We are entering the last full week of the Federal Benefits Open Season which ends on December 12. Govexec.com reports that “As the end of open season for changing health insurance elections draws
near, the refrain among health care specialists boils down to: Look into
changing your plan now, before it’s too late.”

The article also reports opinions that the Affordable Care Act won’t significantly impact the FEHBP when the health insurance exchanges take effect in 2014.The FEHBlog has a different perspective.

In 2014, the Affordable Care Act begins to impose a health insurance tax on the Blue Cross FEP, the HMOs participating in the FEHBP, and oddly enough the qualified health insurance plans operating in the health insurance exchanges. This tax and other Affordable Care Act taxes such as those on medical devices will increase plan premiums. Also in 2014, plans will be prevented from imposing lifetime and annual dollar limits on essential health benefits as defined by the HHS Secretary. Although the Institute of Medicine gave the Secretary very sound advice to take the cost of health care into account when establishing the essential health benefits, Health Care Finance News reports that the medical community and interest groups are pushing the Secretary the other way. Finally the tax on high cost plans (a/k/a the Cadillac tax) which takes effect in 2018 has the potential for disrupting the FEHBP.

While on the topic of the Affordable Care Care Act, the Department of Health and Human Services finalized on Friday the rule governing the minimum loss ratio imposed on insurers including those operating in the FEHBP. Modern Healthcare adds “A final regulation issued Friday to implement a federal medical-loss-ratio standard (PDF) rejected most changes requested by insurers to an interim version issued last December.” However, America’s Health Insurance Plans had a measured reaction:

HHS has conducted a thorough and balanced process in crafting this
final regulation. Today’s announcement takes important steps to make the
regulation more workable. The regulation also ensures that some of the
costs associated with modernizing the medical claims coding system are
appropriately recognized as activities that improve health care quality.
We believe health plans’ programs to prevent and combat health care
fraud should be given similar consideration and that additional steps
should be taken to ensure that consumers and small employers do not lose
access to the guidance of a trusted health benefits advisor between now
and 2014.  We will continue to work with the Department on these
important issues.

The continuing resolution funding the federal government, including the FEHBP, expires on December 16. The Hill reports 

House Majority Leader Eric Cantor (R-Va.) said Friday afternoon that
House Republicans are hoping to finish work on a complete 2012 spending
agreement by mid-December, which would let Congress avoid the need for
another continuing spending resolution.

That strikes the FEHBlog as a heavy lift, but let’s keep hope alive.

To commemorate the introduction of the generic version of Lipitor, a bipartisan group of three Senators has sent letters to Lipitor’s manufacturer, Pfizer, three major PBMs, and two insurers “after a news report alleged Pfizer agreed to provide discounts to
pharmaceutical benefit management companies (PBMs) and insurance
companies if the PBMs and the insurers would block prescriptions for
Lipitor’s generic equivalent.”

For the next sixth months, we are in the transitional period where a limited number of generic manufacturers can offer generic Lipitor. After that six months, the FEHBlog believes that there is little that Pfizer can do to keep the generic genie in the bottle. The Wall Street Journal offered a user’s guide to generic Lipitor.

Govexec.com reports that the House of Representatives has passed on a bipartisan vote a package of reforms to the federal workers compensation program (FECA).  A similar bill is moving through the Senate. These would be the first major FECA program changes in 40 years, if enacted by both Houses.

Business Insurance reports that health care firms, such as hospitals, are particularly vulnerable to security breaches

because of factors that include stringent federal and state
regulations, widespread dissemination of patient data and a growing
black market for patient medical information.

At CNA Financial
Corp., for instance, health care represents about 25% of the data breach
insurance business written but 60% of all claims, said Mark Silvestri,
Quincy, Mass.-based vp of product development and director of CNA’s
NetProtect.

