FEHBlog

The PPACA creates several new HIPAA electronic transaction requirements which begin to take in effect in 2013 right around the time that health plans must become compliant with the complex and expensive 5010 electronic transactions standards and the ICD-10-CM code set changes. I therefore was pleased to learn in a Health Date Management article that an industry group called the Committee on Operating Rules for Information Exchage (CORE), a CAHQ initiative.  Health Data Management reports that

 Mandates in the health reform law to adopt “operating rules” for a series of existing and new HIPAA transactions between 2013 and 2016 should easily be achievable, two consultants familiar with the health care electronic data interchange business say.
Industry stakeholders have worked for five years [though CORE] to reach consensus on the rules, which seek to make electronic claims and related transactions far more uniform than they are today, says Rachel Foerster, principal at Rachel Foerster & Associates Ltd., Beach Park, Ill.

The LA Times reflects on the tenth anniversary of the phenomenal scientific accomplishment of sequencing the human genome.  I do hope that the personalized medicine will bring down health care costs over time. A leading genetic scientist, J. Craig Venter, observes in the journal Nature

“Where will genomics be ten years from now? As sequencing capacity increases globally and the data quality improves, we will move beyond the current goal of one genome per person to sequencing multiple genomes per person from sources including sperm and egg cells, blastocysts, stem cells, pre-tumour cells and cancer cells. This will enable us to select healthy cells for reproduction and tissue transplants, or to better understand ageing and tumour development. Equally important for medical progress is the sequencing of the genomes of the millions of microbacteria that dwell within all of us. The genome revolution is only just beginning.”

Reuters reports that U.S. prescription drug sales in 2009 climbed by 5% in 2009 to just over $300 billion. The AP reports that “Sales of high-priced specialty drugs made up more than 20 percent of sales, up from 7.5 percent in 2008. Specialty drugs include injectable, biotech medications used to treat chronic conditions like cancer and psoriasis.”  The Patient Protection and Affordable Care Act created a regulatory pathway for approval of  “generic” versions of specialty or “large molecule” drugs (or “biosimilars”) which after a 12 year exclusivity period for the manufacturer.  The European Union which created this regulatory pathway in 2004 has approved several biosimilar drugs according to the Biotechnology Industry Organization.

Congress created a regulatory pathway for approval of generic versions of small molecule drugs in 1984.  Reuters notes that “The shift toward [small molecule] generics is likely to accelerate by 2012, when several major products, including the world’s two biggest-selling medicines – the cholesterol fighter Lipitor and the blood clot preventer Plavix – face competition from cheap generics.”

The President signed into law today the package of amendments to the Patient Protection and Affordable Care Act (H.R. 4872) that Congress passed on Thursday under its budget reconciliation rules.

A Wall Street Journal article captioned “Flap over Children’s Coverage Settled” incongruously discusses the FEHB Program in the context of a dispute over the scope of the new law’s restrictions on pre-existing condition exclusions:

Jade Harmer, 13, of Fredericksburg, Va., might be able to benefit from the health bill’s immediate provisions. Her mother, Tina Harmer, said the family’s insurance, a Blue Cross Blue Shield plan that is part of the Federal Employee Health Benefits Program, wouldn’t cover weekly $1,000 drug injections for Jade’s multiple sclerosis.
The Blue Cross Blue Shield Association, which administers the Harmers’ plan, couldn’t comment on the specifics of the case. But Jena Estes, a vice president there, said the drug in question was not approved for use in children.
Ms. Harmer applied to several other insurers but said her daughter was turned down because of her health condition. She was hoping that with the new health-care bill she could find a policy that would cover her daughter’s treatment.
“I’ve been keeping a close eye on health reform because I know it would help with pre-existing conditions, but a few things worry me,” said Ms. Harmer. “Is it what they say it is?”

As a parent, I sympathize with this mother, but I don’t get her point. The FEHB Program does not permit pre-existing condition exclusions or limitations, and it has a disputed claims process that is controlled by OPM, not the health plans, which is a very fair deal to federal and postal employees and annuitants. Off label use of prescription drugs is not a matter to be taken lightly considering recent federal prosecutions against drug manufacturers that alleged marketed off label uses for certain prescription drugs. The American Cancer Society offers a useful discussion of the topic on its website.

