FEHBlog

It’s Presidents’ Day, and Congress is on recess until next week. Before leaving on recess, the Senate passed an Federal Aviation Administration reauthorization bill (S. 223) which according to Business Insurance includes a repeal of the expanded IRS Form 1099 reporting requirements created by the Affordable Care Act. The House of Representatives passed on a party line vote a new full year continuing resolution (H.R. 1) that would cut current appropriations by $61 billion. Govexec.com reports on the House bill’s potential impact. The Senate majority leadership is opposed to the House measure, and the President has formally threatened to veto it.

The current continuing resolution funding the federal government expires on March 4. There’s still time to reach a compromise. However, if no compromise is reached, then a government shutdown will occur by operation of the Anti-Deficiency Act. The Washington Post reports today on that prospect. Here’s the key consideration from the FEHBlog’s perspective — which is drawn from a 1998 Congressional Research Service report following the government shutdowns that occurred in 1995 and 1996:

Effects on Federal Staffing. An immediate and critical shutdown effect is the furloughing (placing in a temporary, non-duty, non-pay status) of federal employees. Exempted from furloughs are 
presidential appointees, Members of Congress, uniformed military personnel, and federal employees rated “essential.” “Essential” employees, required to work during a shutdown, are those performing duties vital to national defense, public health and safety, or other crucial operations. Shutdown furloughs are not considered a break in service and are generally creditable for retaining benefits and seniority.

Federal Employee Health Benefit Program (FEHBP) benefits continue for a year in a non-pay status, and the government continues to be obligated for its share of their health plan premium. Employees may continue to pay their share while on furlough, or they may elect to have their premium costs accumulate and have them deducted from their pay in a lump-sum when they return to work.

The AMA News reports that at a recent AMA meeting, the CMS Administrator Donald Berwick MD urged doctors to embrace the Administration’s health care quality and electronic medical record initiatives in order to avoid being left in the competitive dust. Here’s an interesting excerpt from the Q&A session at that meeting:

Payment methods should reward physicians and hospitals for keeping patients healthy, said Harold Miller, executive director at the nonprofit Center for Healthcare Quality and Payment Reform. “Nobody gets paid at all when patients stay well.”

Such payments could be possible under accountable care organizations, as mandated by the health reform law. At this article’s deadline, CMS was preparing to unveil a proposed rule on ACOs, which will allow physicians and hospitals to work together on coordinating care and sharing some of the savings that they generate for federal health programs.

But Miller said the public could turn against ACOs if people feel they are another way to ration care. [Federation of American Hospitals President Chip] Kahn questioned how ACOs will effectively coordinate care for patients who don’t stay in the care network.

Welcome, Mr. Kahn to the wonderful world of health insurers.

The Wall Street Journal reported at length on the problem that erroneous medical bills create for patients. According to the article,

There are no comprehensive statistics on medical-billing mistakes, but Stephen Parente, a professor of health finance at the University of Minnesota who has studied medical billing extensively, estimates that 30% to 40% of bills contain errors. The Access Project, a Boston-based health-care advocacy group, says it’s closer to 80%. 

I have a daughter who attends college out of state. I have had problems with her health care bills which are sent to the wrong health insurer. (These types of errors are included in the error percentage according to the article.) When I get the bills, I call the provider’s billing office which is quite willing to re-bill the correct insurer. Hopefully some of the CORE Operating Rules will help eliminate these types of mistakes over time. e.g., with improved real time eligibility records.

The AP reports that the Justice Department yesterday filed a motion asking U.S. District Judge Vinson to clarify his ruling the the Affordable Care Act is unconstitutional. The Government wants the Judge to state that States should continue to implement the law while the case is on appeal. The plaintiffs reported will file a response today.

There’s a lot going on up on Capital Hill but the FEHBlog will review that on Sunday.

The AMA News reports on a new study with another take on the correlation between hospital costs and mortality. This new study of California admissions suggests the existence of a correlation between more intensive /expensive care and lower mortality which is music to the ears of the hospital industry. Other studies disclaimed such a correlation. Another researcher cautions that

Part of this research riddle could be explained by looking at what happens to patients when they leave the hospital, said Amber Barnato, MD, MPH, associate professor of medicine at the University of Pittsburgh School of Medicine.

