FEHBlog

I was out of town over the weekend so I am doing the weekend update this evening.  Hey, it’s the summertime.

The House of Representatives has begun its August recess while the Senate remains in session. It takes up Elena Kagan’s Supreme Court nomination tomorrow.

Last week, the Centers for Medicare and Medicaid Services announced a new prospective payment system for end stage renal disease facilities. Medicare provides coverage to people with end stage renal (kidney) disease without regard to the patient’s age. In the early 1970’s Congress decided to test expansion of Medicare coverage to catastrophic illnesses. End stage renal disease was the first and last test case because the expansion caused costs to explode as discussed in this American Society of Nephrologists journal article from 2009.  When Medicare squeezes on doctors and health care facilities, the providers shift costs to the private sector, including the FEHB Program.

Following up on last week’s Wall Street Journal article about shrinking health care expenses discussed in Thursday’s FEHBlog, Kaiser Health News reports on the growing practice of consumers to ask providers for discounts.

Healthcare IT News predicts that HHS’s withdrawal of its final rule on the HITECH Act’s nationwide requirement to provide notice of breach of unsecured protected health information (also discussed in last  Thursday’s FEHBlog) may mean the end of the current interim rule’s sensible harm standard. The harm standard means that a plan or provider does not have to alarm a person with a breach notice unless there’s a risk of financial or reputational harm to that person.

Today, a federal judge denied the federal government’s motion to dismiss the Commonwealth of Virginia’s challenge to the Affordable Care Act’s individual coverage mandate according to Business Insurance. A copy of the opinion is available here.

The U.S. Office of Personnel Management announced yesterday that this year’s Federal Benefits Open Season, which runs from Monday, November 8, 2010 through Monday, December 13, 2010. The Open Season allows federal and postal employees and annuitants to select a different FEHB or FEDVIP plan or change a FedFlex option for 2011.  Beginning in 2011, the Open Season will be the month of November.

Last year, the Department of Health and Human Services issued an interim final rule implementing the HITECH Act’s nationwide notice of unsecured protected health information breach rule. HHS solicited comments on the interim final rule and on May 14, 2010, HHS submitted a “final” final rule for Office of Management and Budget review, the final step before publication in the Federal Register. Today, HHS announced today that it had withdraw that final final rule from OMB consideration.”for further consideration, given the Department’s experience to date in administering the regulations.” The FEHBlog finds this development unsettling.

The Wall Street Journal reported today that Americans are consuming less health care services. This was an objective of consumer driven health care which came into vogue about eight yeears ago when the IRS approved healthcare reimbursement arrangements. Consumer driven health care gives people a financial incentive to control their health care spending and the know how to do it through the internet and other tools. The FEHBlog finds this development encouraging.

Rite Aid Pharmacies agreed to pay $1 million to settle HHS and Federal Trade Commission complaints that the company had committed HIPAA Privacy Rule violations by dumping in the trash prescriptions and pill bottles bearing protected heath information on their labels according to this government press release.

The AMA News reports that the Health Net, a health plan now owned by United Healthcare, agreed to pay $250,000 to settle Connecticut attorney general charges that it had violated the HIPAA Privacy Rule as a result of the disappearance of a portable disk drive with protected health information.

Take aways — The federal and state governments are serious about their HIPAA enforcement efforts and the 2009 HITECH Act greatly strengthened their authority. HIPAA covered entities and business associates should be careful to encrypt portable electronic storage devices.

Yesterday, HHS clarified its guidance on submission of health plan claims to the Early Retiree Reinsurance Program established by the Affordable Care Act. HHS is not allowing the FEHB Program, which covers loads of early retirees, to participate in this Program.

Belaboring the obvious (my job as a lawyer), the Generic Pharmaceutical Association (GPhA) released a report on the tremendous savings created by small molecule generic drugs. It will be interesting to see five or ten years from now whether similar claims will be made about large molecule generic drugs or bio-generics. The Affordable Care Act authorized the Food and Drug Administration to create a regulatory pathway for approval of bio-generics. It’s interesting to note that the GPhA found the ACA’s provision inadequate. Time will tell.

Last Thursday and Friday, the National Association of Insurance Commissioners committee working on Affordable Care Act implementation issues met in Washington, DC.  National Underwriter reports that the battle of the minimum medical loss ratio (“MLR”) definitions was a hot topic at the meetings.  Under the Affordable Care Act, health insurers, including those sponsoring or underwriting FEHB plans, must spend at least 85% of premiums on medical expenses and health care quality efforts.  FEHB plans generally meet this requirement. The tricky part will be how the regulators will treat plan efforts to build or re-build reserves. This requirement takes effect with the 2011 plan year.

According to National Underwriter, “America’s Health Insurance Plans (AHIP) put out a paper listing its goals for the MLR effort. AHIP says the rules adopted should:

Ensure that existing efforts to improve quality are allowed to continue and new initiatives to support the goals of PPACA are not discouraged.

Recognize that quality improvement efforts will be advanced by ICD-10 implementation.

