OPM released its Fiscal Year 2009 summary of performance and financial information report on its website today. The report on page 5 contains the following FEHBP discussion:

Since 1959, the Federal Employees Health Benefits Program (FEHBP) has offered group health insurance to Federal employees. Federal retirees were added to the program in the 1960’s. The FEHBP currently offers 232 health plan options which cover nearly 8 million Federal employees, annuitants, and their dependents.

On average, the Government contributes approximately 70 percent of the total premium cost of enrollments within the FEHBP. Federal agencies, as employers, pay their share of premiums out of the same resources appropriated or otherwise available for the payment of employee salaries. The Government’s share of premiums is approximately $40 billion for both current employees and retirees.

While the FEHBP directly bears the cost of health services, it is currently difficult to analyze those costs and actively manage the FEHBP program to ensure the best value for both Federal employees and taxpayers. In the past, OPM has not routinely collected, or analyzed, program-wide claims data. The capacities to collect, manage, and analyze health services data on an ongoing basis will allow OPM to: 1) understand the drivers of cost increases for Federal employees; 2) determine the best approach to developing worksite wellness programs; and 3) model the potential effects of health system reform or environmental changes on Federal employees.

During FY 2009, OPM developed a plan to reorient the management of the FEHBP by capitalizing on the collection and analysis of program wide claims data. The planned implementation will include:

Data Collection and Maintenance—Establish regular data feeds from the ten largest FEHBP plans (and major Pharmacy Benefit Managers); develop/test front end edits to assure data integrity and consistency across plans; manage data flows; assure and maintain data quality and integrity; manage data storage and back-up.

Analysis Support—Design database and linking routines to link claims to demographics, provider files, and other OPM maintained data sets; create databases that analysts can use to run specific analyses.

Data Warehouse—Development of a data warehouse application that will allow flexible queries of the data set—not only general demographic queries, but also risk-adjusted profiles, comparison of chronically ill patients, and other useful analytics.

Developing such a database and analytical capability will better position OPM to negotiate effectively with FEHBP carriers to keep Federal premium increases below industry-wide levels. This initiative will build OPM’s knowledge base and expertise, strengthening its ability to strategically shape future benefits design, and better position OPM to negotiate with the carriers.

Over time, this initiative will result in contained premium growth. The magnitude of the savings is not concrete at this time; however, just a 0.1 percent reduction in annual premium growth for three consecutive years yields savings of approximately $1.25 billion to the Program over ten years, and more specifically, $400 million in payments from the Government’s general fund for annuitant premiums over the same period.

OPM sought funding for this initiative in its FY 2011 budget proposal which Congress is considering.

Congress is now in recess until April 12.

Last week, a House Appropriations Subcommittee held a hearing on OPM’s FY 2011 budget proposal.  OPM Director John Berry testified. The Director noted that

Included in the OPM budget request is $7 million to start a data warehouse to analyze the claims experience of participants in the Federal Employees Health Benefits Program (FEHBP). Through this effort we hope to identify trends in employee health issues and potentially drive down costs through a better understanding of the Federal employee and retiree population’s most common health care needs.

Availability of health, wellness, and work-life options for Federal employees is a critical tool for improving the ability of the Government to recruit and retain a high-performing workforce. In 2010, OPM received an appropriation of $2,654,000 to develop and operate a comprehensive worksite wellness pilot program for the downtown Washington campus including GSA, Interior, and OPM. The development of Government-wide health and wellness policies and programs to provide employees with a meaningful balance of work and life will continue to be a top priority at OPM in FY2011.

The Politico reports that a bill (H.R. 4851) to further extend unemployment benefits, the COBRA / TCC subsidy program, and the moratorium on a 21% cut in Medicare Part B reimbursement to doctors stalled in the Senate over funding issues. The Senate will not take up this bill again until it returns from recess on April 12. As a result, the Medicare cut will take effect on April 1, although I expect that the Centers for Medicare and Medicaid Services (“CMS”) will instruct its Medicare administrators to hold Part B claims in order to allow the Senate to act. This development impacts the FEHB Program because there is a large cadre of annuitants with primary Medicare Part B coverage in the FEHB Program. Moreover, FEHB fee for service plans are entitled to use Medicare Part B pricing for claims incurred by annuitants who do not enroll for Part B (5 U.S.C. Sec. 8904(b)).

