FEHBlog

OPM posted on its health care reform website today a summary of the webinar held earlier this month. As the FEHBlog explained, the webinar helpfully covered dependent eligibility changes in the FEHB Program for 2011, including how to cover newly eligible children between over age 21 but under age 26 under an FEHB plan on January 1, 2011.

The Health and Human Services Department today released the interim final rule implementing the Affordable Care Act’s minimum loss ratio requirement applicable to health insurers (but not self-funded plans) next year. HHS adopted the National Association of Insurance Commissioners’ recommendations for this rule. An HHS fact sheet is available here. Businessweek reports that as a result of the end of market uncertainty over the rule’s content, “Several large health insurance stocks climbed Monday while the broader market fell”. In other words, it could have been worse for insurers.

Last week before the Senate left town for Thanksgiving, Jacob “Jack” Lew was confirmed to be director of the Office of Management and Budget according to the Washington Post. Mr. Lew held the same position for a spell during the Clinton Administration.

As we head into the third week of the Federal Benefits Open Season and the second week of Congress’s lame duck session, Congress has made movement in extending the life of the Medicare Part B physician reimbursement patch beyond November 30. The Hill reports that the Senate passed a bill that would extend the patch’s life until the end of the year. The $1 billion cost of the extension will be paid for by reductions in Medicare payments to physical therapists. The House is expected to take up this bill right after Thanksgiving. “[Senate Finance Committee Chairman Max] Baucus and [Finance Committee ranking member Chuck] Grassley also agreed they would work together to pursue a year-long fix to the formula that could be enacted before the month-long patch expires.”

The New York Time reports today on the “growing frenzy” of hospital and doctor group consolidation created by the Affordable Care Act (“ACA”). 

Business Insurance reports on the first round of guidance that the ACA regulators have issued to the States about the State health insurance exchanges that the ACA requires to be operational in 2014. 

In the initial guidance, HHS notes that states will have the option to establish exchanges as a governmental agency, either as part of an existing agency or through the creation of a new state agency. Alternatively, an exchange could be part an independent public authority, as is the case in Massachusetts. The guidance also says exchanges could negotiate rates with insurers or could act as a “clearinghouse” that would be open to all qualified insurers.

CVS Caremark announced last week the results of

A new study by Harvard, Brigham and Women’s Hospital and CVS Caremark researchers has found a direct correlation between the amount of a patient’s out-of-pocket co-pay and likely abandonment of the prescription, with patients having a co-pay of $50 almost four times more likely to abandon a prescription at a pharmacy than those paying $10. The study also found that e-prescriptions are 65 percent more likely to be left abandoned at a retail pharmacy by patients than are hand-written prescriptions. * * * The researchers said that if the 3.27 percent abandonment rate observed during the study period is applied to the 3.6 billion prescriptions filled at pharmacies in 2008, approximately 110 million prescriptions would be abandoned. The researchers outlined a predictive model for pharmacists to apply to help them recognize likely candidates for abandonment that includes

• Reviewing the individual’s benefit plan and tiered co-pays. The study said cost is the strongest predictor of abandonment. The data shows a 1.4 percent prescription abandonment rate for patients with co-pays of $10 or less, a 3.4 percent rate for patients with co-pays between $30 and $40 and a 4.7 percent rate for patients with co-pays of $50.
• Understanding past pharmacy behavior. Patients with first-fill prescriptions are three times more likely to abandon prescriptions than those who are re-filling their medication.
• Identifying the age of the patient. Younger patients are more likely than older patients to abandon their medications.
• Reviewing the drug class. The study found that opiates, anti-platelets and statins were the least likely to be abandoned, while insulin and proton pump inhibitors were more likely to be abandoned.

The FEHBlog wonders why retail pharmacies don’t require customers to pay at the time that prescription fill or re-fill request is made. That’s the common practice among mail order pharmacies.

