The Senate Homeland Security and Government Affairs Committee held a business meeting today at which it marked up the 21st Century Postal Service Act (S. 1789) that the Chairman, Sen. Lieberman (D CT) and the Ranking Member, Sen. Collins (R Maine) introduced. The FEHBlog, who watched the meeting on the internet, was relieved when the Committee approved by an 11-6 vote a motion by Sen. Akaka (D Hawaii) to delete Section 103 which would have forced Postal Service retirees into a Medigap plan.

Section 103 would have refused employer health insurance coverage to Postal Service retirees who declined to purchase Medicare Part B. Sen. Akaka said at the meeting that OPM’s actuaries have opined that the bill’s Medigap plan would not produce the savings that the Postmaster General has projected and that it also would weaken the FEHBP. (The FEHBlog agrees and so did FEHBP expert Walton Francis at an AEI conference today that the FEHBlog also watched.) Sen Begich (D Alaska) asked Sen. Lieberman whether the Centers for Medicare and Medicaid Services has expressed its opinion on this significant cost shift to Medicare. The bill’s sponsors did not think that was necessary. Sen. Lieberman was not pleased with this result, and he said that he would raise the Medigap plan issue on the Senate floor.

The American Enterprise Institute (“AEI”) had a meeting today titled Dismantling the FEHBP at which two FEHBP experts Walt Francis and Jim Morrison and an AEI economist Joe Antos spoke. All of the speakers spoke out against the Administration’s proposal to carve out prescription benefit contracting from the carriers to OPM  Walt Francis described this initiative as a solution in search of a problem. In support of that position, the FEHBlog notes that the FEHBP’s 2012 premium increase is lower than the Mercer estimated projected 2012 increase for private sector employers.  Mr. Francis also pointed out that at a 2009 House Oversight Committee hearing he learned that TRICARE drug costs rose at a rate two times higher than FEHBP drug costs. The TRICARE drug program is managed and self-funded by the government while the FEHBP is managed and insured by the carriers.

AEI summarized Jim Morrison’s position as follows:

Health plans integrate pharmacy benefits with the medical benefits they provide; imposing one set of pharmacy benefits on all of the plans unwisely ignores the complex interaction between the benefit components of each plan.

He noted that there are several recent studies that find that carving out prescription drug benefit administration costs more money for this reason. The most recent study is one conducted by CIGNA and Health Partners that was released last February.

Here’s a link to this event where you can watch it (about 1 hour and 15 minutes) and read background materials.

Well, this is getting repetitive. Congress is in session this week. 12 days to go until the Continuing Resolution funding the Federal government’s operations expires and 17 days until the Super Committee must make its recommendations to Congress. The Washington Post reports on the status of the appropriations process — now featuring “minibuses.” Your guess about the outcome of the Super Committee discussions is as good as mine.

OPM is in the process of creating an all payer claims database for the FEHBP. A similar database has existed for the Medicare Program (and it doesn’t seem to have helped too much). The Medicare database is subject to Freedom of Information Act requests. Many moons ago, the American Medical Association obtained a federal court injunction stating that CMS cannot disclose the identities of physicians who receive Medicare payments when it answers those FOIA requests. Last year, the Wall Street Journal studied the data that it could obtain from the database and it found (SHOCK!) patters of Medicare fraud. On Friday, the Wall Street Journal reports that

A New York-area family-practice doctor [Dr. Emma Poroger] who was featured in a Wall Street Journal articleabout Medicare abuses last year was indicted by a federal grand jury this week for allegedly submitting more than $13 million of false claims to the program.

* * *
Dr. Poroger, 56 years old, is the second health-care professional cited in a series of Journal articles about Medicare abuses who has since been indicted. A Brooklyn physical therapist, Aleksandr Kharkover, pleaded guilty in May to submitting fraudulent claims to Medicare for services that were medically unnecessary and never performed.

Another doctor featured in the series, Theresa Rice, has been suspended by the Texas medical board. And a fourth, Portland neurosurgeon Vishal James Makker, is under investigation by the Oregon medical board and is no longer allowed to operate on patients without supervision.

The Journal has gone to court in an effort to overturn the AMA injunction.

Modern Physician reports that Sen Charles Grassley (R Iowa) is challenging the Health and Human Services Department’s decision to close public access to a separate data base known as the National Practioner Database that contains information on medical malpractice awards and sanctions against doctors.