Dr. Barnato wrote a study published in the February 2010 Medical Care that examined the intensity of end-of-life care among more than 1 million patients at Pennsylvania hospitals from 2001 to 2005. She found that hospitals with high “treatment intensity” had better survival rates than those that deployed fewer interventions near the end of life. However, the mortality gap waned after six months and disappeared after one year.“Perhaps patients going to high-intensity areas are getting some more days or months of life, but they’re not on average living 15 more years,” Dr. Barnato said.

Yesterday, the Justice Department announced a large number of arrests and indictments for health care fraud. Among those indicted in Miami were

Victor Ramon Castillo [who] was charged with five counts of health care fraud, in connection withVida Group Services, Inc., in Miami, Florida. The indictment alleges that Castillo incorporated Vida Group, submitted an application to Blue Cross on behalf of Vida Group, opened a bank account, and submitted approximately $1,118,854 in fraudulent claims to Blue Cross, of which Blue Cross paid $298,038. The indictment alleges that many of the fraudulent claims were for Federal employees receiving health benefits under the Federal Employees Health Benefits Program. This case is being prosecuted by Assistant U.S. Attorney Robert Luck.

President Obama released his Fiscal Year 2012 budget yesterday. In the reductions and savings section, you will find the following proposal under the heading Reductions: Health Care (Pharmaceutical Proposals):

FEHB Program Pharmacy Benefit Contracting.  Under current law, health plans participating in
the Federal Employee Health Benefits (FEHB) program contract with pharmacy benefits managers who negotiate prices with drug manufacturers and pharmacies on behalf of their enrollees.  Under the current contracting arrangement, prescription drug costs have risen significantly and now consume roughly 30 percent of total FEHB program expenditures.  Under the Administration proposal, the Office of Personnel Management would be given authority to streamline pharmacy benefit contracting within the FEHB program and leverage enrollees’ purchasing power to reduce costs and obtain greater value for enrollees.

With all due respect to the Government, the FEHBlog notes that drug costs are a significant percentage of all health plan costs. In particular, the FEHB Program sees a particularly high percentage because 1/2 of FEHBP enrollees are annuitants and a large percentage of those annuitants are over age 65 and have primary health insurance coverage under Medicare Part A (hospital care) or Medicare Part A and B (physician and other health care provider services). FEHB Program annuitants typically do not opt for Medicare Part D prescription drug coverage. For these people, perhaps 25% of the total enrollment (the FEHBlog needs to track down that figure), Medicare pays the lion’s share of their hospital bills while the FEHB plans pay the lions share, if not all, of their pharmacy bills. It’s the demographics. The FEHBlog thinks that the plans are doing a good job providing prescription drug coverage to enrollees at a reasonable cost considering the demographics.

Here’s a link to the Administration’s discussion of OPM’s proposed FY 2012 budget.

The FEHBlog recently noticed that the OPM Inspector General has posted its semi-annual report to Congress for the period ended September 30, 2010.

Business Insurance discusses an interesting bounce of the Affordable Care Act ball. While the ACA amended the Internal Revenue Code to exclude from an employee’s income the cost of covering children up to age 27, that tax exemption does not automatically find its way into all tax codes. The FEHBlog found this Arlen Group report identifying the states, including California, with a disconnect. The Business Insurance report concludes

Employers with employees in nonconforming states will have to decide what approaches to take, consultants say. Some may wait and hope their states take action to bring state law into line with federal law on the issue.
“There is still sufficient time for states to act for 2011,” Aon Hewitt’s Mr. Piro said.

One such employer is the U.S. Government. Federal employees are not exempt from state income taxes on their federal salaries.

This AMA News article is fun reading, at least to the FEHBlog.

Physicians who are outside big insurers’ networks in several states can expect health plans to pay even less of the cost of their services as Medicare rates replace fee schedules based on “usual, customary and reasonable” rates, doctors organizations say.

The AMA danced on the grace that it dug for the Ingenix usual reasonable and customary databases. Be careful what you wish for. In the FEHBlog’s view, insurer reliance on the Medicare resource based relative value fee schedules make perfect sense. What’s more, doctors offices are familiar with those schedules which have been around since the early 1990s. That’s bending the cost curve down.