OPM released its Fiscal Year 2009 summary of performance and financial information report on its website today. The report on page 5 contains the following FEHBP discussion:

Since 1959, the Federal Employees Health Benefits Program (FEHBP) has offered group health insurance to Federal employees. Federal retirees were added to the program in the 1960’s. The FEHBP currently offers 232 health plan options which cover nearly 8 million Federal employees, annuitants, and their dependents.

On average, the Government contributes approximately 70 percent of the total premium cost of enrollments within the FEHBP. Federal agencies, as employers, pay their share of premiums out of the same resources appropriated or otherwise available for the payment of employee salaries. The Government’s share of premiums is approximately $40 billion for both current employees and retirees.

While the FEHBP directly bears the cost of health services, it is currently difficult to analyze those costs and actively manage the FEHBP program to ensure the best value for both Federal employees and taxpayers. In the past, OPM has not routinely collected, or analyzed, program-wide claims data. The capacities to collect, manage, and analyze health services data on an ongoing basis will allow OPM to: 1) understand the drivers of cost increases for Federal employees; 2) determine the best approach to developing worksite wellness programs; and 3) model the potential effects of health system reform or environmental changes on Federal employees.

During FY 2009, OPM developed a plan to reorient the management of the FEHBP by capitalizing on the collection and analysis of program wide claims data. The planned implementation will include:

Data Collection and Maintenance—Establish regular data feeds from the ten largest FEHBP plans (and major Pharmacy Benefit Managers); develop/test front end edits to assure data integrity and consistency across plans; manage data flows; assure and maintain data quality and integrity; manage data storage and back-up.

Analysis Support—Design database and linking routines to link claims to demographics, provider files, and other OPM maintained data sets; create databases that analysts can use to run specific analyses.

Data Warehouse—Development of a data warehouse application that will allow flexible queries of the data set—not only general demographic queries, but also risk-adjusted profiles, comparison of chronically ill patients, and other useful analytics.

Developing such a database and analytical capability will better position OPM to negotiate effectively with FEHBP carriers to keep Federal premium increases below industry-wide levels. This initiative will build OPM’s knowledge base and expertise, strengthening its ability to strategically shape future benefits design, and better position OPM to negotiate with the carriers.

Over time, this initiative will result in contained premium growth. The magnitude of the savings is not concrete at this time; however, just a 0.1 percent reduction in annual premium growth for three consecutive years yields savings of approximately $1.25 billion to the Program over ten years, and more specifically, $400 million in payments from the Government’s general fund for annuitant premiums over the same period.

OPM sought funding for this initiative in its FY 2011 budget proposal which Congress is considering.

Congress is now in recess until April 12.

Last week, a House Appropriations Subcommittee held a hearing on OPM’s FY 2011 budget proposal.  OPM Director John Berry testified. The Director noted that

Included in the OPM budget request is $7 million to start a data warehouse to analyze the claims experience of participants in the Federal Employees Health Benefits Program (FEHBP). Through this effort we hope to identify trends in employee health issues and potentially drive down costs through a better understanding of the Federal employee and retiree population’s most common health care needs.

Availability of health, wellness, and work-life options for Federal employees is a critical tool for improving the ability of the Government to recruit and retain a high-performing workforce. In 2010, OPM received an appropriation of $2,654,000 to develop and operate a comprehensive worksite wellness pilot program for the downtown Washington campus including GSA, Interior, and OPM. The development of Government-wide health and wellness policies and programs to provide employees with a meaningful balance of work and life will continue to be a top priority at OPM in FY2011.

The Politico reports that a bill (H.R. 4851) to further extend unemployment benefits, the COBRA / TCC subsidy program, and the moratorium on a 21% cut in Medicare Part B reimbursement to doctors stalled in the Senate over funding issues. The Senate will not take up this bill again until it returns from recess on April 12. As a result, the Medicare cut will take effect on April 1, although I expect that the Centers for Medicare and Medicaid Services (“CMS”) will instruct its Medicare administrators to hold Part B claims in order to allow the Senate to act. This development impacts the FEHB Program because there is a large cadre of annuitants with primary Medicare Part B coverage in the FEHB Program. Moreover, FEHB fee for service plans are entitled to use Medicare Part B pricing for claims incurred by annuitants who do not enroll for Part B (5 U.S.C. Sec. 8904(b)).