The Federal Times offers readers a cornucopia of articles focused on the FEHB Program in this week’s issues. The topics include

• plan member satisfaction ratings
• continuing interest in plans with lower premiums
• expanded coverage of in-network preventive care and smoking cessation programs in 2011
• extended eligibility of children under self and family to age 26 beginning in 2011, and
• the availability of new GEHA and MHBP sub-options that will reimburse annuitants for at least a portion of the Medicare Part B premiums.

On Monday, the Affordable Care Act regulators issued an amendment to the interim final rule on grandfathered plans. The accompanying press release explains that the amendments allow[s] group health plans to change insurers “and remain grandfathered, as long as the change in issuer does not result in significant cost increases, a reduction in benefits, or other changes described in the original grandfather rule.” The change is prospective only, e.g., the group health plan decided to change insurers in September but the change takes effect January 2011.  This change is in alignment with the original rule’s provision permitting group health plans to convert from insured to self funded status without losing grandfathered plan status. This change has little impact on the FEHB Program because for most plans the grandfathered plan ship has sailed.

OPM announced yesterday that the agency is revising the Privacy Act system of records notice, initially published on October 5, concerning the FEHB Program claims data warehouse that it intends to create in order to improve the FEHB Program. OPM explained that

Based on the comments we have received since we published the initial notice, OPM is considering revisions to the systems notice to, among other things, provide greater specificity regarding the authorities for maintaining the system, clarify its intent to significantly limit the circumstances under which personally identifiable records may be released, and provide a more detailed explanation of how the records in this system will be protected and secured. If OPM publishes a revised systems notice, the public will have the opportunity to comment on the revised notice before OPM begins operating the system.

OPM will continue to accept comments on the October 5 notice until December 15, 2010.

The FEHBlog on Sunday discussed generic drug savings. Business Insurance reports today that “Health care plans have reduced pharmaceutical costs by dispensing generics more often, but they could do a better job of monitoring whether plan members take their medication as prescribed, a report by the National Business Coalition on Health concludes.”  This is just one of the findings in the Coalition’s annual eValue8 report.

CMS announced today that it has

established the new Center for Medicare and Medicaid Innovation (Innovation Center). Created by the Affordable Care Act, the Innovation Center will examine new ways of delivering health care and paying health care providers that can save money for Medicare and Medicaid while improving the quality of care.  CMS also announced the launch of new demonstration projects that will support efforts to better coordinate care and improve health outcomes for patients. 

According to the press release the new demonstration projects will test the “health home” and “medical home” concepts which are designed to strengthen primary care and better coordinate care for patients.

Well, as we enter the second week of the Federal Benefits Open Season, Congress returns for its lame duck session and Medicare starts its annual Open Season for Medicare Advantage and prescription drug plans.

The Federal Times reports that

More than six weeks after the Oct. 1 start of the fiscal year, agencies are operating off a continuing resolution that generally leaves spending at fiscal 2010 levels. The [continuing] resolution [that Congress passed before the November 2 election] expires Dec. 3; the question is whether lawmakers will belatedly approve a dozen fiscal 2011 spending bills — possibly as a catch-all “omnibus” package — or punt a final decision into next year by passing another continuing resolution.

In addition to appropriations, Congress may consider the American Medical Association’s request to keep the Medicare Part B reimbursement “patch” in effect through the end of next year. Absent Congressional action, Medicare Part B reimbursements will be cut by 23% on December 1.

Business Insurance reports that “Senate Finance Committee Chairman Max Baucus, D-Mont., said Friday that he will introduce legislation to repeal a[n Affordable Care Act] requirement that employers furnish 1099 statements if they do more than $600 in business with a corporate vendor.” A similar effort failed in September.

The Hill reports that “An employer-backed group [called Save Flexible Spending Plans] is pressing the new leaders in Congress to alleviate restrictions placed on flexible spending accounts by the health reform law. The group is demanding that Congress delay or repeal the Affordable Care Act’s requirement — effective next year — that flexible spending account (and group health plan) participants must obtain a doctor’s prescription for over the counter drugs (except insulin) in order to receive plan reimbursement. The OPM presenters discussed this change in last week’s webinar. According to the Hill, the group’s chairman, Joe Jackson, “called the provision ‘an utter waste of consumers’ and physicians’ limited time’ that will only increase healthcare costs.