Include fraud prevention and detection activities in the definition of activities that improve health care quality. 

Implement a plan for transitioning from the existing state system to the new federal standards to maximize consumer choice.” 

California Healthline reports that the NAIC may complete its work next month. The NAIC will be making recommendations to the Health and Human Services Department.

Congress is now hurtling toward its August recess. The Senate Homeland Security and Governmental Affairs Committee will be holding a business meeting on Thursday. No FEHBP issues are on the agenda.

The Affordable Care Act regulators issued another rule today.  This time it was the rule implementing the Act’s requirements for internal and external disputed claim procedures.  This rule is applicable to non-grandfathered group health plans, including FEHB plans, beginning with the first plan year following September 23, 2010. Business Insurance highlights the differences between this rule and the Labor Department rules currently applicable to ERISA governed plans which Congress deemed to be the gold standard in the new law:

Govexec.com is reporting that the National Community Pharmacists Association is seeking to revive H.R. 4489, a bill to more strictly regulate prescription benefit managers and prescription drug pricing in the FEHB Program.  The Association sent a letter to OPM endorsing the bill.  According to Govexec.com, “OPM spokesman Edmund Byrnes said the agency is in the process of putting together a formal response to NCPA’s recommendations.” The FEHBlog thinks that OPM’s February 2010 carrier letter on PBM arrangements effectively trumped the bill.

The Senate passed a bill today extending unemployment benefits but not extending the COBRA/TCC subsidy program beyond May 31, according to the Washington Post. That subsidy program does appear to be phasing out.

The AMA News features an interesting article on the coming struggle on Capitol Hill to fix the formula for reimbursing doctors under Medicare Part B.  Without a legislative fix, the formula will drop the reimbursement level by 23% on December 1, 2010. In mid-June, CMS implemented a similar drop for a few days when Congress dawdled with extending the fix past May 31. In the end, Congress increased the reimbursement formula by 2.2% through November 30, 2010. But Congress is finding it necessary to appropriate an additional $95 million to CMS to pay for reprocessing these claims.

On the Affordable Care Act front, reginfo.gov informs us that the Labor Department rule implementing the Act’s disputed claim process provision (PHSA Section 2719) has been pending final Office of Management and Budget review since July 16. The interim final rule implementing the Act’s preventive care mandate was published in yesterday’s Federal Register. The comment deadline is September 17, 2010.

Finally, the FEHBlog got a kick out of this Wall Street Journal article about doctor’s notes.  It reminds me of the Seinfeld episode in which Elaine is concerned about what her doctor is writing about her on his chart and she arranges for Kramer to try to steal the chart. Of course, one of the HIPAA Privacy Rule’s individual rights is the ability to review and even propose amendments to a doctor’s notes on you, but the Privacy Rule was not on the books in the 1990s.

What goes around comes around.  The New York Times reports this morning on a new trend among health insurers selling to individuals and small business — plans with narrow provider networks. Of course, in the 1990s health insurers pushed the managed care model featuring narrow networks and a primary care physician gatekeeper. The new model allows the patient to make his or her own health care choices among a smaller network of providers that the insurer presumably considers cost effective. The article indicates that larger employer have begun expressing interest in the approach. In the end it may be that only larger employer will have this option because the narrow network approach may run afoul of the Affordable Health Care Act’s requirement for qualified health plans operating in the health insurance exchanges beginning in 2014.

NCQA last week announced changes to next year’s HEDIS quality standards that can be used to measure the performance of  health plans.  OPM currently uses a subset of those standards with FEHB plans. OPM explained in its April 2010 call letter for 2011 benefit and rate proposals that

OPM plans to work with experts in the field to develop a refined set of performance measures that provide additional insights into plan quality. We will continue to endeavor to align our quality measurement requirements with existing NCQA processes wherever possible to reduce the burden on plans. Other large employers and purchasing coalitions have continually evolved their performance measurement requirements and the FEHB Program needs to do the same,

Last week the Pharmaceutical Research and Manufacturers of America (“Phrma”)  named John J. Castellani, formerly head of the Business Roundtable, to be its new President.

The FEHBlog discovered that on June 24, 2010, the Congressional Research Service published a report on Federal Employee Benefits and Same Sex Partnerships.  

HHS, the Labor Department and the IRS released today the interim final rule implementing the Affordable Care Act’s preventive care mandate.  Here is a link to the list of preventive care services that non-grandfathered plans must cover under this mandate with no-cost sharing when received from an in-network provider.

There is no obligation on health plans to provide these services out of network.  Business Insurance explains that

The regulations * * * make clear that regular cost-sharing requirements can be imposed on an office visit when a recommended preventive service is billed as a separate charge.
In addition, treatment resulting from a preventive service can be subject to cost-sharing requirements if the treatment is not itself a recommended preventive service.
Regulators estimate that the new requirements will increase group health care plans’ costs by an average of 1.5% a year.
Mike Thompson, a principal with PricewaterhouseCoopers L.L.P. in New York said, though, the cost impact will be much lower for employers that already provide coverage for many preventive services.

