FEHBlog

The Affordable Care Act requires employers, including the U.S. Government, to report the cost of employee health insurance on the annual W-2 form as a way to make that cost more visible to employees. The Internal Revenue Service released a draft 2011 W-2 form today — the form that will be used in January 2012 — and announced that the IRS will not enforce this requirement until the 2012 reporting year — the W-2 that will be distributed in January 2013.

The Labor Department issued two more FAQs on Affordable Care Act implementation, neither of which applies to the FEHBP.

AHIP has launched a Spotlight on Community Leadership, an online showcase of the innovative efforts of AHIP Member Organizations to improve the health and well-being of those in their communities through special outreach and service programs.

The Wall Street Journal reports that an increasing number of people are declining to pick up or purchase their filled prescription at the pharmacy. The Journal compared records from the second quarter of this year to records from 2006 before the Great Recession. However, the FEHBlog has noticed that its pharmacy has begun to refill prescriptions without being asked. That’s another change from 2006. So is it possible that the customer does not know that the prescription needs to be picked up. The Journal also reported on a new program by prescription benefit manager Express Scripts “that aims to contact people who fail to take their prescription drugs—before they actually stop.”

On Friday, the Labor Department issued a set of new frequently asked questions about the regulations implementing the Affordable Care Act’s insurance market reform provisions. Most of the guidance concerns the circumstances under which a group health plan loses grandfathered status. That’s not a continuing issue for most FEHB plans because the initial regulatory guidance came out after the 2011 benefit and rate proposals had been submitted to OPM. The Q&A on rescissions confirmed the anti-rescission provision’s broad scope, while the Q&A on preventive health services provided useful guidance to FEHB plans.

The National Healthcare Anti-fraud Association, an excellent organization to which many FEHB plan carriers and the OPM Inspector General’s office belong, issued a white paper on combating health care fraud in the post-health care reform world. The organization’s press release explains “Health care fraud is both a multi-billion-dollar crime and an endangerment to public health. NHCAA’s white paper concludes that the fight against health care fraud will be enhanced if measures such as increased sharing of anti-fraud information, stronger auditing procedures and greater investment in fraud-fighting programs are adopted.”

Govexec.com reports on premium increases in the federal employee dental and vision insurance program (FEDVIP) for 2011.

The FEHBlog is hopeful that unlocking the human genome will lead to new, more effective treatments that over time will reduce health care costs. The Wall Street Journal posted an article by author Matt Ridley who writes on genomics and takes the opposite viewpoint. Mr. Ridley’s latest book is the Rational Optimist.

OPM today issued its annual benefits administration letter identifying significant changes to the FEHB Program for 2011. There are two new HMOs joining the Program for 2011 and there are a number of HMOs that are either leaving the Program or modifying their service areas. Employees currently enrolled in plans that will be unavailable in 2011 must re-enroll in the upcoming Open Season for a replacement plan.

Dear FEHBlog readers, the FEHBlog apologize that the chart that I posted last night did not fit on the blog page. It looked OK in the composition box. Fortunately, I discovered the mistake earlier today, and it’s fixed now.

In the fact sheet that OPM posted about 2011 FEHB premiums on October 1, the agency remarked

OPM will soon launch a new Health Claims Data Warehouse which will become a useful tool for analyzing health services data from the FEHB plans. The warehouse will allow OPM to better understand the health of federal employees, as well as the cost and quality of care they receive. The warehouse will give OPM the ability to manage the program so that employees and tax-payers get the best value.

Today, OPM published in the Federal Register a Privacy Act system of records notice about the health claims data warehouse. Govexec.com reports that this notice has raised concerns with privacy advocates.

The Labor Department has posted on its Affordable Care Act website links to the public comments which were filed about the interim final rule implementing the Affordable Care Act’s preventive care mandate (applicable to non-grandfathered plans) and the Act’s internal claim and appeal mandate .  This mandate will be treated as the new internal claim and appeal standard for the FEHB Program in 2011.  The OPM external appeal process created by the FEHB Act and OPM regulations is unaffected by the Affordable Care Act.