Speaking of drugs, Reuters reports that “The U.S. healthcare system will reap at least $70 billion in savings over the next four years as brand-name medicines become available as lower-cost generics.”

The healthcare system has become ever more efficient at driving patients to generics. When a generic alternative is available, doctors prescribe it 93 percent of the time, up from 83 percent in 2003, according to IMS.

Among the high-profile drugs losing U.S. patent protection during the 2011-2014 period are the world’s two top-selling medicines: Pfizer Inc’s (PFE.N) Lipitor cholesterol treatment and the blood-clot preventer Plavix, sold by Bristol-Myers Squibb (BMY.N) and Sanofi-Aventis (SASY.PA).  Other widely sold medicines set to see generic competition include Eli Lilly’s (LLY.N) Zyprexa schizophrenia drug and Merck’s (MRK.N) Singulair asthma treatment.

In contrast to low priced generics, the New York Times reports about a

controversial review by the Centers for Medicare and Medicaid Services [CMS] to determine whether to pay for Provenge, which costs $93,000 per patient and extended lives by about four months in clinical trials. Medicare advisers will meet next Wednesday  [November 17] to discuss the drug, which was developed by Dendreon, a Seattle-based biotechnology company.

Provenge is the first so-called therapeutic cancer vaccine – meaning it works by training the patient’s immune system to attack the tumor – to win F.D.A. approval. The treatment is made for each patient from his own blood. Sales have been small so far because Dendreon’s manufacturing capacity has been limited.

A Washington Post report predicts that the CMS review panel will approve Medicare coverage of Provenge. According to the Post, “most private insurers already pay for Provenge, and Medicare patients can receive it while the government conducts its review.”

OPM held a very useful webinar for federal benefits enrollees on Wednesday. For about 20 minutes OPM presenters discussed the principal Affordable Care Act changes to the FEHB Program and FSAFeds. Of course the principal FEHB Program change is the expansion of dependent children coverage to age 26. OPM announced that the Powerpoint slides from webinar will be posted to OPM’s federal benefits website  next week. OPM  also post a set of child eligibility Frequently Asked Questions (FAQs) to on the agency website shortly.


The OPM presenters explained that if you are a federal or postal employee who needs to convert from self only to self and family coverage in order to re-enroll a child over age 22 but under age 26 (an aged out child) or who will be switching plans during the current Open Season, you should make this change using the Qualifying Life Event (QLE) process rather than the Open Season change process. 


The QLE change process will permit the child’s coverage to resume on January 1, 2011. In contrast the Open Season change process will cause the child’s coverage to resume on January 2, 2011 (or in certain circumstances January 8).  The Open Season change effective date for annuitant enrollees is January 1 so annuitants don’t face this timing quirk. 


Employed and annuitant enrollees who have self and family coverage now and are not changing plans this Open Season can add back an aged out child by notifying the Plan in accordance with the Plan’s instructions (not by using an SF 2809). The process will be seamless for children who will not reach their 22nd birrthday before the end of this year. Those children will receive extended coverage to their 26th birthdays. For complete information, consult OPM’s benefit administration letter.

Computerworld reports that OPM likely will delay the scheduled November 15 launch of its new systems of records intended to create a warehouse of FEHB plan claims data. “Harley Geiger, policy counsel for the CDT, said on Monday that the OPM had informed the CDT that it will soon be releasing more detailed information on the database, and on the privacy and security controls that will be put into place to protect the data.”

Many FEHBP enrollees also have Medicare coverage. Last week, the Centers for Medicare and Medicaid Services announced that in 2011 

the Medicare Part A deductible for inpatient hospital care will be $1,132 in 2011, an increase of $32 from this year’s $1,100 deductible. The Part A deductible is the beneficiary’s cost for up to 60 days of Medicare-covered inpatient hospital care in a benefit period. Beneficiaries must pay an additional $283 per day for days 61 through 90 in 2011, and $566 per day for hospital stays beyond the 90th day in a benefit period. [Medicare provides a lifetime reserve of sixty days of inpatient care for confinements lasting beyond the 90th day] For 2010, the per-day payment for days 61 through 90 was $275, and $550 for beyond 90 days. 