It’s about three weeks until the current continuing resolution (“CR”) funding the federal government, including the FEHB Program, expires on March 4.  The current CR is based on the appropriations approved for the previous FY 2010 fiscal year. On Friday, according to this Govexec.com report, the House majority leadership introduced a new CR that would cut $100 billion in funding (as compared to the President’s Fiscal Year 2011 budget proposal) for the remainder of the current fiscal year which ends September 30, 2011. OPM’s appropriations would be cut by $5.2 million according to this House Appropriations Committee chart. (OPM’s FEHB program operations are funded from the FEHB trust fund in the U.S. Treasury rather than general government appropriations. There is a 1% surcharge on FEHB premiums to fund OPM’s administration operations. However, Congress typically appropriates one-quarter of that surcharge for OPM use. The balance winds up being allocated to plan reserves.)  The House is expected to approve the Appropriations Committee’s bill. Then the Senate, where the Democrats have a 57-43 seat majority (including the two independents who caucus with them) will begin work on the CR. That’s when the fun begins.

Tomorrow, the President sends his FY 2012 budget proposal up to Capitol Hill. The House Ways and Means and Budget Committees will be holding hearings on the proposal later this week. So it’s a two front battle. 

Business Insurance reports that House and Senate Republicans have introduced a bill to eliminate the $2500 cap on health care flexible spending accounts which the Affordable Care Act (“ACA”) imposed effective in 2013 and the ACA’s restrictions on reimbursement of over the counter drugs that took effect this year. However, as FSA funding counts toward the ACA’s Cadillac or high cost health plan tax, I expect a sharp reduction in FSA offerings in 2018 even if this bill is enacted.

On Friday, the Department of Health and Human Services launched “a new web portal providing important health and health care indicator data to support innovations in information technology.”

The Health Indicators Warehouse is a collection of health indicators from a wide array of HHS data sources that are maintained to support researchers, technology developers and policymakers. Health indicators are measurable characteristics that describe the health of a population (e.g., life expectancy, mortality, disease incidence or prevalence, or other health states); determinants of health (e.g., health behaviors, health risk factors, physical environments, and socioeconomic environments); and health care access, cost, quality, and use. Depending on the measure, a health indicator may be defined for a specific population, place, political jurisdiction, or geographic area. Currently, the Health Indicators Warehouse includes nearly 1200 health indicators derived from over 170 different data sources, with all being downloadable via APIs.

Pretty cool.

The Kaiser Health News reports about a newly published book by a true contrarian — “Overdiagnosed: Making People Sick in the Pursuit of Health,” authored by Dartmouth researchers and physicians H. Gilbert Welch, Lisa Schwartz and Steven Woloshin.  Check out this excerpt from the Q&A with Dr. Welch:

Q. Many health care experts today say it’s important that everyone have a “medical home“: a primary care physician who’s their regular go-to person for routine and preventive care, and who coordinates their care with specialists and other health care providers when necessary. If you’re healthy, do you need a medical home?A. The patients that most need a medical home are those with multiple chronic conditions and who are on many medications.
For people who are well, the virtue of having a regular primary care physician is to establish a relationship and to establish the set of values that will guide your care. You can talk about where you are on the spectrum between aggressively looking for early signs of disease and waiting until you have symptoms to seek out treatment. The first may have the potential benefit of early diagnosis, but the potential harm of being diagnosed and treated for problems that will never become relevant.
Q. What’s on your wellness wish list?A. Let’s help people learn how to ask good questions of their doctors. How to understand risk and health statistics so they can make better decisions. Wellness programs could educate and inform people about how to be a critical consumer of health care. Wouldn’t that be something?

Speaking of medical homes, the AMA News reports on the NCQA’s recently revised accreditation standards for medical home providers. According to the report, the revised standards “place greater emphasis on patient feedback, access to physicians and care coordination.”  Here’s a physician’s perspective from the article:

Peter McDougall, MD, a solo family physician in Fort Worth, Texas, has been recognized as a level 3 NCQA medical home since March 2010. He was in a good position to receive recognition because he’s had an EMR system since 1997. Staff members enter data during patient visits and follow up with patients.
Dr. McDougall spent about $8,000 and several months in 2010 to receive the certification. He said his patients gave him a lot of positive feedback about the achievement. Most NCQA standards make a lot of sense, he said.
Dr. McDougall said doctors should look at NCQA recognition as a reward in itself, not a fast track to better payment. “If your goal is to increase payment by recognition, I think that’s way in the future and very cloudy,” he said. “I know the payers quite well. They really don’t have a good feel at all for what this process is.”

As FEHB plans are created by federal government contracts, it’s worth noting a Govexec.com report that “The Obama administration announced today [in the Federal Register] it was withdrawing a proposal that would have required federal agencies to post copies of contracts and task-and-delivery orders on a public website.”

