FEHBlog

Congress remains out of session this week.

The big news today is that Aetna is acquiring Coventry Health Care subject to standard anti-trust review and the approval of Coventry’s shareholders. Both Aetna and Coventry offer HMOs in the FEHBP and Coventry also underwrites three employee organization sponsored plans. Here’s a link to Aetna’s investor presentation.

House minority leader Nancy Pelosi once said “we have to pass the [Affordable Care Act] bill so that you can find out what is in it.” Business Insurance reports that employers are now learning about Section 1341 which creates a transitional reinsurance program for qualified health plans operating in the exchanges. Here’s a link to a CMS presentation about the program. The provision, which HHS administers, requires health insurers and self-insured health plans to fund this program to the tune of $12 billion in 2014, $8 billion in 2015, and $5 billion in 2016, the last year of the program. According to Business Insurance,

Benefit consultants have made preliminary projections. Aon Hewitt, for
example, estimates that the 2014 assessment will be in the range of $60
to $80 per health care plan participant, while Towers Watson & Co.
puts the first-year assessment range at between $70 and $90 per plan
participant. 

This is significantly higher than the $1 or $2 per participant fee imposed on insurers and self insured plan sponsors to fund the Patient Centered Outcomes Research Institute but less than the fee that the law imposes just on health insurers. The charge to the FEHBP in 2014 will range from $480 to $720 million.

Public health issues are difficult to identify, let alone address. The San Francisco Chronicle reports that declining male circumcision rates will cost health care costs to increase. The circumcision rate has dropped from 79% in the 1980s to 55% now. The lack of protection may boost U.S. health-care costs by $4.4 billion
if rates plunge in the next decade to levels seen in Europe, where 10
percent of boys are circumcised, according to the analysis by health
economists at Johns Hopkins. Each time a circumcision is avoided, $313
is added in direct illness- related expenses, after taking into account
the cost of the procedure, [Aaron] Tobian [the study’s senior researcher] said in a telephone interview.

An identified public health issue is patient non-adherence to prescriptions. The AMA News reports that

The Food and Drug Administration cleared the smart pill, called the
Ingestion Event Marker, for marketing as a medical device on July 10.
The ingestible sensor is the size of a grain of sand and can be
integrated into an inert pill or an active medication. Fluid in the
stomach activates the sensor and sends a signal through body tissue to a
small, water-resistant patch worn on the torso. The patch detects when
the pill is ingested and wirelessly sends that data to an application
accessible by mobile phone or computer.

Health Affairs came out with an article on the growing use of retail clinics, a trend that the FEHBlog has been following because it has the potential for bending the healthcare cost curve down:

Retail clinics have rapidly become a fixture of the US health care delivery landscape. We studied visits to retail clinics and found that they increased fourfold from 2007 to 2009, with an estimated 5.97 million retail clinic visits in 2009 alone. Compared with retail clinic patients in 2000–06, patients in 2007–09 were more likely to be age sixty-five or older (14.7 percent versus 7.5 percent). Preventive care—in particular, the influenza vaccine—was a larger component of care for patients at retail clinics in 2007–09, compared to patients in 2000–06 (47.5 percent versus 21.8 percent). Across all retail clinic visits, 44.4 percent in 2007–09 were on the weekend or during weekday hours when physician offices are typically closed. The rapid growth of retail clinics makes it clear that they are meeting a patient need. Convenience and after-hours accessibility are possible drivers of this growth. However, retail clinics make up a small share of overall visits in the outpatient setting, which include 117 million visits to emergency departments and 577 million visits to physician offices annually.

Medpage has an expanded story of the Health Affairs article. Medpage notes medical society opposition to the clinics which ironically enough people often use when doctors offices are closed.

CMS clarified its position on the temporary enforcement safe harbor for certain employers, group health plans, and group health insurance issuers with respect to the ACA’s contraception coverage mandate. The FEHBlog finds this interesting because the FEHBA’s contraception mandate, which is found in the annual appropriations bills, includes exclusions for faith based health plans. It does not appear that this safe harbor is directed at such plans. Rather it is directed at religious employers, which the U.S. government is not. However, both the House and Senate appropriations committees have cleared include this exemption for faith based plans operating in the FEHBP.

