FEHBlog

The President signed the Patient Protection and Affordable Care Act into law six months ago today. OPM posted on its website today a benefits administration letter that explains the Affordable Care Act driven changes to the FEHB Program that take effect January 1, 2011.

The Department of Health and Human Services (HHS), the Department of Labor, and the Internal Revenue Service principally are responsible for implementing the Affordable Care Act. The FEHB Program is subject to their Affordable Care Act regulations. Historically in accordance with the FEHB Act, the Program has operated under OPM regulations. However, for the past decade or so, Congress has modified the FEHB Program by amending the Public Health Service Act which HHS administers. 

HHS has delegated to OPM responsibility for administering the fall back Pre-existing Condition Insurance Plan administrator contract, which is held by a FEHB plan carrier, GEHA.  More recently, HHS delegated to OPM responsibility for handling external claim appeals from insureds covered under health insurance policies issued by insurance companies in states which don’t have a federally approved external appeal program as of today.

The National Association of Insurance Commissioners released a draft regulation implementing the Affordable Care Act’s minimum medical loss ratio provision which applies to all health insurers next year. The NAIC will consider the draft next month and then will send it off to HHS for actual rule-making. The Wall Street Journal reports that the draft is a mixed bag for insurers.

Govexec.com reports that the Senate Budget Committee today approved the Jacob “Jack” Lew’s nomination to be Director of the Office of Management and Budget. The full Senate now can consider the nomination, possible before it adjourns on October 8 for the elections. “If confirmed, Lew said he would conduct an exhaustive review of every federal agency to trim waste and inefficiencies.”

The Senate Homeland Security and Governmental Affairs approved the nomination of Jacob “Jack” Lew to be Office of Management and Budget Director by a 9-0 vote today. The Washington Post reports that the Senate Budget Committee also must vote on the nomination before the full Senate can consider confirmation.

The agencies responsible for implementing the Affordable Care Act — Health and Human Services, Labor, and the Internal Revenue Service — have issued a set of frequently asked questions that address a variety of compliance issues. Business Insurance reports on the new guidance.

The Federal Times reports on a proposed Centers for Medicare and Medicaid Services rule to aggressively combat Medicare fraud and abuse by health care providers. Among other initiatives, the proposed rule would cause CMS to “rate all types of medical providers by their risk for engaging in fraud. Those at highest risk would undergo fingerprinting and criminal background checks. New home-health agencies and suppliers of home-health equipment that are not publicly traded companies would initially get this increased screening.”

A FEHBlog reader recently commented on rising FEHB plan premiums for former spouses. There’s no doubt that FEHB plan premiums have been rising — in my view due principally to the group’s demographics and rising medical costs. Before Congress approved self-pay COBRA continuation coverage for private sector health plans in 1986, Congress provided self-pay FEHB continuation coverage for certain former spouses. In contrast to COBRA continuation coverage which lasts 36 months for former dependents, FEHB former spouse coverage can last for the individual’s lifetime. Former spouse coverage is explained at this OPM website. Congress later extended self-pay continuation coverage rights to former employees and former dependents, including ex-spouses who are ineligible for former spouse coverage. This is known as temporary continuation coverage or TCC and it’s very similar to COBRA. Both former spouse and TCC enrollees have Open Season rights like federal and postal employees and annuitants. They can elect lower cost plans during the Open Season if desired.

The Senate Homeland Security and Government Affairs Committee will consider President Obama’s nomination for Office of Management and Budget Director Jacob “Jack” Lew on September 21. Govexec.com reported on Mr. Lew’s confirmation hearing before that Committee last week. The Federal Times reports that

If he gets the job of Office of Management and Budget director, Jacob Lew will push the Office of Personnel Management to respond to findings that the U.S. Postal Service overpaid its pension obligations by tens of billions of dollars, according to a written answer he provided on a Senate Homeland Security and Governmental Affairs Committee questionnaire.

Barron’s posted a Caris & Co.’s review of the pharmacy benefit manager (“PBM”) pricing environment.

