The partial shutdown continues. Roll Call reports that the backpay bill for furloughed federal employees has run into a snag at the Senate. Govexec.com reports that many agencies, e.g. State Department, federal courts, are operating on unused fiscal year 2013 appropriations which could run out soon leading to “thousands” of more furloughs.

Here are some interesting developments on the benefit design front:

• Aon Hewitt reports that consumer driven plans continue to grow in popularity among employers. This trend will continue as we inch toward the 2018 date for implementation of the ACA’s Cadillac tax. 
• Aetna released a report on the success of its dental integration program:

The DMI program uses technology to automatically identify members with diabetes, cardiovascular disease, or who are pregnant. Members with those medical conditions who have not recently seen the dentist receive education by mail and phone on the importance of regular dental care. Aetna dental coordinators are available to help DMI members choose a dentist and schedule an appointment. DMI members qualify for enhanced dental benefits such as an extra cleaning and periodontal services covered at 100 percent to help prevent more serious and costly issues. The enhanced dental benefits are not subject to deductible or coinsurance and do not count toward annual plan maximums. There is no added cost to members or plan sponsors for the DMI program.

• Modern Healthcare reports that 

 A group of large employers including retail giants Wal-Mart Stores and Lowe’s Cos. announced they will offer their employees coverage for hip and knee implant procedures with no cost-sharing if they receive the procedures at one of four previously selected hospital systems.

The participating hospitals are Johns Hopkins Bayview Medical Center in Baltimore; Kaiser Permanente’s Orange County-Irvine (Calif.) Medical Center; Mercy Hospital Springfield (Mo.); and Virginia Mason Medical Center in Seattle.

The preferred network is similar in many ways to initiatives developed by Wal-Mart and Lowe’s that encourage employees to visit preferred academic centers like the Cleveland Clinic and Mayo Clinic for heart and spine surgeries.

In the same vein, Kaiser Health News reports on steps that health systems are taking to better manage high utilizers.

The Defense Department is calling back most of its furloughed workers based on a law that Congress passed last Monday. According to a Federal News Radio report,

The administration’s interpretation of the law will allow “most” of DoD’s 350,000 currently-furloughed civilians to return to work. Officials were not able to give a precise count of how many would be left sidelined, but Robert Hale, the Pentagon’s comptroller told reporters Saturday evening that he believed more than 90 percent of the overall civilian workforce would be back on duty and earning pay by next week. 

That represents over 3/8’s of the total furloughed workforce. The House also agreed yesterday to give backpay to the furloughed employees.  The Washington Post reports that the Senate is expected to approve this bill and the President will sign it. According to CNN and Modern Healthcare reports, a repeal of the ACA’s 2.3% medical device tax is attracting bipartisan attention.  Perhaps not the beginning of the end but at least the end of the beginning to paraphrase Winston Churchill.

Also because tomorrow is the first Monday in October, the U.S. Supreme Court’s new term will begin. The Wall Street Journal reports that the new term will begin with significant business law cases. The article concludes

Among the more intriguing possibilities is a dispute over the federal health-care law. U.S. Solicitor General Donald Verrilli has asked the court to decide whether corporations can assert religious rights to object to a provision that requires employers to include health-plan coverage for contraception. Lower courts have issued conflicting rulings on the issue.

 The ACA is the gift that keeps on giving to lawyers, including the FEHBlog.

Earlier this year, OPM proposed to Congress that it be allowed to create premium differentials designed to encourage wellness, e.g., higher premiums for smokers. This is a common practice in the private section, which the Affordable Care Act has endorsed. Business Insurance reports a growing trend among employers to use the stick (typically together) with the carrot as a wellness incentive.

 Twenty-two percent of U.S. employers polled in Towers Watson’s 2013/2014 “Staying@Work Report” said they have already incorporated penalties into their wellness incentive structures, while 36% say they are planning to do so by the end of next year.
By 2016, 61% of employers said they plan to penalize employees who do not participate in wellness programs.

