries can enjoy this same opportunity, this year’s NDAA includes language from legislation introduced by Congressman Martin Heinrich (D‐N.M.) to allow TRICARE beneficiaries to extend coverage to their dependent children until age 26, the same benefit that was afforded to individuals with private insurance policies under the new health care law.

Roll Call reports on federal employee union lobbying efforts to convince Congress to accelerate into this year age 26 coverage in the FEHB Program.

Milliman, a benefits consulting firm, released its last Medical Index last week finding that the “average total medical spending for its “typical American family of four” reached $18,074, an increase of $1,303 over last year. The total-dollar increase is the highest in the history of this study.” 

Mercer, another benefits consulting firm, released a survey on employer reaction to PPACA’s immediate reforms including the age 26 change and the elimination of lifetime benefit maximums (which generally do not exist in the FEHB Program). “Many employers are bracing for higher health care costs resulting from compliance with health reform mandates that take effect with the 2011 plan year. According to a survey of nearly 800 employers released today by Mercer, the cost impact will range from moderate to severe, depending on the employer’s circumstances.” This, of course comes on top of the cost increases that Milliman found.

Towers Watson, another benefits consulting firm, released a survey on employer reaction to the 40% high cost plan excise tax that takes effect in 2018. The reaction is fear.

“The original concept of the excise tax was to penalize employers with excessively rich health benefit plans,’ said Randall Abbott, a senior consultant for Towers Watson. ‘Assuming even reasonable annual plan cost increases to project 2018 costs, many of today’s average plans will easily exceed the cost ceiling primarily directed at today’s ‘gold-plated’ plans.” * * *

“All it takes to drive costs above the excise tax cap for six in ten employers is an 8% average annual cost increase. And, without making plan design changes, that’s what many employers are projecting,” said Dave Osterndorf, a consulting actuary with Towers Watson. “This rate of increase has been typical for the past several years. We see it as an open question as to whether the recently passed PPACA will mitigate cost trends in the near term for employers.”

It’s not a pretty picture.

I plowed through some of the PPACA minimum loss ratio comments posted on the regulations.gov website and I found these to be worth reading — AHIP’s comments and attachment and Oliver Wyman (actuarial firm) comments and associated study. I must say that regulation.gov is one difficult site to navigate.

The clock is ticking again toward the end of the month when the COBRA/TCC continuation coverage subsidy and the moratorium on the 21% cut in Medicare Part B payments to physicians end. The AMA News reports on the medical profession’s strategy for Congress to enact a five year freeze.

Business Insurance reports on a Towers Watson Consulting survey of 661 employers finding that 16% of those employers said they would extend the coverage [to adult dependents up to age 26] before the [PPACA] required effective date [typically January 1, 2011], 78% said they would wait until the effective date and 6% did not yet know.”  The study indicates that employers lack the resources necessary to accelerate implementation into this year.

The Washington Post has called my attention to a May 11, 2010, Congressional Budget Office report on S. 1102, Sen. Joe Lieberman (I Conn.) bill to extend FEHB Program coverage (and certain other statutory federal employment benefits) to the same sex partners of federal employees.

CBO estimates that enacting S. 1102 would increase direct spending by $101 million over the 2010-2015 period and $310 million through 2020.1 We estimate that enacting the bill would not have any direct impact on federal revenues. Over the same period, CBO estimates that discretionary spending would also increase, by $394 million, assuming appropriation of the necessary funds. Providing additional health insurance benefits through the Federal Employees Health Benefits (FEHB) program would account for the largest increase in both mandatory and discretionary spending—$294 million and $355 million, respectively.

Senator Cardin’s bill (S 3341) which would allow OPM to accelerate the increase in the dependent child eligibility age to 26 regardless of marital status, now has twelve co-sponsors, including Sen. Susan Collins (R Maine), the ranking minority member of the Senate Homeland Security and Governmental Affairs Committee, to which the bill was referred.

Friday was the Department of Health and Human Services’ (“HHS”) deadline for submission of public comments on implementation of new Public Health Service Act sections 2718 and 2794 (added by PPACA Sections 1001 and 1003). Section 2718 is the minimum medical loss ratio (“MLR”)  provision, and Section 2794 requires HHS and the relevant state to review unreasonable health insurer premium increases. The comments of the National Association of Insurance Commissioners (“NAIC”) are available here. The NAIC will be providing further guidance concerning the MLR provision on June 1.

Modern Healthcare reports that healthcare providers who are not subject to any similar limit on their profits and clearly want to bend the cost curve up are urging HHS to clamp down on the health insurers. For example, “the Medical Group Management Association wrote in its comments that HHS should include administrative costs incurred by providers [to bill insurers] as a component of insurers’ administrative costs in defining medical loss ratios.”

I took a gander at reginfo.gov to find out whether any more PPACA regulations, such as the grandfathered plan rule and the lifetime and annual limit rule, are coming down the pike soon. I didn’t find PPACA regulations but I did find that the Office of Management and Budget is reviewing the final HHS notice of security breach rule.  This final rule will reflect HHS’s reaction to comments on the interim final rule issued last August.