Yesterday, Standard and Poors released its Healthcare Economic Indices for June 2012. Healthcare costs covered by commercial health plans increased by 8/09% over the year ending June 2012, down from an 8.40% increase reported for May 2012. Medicare claim costs rose by 2.27% down from a 2.50% increase in May.

“The past two months have generally been marked by a deceleration in the annual rate of change in health care costs. In June 2012, all nine of our Healthcare Indices’ annual growth rates decelerated from their May 2012 rates,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “In May, six of the nine indices we publish also saw a deceleration in their annual growth rates from April. In June, the Composite Index posted an annual rate of +5.78%, the Commercial Index +8.09% and the Medicare Index +2.27%. These rates were all down from their respective April and May 2012 levels.

Earlier this week the Government Accountability Office issued an FEHBP related ruling. Several federal court employees in California filed a employee grievance over the fact that OPM would not allow them to enroll their same sex spouses under their FEHBP self and family coverage. The court internally agreed with the employees and wanted to give them employees additional compensation so that they could purchase health insurance for their spouses. The GAO ruled that

Where the Office of Personnel Management (OPM) does not permit the enrollment of an employee’s spouse under the Federal Employees Health Benefits Program (FEHBP), appropriated funds are not available to reimburse the employee for the costs of health insurance for his spouse. The Federal Employees Health Benefits Act of 1959 charges OPM with the administration of the FEHBP, and OPM has advised that same-sex spouses are not eligible for enrollment. Accordingly, a federal court may not use its appropriation to reimburse its employee for the cost of purchasing health insurance outside of the FEHBP.

Today HHS announced that the government is teaming up with pharmacy chains that will encourage seniors with Medicare coverage to obtain “free” preventive care. Today’s Wall Street Journal included an interesting opinion piece explaining that “To meet the promise of free preventive care nationwide, every family doctor in America would have to work full-time delivering it, leaving no time for all the other things they need to do.”

Speaking of pharmacies, the Wall Street Journal reports that the major chains and prescription benefit management companies have been announcing second quarter results. Quick and dirty, CVS Caremark cleaned up on the Walgreens – Express Scripts contract disputes and expects to retain 50% of the new business that it attracted during that dispute once Walgreens and Express Scripts start doing business again on September 15. The pharmacy chain — PBM business model seems to be working out pretty well.

Congress remains in recess until after Labor Day.

Kaiser Health News reports that CMS plans to penalize 2,111 hospitals for excess readmissions pursuant to authority granted by (what else) the Affordable Care Act. “A total of 278 hospitals nationally will lose the maximum amount allowed
under the health care law: 1 percent of their base Medicare
reimbursements. Several of those are top-ranked institutions, including
Hackensack University Medical Center in New Jersey, North Shore
University Hospital in Manhasset, N.Y. and Beth Israel Deaconess Medical
Center in Boston, a teaching hospital of Harvard Medical School.” For context, the American Hospital Association reports that there are about 5700 hospitals in the U.S. Of course, these facilities will shift these losses onto the private sector, including the FEHBP.

The AMA News has interesting observations about how the aging medical workforce may be creating a drop in health care quality. “One in five licensed U.S. doctors is older than 65, according to 2010
data from the AMA. Many of those doctors continue to practice for the
love of medicine and often because retirement is financially out of
reach.” The FEHBlog, while not a doctor, is no spring chicken himself and appreciate the complexities of this issue, which medical societies and state regulators are beginning to confront.

Speaking of public health concerns, the Centers for Disease Control released a state by state map of self reported obesity rates. The FEHBlog is curious about obesity statistics because last year at this time he would have reported himself as obese. Fortunately with good medical and family guidance, the FEHBlog has lost a good bit of weight and is well under the obesity level on the BMI scale for his height. But he is still a good ten to fifteen pounds away from being under the overweight classification and he is feeling quite trim as it is. Watch those carbs!

Following up on the AMA New’s article about the uptick in doctors visits, the Wall Street Journal explained in an article yesterday that

UnitedHealth Group and Aetna both said that part of the recent outpatient boost stems from their initiatives to get certain services moved out of inpatient settings. UnitedHealth, for instance, has a program, pegged to a heart association’s guidelines, that aims to test for heart attacks in a hospital’s outpatient suite rather than sending chest-pain patients straight to an intensive-care unit. “Some of that outpatient growth is purposeful on our part,” said Joe Zubretsky, Aetna’s chief financial officer, in an interview.

