The Washington Post’s Federal Eye column posited on Wednesday that the President could name OPM Director John Berry to replace Ken Salazar who is retiring as Interior Secretary. Of course, it seems to the FEHBlog  that the President also could name Director Berry to replace Hilda Solis who is retiring as the Labor Secretary.

The legal bombshell of the week was that yesterday the Health and Human Services Department released a 563 page omnibus final rule implementing the 2009 HITECH Act’s changes to the HIPAA Privacy and Security Rules — wider enforcement scope, vastly stepped up civil penalties. Modern Healthcare has a useful report on this development titled “Experts see major shifts in privacy rule.” Yes indeed the enforcement screw is tightening on health care providers, health insurers, and thousands of companies, including the FEHBlogs’s which have access to protected health information as part of their work for these HIPAA covered entities. That’s a lot to chew on over the long weekend.

OPM has awarded a contract to Maximus Federal Services, Inc. for expert assistance with disputed claim reviews in the FEHBP and FEDVIP programs.

The President’s executive gun control initiatives today involve mental healthcare issues according to the Hill’s Healthwatch. This one puzzled the FEHBlog

Obama said his administration would finalize rules on mental health
parity, the requiring of mental healthcare to be covered the same way as
physical healthcare. The regulations have languished since 2008, and
Senate Democrats had called on Obama to push the rules forward as part
of his gun-control recommendations.

Those quite complicated 2008 rules were issued in interim final form and have been effective for over four years in the FEHBP. The FEHBlog shudders to think what HHS and DOL have up their respective sleeves on this finalization, but he senses the cost curve moving up again. Several of the President’s mental health initiatives make sense but this mental health parity law already has been stretched to its limits (in not beyond) by the existing regulation.

Modern Healthcare reports that hospital prices only rose 5.1% in 2012 compared to 6.2% in 2011. Thank heavens for small miracles.  That’s just about two times higher than the growth in the urban consumer rice index. The physician price index for 2012 roughly was in line with the CPI-U change.

The AMA News reports that patients, at their doctors’s recommendation, are using health and fitness apps created by large health insurers like Aetna and CIGNA. The FEHBlog noticed today that several FEHB plans have apps available on Microsoft’s Healthvault as para of OPM’s Blue Button initiative.

The House of Representatives is in session this week for a few days principally to address Superstorm Sandy relief according to the Hill’s Floorwatch. The Senate is out until after the inauguration next Monday.  Congress did pass and the President signed a bipartisan bill again according to the Hill that will facilitate settlement of Medicare liens in negligence lawsuits. That was a big issue for the plaintiffs’ bar.

The AMA News reads the tea leaves created by the recent government report on healthcare spending in 2011, the first calendar year of ACA implementation. The AMA News which has been dismayed by the drop in physician’s services in 2009 – 10 is encouraged by this report.  It’s definitely worth a peek. The AMA News also reflected on the five biggest concerns for doctors this year — the ACA leads the pack.

The Wall Street Journal’s Numbers Guy columnist, whom the FEHBlog enjoys reading, wrote on a recent Journal article about a study finding that overweight (not obese) people tend to live longer than “normal” weight people measured on the BMI scale. The Numbers Guy writes that the utility of the obesity measure on the BMI scale is well accepted but once you get below that level into overweight the consensus breaks up. That makes sense to the FEHBlog who lost quite a bit of weight over the last year  and is still overweight on the BMI scale (26.2 — normal is from 18.5 to 24.9). The point is that a dietitian friend explained to me that it’s important for older people (including the FEHBlog) to have a little weight on their bones because if serious illness strikes you can lose weight fast. That may explain the longevity finding.

Business Insurance reports that “In 2011, total U.S. health care spending hit $2.701 trillion, or $8,680
per person. While this is a record, expenditures rose only 3.9% in 2011,
unchanged from 2010 and 2009, according to statistics compiled by
researchers at the U.S. Centers for Medicare & Medicaid Services and
published in the journal Health Affairs.”  The Wall Street Journal reports that health care costs are poised to jump again as people get back to work and Obamacare becomes unleashed.  The Healthcare Cost Institute, a group of large health insurers with a huge claims database, has released new charts on how we spend our health care dollars.

HHS today trumpeted the growth of accountable care organizations in Medicare. Accountable care organizations are an approach to coordinating care under which the providers assume financial risk.  The AMA News reports on a recent Commonwealth Fund study finding that becoming an ACO is easier said than done.

The AMA News also reports on the provider community’s now quixotic (in the FEHBlog’s view) campaign to prevent the scheduled implementation of the ICD-10 code set in 2014. The FEHBlog is sympathetic to this campaign. The ICD-10 upgrade that HHS has mandated under HIPAA will not improve the claims process a whit. Public health groups have advocated the change because the ICD-10 gives much more detailed diagnostic coding information that the ICD-9. But the idea of HIPAA was to improve electronic claims processing, not public health.

And since this entry is supposed to include miscellany, let’s end with a Kaiser Health News article about how doctors, dentists, and allied health professionals are resorting to Groupon and other social media sales techniques to hawk their services. Hippocrates must be rolling in his grave.