On a related note the Privacy, Technology and the Law subcommittee of the Senate Judiciary Committee will be holding a hearing Wednesday afternoon about protecting potected health information in a digital world.

AHIP announced last week that

A new technical analysis by Oliver Wyman estimates that the new health insurance tax in the Affordable Care Act (ACA) “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.”

Ironically this tax, which takes effect in 2014, will fall predominately on the insured plans in the health insurance exchanges that serve individuals and small business. It also adversely impacts insured FEHBP plans like the Federal Employees Plan and the HMOs participating in the Program. Self-insured plans, Medicare, and Medicaid, are exempt from the tax.

The American Enterprise Institute will be holding an expert panel discussion on the Administration’s proposal to carve out FEHBP prescription benefit administration to one prescription benefits manager under contract with OPM. The discussion will be held next Wednesday November 9 at 9:15 am and you can watch it remotely on the internet.

Fortunately the AEI session does not conflict with OPM’s Federal Benefits Open Season webcasts. It will however, conflict with the Senate Homeland Security and Governmental Affairs Committee’s markup of the 21st Century Postal Service Act that a bipartisan group of Senators introduced on Wednesday. The American Postal Workers Union website summarizes the bill’s provisions. The provisions impacting the FEHBP would

Authorize the Postal Service to enter into negotiations with the unions to develop a USPS healthcare plan inside or outside of the Federal Employee Health Benefits Program (FEHBP)., and

Require Medicare-eligible retirees to enroll in Medicare Parts A and B and require the Postal Service to develop Medigap-like plans that offer comparable benefits within the Federal Employee Health Benefits Program for retirees and their dependents [whether or not the unions agree to a USPS healthcare plan].

The U.S. Office of Personnel Management begins to hold a series of five Federal Benefits Open Season webinars beginning tomorrow. Of course the first session is an introduction to the Open Season. OPM advises that

• Each webcast will be viewable starting at 1:30pm Eastern Time. To view the webcast online, you must use a broadband (high-speed) internet connection.
• The webcast stream will become active 24 hours before the
  webcast is scheduled to begin. Be sure to test the webcast stream
  during that 24 hour window. To test the webcast stream, click on the
  link below.
• The link to view the webcast is http://pointers.audiovideoweb.com/stcasx/il83winlive3146/play.asx.
  • You will need Windows Media Player 9.x or higher to view the webcast.
• If you miss one of our shows, or if you need to see part of one again, you can watch a recording of each webcast at www.opm.gov/insure/openseason/videos.asp. The recordings will be posted the same day that they are broadcast.

The Centers for Medicare and Medicare Services announced the sustainable rate of growth formula driven change to Medicare Part B physician reimbursement in 2012 — a 27.4% reduction instead of the initially estimated 29.4% reduction. The announcement explains certain adjustments that are being made to the geographic factor in the resource based relative value schedule that Medicare Part B uses. This factor has been a hot bed of litigation and contention between urban and rural areas. Also,

In the CY 2012 final rule, CMS is expanding the potentially misvalued
code initiative, an effort to ensure Medicare is paying accurately for
physician services and more closely managing the payment system.  This
year, CMS is focusing on the codes billed by physicians in each
specialty that result in the highest Medicare expenditures under the
MPFS to determine whether these codes are overvalued.  In the past, CMS
has targeted specific codes for review that may have affected a few
procedural specialties like cardiology, radiology or nuclear medicine
but has not taken a look at the highest expenditure codes across all
specialties. This effort results in increased payments for primary care
services that have historically been undervalued by the fee schedule.

Modern Healthcare reports on the industry’s take on this annoucement. As the FEHBlog has explained, Congress has to dig the physicians out of this hole and soon.

Following up on last Thursday’s post, here’s a link to a better chart discussing the changes to the Medicare Parts A and B deductibles and premiums for 2012. With respect to Medicare Part A which provides inpatient coverage

The Part A deductible paid by a beneficiary when admitted as a hospital
inpatient will be $1,156 in 2012, an increase of $24 from this year’s
$1,132 deductible.  The Part A deductible is the beneficiary’s cost for
up to 60 days of Medicare-covered inpatient hospital care in a benefit
period. Beneficiaries must pay an additional $289 per day for days 61
through 90 in 2012, and $578 per day for hospital stays beyond the 90th
day in a benefit period. For 2011, per day payment for days 61 through
90 was $283, and $566 for beyond 90 days. For beneficiaries in skilled
nursing facilities, the daily co-insurance for days 21 through 100 in a
benefit period will be $144.50 in 2012, compared to $141.50 in 2011.