Similarly,

Health plans that encourage primary care are one reason visits have increased at Village Health Partners, a 20-physician family practice in Plano, Texas, said Christopher Crow, its president, who said he sees employers using “benefit designs that include both carrots and sticks” to get folks to seek preventive services and tests. Dr. Crow also pointed to improvements in the local economy.

That makes sense.

 HHS announced new operating procedures for electronic health care transactions this week.

Administrative Simplification: Adoption of Operating Rules for Health
Care Electronic Funds Transfers (EFT) and Remittance Advice Transactions
were developed through extensive discussions with industry
stakeholders. The rule adopts the Council for Affordable Quality
Healthcare’s Committee on Operating Rules for Information Exchange (CAQH
CORE) Phase III EFT & ERA Operating Rule Set, including the CORE
v5010 Master Companion Guide Template, with the exception of Requirement
4.2 of the Phase III CORE 350 Health Care Claim Payment/Advice (835)
Infrastructure Rule. Collectively, these rules are referred to as the
EFT & ERA Operating Rule Set.

This drives the FEHBlog nuts. CAQH, a collaborative effort between health care providers and health plans developed this operating rules. The ACA then hijacked them and required HHS to issue them as federal regulations which allows HHS to trumpet that they are cutting more red tape. But the red tape was being cut and now we have technological requirements set in law. That doesn’t make sense.

HHS this week submitted to OPM for final review and approval its HIPAA rule creating a plan identification number and extending the ICD-10 compliance date by one year to October 1, 2014. HHS was authorized to issued a plan identifier rule when HIPAA was enacted in 1996.  HHS has been issuing health care provider identifying numbers for several years now. The FEHBlog does not understand the delay in the health plan identifier rule. Again the problem lies in HIPAA setting technological standards via regulatory action. Not a good idea.

Joe Davidson’s column in this morning’s Washington Post discusses an OPM briefing paper advocating changes to the FEHB Act that would increase competition by, for example, allowing regional PPOs to join the program. Davidson’s column also provides a link to a Blue Cross Blue Shield briefing paper with legislative alternatives to the regional PPO offerings. As Davidson points out at the end of his column this initiative is not on the legislative radar screen right now.

The National Business Group on Health announced the results of a nationwide survey yesterday finding that large employers expect to hold health plan cost increases to 7% in 2013 using high deductible plans and wellness initiatives.  Next month OPM will announce the FEHBP’s average premium increase for 2013 which the FEHBlog expects to be well below 7%.

Meanwhile, the AMA News breathes a sigh of relief that the number of primary care doctors visits is rebounding this year.   “Dr. [Glenn] Stream [president of the American Academy of Family Physicians] said it’s still too early to conclude that the first signs of
increased volume are going to be part of a sustained trend, or to know
how long such a trend will last. But over the longer term, he expects to
see a rise in demand for primary care due to the aging population and
the start of health coverage guarantees, mandates and subsidies in 2014.” Hope springs eternal.

Congress is now in recess until September following the political conventions and Labor Day.  Politico reported last week on lobbying efforts to head off the ACA’s health insurance fee which takes effect in 2014. The ACA imposed that fee ostensibly to require insurers to kick back some of the revenues from all of the new insureds entering the exchanges. The hefty fee does fall on insurers in the exchanges but it also falls on insurers in the FEHBP. The hefty fees will be counterproductive particularly in the FEHBP wherre the ACA did not expand membership other than certain Indian tribal employees.

The Centers for Medicare and Medicaid Services announced last week the final Medicare Part A reimbursement rates for inpatient care beginning October 1, 2012.  While in April, CMS proposed an 0.9% increase, the final rule grants acute care hospitals a three times larger increase of 2.8%. Beckers Hospital Review offers nine observations on the final rule. Medicare pricing impacts the FEHBP because there is a large cadre of Medicare Part A eligible annuitants in the FEHBP and a smaller and decreasing cadre of annuitants who retired before 1984 and are not eligible for Medicare Part A. Fee for service FEHB plans receive Medicare pricing on Part A care rendered to those individuals.

The Beckers article notes that the final rule added two new never events for Medicare payment purposes — surgical site infection following cardiac implantable electronic device procedures and pneumothorax with venous catheterization.

OPM now has a special webpage about extending FEHBP coverage to seasonal firefighters. The wildfire season evidently runs from April through October.