OPM has provided the following breakdown of factors contributing to the FEHBP premium increases:

While no one likes price increases, the FEHBlog thinks that this breakdown makes the 2011 increase understandable. Considering the FEHB Program’s enrollment (1/2 of the Program enrollment is annuitants, average age of employees is in the late 40s, etc.), it is surprising that the actual increase is lower than the predictions that benefit consultants are making for average premium increases in large employer groups for 2011 (as the FEHBlog has recounted).  That speaks well of OPM, the FEHB plan carriers, and the federal and postal employees and annuitants participating in the Program who clearly work together to control costs.

OPM released 2011 FEHBP and FEDVIP premiums on Friday.  The Washington Post, the Federal Times, Govexec.com, Federal News Radio, Business Insurance, and the Federal Daily reported on the news. NARFE and NTEU issued press releases. Blue Cross FEP and GEHA have already posted information about their 2011 benefit offerings. Open Season is in the air.

The U.S. Office of Personnel Management today announced 2011 FEHBP and FEDVIP rates today in advance of the Federal Benefits Open Season that runs from November 8 through December 13, 2010.

The Federal Times identifies the health plans that are leaving and joining the FEHBP for 2011. 

Congress has left town to campaign for re-election. Before leaving, Congress passed a continuing resolution to fund federal government operations through December 3, 2010. The Federal Times provides a helpful rundown of the specific funding measures included in the resolution.

Congress will return for a lame duck session on November 15, 2010. The AMA already is beating the drum for a new Medicare fix. Absent Congressional action, “On December 1 of this year, Medicare payments for physician services are scheduled to be cut by 23%. A 6.5% reduction is intended to follow on January 1, 2011.”

Thanks to yesterday’s Politico Pulse, I ran across the American Hospital Association’s 46 page summary of the Affordable Care Act’s health insurance reforms.  The consulting firm Towers Watson issued a report on its second survey of employer reactions to these reforms. According to that report,

Not surprisingly, most respondents indicate that their current focus is on compliance with the law rather than on how it might affect their longer-term health care benefit strategies. However, respondents said their focus will shift to rethinking strategies and developing multiyear approaches in 2011. What’s more, some employers are making significant changes to their health benefit plans now.

Also of interest, many respondents said they plan to increase their efforts to encourage employee participation in health-related programs such as wellness programs, behavioral outcomes (e.g., management of target body mass index, weight loss) and health risk assessments.

FEHB plans are engaged in the same processes — trying to comply with the Affordable Care Act’s mandates within a very short tight frame and to cooperate with OPM’s efforts to improve the health and well being of federal and postal employees and annuitants.

Govexec.com reports that the Senate leadership has unveiled a continuing resolution to fund federal government operations at current fiscal year levels through December 3, 2010. The Senate may vote on the resolution tomorrow. However, according to the Politico, Sen. Mary Landrieu (D La) has placed a hold on Senate floor consideration of the nomination of Jacob “Jack” Lew to be Office of Management and Budget Director.

Hewitt Associates, the benefits consulting firm, published a survey of 350 large employers projecting “an 8.8 percent average [health benefits] premium increase for employers [in 2011], compared to 6.9 percent in 2010 and 6.0 percent in 2009.” OPM should be releasing 2011 FEHB premiums soon. The FEHBlog, who is not an actuary, found this fact surprising:

In 2010, Hewitt saw average cost increases of 7.8 percent for health maintenance organizations (HMOs), 6.9 percent for point-of-service (POS) plans and 6.3 percent for preferred provider organizations (PPOs).

For 2011, Hewitt forecasts that companies will have average cost increases of 8.5 percent for PPOs and POS plans. Companies will see an average cost increase of 9.4 percent for HMOs. That means from 2010 to 2011, the average cost per person for major companies will increase from $8,671 to $9,408 for PPOs; $9,373 to $10,254 for HMOs; and $9,747 to $10,575 for POS plans.