AHIP is offering helpful information about the importance of health literacy developed by an Aetna subsidiary iTriage. This information certainly is worth sharing with health plan members.

The Hartford Courant reports that “Cigna Corp. on Thursday added Consumer Reports’ ratings of hospitals to the insurer’s website [for its insureds called myCigna], making it one of four analytics [including Leapfrog, other industry sources, and Cigna’s own research] that people can browse before having a surgery or other procedure.”  The FEHBlog finds it interesting that Cigna does not offer CMS’s Hospital Compare ratings.

Finally, Healthday reports that doctors continue to prescribe antibiotics unnecessarily.

 Antibiotics only work against bacterial infections, and yet they are prescribed at a rate of 60 percent for sore throats and 73 percent for bronchitis, conditions that are typically caused by viruses, the scientists said.

“For sore throat, antibiotics should be prescribed about 10 percent of the time,” said study author Dr. Jeffrey Linder, a researcher in the division of general medicine and primary care at Brigham and Women’s Hospital in Boston.

Although the U.S. Centers for Disease Control and Prevention encourages the proper use of antibiotics, their use for sore throats has only dropped from about 70 percent of doctor visits in 1990 to 60 percent of visits now, he said.
“The story for bronchitis is even more bleak,” [study author D. Jeffrey] Linder said. “The antibiotic prescribing rate was 73 percent and the right prescribing rate for bronchitis, according to guidelines, is zero,” he said. “That hasn’t changed at all over the last 30 years.”
Linder thinks these rates remain high because, on the one hand, patients demand antibiotics from their doctors and, on the other hand, doctors don’t want to miss a more serious condition such as pneumonia or strep throat.
“There’s plenty of blame to go around,” he said. “It’s a lot easier to write a prescription than to have a five-minute conversation about why antibiotics aren’t necessary.

This is the 1500th FEHBlog post since the FEHBlog began in 2006. The President soon will be meeting with Congressional leaders about the shutdown. Fingers crossed. The Wall Street Journal offers a chart on the percentages of agency employees who have been furloughed.

The actuarial consulting firm Mercer came out with a report on early results of its employer health care cost survey:

Based on early responses from a major survey conducted annually by Mercer, employers expect health benefit cost per employee will rise by 4.8% on average in 2014. Cost growth slowed to 4.1% in 2012, a 15-year low. The projected increase for 2014, while still relatively low, represents a slight uptick in the rate of growth (Fig. 1).

As you know, OPM announced last week that FEHB premiums would increase on average by 3.7% in 2014, more than a percentage point lower than this survey. The FEHBlog noticed that the APWU Health Plan has now posted information about its 2014 benefits.

Mobihealth News posted an interesting interview with a few mobile health application CEOs held “at the “3 CEOs” session at the Health 2.0 event in Santa Clara, California this week.”

Before the shutdown, an HHS Tiger Team held a hearing on how patients can learn who accessed their electronic health record data, according to this Ihealthbeat report. According to the HITECH Act, this accounting must include treatment, payment, and healthcare operations disclosures. That expansive requirement fortunately is not found in the HIPAA Privacy Rule’s accounting for disclosures provision which applies to health plans.Witnesses testified at the hearing that health care provider compliance with this requirement applicable to their “free” electronic health record systems is infeasible. The FEHBlog is not surprised to learn this fact or that a patient privacy advocate Dr. Deborah Peel demanded full compliance, no matter the cost.

Unfortunately, Congress has not yet reached an agreement on a continuing resolution funding the federal government and a partial shutdown affecting 800,000 federal employees has taken effect. OPM has updated its furlough guidance (no change to the FEHBP discussion quoted in Sunday’s post), and the Washington Post discussed the shutdown’s limited impact on federal annuitants. The shutdown should come to a head within a couple of weeks as the Government hits its no turning back debt ceiling on October 17 according to the Treasury Secretary.

OPM did post a new webpage about the availability of the multi-state plan in thirty state exchanges and DC. A map identifies the states where the MSP is available.