The publication also featured an article on best security practices.  The National Institute of Standards and Technologies offers a dandy set of security guidance known as the 800 Series Special Publications.  Publication 800-122 is a guide to protecting the confidentiality of personally identifiable information. Good stuff.

Senate Homeland Security and |Governmental Affairs Committee Chairman Joe Lieberman (I Conn) and Ranking Minority Member Susan Collins (R Maine) have reintroduced their bill to extend FEHB coverage to same sex domestic partners of federal employees.

The HHS Office for Civil Rights which is responsible for enforcing the HIPAA Privacy and Security Rules announced earlier this month that it has begun a pilot program of auditing covered entity and business associate compliance with these rules. The HITECH Act which was part of the 2009 economic stimulus law called for these audits. The 20 audits in the pilot program will be conducted over the next 12 months.  KPMG, one of the large public accounting firms, has been contracted to conduct the audits for OCR.

The AMA News reports with some alarm that

Physician office visits by privately insured patients
younger than 65 have fallen 17% in two years, according to a Kaiser
Family Foundation analysis released Nov. 15.

The research is the latest to suggest that the decline in how often
patients see their doctors, fill prescriptions and stay in the hospital
is due to factors beyond the recession and may last for a while.

Perhaps consumerism is working.

The FEHBlog hopes that everyone has an enjoyable Thanksgiving weekend. Congress returns to work this week as we begin the third week of the annual Federal Benefits Open Season which ends on December 12. What a relief that the Redskins finally won a fourth game today.

CBS News reminds us that the best selling prescription drug Lipitor will be available in generic form beginning this coming Wednesday November 30.  This will be a big savings for consumers and health plans. “Based on Lipitor’s sales of $7.2 billion last year, this one generic drug should save the overall U.S. system $6.5 billion.” Of course, nothing is simple and Lipitor’s manufacturer Pfizer is trying to hang onto some of its Lipitor profits, but the savings will be huge. Medco offers a long list of blockbuster drugs that will be going generic over the next 15 months.

Business Week reports that a cloud continues to hang over Walgreen’s due to its ongoing contract dispute with the prescription benefits manager Express Scripts. If the NBA and the NFL can reach settlements with their players so should these companies.

Govexec.com takes a look at the various “reforms” recently proposed for the FEHBP. It simply is odd that the FEHBP — the largest consumer choice program in this country and the model for Medicare Part D and the Affordable Care Act’s health insurance exchanges — has come under such scrutiny at a time when it is purring along so well — a 3.5% average premium increase for 2012 which well below the private sector estimate of 5.4% and just above 3.0% increase for Medicare Part B which relies on statutory pricing.

Speaking of Medicare, the President nominated Marilyn Tavenner to succeed Donald Berwick as Administrator of the Center for Medicare and Medicaid Services according to this Kaiser Health News report.

The FEHBlog wishes everyone a Happy Thanksgiving. Of course, the Super Committee did not produce any deficit cutting recommendations. Congress will return to work after the Thanksgiving break. The AMA News makes it clear that the medical community is nervous about the looming end of the Medicare Part B reimbursement patch on December 31.  Modern Healthcare reports that the Democratic leadership in the House of Representatives has sent a letter to House Speaker John Boehner asking the Republican majority to “>to ensure three pieces of legislation get passed before Dec. 16: extension of the SGR [Medicare Part B] fix, extension of unemployment insurance, and extension and expansion of the “payroll tax holiday.”

A pre-holiday tidbit from Business Insurance is that the Early Retiree Insurance Program created by the Affordable Care Act has used up $4.1 billion or 80% of its $5 billion appropriation which Congress intended to last the Program through 2013. That’s up half a billion from the mid October 2011 report. It looks like the Program will be out of funding in the first quarter of 2012, and the FEHBlog would bet the ranch that Congress does not replenish the funding. In retrospect, although the FEHBlog considers it inequitable that the Affordable Care Act regulators excluded the FEHBP from the Program, there’s no doubt that including the FEHBP, with its large cadre of early retirees, would have accelerated the Program’s demise.