This may result from the fact that HMOs tend to be concentrated in higher cost urban areas. Hewitt reports that

In 2010, a few U.S. markets experienced rate increases significantly higher than the national average. Five major metropolitan areas in California, for example, experienced rate increases of 10 percent or higher: Los Angeles (10.2 percent), Orange County (10.6 percent), Sacramento (10.7 percent), San Diego (10.8 percent), and San Francisco (10.4 percent). Other U.S. cities experiencing higher-than-average rate increases included Charlotte (9.7 percent); Newark, NJ (10.8 percent); Philadelphia (10 percent); and Tampa (9.2 percent). Conversely, Columbus, Ohio (4.3 percent); Dallas/Ft. Worth (3.7 percent); Portland, OR (4.6 percent); and Washington D.C. (4.0 percent) experienced lower-than-average rate increases in 2010.

The Labor Department has posted on its EBSA website the 145 public comments submitted on the June 28 Affordable Care Act regulations implementing the patient protection provisions.  Also posted there are the archives of the Labor Department’s webinar on the Affordable Care Act presented earlier this month. You’ll find them under the Webcasts heading on the upper right hand side of the page.

The House of Representatives and the Senate are closing to taking a break for the elections, and the federal government’s fiscal year expires on September 30. Govexec.com reports that both legislative bodies are working on a continuing resolution to maintain the funding of federal government operations, including the FEHB Program, past that date.

Business Insurance reports that “The U.S. Government Accountability Office has appointed 19 members of a new center for comparative effectiveness research [known as the Patient-Centered Outcomes Research Institute] established by the Patient Protection and Affordable Care Act.” According to GAO’s press release which includes the appointees’ biographies

PCORI [is] a non-profit organization to assist patients, clinicians, purchasers, and policy-makers in making informed health decisions by carrying out research projects that provide quality, relevant evidence on how diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed. The Act directs the Comptroller General to appoint 19 of the 21 members of the PCORI Board of Governors. In addition to these 19 members appointed today, the Director of the Agency for Healthcare Research and Quality and the Director of the National Institutes of Health, or their designees, are the other two members who will serve on the PCORI Board.

The FEHBlog understands that the PCORI Board is one of the Affordable Care Act initiatives intended to bend the health care cost curve down.  Unfortunately, however, as interpreted by the National Association of Insurance Commissioners last week, costs that health insurers incur to actually hold down costs such as utilization review and anti-fraud measures do not count as medical expenses. Draft regulation, p. 31.  If an insurer does not spend at least 85% of premiums on medical expenses (for group insurance — 80% of individual insurance), the difference between the spend and this minimum percentage must be rebated.

Yesterday, the FEHBlog noticed a road sign stating that our nearby hospital Suburban Hospital is a member of the Johns Hopkins Medicine. The Washington Post reported today that Johns Hopkins Medicine has its eye on acquiring another local hospital, Sibley. According to this report

The acquisitions are part of a wave – particularly in the mid-Atlantic region – of consolidations leading to fewer independent hospitals and doctors, a trend that many industry executives say will grow because of the health-care overhaul.

The action in the mid-Atlantic is being watched closely, with experts saying consolidation in other parts of the country has led to higher health-care prices – size is power, and commanding market share can give hospitals an edge in negotiations with insurers. 

Last week, “CAQH® [an industry coalition of health insurers and health care providers] released the results of a landmark study to assess the quality and accuracy of data reported by providers about their professional credentials and practice information at its 2010 Administrative Simplification Conference.”  This data is part of CAQH’s Universal Provider Datasource (“UPD”).  CAQH explains that “By streamlining data collection electronically, UPD is reducing duplicative paperwork and millions of dollars of annual administrative costs for more than 800,000 physicians and other health professionals, as well as over 550 participating health plans, hospitals and healthcare organizations.” According to its press release.

The results showed that the sampled UPD data was 93.9% accurate. Based on the study findings, CAQH has initiated an array of system edits, adjustments to data fields and respondent prompts to make instructions clearer for providers. These system refinements will improve UPD provider data quality: accuracy is expected to increase to 97% or more. This will strengthen the utility of UPD for enterprise-wide adoption by health plans, hospitals, healthcare delivery organizations, healthcare information exchanges, and state and federal governments.

Good news.