Also yesterday, OPM released the final rule on exchange coverage for members of Congress and their official staffs in 2014. OPM has decided that these 11,000 folks will receive coverage in the District of Columbia SHOP / small business exchange from a gold (80% actuarial value level) plan. Also OPM (happily in the FEHBlog’s view) decided that members of Congress and their official staffs can receive their annuitant coverage in the FEHBP rather than on the exchanges (as stated in the proposed rule.)  A OPM fact sheet on the rule is available here.

The end of the federal fiscal year is tomorrow and Congress has not reached agreement on a continuing resolution beyond that date.  Here’s a link to the most recent New York Times article. Here’s OPM’s guidance for employees on FEHBP coverage in the event of a shutdown furlough:

1.  Will an employee continue to be covered under the Federal Employee Health Benefits
(FEHB) program during a shutdown furlough if the agency is unable to make its
premium payments on time?
A. Yes, the employee’s FEHB coverage will continue even if an agency does not make the
premium payments on time. Since the employee will be in a non-pay status, the enrollee
share of the FEHB premium will accumulate and be withheld from pay upon return to pay
status.
2. What happens if an employee wants to terminate Federal Employee Health Benefits
(FEHB) coverage while in a nonpay status in order to avoid the expense?
A. Unlike other types of non-pay status, employees in a non-pay status due to a lapse of
appropriations (shutdown furlough) will not have the opportunity to terminate or cancel
FEHB coverage. The employee will remain covered; the enrollee share of the FEHB
premium will accumulate and be withheld from pay upon return to pay status. 

The Federal Times came out with an article on OPM’s press release about 2014 FEHBP rates and benefits. Plans, e.g., GEHA, continue to release more detailed information about theie 2014 benefits on their websites.

The New York Times is reporting this evening that OPM will announce tomorrow that the Blue Cross Blue Shield Association has contracted with the agency to offer a multi-state plan in the health insurance exchanges of thirty states and the District of Columbia in 2014.  According to the article

Under the 2010 health care law, the federal government was supposed to sign contracts with at least two multistate plans. But the application from Blue Cross and Blue Shield was the only one approved. Five other companies expressed interest and may file applications in the future, federal officials said. By 2017, at least two multistate plans are supposed to be available in each state.

Of course, there has been quite a kerfuffle over whether members of Congress and their official staffs would receive a government contribution for exchange coverage in 2014.  OPM issued a proposed rule that would provide such a subsidy. A final rule is pending at OMB. The FEHBlog has been curious about Sen. Chuck Grassley’s response to this situation as Sen. Grassley proposed moving these 11,000 folks from the FEHBP to the exchanges. The answer came in a Roll Call article on Friday. Sen. Grassley explains that the OPM rule matches his legislative intent. Roll Call explains that

Mark Harkins at the Georgetown University Government Affairs Institute has more details on how the language written into the ACA ended up dropping members of Congress and their staffs from qualifying for employer contributions. He writes that there were actually dueling provisions to force members of Congress and their staffers onto the exchanges. There was the measure from Grassley in the Finance Committee — which was more detailed and maintained employer contribution — and an amendment from Republican Tom Coburn of Oklahoma in the Health, Education, Labor and Pensions Committee, which also marked up a health care bill.  Coburn’s language, as written, prevented members and staff from receiving contributions. It appears, based on text, Reid chose Coburn’s language over Grassley’s.

And the beat goes on.

The Senate Homeland Security and Governmental Affairs Committee held another postal reform hearing today. The National Association of Letter Carriers and Mail Handlers Union Presidents presented constructive testimony. The star of the show in the FEHBlog’s view was OPM Planning and Policy Analysis Director Jonathan Foley who testified in relevant part that

OPM has long believed and has previously testified before this Committee that the Postal Service and its employees and retirees are well-served by the FEHB Program.

If postal employees and retirees are removed from the FEHB Program risk pool under both Sections 104 and 105, costs under the original FEHB Program risk pool would increase by about two percent per enrollee.