The consulting group Milliman released its 2010 group health insurance survey which finds in pertinent part, as we lawyers like to say, that group health insurers plan to make greater use of

• pay for performance programs such as Bridges to Excellence
• risk sharing arrangements with health care providers
• price transparency tools for members, and
• tiered provider networks (PPO within a PPO)

Among the survey’s other key findings:
— 85% of respondents looked for health care information about symptoms [on the internet] before visiting a doctor while 71% of respondents said they brought a list of questions to ask their doctor during a visit. However, 41% indicated they were unsure how to discuss their concerns while 47% felt their doctors were rushed during the visit.
— Almost four in ten employees (39%) support incentives for using proven treatments versus 16% who support penalties for using treatments that research has shown work less effectively.

Yesterday, OPM issued a benefits administration letter to payroll offices on recent changes to its Federal Employees Group Life Insurance Program.

OPM is engaged in a major campaign to help employees and annuitants stop smoking — a campaign that enjoys the support of FEHB plans. The Washington Post reports that the top federal employee, President Obama, has quit smoking. The President deserves congratulations for that accomplishment.

Happy Super Sunday!

Govexec.com reports that Senate Appropriations Committee Chairman Daniel Inouye (D Hawaii) is predicting another short extension of the continuing resolution funding the federal government which now is scheduled to expire on March 4. The House was on recess last week, although the Budget Committee did issue a proposal for cuts to discretionary spending for the current Government fiscal year which the House Appropriations Committee will implement this week and the full House will take up during the week of February 14. That’s the same week that the Administration will issue its budget proposal for the federal fiscal year that begins October 1, 2011. The Senate will be on break the week of February 21 and is not expected to rubber stamp the House bill. That brings us to another short extension of the current continuing resolution. 

The FEHBlog ran across this interesting commentary about the looming U.S. doctor shortage in the AMA News. The commentary notes that “The number of Medicare-funded residency programs was capped at about 100,000 by the Balanced Budget Act of 1997.”  A Wall Street Journal op-ed in the Wall Street Journal seconds the point that “The doctor shortage was fostered in 1996 when Congress capped the number of new doctors Medicare would pay to train, a practice that continues to this day.” The Affordable Care Act funds 889 new primary care residencies according to the AMA commentary. That’s less than a 1% increase in the current cap. The shortage is expected to be 125,000 in 14 years. Puzzling.

Last week, the Centers for Medicare and Medicaid Services published a proposed rule which would require all Medicare participating providers to give Medicare beneficiaries written notice about their right to contact a Medicare Quality Improvement Organization (QIO) with concerns about the quality of care they receive under the Medicare program.  Currently, hospitals are subject to this obligation. The proposed rule would extend the requirement to doctors and other providers. This rule likely would not go into effect until 2012.

The Wall Street Journal published an article on the rapidly growing practice of employers offering wellness programs to their employees.

Employers spent an average $220 per worker on wellness incentive awards last year, up 35% from $163 in 2009, according to a survey of more than 1,200 employers from Buck Consultants, a benefits-consulting group based in New York. About 11% spent more than $500 per employee last year. Nearly three out of four North American employers have some sort of wellness program, according to the survey

OPM offers federal employees the healthierfeds program and it encourages FEHB plans to offer wellness programs. OPM’s principal focus this year is on its stop smoking program.

Business Insurance reports that the Virginia Attorney General plans to ask the U.S. Supreme Court to review the federal  District Court’s decision holding the Affordable Care Act’s individual mandate unconstitutional without taking the time for an intermediate appeal to the 4th Circuit. Ultimately the Supreme Court will decide this issue but my best guess is that the Supreme Court will allow the Circuit Courts of Appeal to weigh in fiirst.

AHIP Hi-Wire reports on the House hearings about the Affordable Care Act held on January 26 and the slew of Affordable Care Act related bills that already have been introduced in Congress. Among them is the following

Rep. Darrell Issa (R-CA) introduced a bill (H.R. 429) proposing to repeal the health reform law and establish a program administered by the Office of Personnel Management to offer federal employee health benefits plans to individuals who are not federal employees

Mr. Issa is the chairman of the House committee with FEHBP oversight responsibility.