The Medicare Part B deductible for physician care will be $162 in 2011. When FEHBP coverage is primary to Medicare, FEHB plans typically will pay these amounts.

The standard Medicare Part B monthly premium will be $115.40 in 2011, a $4.90 increase (or 4.4-percent) over the 2010 premium. The premium is income adjusted. The majority of Medicare beneficiaries will continue to pay the same $96.40 premium amount they have paid since 2008 because there will be no cost of living adjustment to Social Security benefits in 2011. Federal annuitants who receive a CSRS annuity are not eligible for the hold harmless protection. NARFE is attempting to get a legislative fix to this problem when Congress returns for its lame duck session next week.

The AHIP staff reports that

While the agenda for this lame duck session is somewhat uncertain, it may also address a Medicare physician payment “fix,” data security legislation, an extension of the 2001 and 2003 tax cuts, and possibly any recommendations that are agreed to by the National Commission on Fiscal Responsibility and Reform.

Completing the annual appropriations process, possibly through an omnibus spending bill, will be the top priority when Congress reconvenes in mid-November. To date, Congress has not approved any of the annual appropriations bills for fiscal year 2011. Instead, in late September, Congress passed a “continuing resolution” (H.R. 3081) that provides temporary funding for federal programs and agencies – including those within the Department of Health and Human Services (HHS) – from October 1, 2010 through December 3, 2010. Most programs are being funded at fiscal year 2010 levels during this time period.

The American Medical Association supported by the White House supports a 13 month long patch to the Medicare Part B physician reimbursement formula. The patch would postpone the impending 25% cut that begins to phase in on December 1, 2010, absent legislation. According to California Healthline,

Lawmakers have not yet proposed offsets for the 13-month fix, which is expected to cost an estimated $17 billion to $20 billion. According to Senate aides, the lawmakers’ hesitation on offsets makes passage of the 13-month fix by Thanksgiving unlikely.

Congress reconvenes on Nov. 15 for one week prior to the Thanksgiving recess. Lawmakers then return on Nov. 29 — two days before the Medicare cuts are scheduled to take place — for the session’s final weeks. Julius Hobson — senior policy adviser with Polsinelli Shughart — said lawmakers might opt for a one-month fix for reimbursements, which would buy them time to consider the 13-month patch during the final weeks of the legislative calendar before Christmas. 

Here’s OPM’s announcement. The FEHBlog will be listening.

OPM’s Federal Benefits Open Season, which encompasses the Federal Employees Health Benefits Program, the Federal Employees Dental and Vision Insurance Program, and the Flexible Spending Accounts for Federal Employees (FSAFEDS) starts tomorrow and runs through December 13. The FEHBlog discovered today that OPM has an extensive set of frequently asked questions about federal employment and federal employee benefits.

OPM offers a health benefits plan comparison tool on its web site, and Asparity Decision Solutions offers its own web based tool that considers your estimated health care expenses.

Govexec.com offers a timely report on the wide range of plan choices available to federal employees, and
Tammy Flanagan of the National Institute for Transition offers her advice on coordinating FEHBP and Medicare coverage.  Ms. Flanagan will be interviewing FEHB plan executives on upcoming episodes of  the radio program “For Your Benefit” on Monday mornings at 10 a.m. ET on federalnewsradio.com (listen online) or on WFED AM 1500 in the Washington metro area.

• Nov. 8: Jane Overton, GEHA Federal Health Plan (Fee-for-service plan and HDHP)
• Nov. 15: John Patrick, Kaiser Federal Health Plan (HMO)
• Nov 22: Tom Bernatavitz, Aetna Federal Health Plan (HMO/consumer-driven plan and HDHP).
• Nov 29: Walt Wilson, SAMBA Federal Employee Benefit Association (Fee-for-service plan)