Director Foley was referring to Sections 104 and 105 of the Senate Postal Reform bill (S. 1486) — Section 104 would permit the Postal Service to create a separate Postal Service Health Plan subject to union approval and Section 105 would create Medicare wrap plans within the FEHBP for Postal annuitants. Two Government Accountability Office representatives and the Postmaster General, among others, also testified.  Govexec.com and Federal News Radio both reported on the hearing.

Politico Pulse reported this morning that OPM has sent the Office of Management and Budget a final version of the proposed rule allowing members of Congress and their official staffs a government contribution toward exchange coverage in 2014. Reginfo.gov does advise that OMB received the submission on September 19. OMB typically reviews ACA rules quickly. As noted in the FEHBlog. Sen. David Vitter (R La) and others (including the Senate Minority Leader according to Politco) are working to undo this fix.

Finally, Reuters reports that U.S. “House of Representatives and Senate committees have agreed on legislation that would give the Food and Drug Administration greater authority to regulate companies that compound sterile drugs and ship them across state lines” roughly one year after the Massachusetts compounding phamacy catastrophe. .

Federal employees will pay 4.4 percent more toward their health insurance premiums in 2014, the Office of Personnel Management announced Tuesday. Federal Employees Health Benefits Program enrollees with self-only coverage will contribute an average of $3.28 more per paycheck, while those with family coverage will pay about $7.90 more.
This increase is steeper than the rise in the government’s portion of the premiums, which will go up 3.3 percent. The employee share is increasing faster due to the particular FEHBP plans enrollees have selected, OPM said. Overall, the government pays about 70 percent of employees’ premiums. Total premiums for non-postal FEHBP enrollees including both the employee and government portion will increase by 3.7 percent in 2014.

Faithful readers of the FEHBlog will know that this is a pretty doggone reasonable premium increase particularly considering the demographics of this group and the new ACA fees that come into play to one extent or another for FEHBP plans next year. OPM and the carriers — aided by a competitive market — do a bang-up job controlling premiums.

Remember too that the government contribution for civil service employees and all annuitants is the enrollment weighted average premium times 72%. When enrollees switch to lower cost plans, the government contribution will be lower than it would have been if no one moved plans. Also the government contribution is capped at 75% of the selected plan’s premium. If the government contribution to a particular plan is subject that cap, then premium increases are picked up principally by the government. If the plan’s premium is not capped, then premium increases are picked up principally by the enrollee.  

Here are links to the Federal Times, Federal News Radio, and Washington Post stories about the premium announcement.

Blue Cross FEP appears to be first out of the gate in posting its 2014 benefit changes. The FEHBlog is sure that many other plans will be posting their 2014 benefit changes this week too.

Congress of course is in session this week in the run up to the end of the current federal fiscal year on September 30. The Hill’s Floor Watch reports and the FEHBlog agrees that the chances of a government shutdown seem very remote — both parties have been down this road a few times in the last few years, and seem to strongly prefer avoiding a shutdown.  Particularly because deadline for increasing the debt limit also is approaching, we could still see some compromise on the Affordable Care Act, possibly a delay of the individual mandate until 2015 (just like the employer mandate — advocated by many Republicans) and/or overriding the OPM proposed rule providing a government contribution for members of Congress and their official staffs in the exchanges next year (advocated by Sen. David Vitter (R La.).

The FEHBlog expects that this week OPM will make its press release on 2014 FEHBP changes to the government contribution and premiums. Furthermore, with the October 1 date for rolling out the state health insurance programs rapidly approaching, OPM also should be announcing its multi-state program plan contractors who will be participating in at least 31 state health insurance exchanges next year.

In its most recent / March 2013 benefits and rates proposals call letter, OPM endorsed the Choosing Wisely campaign. According to the campaign’s website, “An initiative of the ABIM Foundation, Choosing Wisely is focused on encouraging physicians, patients and other health care stakeholders to think and talk about medical tests and procedures that may be unnecessary, and in some instances can cause harm. Bravo. Earlier this month, the Society of General Medicine, the American Academy of Orthopedic Surgeons, and the American College of Surgeons each made five new evidence based recommendations about medical procedures or tests that should be avoided. That’s how the cost curve can be pushed down.