Modern Healthcare reports that President Obama is expected to nominate Donald Berwick, MD, to be the CMS Administrator.  CMS has not had a Senate confirmed Administrator since late 2006.  Here’s Dr. Berwick’s impressive CV from the Institute for Healthcare Improvement website:

Donald Berwick, MD, MPP, FRCP, President and CEO, Institute for Healthcare Improvement (IHI), is one of the nation’s leading authorities on health care quality and improvement. He is also Clinical Professor of Pediatrics and Health Care Policy at the Harvard Medical School, and Professor in the Department of Health Policy and Management at the Harvard School of Public Health. Dr. Berwick has served as vice chair of the US Preventive Services Task Force, the first “Independent Member” of the Board of Trustees of the American Hospital Association, and chair of the National Advisory Council of the Agency for Healthcare Research and Quality. An elected member of the Institute of Medicine (IOM), Dr. Berwick served two terms on the IOM’s governing Council and was a member of the IOM’s Global Health Board. He served on President Clinton’s Advisory Commission on Consumer Protection and Quality in the Healthcare Industry. He is a recipient of numerous awards, including the 1999 Joint Commission’s Ernest Amory Codman Award, the 2002 American Hospital Association’s Award of Honor, the 2006 John M. Eisenberg Patient Safety and Quality Award for Individual Achievement from the National Quality Forum and the Joint Commission on Accreditation of Healthcare Organizations, the 2007 William B. Graham Prize for Health Services Research, and the 2007 Heinz Award for Public Policy from the Heinz Family Foundation. In 2005, he was appointed “Honorary Knight Commander of the British Empire” by the Queen of England in honor of his work with the British National Health Service. Dr. Berwick is author of numerous articles and the books Curing Health Care and Escape Fire.

Yesterday, Congress finished its work on healthcare reform by enacting a package of amendments to the Patient Protection and Affordable Care Act under its reconciliation rules as reported in Business Insurance. Today, the U.S. Office of Personnel Management circulated the following message on health care reform:

On March 23, 2010, President Obama signed into law the “Patient Protection and Affordable Care Act,” Public Law 111-148.  While some aspects of this law will not take effect until 2014, there are several major provisions that become effective before that time.  Among those is the coverage of a dependent until age 26. The effective date of this provision is the first day of the plan year that is six months following enactment of the law.  For the Federal Employees Health Benefits (FEHB) Program, that means January 1, 2011.  The Office of Personnel Management (OPM) will take the necessary actions to comply with the new law by this effective date.  We will provide additional information on our website in the near future about the changes to FEHB plans for the 2011 plan year occurring as a result of passage of the PPACA so that employees and retirees have the information in time for the Open Season, which begins in November.

This morning, the Federal Workforce Subcommittee of the House Oversight and Government Reform Committee reported out to the full committee an amended version of H.R. 4489, the FEHBP Prescription Drug Integrity, Transparency, and Cost Savings Act.

Chairman Stephen Lynch (D Mass) amended the original bill in the following principal respects:

• The amended bill no longer sets the pharmacy reimbursement rate at average manufacturers price. Instead at retail carriers will be charged the amount that the PBM pays the retail pharmacy and at mail the carrier will be charged the actual acquisition cost plus a dispensing fee not to exceed dispensing fees for the mail order pharmacy’s other lines of business.
• The amended bill is only applicable to experience rated carriers
• The amended bill’s drug substitution requirements do not apply to brand to generic substitutes.

I have heard that the full committee will consider this bill in April.

In other news, I ran across this Congressional Research Service report on federal employee benefits (including FEHBP) and same sex partnerships. The report discusses, among other things, cost estimates for the Domestic Partnership Benefits and Obligations Act, now pending before the House (H.R. 2517) and the Senate (S. 1102). The Senate bill was reported out of the Homeland Security and Governmental Affairs Committee in December 2009. The House bill was reported out of the Government Reform and Oversight Committee on January 22, 2010. The House bill was placed on the Union Calendar on January 29, 2010, after the House Judiciary Committee and the House Administration Committee discharged the bill.