In general, our conversations confirmed that there is not a meaningful step-down in industry pricing. However, increased scrutiny on the provisions and language included in PBM contracts could negatively impact margins in the future. Much of the focus is on “pass-through” contracts, which represent a small portion of PBM contracts (approximately less than 20%).

Pass through contracts is precisely the focus that the U.S. Office of Personnel Management established for the FEHB Program earlier this year.

FAIR Health, Inc., which has taken responsibility from Ingenix for managing two usual reasonable and customary databases for pricing out-of-network provider claims (as the result of a settlement with the New York Attorney General), offered an update on its efforts last month.

It has been a busy summer at FAIR Health. Our team has been working diligently to continue our progress in transferring Ingenix’s MDR and PHCS databases to FAIR Health, working with the Syracuse University-led Upstate Health Research Network (UHRN) on the initial methodologies for analyzing our claims data and producing our 2011 benchmark products, building FAIR Health’s Consumer Website, and putting in place the IT and operational infrastructure that will support all of our activities.  I am proud to report that we remain on schedule for the launch of our new claims database and the testing and demonstration of our innovative Consumer Website by fall 2010. The first set of data products derived from the new database will be released to customers on schedule in January 2011.

The AP reports that the Senate failed yesterday to pass an amendment modifying or repealing the Affordable Care Act’s changes to the IRS Form 1099 MISC reporting requirement, which has become quite a big political football.

Skimming through my BNA publications, I ran across two recent studies of interest:

• A recent Congressional Budget Office study on how obesity in adults affects health care spending, and
• A recent Health Affairs study on where Americans get their health care (and it’s not typically from the family doctor anymore.)

I also subscribe to the AMA News. Here are two AMA News articles that caught my attention:

• One discusses a recent RAND study on the current place of retail clinics, e.g., MinuteClinic, in the U.S. healthcare system (it’s yet to be defined), and 
• The other discusses the trend of health insurers to open storefronts in retail malls. 

House Majority Leader Steny Hoyer (D MD) spoke before the NARFE group today. According to the Federal Times, he told them not to expect Congress to increase the government contribution toward FEHB Program coverage or extend the premium conversion program to annuitants in the near term. The FEHBlog appreciates the Congressman’s candor.

OPM should be releasing 2011 FEHB premium information soon. The Government contribution for federal employees and annuitants is set by statute at  72% of the enrollment weighted average premium capped at 75% of the selected plan’s actual premium. 5 U.S.C. Sec. 8906.

The FEHBlog does not believe that Congress [from a political standpoint] can allow federal annuitants to pay their FEHB premiums with pre-tax dollars (the premium conversion program available to employees) without extending the same right to private sector retirees, and that would cost a lot of tax dollars.

On Friday OPM issued a benefits administration letter to government payroll offices with an attachment that explain Affordable Care Act driven changes to the FEHB Program for 2011. The guidance focuses on how to add dependent children between age 22 and 26  (and married children under age 26) to self and family FEHB coverage. Here are two important points made in the letter:

First point

Be aware: The effective date of coverage for your newly eligible children depends upon the event used to enroll or change enrollment.

* * *

If you are an employee who gets paid biweekly (this applies to most Federal employees) or you are an Office of Workers’ Compensation (OWCP) recipient, and you want you child covered on January 1, 2011, then you must enroll or change your enrollment as a “change in family status” – qualifying life event (QLE). The qualifying life event code to use on the SF 2809 is ‘1C’ for employees and ‘2B’ for OWCP recipients.

You may change your enrollment from 31 days before to 60 days after January 1, 2011. Your change to Self and Family will take effect on the first day of the pay period that includes January 1, 2011. Your child will be covered on January 1, 2011. If you make your QLE change after January 1st, your child will be covered retroactively to January 1, 2011 and you will pay retroactive premiums back to the effective date of the enrollment or change.

If you enroll or change your enrollment as an Open Season change, it will take effect on the first day of the first pay period that begins in 2011. For most employees, this will be January 2, 2011. For the Office of Workers’ Compensation, this will be January 16, 2011. For a few other agencies, the date may be different.