Congress has recessed for the Thanksgiving holiday, and according to news reports, including the Wall Street Journal,  the Super Committee will admit defeat tomorrow. As it turns out tomorrow, not Wednesday, is the Super Committee’s effective deadline because the Committee can only vote on proposals that have been made public for at least 48 hours before the vote.

The American Medical Association (“AMA”) must be freaking out because they were betting that the Super Committee would fix the statutory sustainable rate of growth formula that will impose a 27.4% cut on Medicare Part B compensation to doctors on January 1, 2012. The beauty part of the Super Committee process is that if the Committee had produced a set of proposals with $1.2 trillion in deficit reductions over 10 years, both Houses would have been required to give the proposals an up and down vote with no amendments. Now the AMA has to rely on the vagaries of the usual legislative process during the holiday season.

We enter the second week of the Federal Benefits Open Season. Federal News Radio reports that

For advice, insight and analysis, [its] Federal Drive [program] with Tom Temin and Amy Morris turned to three experts in the Open Season arena — Colleen Murphy, executive for PlanSmartChoice, an ADP product; Walton Francis, editor of the Checkbook Guide to Health Plans for Federal Employees; and Federal News Radio’s Senior Correspondent Mike Causey.

Details are available here.

Standard & Poors last week issued the September 2011 report on its healthcare index. Not good news.

Data released today by S&P Indices for the S&P Healthcare Economic Composite Index indicate that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.75% over the 12-months ending September 2011. This is a slight increase over the +5.71% annual growth rate posted in August 2011 and the fifth consecutive increase since the index hit its lowest rate of +5.32% in April 2011.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance increased by 8.03% over the year ending September 2011, also increasing for the fifth consecutive month. On the other hand, growth rates in Medicare claim costs hit yet another low, rising at an annual rate of +1.97% as measured by the S&P Healthcare Economic Medicare Index. The S&P Healthcare Economic Hospital Medicare Index also posted a record low annual rate of +0.71% in the year ending September 2011. This is a staggering 7.59 percentage points lower than the highest annual growth rate of +8.30% recorded for this index just two years ago in August 2009.

The Hospital and Professional Services Indices posted increases of 5.51% and 5.78%, respectively, from their September 2010 levels. These are marginal changes from the +5.40% and +5.83% respective annual rates posted in August 2011.

That my friends is strong evidence of significant cost shifting from the Medicare Program to the private sector.

The Federal Times reports that the President has signed into law a minibus appropriations bill that funds several departments and extends funding for other government agencies and programs, including the FEHBP, until December 16. Congress actually is hopeful that all appropriations matters will be wrapped up by that date. The law also further “defers a legally required $5.5 billion “prepayment” by the U.S. Postal
Service for retiree health care, this time until Dec. 16. That payment
was originally due Sept. 30; USPS officials said they don’t have the
money to cover it.”

Also the Labor Department, one of the Affordable Care Act regulators, published a new FAQ advising health plans that the obligation to issue four double sided page long summaries of benefits and coverage will be deferred until the final rule’s effective date. Obviously that will occur after the statutory effective date of March 23, 2012. According to a Business Insurance report, “This is great news for employers since the initial guidance left much
of how the (summary of benefits and coverage) would apply to large
employer plans unaddressed,” said Rich Stover, a principal with Buck
Consultants L.L.C. in Secaucus. N.J. The FEHBlog agrees.

The publication also includes FAQs about Mental Health Parity Act rule’s restrictions on so-called non-quantitative benefit limitations.

Also following up on this week’s posts, the FEHBlog thought that he had missed the publication of the annual FEHBP information technology report. But actually OPM announced the report the day after the FEHBlog mentioned it.

The Centers for Medicare and Medicaid Services have given health care providers an additional three months — until March 31, 2012, to start using the new HIPAA electronic transaction standards known as ANSI X 5010.  Health care providers generally are required to submit claims electronically to Medicare and Medicaid so this is a big deal.