The 113th Congress of the United States was sworn in last Thursday. The House is now in recess for a week and the Senate is in recess for two weeks according to the Hill’s Floorwatch.  The Hill also reports that “House and Senate appropriators have been quietly working behind the scenes for months to craft 12 compromise annual spending bills to avoid a shutdown that is slated to occur when the current six-month stopgap spending bill expires [ on March 31].” Similarly, the Federal Times reports that “Two top lawmakers from opposing parties [Senator Tom Carper (D Del) who chairs the Senate Homeland Security and Government Affairs Committee and Rep. Darrell Issa (R. Calif.) who chairs the House Oversight and Government Reform Committee] this [past] week pledged cooperation to put the U.S. Postal Service back on its feet financially.” That, of course, will require legislation.  By the way, Rep. Blake Farenthold (R – TX) will chair the House Oversight Committee’s subcommittee with responsibility for the FEHBP.

The AMA News reports that although the Medicare doc fix is in place for another year, the 2% cut in Medicare pay to doctors created by the sequestration law remains looming. Congress punted the sequestrations down the road for two months to March 1, 2013. The doc fix stuck it to the hospitals while the sequestration sticks it to the doctors. It is conceivable that the sequestration may take effect.

The FEHBlog was startled yesterday by the Washington Post’s below the fold headline that the breast pump industry is booming due to the ACA. This is front page news?? Did the Post reporter never see the movie Field of Dreams?  If you build it they will come. In the women’s preventive health care rule that created the contraceptive mandate, the Obama Administration also mandated that health plans cover breast milk pump rentals with no cost sharing. That mandate became applicable to the FEHBP on January 1. A breast milk pump costs $30 on Amazon.com ($110 for an electric model.) Adding the complexity of insurance and removing any consumer incentive to engage in price comparison will drive the cost curve up.

Following up on yesterday’s post, here is a link to Health Data Management which provides a CMS explanation of the Medicare changes made by the New Years Day tax law that provided another year of the doc fix to Medicare Part B payments.

Here is a link to a Kaiser Health News flowchart that explains the IRS’s approach to the Affordable Care Act’s share responsibility / pay or play provisions discussed in a recent FEHBlog post.

Finally, on the HIPAA front, ihealthbeat reports that CMS has announced that it will delay enforcement of two HIPAA standard transaction operating rules for three months (until March 31, 2012). The standard operating rules in this case for eligibility and claim status are intended to replace the multiplicity of individual health plan implementation guides for the transaction standards.

Securityinfowatch.com reports that

The Hospice of North Idaho (HONI) has agreed to pay the U.S. Department of Health and Human Services’ (HHS) $50,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule. This is the first settlement involving a breach of unprotected electronic protected health information (ePHI) affecting fewer than 500 individuals.

In this case, the Hospice had a laptop with unencrypted data on 441 patients stolen in 2010.  The article points out that the government now has a website that discusses the myriad HIPAA security risks of mobile devices. It’s worth a look.

As I’m sure your know, Congress passed a bipartisan fiscal cliff bill on New Years Day and the President has signed it into law. The bill includes a one year extension of the Medicare Part B doc fix, thereby avoiding a 26.5% cut in Medicare Part B payments to doctors.  The Washington Examiner provided the following list of the pay fors.

The principal pay for hits hospitals — see first bullet point (DCI adjustment) and ninth bullet point (DSH adjustment). The hospitals are up in arms according to Kaiser Health News.  

Documentation and Coding (DCI) adjustment.  This provision will phase in the recoupment of past overpayments to hospitals made as a result of the transition to Medicare Severity Diagnosis Related Groups (MS-DRGs).   Savings: $10.5 billion.

Rebase End Stage Renal Disease (ESRD) payments. This provision incorporates recommendations from the General Accountability Office by re-pricing the bundled payment to take into account changes in behavior and utilization of drugs for dialysis. Savings: $4.9 billion.

Therapy Multiple Procedure Payment reduction.  This provision further reduces payment for subsequent therapies when therapies are provided on the same day.  Savings: $1.8 billion.

Payment for Certain Radiology Services.  This provision would equalize payments for stereotactic radiosurgery services provided under Medicare hospital outpatient payment system.  Savings: $0.3 billion.

Adjustment of Equipment Utilization Rate for Advance Imagining Services.  This policy would increase the utilization factor used in the setting of payment for imaging services in Medicare from 75% to 90%.   Savings: $0.8 billion.

Competitive Prices for Diabetic Supplies.  This proposal would apply competitive bidding to diabetic test strips purchased at retail pharmacies.     Savings: $0.6 billion.

Adjust Payment Adjustment for Non-Emergency Ambulance Transports For ESRD Beneficiaries.  This provision reduces the payment rates for ambulance services by 10% for individuals with ESRD obtaining non-emergency basic life support services involving transport, based on a recent General Accountability Office report.  Savings: $0.3 billion

Increase statute of limitations for recovering overpayments.  This provision increases the statute of limitations to recover overpayments from three to five years, based on recommendations from the Office of Inspector General at the Department of Health and Human Services.  Savings: $0.5 billion.