* * *

For United States Postal Service employees, CSRS/FERS annuitants, Temporary Continuation of Coverage (TCC) enrollees and former spouses, an enrollment or change in enrollment made either as a “change in family status” QLE or as an Open Season change will provide coverage of eligible children on January 1, 2011. This is also true for other agencies and other retirement systems with a pay period that begins on January 1, 2011.

If you have a Self Only enrollment and would like your newly eligible child to be covered, you must change to a Self and Family enrollment. If you do not change to a Self and Family enrollment as a “change in family status” QLE or an Open Season change then your child will not be covered.

Read the letter and its attachments for the complete details

Second point

The [Affordable Care Act]  Act has made no changes to the Federal Employees Dental and Vision Insurance Program (FEDVIP), the Federal Employees’ Group Life Insurance Program (FEGLI) or the Federal Long Term Care Insurance Program (FLTCIP). Health care reform does not extend coverage for children until age 26 or provide coverage for married dependent children under these programs.

Thanks for the guidance, OPM.

Congress resumes its work this week following the August recess. As previously discussed in the FEHBlog, Congress is expected to vote on modifying or repealing the expanded IRS Form 1099 reporting requirement included in the Affordable Care Act. The Federal Times reports that Congress is not expected to tackle 2011 fiscal year appropriations before the mid-term election recess at the beginning of October.

“I’m expecting very little action on the appropriations bills because Congress simply won’t be in long enough to make significant progress,” said Brian Riedl of the Heritage Foundation think tank. Like other analysts, Riedl thinks the Defense appropriations bill stands the best chance of winning final approval in the next few weeks. Otherwise, he predicts most agencies will be saddled with stopgap continuing resolutions that keep federal spending at 2010 levels at least into November. And many experts expect that the spending bills will be bundled into a massive omnibus appropriations package that will be approved in a lame-duck session before year’s end.

FEHB Program appropriations are included in the financial services appropriations bill (S. 3677).

Finally, Kaiser Health News reports that

A study released Thursday [by Dartmouth researchers] challenges two widely-held assumptions about medical care: that people who see a primary care physician will end up healthier than those who don’t, and that having more primary care doctors in an area guarantees better access for patients.

The U.S. Office of Personnel Management released updated today its guidance on coverage of dependent children in 2011. Based on guidance from the Health and Human Services Department, the Internal Revenue Service, and the Labor Department, OPM has concluded that it does not have to change its definition of foster child next year. According to OPM’s FEHB Handbook:

Wow. Modern Healthcare reports that “Medical malpractice costs average about $55.6 billion annually, or 2.4% of annual healthcare spending, according to a Health Affairs analysis.”

Business Insurance reports that the Internal Revenue Service issued guidance today implementing the one of the Affordable Care Act’s limitations on flexible spending accounts, such as FSAFeds, health reimbursement accounts, and healthcare spending accounts, such as those offered by consumer driven FEHB plans. The IRS explains that 

Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.

HHS’s Office of Consumer Information and Insurance Oversight released official guidance to group health plans on how to obtain waivers from the Department’s restriction on annual limits imposed on essential health benefits under the Affordable Care Act. Given the fact that 2011 FEHB plan benefit and rates will be announced in the new few weeks, this guidance will likely be of little value to FEHB plans.

The Los Angeles Times reports that “After 40 years of continual declines, the smoking rate in the United States has stabilized for the last five years, with one in every five Americans still lighting up regularly, the Centers for Disease Control and Prevention said Tuesday.”  At OPM’s request, FEHB plans will be offering enhanced smoking cessation programs next year.

Happy Labor Day weekend.