Ihealthbeat provides several reactions to the American Medical Association’s stand against the ongoing ICD 10 conversion discussed in Wednesday’s FEHBlog post.

Joe Davidson of the Washington Post reported on the beginning of a quiet Federal Benefits Open Season (so described because the average premium increase is so low for 2012) Mr. Davidson reported from a health fair sponsored by the FEHBlog’s Congressman Chris Van Hollen. He observed that “People from health insurance companies, many with logo-laden swag, were available to answer questions about their products.” That’s a cheap shot. These health fairs have been around for decades and attendees expect a little “swag.” What’s wrong with that?  It’s fun.  It’s important to note the “swag” is not purchased with government funds.

OPM holds its last Open Season webinar tomorrow at 1:30 pm ET. Tomorrow’s webinar is on the topic of the FEHBP and Medicare. The previous webinars are available on YouTube. (Seriously.) The FEHBlog listened to Tuesday’s webinar about how to select the right health plan. OPM recommended three sources of information for comparing FEHB plans — OPM, Plan Smart Choice  (a tool which has improved over the years), and Consumers Checkbook.

The Administration made announcements today about reductions in improper payment rates in many high error programs such as Medicare and Medicaid.. You won’t hear the FEHBP’s name called here because the FEHBP has a low improper payment rate that will be disclosed soon in OPM’s FY 2011 financial statements. Carriers do a good job of managing their plans.

Business Insurance reports that according to a Mercer survey, the average cost of employer sponsored health insurance has cracked $10,000 in the U.S. That’s not good news particularly as we creep ever closer to the Affordable Care Act’s tax on health insurance premiums that takes effect in 2014 and its tax on high premium plans that takes effect in 2018. Of course, the U.S. Supreme Court announced on Monday that it will consider the constitutionality of the Affordable Care Act in a five and 1/2 hour long argument early next year that will consider the constitutionality of the individual mandate and the constitutionality of the law’s provisions expanding Medicaid and imposing significant new costs on States. The Court also will consider two related issues — whether the appeal is premature because the relevant provisions do not take effect until 2014 (a decision reached by the U.S. Court of Appeals for the Fourth Circuit) and whether these two challenged features of the law are severable from the rest of the law which would allow the law to remain in effect except for features that the Court finds unconstitutional. C-SPAN has asked the Supreme Court for permission to televise the argument according to the WSJ’s Law Blog. The Supreme Court has a web page on this important case here.

The Washington Post reports that OPM has been named one of the top ten places to work in the federal government. Kudos to OPM.

Finally, in a truth is stranger than fiction piece, Medscape reports that the American Medical Association’s Board of Governors wants the federal government to stop implementing the International Classification of Diseases 10 (ICD 10) code set because implementation will cost doctors too much money. (Oddly enough, the Chairman of the AMA’s Board of Trustees is Dr. Wah as in wah! wah!)

The International Classification of Diseases and Related Health Problems, 10th Revision, contains approximately 68,000 codes, and its implementation is slated for October 2013. ICD-10 will replace ICD-9, which has just 14,000 codes.

The Department of Health and Human Services two years ago finalized a HIPAA rule requiring health plans to implement a new set of electronic billing transaction standards known as the ANSI X5010 by January 1, 2012, and implement the ICD-10 by October 1, 2013. Doctors and hospitals who want to bill health plans electronically must use the same transaction standards and code sets.

The ICD blew up in order to improve public health reporting which is not the purpose of electronic billing. The current ICD 9 works fine. However, while the FEHBlog shares the AMA’s sentiments, this train left the station two years ago and health plans have spent millions implementing the new requirements. The AMA’s only hope is Congress. We’ll see., but I would not bet the ranch on the AMA succeeding with this one.