Speaking of waste and abuse, Kaiser Health News reports that primary care doctors are running up the Nation’s health care bill to the tune of $6.8 billion in 2009 by ordering unnecessary tests and procedures in connection with routine visits, which now are cost sharing free to patients thanks to the Affordable Care Act.

For many adults, a routine visit to a primary care physician might
involve blood tests, a urinalysis, an electrocardiogram, maybe a bone
density scan. Too often, however, these tests are inappropriate and they
cost a bundle, according to a recent study,  not only for the health care system but also for individuals, who are increasingly footing more of the bill for their care.

The study, led by physicians from the Mount Sinai Medical Center and
the Weill Cornell Medical College in New York, was published online in
October in the Archives of Internal Medicine. The researchers examined
the cost of common primary care practices that were identified as being overused earlier this year in a study by another group of physicians, known as the Good Stewardship Working Group.

The newest study, using data from federal medical surveys, estimated
that 12 of those unnecessary treatments and screenings accounted for
$6.8 billion in medical costs in 2009. The activity most frequently
performed without need was a complete blood cell count at a routine
physical exam. In 56 percent of routine physicals, doctors
inappropriately ordered such tests, accounting for $32.7 million in
unnecessary costs. In terms of dollars, the biggest-ticket item by far
was physicians ordering brand-name statins before trying patients on a
generic drug first: That accounted for a whopping $5.8 billion of the
$6.8 billion total.

But let’s wrap things up with good news, the AMA News reports, much to the medical profession’s chagrin that

The number of visits patients make to physicians in a
given month — a vital sign for the whole health care economy — has
been declining consistently, according to multiple tracking studies,
companies and researchers.

Analysts say those numbers may not bounce back, even with health
system reform. That’s because a struggling economy, higher insurance
deductibles, and the efforts by health plans and others to reduce
utilization have altered patient patterns, perhaps permanently. Patients
now often seek office visits — or any interaction with the health
system — only when a problem can’t be ignored.

The cost curve bends down for once!

Happy Halloween! The FEHBlog missed the regular weekend update yesterday as he was travelling back from New York City. The FEHBlog will be back on track this weekend.

We are now 18 days from the end of the current continuing resolution funding the federal government and 23 days from the due date for the Super Committee’s deficit reduction recommendations to Congress.

Both the House and the Senate are in session this week. The Hill reports that the House majority is working on a 30 day extension of the continuing resolution.

We are two weeks away from the start of the Federal Benefits Open Season, which starts on November 14 and ends on December 12.  During the Open Season, federal and postal employees and retirees can change FEHB plans without any pre-existing condition limitation — an historic feature of the FEHBP. The Federal Times reports today that

The Office of Personnel Management, which runs FEHBP, said in an e-mail that about 10 percent of active federal employees and 4 percent of retirees change health plans each year — usually selecting a less expensive program. Those shifts help hold down premium costs by about 1 percent, OPM said. Feds in the Washington area, for example, can choose from 27 different plans, and OPM said the wide assortment of choices leads directly to movement among plans.

“One of the unique advantages of the FEHB is the large number of plans from which enrollees can choose,” Jonathan Foley, OPM’s director of planning and policy analysis, said in an Oct. 20 e-mail. “In a given open season, the net effect of enrollee movement is a reduction in total premium increase when compared to the increase that would have resulted from a static population.”

November should be an interesting month.

Govexec.com reports on the improvements to disease management and wellness programs that FEHBP expert Walton Francis is finding in the 2012 benefit packages of FEHBP plans. As mentioned in the FEHBlog earlier this week, OPM has posted information about those benefit packages on its website. Of course you can find more information on the individual plan websites.

The FEHBlog has been following the efforts to repeal the sustainable rate of growth formula that the Centers for Medicare and Medicaid Services must use to determine Medicare Part B reimbursements to doctors. If Congress does not repeal and replace the SRG by the end of this year, the statutory formula will generate a 29% cut in Medicare reimbursements to doctors. Congress has the alternative of extending the current patch but you never know what’s going to happen with the Super Committee in the mix.