Modern Healthcare reports that President Obama is expected to nominate Donald Berwick, MD, to be the CMS Administrator.  CMS has not had a Senate confirmed Administrator since late 2006.  Here’s Dr. Berwick’s impressive CV from the Institute for Healthcare Improvement website:

Donald Berwick, MD, MPP, FRCP, President and CEO, Institute for Healthcare Improvement (IHI), is one of the nation’s leading authorities on health care quality and improvement. He is also Clinical Professor of Pediatrics and Health Care Policy at the Harvard Medical School, and Professor in the Department of Health Policy and Management at the Harvard School of Public Health. Dr. Berwick has served as vice chair of the US Preventive Services Task Force, the first “Independent Member” of the Board of Trustees of the American Hospital Association, and chair of the National Advisory Council of the Agency for Healthcare Research and Quality. An elected member of the Institute of Medicine (IOM), Dr. Berwick served two terms on the IOM’s governing Council and was a member of the IOM’s Global Health Board. He served on President Clinton’s Advisory Commission on Consumer Protection and Quality in the Healthcare Industry. He is a recipient of numerous awards, including the 1999 Joint Commission’s Ernest Amory Codman Award, the 2002 American Hospital Association’s Award of Honor, the 2006 John M. Eisenberg Patient Safety and Quality Award for Individual Achievement from the National Quality Forum and the Joint Commission on Accreditation of Healthcare Organizations, the 2007 William B. Graham Prize for Health Services Research, and the 2007 Heinz Award for Public Policy from the Heinz Family Foundation. In 2005, he was appointed “Honorary Knight Commander of the British Empire” by the Queen of England in honor of his work with the British National Health Service. Dr. Berwick is author of numerous articles and the books Curing Health Care and Escape Fire.

Yesterday, Congress finished its work on healthcare reform by enacting a package of amendments to the Patient Protection and Affordable Care Act under its reconciliation rules as reported in Business Insurance. Today, the U.S. Office of Personnel Management circulated the following message on health care reform:

On March 23, 2010, President Obama signed into law the “Patient Protection and Affordable Care Act,” Public Law 111-148.  While some aspects of this law will not take effect until 2014, there are several major provisions that become effective before that time.  Among those is the coverage of a dependent until age 26. The effective date of this provision is the first day of the plan year that is six months following enactment of the law.  For the Federal Employees Health Benefits (FEHB) Program, that means January 1, 2011.  The Office of Personnel Management (OPM) will take the necessary actions to comply with the new law by this effective date.  We will provide additional information on our website in the near future about the changes to FEHB plans for the 2011 plan year occurring as a result of passage of the PPACA so that employees and retirees have the information in time for the Open Season, which begins in November.

This morning, the Federal Workforce Subcommittee of the House Oversight and Government Reform Committee reported out to the full committee an amended version of H.R. 4489, the FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act.

Chairman Stephen Lynch (D Mass) amended the original bill in the following principal respects:

• The amended bill no longer sets the pharmacy reimbursement rate at average manufacturers price. Instead at retail carriers will be charged the amount that the PBM pays the retail pharmacy and at mail the carrier will be charged the actual acquisition cost plus a dispensing fee not to exceed dispensing fees for the mail order pharmacy’s other lines of business.
• The amended bill is only applicable to experience rated carriers
• The amended bill’s drug substitution requirements do not apply to brand to generic substitutes.

I have heard that the full committee will consider this bill in April.

In other news, I ran across this Congressional Research Service report on federal employee benefits (including FEHBP) and same sex partnerships. The report discusses, among other things, cost estimates for the Domestic Partnership Benefits and Obligations Act, now pending before the House (H.R. 2517) and the Senate (S. 1102). The Senate bill was reported out of the Homeland Security and Governmental Affairs Committee in December 2009. The House bill was reported out of the Government Reform and Oversight Committee on January 22, 2010. The House bill was placed on the Union Calendar on January 29, 2010, after the House Judiciary Committee and the House Administration Committee discharged the bill.

I have a son who ages out of my private health insurance plan at the end of next month. For personal reasons, I would not object to a boost in the age limit. One of the provisions under Section 1001 of the Senate health care reform bill (H.R. 3590) that the President signed into law today provides that

SEC. 2714. EXTENSION OF DEPENDENT COVERAGE.
(a) IN GENERAL. A group health plan and a health insurance issuer offering group or individual health insurance coverage that provides dependent coverage of children shall continue to make such coverage available for an adult child (who is not married) until the child turns 26 years of age. Nothing in this section shall require a health plan or a health insurance issuer described in the preceding sentence to make coverage available for a child of a child receiving dependent coverage.
(b) REGULATIONS. The [Health and Human Services] Secretary shall promulgate regulations to define the dependents to which coverage shall be made available under subsection (a).
c) RULE OF CONSTRUCTION. Nothing in this section shall be construed to modify the definition of dependent as used in the Internal Revenue Code of 1986.