The Washington Post reports that the House of Representatives did pass essentially along party lines a continuing resolution (H. Jt. Res. 59) funding federal government operations — excluding the Affordable Care Act — through December 15, 2013. The Hill reports that the White House is seeking meetings with Congressional leaders to avoid a government shutdown on October 1. This us going to come down to the wire in all likelihood.

Yesterday, the Senate Homeland Security and Governmental Affairs Committee held a hearing on Postal Service reform. At the hearing, the Postmaster General testified that

The Postal Service has reached its statutory debt limit of $15 billion and it held unrestricted cash representing only 11 days of average daily operating expenses. Current projections indicate that it will continue to have a dangerously low level of liquidity in the foreseeable future. The Postal Service will be unable to make the required $5.6 billion Retiree Health Benefits (RHB) prefunding payment due by September 30, 2013. This is in addition to similar payment defaults on $11.1 billion in 2012. Our cash position will continue to worsen in October 2013, when the Postal Service is required to make its annual payment of approximately $1.4 billion to the Department of Labor (DOL) for workers’ compensation expenses. By mid-October 2013, the Postal Service projects it will have a cash balance on hand of approximately five days of average daily expenses. For an organization the size of the Postal Service – which has revenues of $65 billion and a total workforce of approximately 490,000 career employees – that is a razor thin margin.

The American Postal Workers Union President and the Rural Letter Carriers Association made good constructive points in their testimony.  The Senate HSGA Committee will be holding a second hearing on this topic next Thursday. Federal News Radio reports that the Committee “is set to take on the Postal Service’s healthcare benefits more broadly at” this hearing.

The Washington Post also took note of the fact that OPM may be without an acting director soon. The Post added one fact that the FEHBlog’s post failed to note — OPM has not had a deputy director since July 2011.

The S&P Healthcare Indices for July 2013 were released today:

Four of the nine S&P Healthcare Economic Indices showed the same annual growth rates for July 2013 as for June 2013 [3.06%]. They were the Composite Index, the Medicare Index, the Commercial Index, and the Hospital Medicare Index As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.15% in July.  Annual growth rates in Medicare costs increased by 1.40% in July, according to the S&P Healthcare Economic Medicare Index. The Hospital Medicare Index’s growth rate recorded 2.29% in July. These indices’ growth rates remain flat from June to July

On a similar note, Business Insurance reports that

In 2012, total U.S. health care spending hit $2.807 trillion, or $8,948 per person. While a record, expenditures rose only 3.9% in 2012, the same percentage increase as in 2011, 2010 and 2009, according to statistics compiled by researchers at the Centers for Medicare and Medicaid Services and published in the journal Health Affairs.

The CBO discussed this rather low (yet above the CPI) spending rate in his blog.  He makes three points:

1. Growth in spending for the fee-for-service portion of Medicare has slowed markedly in the past few years—apparently not because of the financial turmoil and recession but because of other factors affecting the behavior of beneficiaries and providers.
2. The slowdown in health care cost growth has been sufficiently broad and persistent to persuade us to make significant downward revisions to our projections of federal health care spending.
3. Despite the recent reductions in our projections of federal health care spending, growth in such spending remains the central challenge in putting the federal budget on a sustainable path.

The abstract for the Health Affairs article adds

Improving economic conditions, combined with the coverage expansions in the Affordable Care Act and the aging of the population, drive faster projected growth in health spending in 2014 and beyond. Expected growth for 2014 is 6.1 percent, with an average projected growth of 6.2 percent per year thereafter. Over the 2012–22 period, national health spending is projected to grow at an average annual rate of 5.8 percent.

Cost curve up. Next week OPM should announce the FEHBP’s 2014 average premium and government contribution changes.