BNA published an  interesting report on the public comments submitted about the Affordable Care Act rule implementing various immediate reforms, including the provisions ultimately prohibiting annual and lifetime dollar limits, restricting rescissions, and expanding out of network coverage of emergency services performed at a hospital. Not surprisingly, the American Medical Association and the American Hospital Association pushed for changes that would bend the health care cost curve up. According to the AMA, for example, “The best default standard for out-of-network emergency services should be a professional’s billed charge based on the professional’s current schedule of retail fees for emergency medical services, AMA said.”  In other words, the sky’s the limit. The article also provides links to comments submitted by the Blue Cross Blue Shield Association and America’s Health Insurance Plans, both of which make useful points.

Bloomberg reports that “Almost half of Americans took at least one prescription drug per month in 2008, an increase of 10 percent over the past decade, a U.S. study found.”

The Annals of Internal Medicine recently published a White House report describing ten ways that the Affordable Care Act will likely affect the practice of medicine:

•  Focusing care around exceptional patient experience and shared clinical outcome goals.
• Expanding the use of electronic health records with capacity for drug reconciliation, guidelines, alerts, and other decision supports.
• Redesigning care to include a team of nonphysician providers, such as nurse practitioners, physician assistants, care coordinators, and dietitians.
• Establishing, with physician colleagues, patient care teams to take part in bundled payments and incentive programs, such as accountable care organizations and patient-centered medical homes.
• Proactively managing preventive care—reaching out to patients to assure they get recommended tests and follow-up interventions.
• Collaborating with hospitals to dramatically reduce readmissions and hospital-acquired infections.
• Engaging in shared decision-making discussions regarding treatment goals and approaches.
• Redesigning medical office processes to capture savings from administrative simplification.
• Developing approaches to engage and monitor patients outside of the office (e.g., electronically, home visits, other team members).
• Incorporating patient-centered outcomes research to tailor care appropriate for specific patient populations.

What’s interesting is that the White House is encouraging doctors to practice in larger groups or as hospital employees. Currently, most doctors operate in small practices like Dr. Welby on television many years ago. Medscape Medical News reports that “Some leaders of organized medicine, however, are objecting to the government message. “We’re not ready to write off the small practices,” J. Fred Ralston Jr, MD, president of the American College of Physicians, told Medscape Medical News. “We think there needs to be more than one delivery model.”

The HHS Office of Consumer Information and Insurance Oversight has created a website for the Early Retiree Reinsurance Program.  This Affordable Care Act program provides group health plans with reinsurance for claims incurred by retirees aged 55 and older who are not eligible for Medicare. The stop loss threshold is $15,000 and the cap is $90,000, but the appropriated funding is limited. OCIIO also announced the 2,000 successful applicants for participation in the EERP.  The list contains many state and local government plans, but no FEHB plans because HHS barred FEHB plans from EERP participation in its interim final regulation. The FEHBlog tries not to be bitter.

The Kaiser Family Foundation released its Employer Health Benefits 2010 Annual Survey today. According to the Foundation’s press release,

Workers on average are paying nearly $4,000 this year toward the cost of family health coverage – an increase of 14 percent, or $482, above what they paid last year, according to the benchmark 2010 Employer Health Benefits Survey released today by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET).

The jump occurred even though the total premiums for family coverage, including what employers themselves contribute, rose a modest 3 percent to $13,770 on average in 2010, the survey found.  In contrast, the amount employers contribute for family coverage did not increase.

Preferred Provider Organizations (PPOs) continue to dominate the employer market, enrolling 58 percent of covered workers.  Average PPO family premiums topped $14,000 annually in 2010.

TRICARE announced the launch of a Retired Reserve program for retired Armed Forces Reservists and National Guardsmen under age 60.

Retired Reservists may qualify to purchase TRR coverage if they are under the age of 60 and are not eligible for, or enrolled in, the Federal Employees Health Benefits (FEHB) program. They must also be members of the Retired Reserve of a Reserve component and qualified for non-regular retirement. For instructions on how to qualify for and purchase TRR go to

About ten years ago, TRICARE created a TRICARE for Life program that attracted thousands of FEHB Program enrollees, harming the FEHBP risk pool and increasing TRICARE costs. It’s nice to see that TRICARE learned from that experience by excluding FEHBP enrollees from this new program.