The Federal Benefits Open Season starts tomorrow and ends on December 12.  During the Open Season, federal and postal employees and annuitants can switch their FEHB plans for 2012 without concern of for pre-existing conditions.

While surveying OPM’s Open Season web page, the FEHBlog ran across OPM’s annual report on the use of health information technology in the FEHBP. OPM finds robust use.

In an odd twist on the government’s efforts to incent the use of electronic health information technology (“HIT”), particularly by health care providers, the U.S. Institute of Medicine issued a report last week recommending that Congress create an independent agency similar to the National Transportation Safety Board that would investigate and attempt to curb patient safety problems created by HIT. According to the Federal Times, “The  [IOM} study cites reports of patient deaths and injuries due to “medication dosing
errors, failure to detect fatal illnesses and treatment delays due to
poor human-computer interactions or loss of data.” Modern Healthcare provides the HIT industry’s reaction to this study.

Congress is making progress on the appropriations bills for the current federal fiscal year. There is a House – Senate conference committee which is expected to complete work on a “minibus” appropriations bill “covering NASA and the Agriculture, Justice, Commerce, Transportation, and
Housing and Urban Development departments, along with a number of
smaller agencies” according to the Federal Times.  This bill will include an extension of the continuing resolution for the rest of the government and the moratorium on the Postal Service’s $5.5 billion pre-retirement health care funding obligation until mid-December.

We are ten days away from the deadline for the Joint Committee on Deficit Reduction a/k/a the Super (Duper?) Committee to submit its deficit reduction package to Congress. According to this Washington Post report, Committee members remain hopeful for a compromise that leads to submission of such a package.

On Tuesday morning, November 15, the Federal Workforce subcommittee of the House Oversight and Government Reform Committee will hold hearing titled “Back to Basics: Is OPM Fulfilling its Mission?” OPM’s Director and the agency’s Inspector General will testify. Joe Davidson from the Washington Post provided background on the hearing in a column last Thursday.

Federal News Radio reported on the AEI conference that I discussed in Wednesday’s FEHBlog post. Federal News Radio who had a reporter at the event did a good job capturing the concerns that the panelists made about the Administration’s proposal to carve out FEHBP prescription drug contracting from the carriers — who bear the underwriting risk — to OPM. The report further states that

The Office of Management and Budget did not respond to a request for comment on why it believes the FEHB proposal makes economic sense.

The American Federation of Government Employees supports the proposal because carving out the pharmacy benefits is the only way to get better prices because there is little competition and less transparency, said Jackie Simon, the union’s public policy director. She said in an email to Federal News Radio that statutory pricing is what the VA and DoD and Bureau of Prisons and the Indian Health Service have, and can do direct negotiations for maximum prices.

The FEHBlog wishes to assure that OPM contractually has imposed on fee for service plan carriers a transparent pricing initiative applicable to prescription drug pricing that just took effect this year. That initiative which is still being implemented is stronger than that found in the private sector.  Moreover, statutory pricing simply shifts costs to other employer sponsored plans and does not work unless the government clamps down on utilization.

Govexec.com picks up on FEHB expert Walt Francis’s opposition to the Postal Service’s effort to carve out its employees from the FEHBP. The Postmaster General has told Congress that he could cut USPS healthcare costs in half. That’s unlikely because the Postal Service’s demographics are worse than the Civil Service’s.  The Govexec.com article explains

If the Postal Service leaves FEHBP, its health care expenses would rise
by about 10 percent, Francis said, largely because of the agency’s aging
workforce, which currently benefits from being in the larger and more
age-diverse FEHBP pool.

What’s more the FEHBP’s competitive model has done a very good job controlling costs — 3.8% increase for 2012 versus Mercer’s 5.4% estimated increase for private sector employer sponsored plans. Group health insurance principles embraced by the FEHBP work over time. Caveat — the Postal unions have the right to collectively bargain a USPS only plan with the Postal Service. Everyone should respect that right.