Inside Health Reform via AHIP HI-Wire reports that at a recent Brookings Institution meeting CMS Administrator Donald Berwick announced that CMS soon will release a proposed rule on the new “accountable care organization” concept and unveil ACO demonstrations to include Medicare beneficiaries and private payer plan participants. According to the article, “CMS is talking to private payers about public-private partnerships and about how clinically integrated organizations can align what they are doing for patients with private insurance with the goals of ACOs, Berwick told reporters after his presentation. (The Federal Trade Commission has warned that broad-based ACOs involving private payers could raise antitrust concerns, but the FTC has been working out those matters with CMS.)”

AIS reports that “Several Blue Cross and Blue Shield plans are moving forward on patient-centered medical home (PCMH) development and starting discussions with providers about accountable care organization (ACO) formation. And a handful of Blues plans actually have ACO pilots in operation.”  The article surveys these efforts.

BlueCross BlueShield of Tennessee is typical of the plans that are closely watching what’s going on in the ACO space. “At this point, BCBST is looking at the market and proceeding slowly regarding ACOs,” says Tom Lundquist, M.D., vice president of performance measurement and improvement. “There’s a lot of talk about ACOs, and some provider groups and hospitals have said they’re interested in having discussions.” Trouble is, he adds, “some [of the providers] believe they’re ready to become an ACO without really discussing the finer points. We’re still not sure what the definition is, so we’re waiting for ACOs to be fully defined.”

The Senate today rejected a Republican proposal to repeal the Affordable Care Act on a straight 47-51 party line vote. Sixty votes were required for approval of this amendment to the FAA Reauthorization Act (S. 223) because the CBO has opined that repeal would increase the federal budget deficit. However, the Senate did approve by a 81-17 bipartisan vote an amendment to S. 223 that would repeal the Affordable Care Act’s vastly expanded IRS Form 1099 reporting requirements.

Business Insurance reports that HHS has officially moved its Affordable Care Act implementation office from the Secretary’s office to the Centers for Medicare and Medicaid Services.  The name of the office has been changed from the Office of Consumer Information and Insurance Oversight (an acronym I liked) to Center for Consumer and Insurance Oversight. (Rhetorical question — Why do consumers require oversight?)  The office has a new director, Steve Larsen, who formerly was Maryland’s insurance commissioner. Jay Angstrom who lead OCIIO will remain in the Secretary’s office. The new Center’s website is up. CMS’s new organization chart is here.

Yesterday, the U.S. District Court for the Northern District of Florida struck down the Affordable Care Act as unconstitutional at the request of 26 States, the NFIB, and two individuals. The Court in a 78 page opinion  held that the Commerce Clause of the U.S. Constitution and the related Necessary and Proper clause does not grant Congress the power to regulate inactivity, specifically the failure to buy health insurance.  The federal government has appealed the decision to the U.S. Court of Appeals for the 11th Circuit.

The U.S. Court of Appeals for the 4th Circuit has decided to expedite its consideration of the government’s appeal of the U.S. District Court for the Eastern District of Virginia’s decision similarly holding the Affordable Care Act’s individual mandate unconstitutional according to Business Insurance.  The Court will hear argument in May 2011. It certainly appears that we are headed toward a Supreme Court decision in 2012. Ever since the Supreme Court’s decision in the most recent case concerning the FEHB Program, the FEHBlog has given up predicting Supreme Court decisions.

The Senate Judiciary Committee is holding a hearing on the Constitutionality of the Affordable Care Act tomorrow at 10 am. The Chairman of the House Judiciary Committee has promised a hearing on the same topic later this month.

The Hill healthcare blog reports that the Senate may vote tomorrow on a  Senate Minority Leader proposed  amendment to an FAA reauthorization bill (S. 223) that would repeal the Affordable Care Act. “Democrats will likely use a maneuver that would force the GOP to round up an impossible 60 votes to repeal the reform law, meaning that 13 Democrats would have to vote with Republicans.” The Senate also will vote on a separate measure to repeal the Affordable Care Act’s expansion of 1099 tax reporting.

The AMA News reports on the progress of a House measure to control health care provider liability for malpractice. The article notes that 

“The AMA does not favor repealing the entire health reform law, but it would support amending it with medical liability reform legislation, a measure to fix the Medicare physician pay formula, and a bill to repeal a provision in the law requiring additional expense reporting by businesses that would apply to some physician practices, said AMA President Cecil B. Wilson, MD. Obama and many Democrats in Congress have said they would support repealing the business expense reporting provision.”