Medicare Improvement Fund. This provision eliminates funding for the Medicare Improvement Fund. Savings: $1.7 billion.

Rebase Medicaid Disproportionate Share Hospital (DSH) payments to extend the changes from the Affordable Care Act (ACA) for an additional year.  This proposal rebases DSH allotments to maintain the level of changes achieved in the ACA, and determines future allotments off of the rebased level using current law methodology.  Savings: $4.2 billion.

Repeal of Class Program.  The provision repeals the Community Living Assistance Services and Supports (CLASS) program established by the Affordable Care Act.  This provision has no scoring implications.

Commission on Long Term Care. The provision establishes the Commission on Long Term Care to develop a plan for the establishment, implementation, and financing of a high quality system that ensures the availability of long-term services and supports for individuals.  This provision has no scoring implications.

Coding Intensity Adjustment.  Under current law, Medicare Advantage plans receive risk-adjustment payments that are further adjustment to reflect differences in coding practices between Medicare fee-for-service and Medicare Advantage.  This provision increases this coding intensity adjustment.  Savings: $2 billion.

Consumer Operated and Oriented Plan (CO-OP). This provision will rescind all unobligated CO-OP funds under section 1332(g) of the Affordable Care Act.   This provision also creates a contingency fund of 10 percent of the current unobligated funds to be used to further assist currently approved co-ops that have already been created.  The provision does not take away any obligated CO-OP funds.  Savings: $2.3 billion

The law also punts the sequestration ball on the road for two months. A Reason magazine blogger aptly analogizes the doc fix problem to the sequestration problem here.

2013 will bring us one short year away from full implementation of the Affordable Care Act. The Internal Revenue Service issued a proposed rule on this shared responsibility or “pay of play” mandate which applies to employers of 50 full time employees (30 or more hours per week) or more.  The IRS’s FAQ on this mandate can be found here. Here’s a link to a Wall Street Journal article on the rule, which included some surprises.  OPM will have to consider changes to the FEHBP necessary to comply with this mandate and avoid the penalties associated with non-compliance.

Folks interested in health care spending should read the New York Times’ article about Questor. Questor manufactures a drug Acthar Gel that first was developed in the 1950s due to Armour packing company’s efforts to find uses for pig by-products. Questor’s drug is derived from the pituitary glands of that animal. The drug treats an orphan (rare) condition called infantile spasms. Questor acquired the drug about ten years ago. In 2007, a new CEO “repositioned” Acthar as a specialty drug and jacked up the price which rose from $700 per vial in 2007 to $28,000 today.  A health insurer that balked at the price increase but was mau maued into paying. The New York Times explains

Insurers generally pay for Acthar because it is considered the best treatment for infantile spasms. They also tend to pay for other approved uses if cheaper drugs have been tried first. And Questcor has carefully executed the orphan-drug playbook. Patients who cannot pay are given the drug free. The company helps with insurance co-payments, to make sure that a patient’s inability to make a co-payment doesn’t stand in the way of the drug being used and the insurer paying $28,000 a vial.

In other words, Questcor shifts the cost onto insurance companies while staving off consumer protests. It has a staff of 30 people who do nothing but work on insurance reimbursements — about one staff member for each of the roughly 30 prescriptions it gets in a typical day for all uses.  Questcor executives argue that with the free drug program and the ample supply, patients have better access to Acthar now than when it was cheaper and often in short supply.

Wow, that’s a lot of chutzpah upon which to reflect.

Here is the FEHBlog’s aummary of Affordable Care Act changes that take effect in 2013 a/k/a Tuesday, many of which have been discussed on the blog earlier this year:

The FEHBlog hopes that all of his readers are enjoying the holidays. Of course, the calendar year end is a time for reflection. Healthcare Data Management reports that Aetna’s CEO Mark Bertolini has been musing about the future of the changing health insurance industry. He observed that “A new business model for insurers predicated on partnering with providers [e.g. accountable care organizations] coupled with skillful use of technology can turn the focus back on the customer. ‘We can use technology to make it easier for the consumer. Convenience is the new word for quality.’”

In a bit of a man bites dog story, the Government Accountability Office yesterday released a report recommending that CMS consider adopting certain private payer strategies to improve health care quality, which the medical industry supports:

•Private entities generally measure performance and make incentive payments at the physician-group level rather than at the individual-physician level. Physician organizations favor this approach.
•Private entities use nationally endorsed performance metrics and noted the need for a standardized set of metrics across all payers. Physician organizations concur that a standardized set of metrics would be less administratively complex.
•Most private entities in GAO’s study provide financial incentives tied to meeting absolute benchmarks–fixed performance targets–or a combination of absolute benchmarks and performance improvement. Physician organizations prefer incentives tied to absolute benchmarks over those based on how physicians perform relative to their peers. Physician organizations also favored incentives that reward improvement because baseline levels of performance vary.
•While private entities’ incentive payments vary in size and in method, private entities typically provide such payments within 7 months of the end of the performance measurement period. Physician organizations stated that financial incentives should be distributed soon after the measurement period to have the greatest effect on performance.