Section 1004 of the Senate bill states that this change shall take effect for plan years beginning on or after the date that is 6 months after the date of enactment of this Act, today March 23, 2010. Consequently, this change will not apply to the FEHB Program until January 1, 2011. (Oddly in a 2000+ page bill, Congress failed to amend the FEHB Act’s dependent definition which ages out unmarried dependent children at age 22 (unless the adult child is totally disabled (5 U.S.C. Sec. 8901). I am confident that this oversight will be remedied before January 1, 2011.)

A key issue left to the judgment of the federal regulators is whether and to what extent this change will be applied retroactively. My daughter, who is 19, unquestionably will receive the extension to age 26 under my private health insurance coverage. However, will her older brother, who loses coverage next month, be permitted to rejoin my plan on January 1, 2011?  This is a big issue for all health plans, not just FEHB plans.

The complications don’t end there. Section 2301(c)of the reconciliation bill of amendments to the Senate bill (which the House approved on Sunday and the Senate is now considering) would delete the phrase “(who is not married)” from Section 2714. In other words, a child’s marriage would no longer be a basis for terminating dependent child coverage before the limiting age if the Senate passes the reconciliation bill. This change also would take effect on January 1, 2011 for the FEHB Program.

This is a very complicated law that will take a while for everyone to digest.

The House of Representatives votes first on the reconciliation bill and then on the Senate bill beginning at 6 pm ET tonight according to CBS News.

OPM and AHIP put on an interesting FEHBP Carrier conference last week. The keynote speaker was OPM Director John Berry. Director Berry talked about building on the FEHBP’s strong foundation. He wants to bring prescription drug costs under control. He wants to increase the productive use of health information technology. He wants to collect more and better data on health care utilization. He wants to focus on wellness and prevention, which he described as an investment in worker productivity. In this regard, he noted OPM’s investment in its own health center, the creation of the fedsgetfit.gov website, and the First Lady’s campaign against childhood obesity. He strongly encouraged updating tobacco cessation programs. He said that well designed benefit packages should feature wellness and prevention. The agency’s call letter for 2011 benefit and rate proposals will describe other priorities. He concluded by saying the retaining leadership in health benefits honors federal service.

Other speakers included CareFirst President and CEO Chet Burrell and Blue Cross Blue Shield of Massachusetts Sr. Vice President Dana Safran MD who discussed their companies efforts to improve health care quality through payment reform.

Gregg Allen, MD, EVP and Medical Director of MedSolutions Inc. touted the health and financial benefits of radiology benefit management (right test and the right time) and accurate diagnosis (proper specialist reads the results).

Hawaii Medical Services Association Senior Vice President Michael Cheng described his company’s Web 2.0 system created by American Well, Inc. that allows members to consult with doctors on-line thereby avoiding ER charges in most cases.

A smoking cessation panel called attention to two government sponsored interactive websites — www.smokefree.gov and women.smokefree.gov (which is targeted at young women smokers) and two stop smoking lines — 1-800-quit-now and 1-800-44u-quit (National Cancer Institute).

Jay Fritz from OPM reported that the agency is pleased with its Facebook page pilot.OPM plans to continue the Facebook page and create a benefits blog on an opm.gov website that will feature discussion boards like the Facebook page. Representatives from GEHA and United Healthcare spoke about their respective organization’s social media efforts. GEHA for example has both Facebook  (774 fans) and Twitter accounts for their members. UHC has a Twitter account for members, and it uses Facebook for employee recruitment. I found that CIGNA also has a Twitter account for members. While I have a personal Facebook account, it’s my opinion that lawyers should not use Twitter because Tweets cannot exceed 140 words — very unprofessional.

I am exhausted from attending my favorite education event of the year — the OPM AHIP FEHBP carrier conference — and then trying to catch up on the NCAA tournament. I will be sharing some highlights over the weekend.

The Congressional leadership did release the Congressional Budget Office report and the 153 page managers’ amendment which serve as the reconciliation sidecar. The President postponed his Asian trip until June and the House leadership is scheduling a floor vote for Sunday, according to the Politico. Here is the Rules Committee’s summary of the managers’ amendment. Here is the Politico’s arena of opinions on the CBO report. (Yes, I am in the tank for the Politico).