As mentioned yesterday, the FEHB plan already offers generous in-network preventive services coverage.

Government HIT News reports that HHS released today its meaningful use regulations that hospitals and other health care providers must follow in order to receive electronic healthcare record funding under last years stimulus act. Modern Healthcare.com takes a look at the regulations (which weigh in at 864 pages) from the providers’ perspective. Interestingly, America’s Health Insurance Plans issued a statement on how health plans are helping bring the medical community into the 21st Century.

The FEHBlog expects that the First Lady, Dr. Jill Biden, and HHS Secretary Sebelius will be releasing the next set of Affordable Care Act implementing regulations tomorrow afternoon. Those regulations will implement the preventive care mandate that applies to non-grandfathered plans beginning with plan years that take effect on or after September 23, 2010. FEHB plans currently provide a wide range of preventive care services with no enrollee cost sharing when the services are performed by a health plan network provider.  

AHIP’s Hi-Wire ran an interesting piece about how health plans are using Medicare Part B’s pricing schedule (known as the resource based relative value schedule (RBRVS)) to price commercial health plan reimbursements to providers.

Elizabeth Curran, Head of National Contracting Policy and Medicare Strategy for Aetna, believes that adopting the Resource-Based Relative Value Scale (RBRVS) used by Medicare makes a lot of things easier because everyone understands it, especially providers.
Mark Austin, Senior Vice President of Network Management at Blue Cross Blue Shield of Tennessee, finds that employers and business groups speak in the language of Medicare rates. He also noted that as more and more payers shift to some form of RBRVS, it becomes a lot easier to compare reimbursement plans.
Jessalyn Greene, Director of Reimbursement Strategy for Scott and White Health Plan, cautioned that geographic differences can force variances to the methodology. She finds that many rural areas will see best use of RBRVS for their Medicare populations.

Given Ingenix’s exit from this business under a settlement with the NY Attorney General, this trend makes a lot of sense to the FEHBlog.

Congress returns to work this week following the Fourth of July recess during which Donald Berwick MD was appointed administrator of the Centers for Medicare and Medicaid Services.

The FEHBlog is anxiously awaiting the next Affordable Care Act implementing regulation, the preventive care mandate (new Public Health Service Act (“PHSA” Section 2713), which was submitted to the Office of Management and Budget for final review on June 29. The FEHBlog hears that the regulation implementing the disputed claim review procedures mandate is in the on deck circle (new PHSA Section 2719). Neither of these mandates is applicable to grandfathered group health plans.

The Politico Pulse presented an interesting Affordable Care Act tidbits last Friday:

NEXT REG BATTLE – [The National Association of Insurance Commissioners] NAIC is wading into another hazardous regulatory task: writing the form that health insurers will provide in March, 2012 to subscribers and applicants to outline benefits and costs [pursuant to new PHSA Section 2715]. Regulators must boil down complex benefit information into brief, intelligible summaries [maximum of 4 pages 12 point font]. Regulators, administration officials and insurers began the task Thursday in the first of what will be biweekly, 90-minute conference calls. NAIC has four prototype documents, obtained by PULSE, being used as a baseline. Three are from a FTC study and one drawn up by the Oregon Insurance Division (Miller’s home state): http://politi.co/dzIJ6T , http://politi.co/cViAHG , http://politi.co/dffqcx , http://politi.co/9XmNsJ

MLR REDUX? PPACA gives NAIC until March 2011 to write the consumer-focused forms but HHS has asked the group to deliver early, sometime in the fall. NAIC plans to comply, but recall the last time something similar happened… [Plans must begin to use one year later — grandfathered plans also are subject to this mandate.]

ABOUT THOSE MLR [medical loss ratio] DEFINITIONS – The head of the NAIC subcommittee working on the definitions says that, while the group makes progress, the end is not in sight. “We still have the December 31 deadline, which we anticipate meeting,” Steve Ostlund, chair of the NAIC’s Accident & Health Working Group said on a call Thursday. He expects to meet the deadline well ahead of time, but won’t put a new estimate on the group wrapping up its work. “It’s not going to go on forever.” [The group is implementing the minimum medical loss ratio requirements stated in new PHSA Section 2718, which applies to insured plans whether or not grandfathered.]

I enjoy reading the Pulse every weekday morning.

HHS has upgraded the www.healthcare.gov website and it has created a health information privacy website which according to an HHS press release will “help visitors easily access information about existing HHS privacy efforts and the policies supporting them. The site emphasizes HHS’ deep commitment to privacy in the collection, use, and exchange of personally identifiable information. This new resource provides Americans with confidence that their personal information is secure and underscores HHS’ goal of greater openness and transparency in government.” 

Although it’s not an FEHB decision, the FEHBlog did note with interest a Business Insurance article reporting that “A 2004 District of Columbia law that would have made pharmacy benefit managers “fiduciaries” was ruled invalid Friday by a three-judge panel of a federal appeals court.” The court concluded that the FEHBA’s private sector analog ERISA preempted the DC law. Here’s a link to the opinion.