I have a son who ages out of my private health insurance plan at the end of next month. For personal reasons, I would not object to a boost in the age limit. One of the provisions under Section 1001 of the Senate health care reform bill (H.R. 3590) that the President signed into law today provides that

SEC. 2714. EXTENSION OF DEPENDENT COVERAGE.
(a) IN GENERAL. A group health plan and a health insurance issuer offering group or individual health insurance coverage that provides dependent coverage of children shall continue to make such coverage available for an adult child (who is not married) until the child turns 26 years of age. Nothing in this section shall require a health plan or a health insurance issuer described in the preceding sentence to make coverage available for a child of a child receiving dependent coverage.
(b) REGULATIONS. The [Health and Human Services] Secretary shall promulgate regulations to define the dependents to which coverage shall be made available under subsection (a).
c) RULE OF CONSTRUCTION. Nothing in this section shall be construed to modify the definition of dependent as used in the Internal Revenue Code of 1986.

Section 1004 of the Senate bill states that this change shall take effect for plan years beginning on or after the date that is 6 months after the date of enactment of this Act, today March 23, 2010. Consequently, this change will not apply to the FEHB Program until January 1, 2011. (Oddly in a 2000+ page bill, Congress failed to amend the FEHB Act’s dependent definition which ages out unmarried dependent children at age 22 (unless the adult child is totally disabled (5 U.S.C. Sec. 8901). I am confident that this oversight will be remedied before January 1, 2011.)

A key issue left to the judgment of the federal regulators is whether and to what extent this change will be applied retroactively. My daughter, who is 19, unquestionably will receive the extension to age 26 under my private health insurance coverage. However, will her older brother, who loses coverage next month, be permitted to rejoin my plan on January 1, 2011?  This is a big issue for all health plans, not just FEHB plans.

The complications don’t end there. Section 2301(c)of the reconciliation bill of amendments to the Senate bill (which the House approved on Sunday and the Senate is now considering) would delete the phrase “(who is not married)” from Section 2714. In other words, a child’s marriage would no longer be a basis for terminating dependent child coverage before the limiting age if the Senate passes the reconciliation bill. This change also would take effect on January 1, 2011 for the FEHB Program.

This is a very complicated law that will take a while for everyone to digest.

The House of Representatives votes first on the reconciliation bill and then on the Senate bill beginning at 6 pm ET tonight according to CBS News.

OPM and AHIP put on an interesting FEHBP Carrier conference last week. The keynote speaker was OPM Director John Berry. Director Berry talked about building on the FEHBP’s strong foundation. He wants to bring prescription drug costs under control. He wants to increase the productive use of health information technology. He wants to collect more and better data on health care utilization. He wants to focus on wellness and prevention, which he described as an investment in worker productivity. In this regard, he noted OPM’s investment in its own health center, the creation of the fedsgetfit.gov website, and the First Lady’s campaign against childhood obesity. He strongly encouraged updating tobacco cessation programs. He said that well designed benefit packages should feature wellness and prevention. The agency’s call letter for 2011 benefit and rate proposals will describe other priorities. He concluded by saying the retaining leadership in health benefits honors federal service.

Other speakers included CareFirst President and CEO Chet Burrell and Blue Cross Blue Shield of Massachusetts Sr. Vice President Dana Safran MD who discussed their companies efforts to improve health care quality through payment reform.

Gregg Allen, MD, EVP and Medical Director of MedSolutions Inc. touted the health and financial benefits of radiology benefit management (right test and the right time) and accurate diagnosis (proper specialist reads the results).

Hawaii Medical Services Association Senior Vice President Michael Cheng described his company’s Web 2.0 system created by American Well, Inc. that allows members to consult with doctors on-line thereby avoiding ER charges in most cases.

A smoking cessation panel called attention to two government sponsored interactive websites — www.smokefree.gov and women.smokefree.gov (which is targeted at young women smokers) and two stop smoking lines — 1-800-quit-now and 1-800-44u-quit (National Cancer Institute).

Jay Fritz from OPM reported that the agency is pleased with its Facebook page pilot.OPM plans to continue the Facebook page and create a benefits blog on an opm.gov website that will feature discussion boards like the Facebook page. Representatives from GEHA and United Healthcare spoke about their respective organization’s social media efforts. GEHA for example has both Facebook  (774 fans) and Twitter accounts for their members. UHC has a Twitter account for members, and it uses Facebook for employee recruitment. I found that CIGNA also has a Twitter account for members. While I have a personal Facebook account, it’s my opinion that lawyers should not use Twitter because Tweets cannot exceed 140 words — very unprofessional.