Govexec.com has an interesting report about the how the managers’ amendment links the increased 40% high cost excise plan tax thresholds to premium increases in the Blue Cross Federal Employees Plan standard option. The tax would take effect in 2018 rather than 2013 as provided under the Senate bill.
Business Insurance reports that  “In all, the changes [to the excise tax] would reduce the amount of revenue generated by the tax by 80%, according to the Congressional Budget Office.

The Politico’s Live Pulse blog says it all — No Congressional Budget Office numbers on the undisclosed health care reform bill tonight. CBS News reports that

There are currently 431 members of the House of Representatives. Assuming all Republicans vote no, Speaker Pelosi needs 216 Democrats to vote yes – meaning she can afford to lose 37 of her members at most.

As of now, CBS has tallied 19 Democrats who say they plan to vote no; 48 more say they are on the fence.

Those members are getting so many calls from constituents on both sides that house phone lines were overloaded today. Back in their home districts, the pressure is just as intense.

In an interesting development, the House of Representatives approved by voice vote a further extension of the COBRA / TCC subsidy program and the moratorium on the scheduled 21% Medicare Part B payment cut to physicians until the end of April (H.R. 4851). The current extensions expire at the end of this month. According to Business Insurance, “As part of a broader bill, H.R. 4213, the Senate last week approved a longer extension to enable employees laid off through the end of the year to receive the subsidy [and continues the moratorium until September 30, 2010], but the House has yet to take up that measure because of funding concerns about certain provisions in the bill, observers say.”

The HHS Office for Civil Rights (“OCR”) which enforces the HIPAA Privacy and Security Rules made an important announcement:

OCR will implement important privacy and security provisions of the Health Information Technology for Economic and Clinical Health (HITECH) Act through notice and comment rulemaking, as required by the Administrative Procedure Act.  These provisions include: business associate liability; new limitations on the sale of protected health information, marketing, and fundraising communications; and stronger individual rights to access electronic medical records and restrict the disclosure of certain information.  OCR continues work on a Notice of Proposed Rulemaking (NPRM) regarding these provisions.  Although the effective date (February 17, 2010) for many of these HITECH Act provisions has passed, the NPRM and the final rule that follows will provide specific information regarding the expected date of compliance and enforcement of these new requirements.

However, interim final rules implementing HITECH Act provisions in two areas have already been issued and are currently in effect: enforcement and breach notification.  New civil money penalty amounts apply to HIPAA Privacy and Security Rule violations occurring after February 17, 2009.  Covered entities and business associates must comply now with breach notification obligations for breaches that are discovered on or after September 23, 2009. OCR announced previously that it would use its enforcement discretion not to impose fiscal sanctions with regard to breaches discovered before February 22, 2010. Since that date has passed, OCR will enforce the Breach Notification Interim Final Rule, including with the possible imposition of sanctions, as it does with the HIPAA Privacy and Security Rule requirements.

Finally, the American Medical Association as part of its ongoing effort to bend the cost curve upward “unveiled its new National Managed Care Contract (NMCC) and database to help physicians analyze and negotiate contracts with insurers and help provide relief from unfair corporate business practices.”

The health care reform effort still remains a behind the scenes operation while the Speaker of the House and her leadership team continue in their efforts to whip up 216 House votes for the Senate bill plus the House managers’ “side car” reconciliation bill. The House Budget Committee approved the use of budget reconciliation yesterday by a 21-16 vote. The next step is to go to the Rules Committee before which point  the manager’s sidecar bill — amendments to the Senate bill — would be unveiled. Fox News is reporting that the Rules Committee plans to hold this meeting on Friday, March 18, which would allow a vote on Saturday.  There’s no real deadline here other than the adjournment of the current Congress at the end of the year.

The Rules Committee may approve the so-called Slaughter solution (Rep. Louise Slaughter chairs the Rules Committee) which would deem the House to pass the Senate bill, rather than actually pass it. As this Politico page indicates, this maneuver has generated a lot of controversy. 

There are just so many things we don’t know yet.  The Hill reports that “As of late Tuesday afternoon, Congressional leaders were still waiting for the final numbers from the Congressional Budget Office on pending health care legislation.”  It’s unlikely we’ll see the managers’ sidecar bill until any CBO scoring issues are worked out. 

Meanwhile I look forward to the AHIP OPM FEHBP carrier conference which will be held on Thursday and Friday. Until then, I will try to take some advice from OPM’s Feds Get Fit web site.