The Administration made a big splash about the effective date of the expanded women’s preventive care benefit on Wednesday. Humorously (at least to the FEHBlog), Kaiser Health News reports that the administrative burden of the expansion falls on the already overburdened doctors.

That’s because not all women are eligible for the cost sharing waiver at the same time. The rule went into effect Wednesday, but only for plans that are new or renewing after that date. Women with “grandfathered” plans that don’t renew for months or even years still face co-pays until that time.

For the FEHBP, the mandate takes effect with the new plan year on January 1, 2013.  OPM requires plans to cover these services whether or not they are grandfathered for ACA purposes.

Bear in mind that two of the “new” screening mandates

• Sexually transmitted infections counseling for sexually-active women.
• HIV screening and counseling for sexually-active women

have been covered under the FEHBP without enrollee cost sharing since 2011 for sexually active women and men. Those screenings are listed under the A and B screenings classified by the U.S. Preventive Services Task Force.

As you know, the FEHBlog believes that belaboring the obvious is a responsibility of his legal profession. However, that role is not limited to lawyers. Yesterday the Generic Pharmaceutical Association released a report trumpeting that generic prescription drugs are less costly than brand name drugs. Duh! The FEHBlog would like to know when the Food and Drug Administration will create the regulatory pathway for creating generic versions of expensive specialty or biologic drugs which was greenlighted by the ACA in March 2010. The European Union has been approving biogenerics for a decade.

The Federal Times reports that the leadership of both Houses of Congress and the President have agreed in principle to a continuing resolution that would fund federal government operations at current levels through March 31, 2013 — six months into the next federal government fiscal year. The continuing resolution will be drafted over the recess and considered in September. The current fiscal year ends on September 30.  The deal is not done, however, until Congress passes the resolution with the President’s approval.

The Hartford Courant reports that yesterday a federal judge in Connecticut joined other federal courts in holding the Defense of Marriage Act unconstitutional.  In that case, several federal employees sued for FEHBP coverage of their same sex spouses, which is prohibited by DOMA. The FEHBlog was aware of similar cases in Massachusetts and California. The article explains that there is another case — which reached the same result — decided in the federal district court in Manhattan and now on appeal to the U.S. Court of Appeals for the Second Circuit. That’s the same federal appellate court where the Connecticut decision is headed. The Supreme Court is expected to take this case for its next term that begins in October, and the FEHBlog is on record that the Supreme Court will hold DOMA unconstitutional principally on federalism grounds.

The FEHBlog enjoys reading the AMA News, and this week’s lead article concerns sleep centers. No the AMA News is not writing about mattress stores. Rather it’s writing about the facilities that offer sleep studies for people who have or may have sleep apnea. For years the studies have been performed in-patient and the number of facilities has grown dramatically to serve our aging population (337 in 1996 to 2412 today). But now the pendulum is swinging the other way as the costs have attracted attention, and in-home testing has arrived. How does the AMA News frame the issues — “How physicians responded to financial problems in one corner of the
health system — sleep testing — illustrates how all doctors can thrive
economically in the face of escalating pressure to provide higher
quality care for a lower cost.”

The House and the Senate will be in session this week. Next week both bodies go out of session for about five weeks for the August recess and the political conventions.

Last week, AHIP issued its annual report on the growth of health savings account qualified high deductible health plans. In 2011, the enrollment in such plans grew by over 2 million covered lives, reaching a total of 13.5 million. The enrollment is largely driven by their popularity with large employers who find that such plans do control costs. HSA qualified high deductible health plans have been offered in the FEHB since Congress approved the concept in late 2003.

The National Business Group on Health released the results of a survey of employees attitudes toward the health benefits coverage offered by their large employers. Similar to OPM surveys of federal employees, this survey reports that employees are satisfied with the coverage, even though employee cost sharing has been rising.

The FEHBlog read a very sad story today in the New York Times about a young woman who died in a New York City hospital after she called 911 because she thought that she had accidentally poisoned herself. Unfortunately, she did not reach any family or friends (or leave a message for them) before the ambulance arrived. The story of her health care is a mess, but surprisingly to the FEHBlog at least, the hospital which had no malpractice insurance won a jury trial trial in a lawsuit brought by the young woman’s family. Truer words have never been written than the article’s concluding quote from the young woman’s mother that . “No one should go to a hospital without someone with you — no one,”
she said. “Don’t go unless somebody at least knows you’re there.”