Business Insurance notes that HHS, the Labor Department, and the IRS received over 5,400 comments on the February 2, 2010, interim final rule implementing the Wellstone Domenici mental health parity and addiction equity act of 2008.  The article quotes several benefits professionals who are hopeful that the agencies will accept the suggestion made by many organizations (and makes sense to me) that the effective date be delayed by one year.

The HHS Office for Civil Rights, which enforces the HIPAA Privacy and Security Rules, posted last week guidance on conducting security risk assessments for covered entities and business associates. The risk assessment is a crucial part of HIPAA Security Rule compliance.

HHS and the Justice Department held a press conference last Thursday concerning their efforts to ramp up efforts to fight health care fraud.

Last but not least OPM issued its FedsGetFit virtual cookbook.

OPM updated its healthcare reform web page today, reiterating its assurance that the agency is working to implement the new law (and I know that to be true.)  Sen. Ben Cardin (D MD) has introduced a Senate companion to the House bill (HR 5200) which would conform the FEHB Act’s dependent eligibility provisions to the health care reform law effective January 1, 2011 (increasing the dependent child age ceiling from 22 to 26 and removing the marriage cut off).  The bill also would authorize the OPM Director to accelerate the change into this year.

I was surprised by the statement in Sen. Cardin’s press release that “The non-partisan Congressional Budget Office has confirmed that this bill has no cost associated with it.” This conflicts with HHS’s projection that the dependent child expansion will increase premiums by seven tenths of a percent on average as discussed in a previous entry.There is no such thing as a free lunch.

The Washington Post reports on the Justice Department’s first opportunity to file a brief opposing one of the lawsuits challenging the Constitutionality of the health care reform law. This brief was filed in an action brought by a advocacy group in Michigan, not one of the lawsuits brought by the States.  On a related note, the Post also reports that

President Obama‘s new health-care law could potentially add at least $115 billion more to government health care spending over the next 10 years, if Congress approves all the additional spending called for in the legislation, congressional budget referees said Tuesday.

That would push the 10-year cost of the overhaul above $1 trillion — an unofficial limit the Obama administration set early on.

As OPM’s call letter for 2011 benefit and rate proposals calls for FEHB plan assistance with the First Lady’s initiative to control childhood obesity, it’s worth pointing out the Task Force’s first report.

Under the health care reform law, HHS is required to issue a regulation implementing the provision that extends dependent coverage to children up to age 26 regardless of marital status.  The HHS interim final rule, fact sheet, and frequently asked questions were issued today. As I anticipated, HHS took the most expansive approach to implementing this law. Under the regulations, the only permissible basis for dependent child coverage is the existence of a family relationship — financial dependency and residency with the enrollee are no longer required.

Modern Healthcare notes that  “According to HHS, the new benefit will cost $3,380 for each dependent, which will raise premiums by 0.7% in 2011 for employer plans. Premiums are also expected to rise by 1% and 1.2%, respectively in 2012 and 2013, although HHS expects the actual increase across the entire individual market will be smaller than these estimates.”  That’s likely on the low side for the FEHB Program which is an older group with (I expect) more adult children than the typical employer group.

The interim final rule requires a special open season for re-enrollment of the adult children, which may be combined with the general Open Season. That ball is in OPM’s court.

These changes take effect on January 1, 2011, absent Congressional action. Interestingly, Federal News Radio columnist Mike Causey described Congressman Van Hollen’s bill that would permit OPM to accelerate this change as a “long shot.” OPM has explained the available options for coverage until then.

Last Monday May 3 was the deadline for submission of public comments on one of the most flawed federal regulations ever issued, the interim final rule implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 “MHPAEA”).  This law became applicable to the FEHB Program on January 1, 2010, and OPM did a good job implementing it with its 2010 call letter guidance. The agencies that produced this rule threw a monkey wrench into the works with a rule that does not produce parity and goes far beyond the the terms of the statute.  For more details, I direct your attention to the comments of the Blue Cross Blue Shield Association, United Health Group, and the National Association of Health Underwriters.

I have mentioned that a group of managed behavioral health organizations called the Coalition for Parity has filed a lawsuit alleging that the government violated the Administrative Procedure Act by issuing the MHPAEA rule in final form rather than following the normal path of issuing a proposed rule for comment. On May 3, the Government filed its brief in opposition to the Coalition’s summary judgment motion, and on May 7, the Coalition filed its reply brief. The case is now teed up for U.S. District Judge Colleen Kollar Kotelly who may decide to hear oral argument before issuing a ruling.

Following up on Sunday’s post, the House Oversight and Government Reform Committee held a business meeting today, and the FEHBP PBM transparency and price setting bill (HR 4489) was not considered. 

Also, as mentioned on Sunday, the Senate Homeland Security and Governmental Affairs subcommittee on federal workforce management held a hearing about federal work-life programs on Tuesday May 4.   Mr. Jonathan Foley, who testified on OPM’s behalf, provided an in-depth description of OPM’s federal workforce wellness initiatives.

Today, the House Energy and Commerce Health Subcommittee held a hearing on trio of health care transparency bills.  I found Harvard Professor Regina Herzlinger’s testimony to be thought provoking. Modern Healthcare reports that Subcommittee Chair Frank Pallone (D NJ) “said he would not commit to advancing legislation that requires providers, payers and vendors to publicly disclose the cost of their services.”