Earlier this month the federal Medicare Payment Advisory Commission or MedPAC offered its proposal to replace the SRG formula with a new formula that holds reimbursements to primacy care physicians steady and cuts reimbursements to specialists 6% annually for several years according to the Hill. Needless to say the medical societies for specialists are outraged.

Whatever happens should ease the cost shift to employer sponsored plans and the disruption to Medicare that would occur if the SGR driven reduction kicks in on January 1, 2012.

CMS announced the Medicare Part B premium amounts today. The premium that most Medicare Part B beneficiaries will owe is $99.90 per month. The details for recent enrollees and high income enrollees are available here. That’s about a 3% increase over 2011 which is in line with the S&P health care index for Medicare payments that the FEHBlog tracks.

This information is very relevant to FEHB plans because there is a large cadre of retired FEHB enrollees who are Medicare eligible.

OPM announced today that it will be circulating federal benefits news on a new Twitter feed, The FEHBlog was the fourteenth follower. OPM sent out a tweet today that its web page with information about 2012 FEHBP plans is live. The website shows a map of the United States and invites the viewer to click on a state which

takes you to a list of all plans available in that state, as well as links to the plan brochures, changes for each plan from the previous year, information on plan patient safety programs, and links to the plan provider directories.

Check it out.

Kaiser Health News reports on the impending transition of many blockbuster prescription drugs, such as Lipitor, Lexapro, and Plavis, to generic status. The article warns that

While blockbuster drugs like Lipitor are sunsetting, University of Michigan business school professor Erik Gordon says pharmaceutical companies are trying to replace them with new, more targeted drugs — like Pfizer’s recently approved lung-cancer medication.

“The interesting thing is it will work in only 5 percent of lung
cancer patients. The other interesting thing is it’s going to cost
$115,000 per year, per patient,” Gordon says.

Some analysts say the growing field of costly specialty drugs could
undermine the growing savings from generics. But Gordon says drug
companies will still have their work cut out for them. It’s getting
tougher not only to come up with new drugs, he says, but also to
convince insurers and the government to pay for them — unless they make
meaningful improvements in health, at a reasonable cost.

Meanwhile the Wall Street Journal reveals that the reason for the contract dispute between the prescription benefit manager Express Scripts and the major pharmacy chain Walgreens is that Walgreens is demanding additional compensation for the patient counselling provided by its pharmacists.

Pharmacy-benefit managers are unlikely to agree to pay for extra
services like medical counseling unless their clients demand it, says
Dan Mendelson, chief executive of Avalere Health Inc., a consulting firm
for health-care companies. “If the health plan demands it, the PBM will
provide it,” he says.

But so far, the “overwhelmingly vast majority” of Express Scripts’
biggest clients don’t want to pay more and are willing to stop using
Walgreen, says a person who is familiar with Express Scripts’ thinking.

Express Scripts remains open to doing business with Walgreen if the
pharmacy accepts its terms, this person says. But support from its
clients is “fortifying” its belief that it shouldn’t budge in
negotiations. Express Scripts also says its clients’ costs would rise if
it accepted Walgreen’s current offer. Walgreen counters that its
advisory services would save Express Scripts members $180 million a
year, or $2 a prescription.

And the beat goes on.

The House return from recess this week while the Senate goes out. The Hill Finance and Economy blog projects that Congress will extend into December the current continuing resolution funding federal government operations. The CR expires on November 18, less than a month away.

Standard & Poors reported last week that

Data released 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 5.73% over the 12-months ending August 2011. This is a marginal increase over the +5.69% annual growth rate posted in July 2011 and the fourth consecutive increase since the index hit its lowest annual growth 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 7.89% over the year ending August 2011, also increasing for the fourth consecutive month. Medicare claim costs, however, hit a new low, rising at an annual rate of 2.16% as measured by the S&P Healthcare Economic Medicare Index.

The survey illustrates the cost shifting from Medicare to the private sector.

The health care industry breathed a sigh of relief when the Department of Health and Human Services issued its final rule governing accountable care organizations (“ACOs”) in the Medicare Program last week. The AMA News reaction is here.  Kaiser Health News explains that

Also Thursday, the Justice Department and Federal Trade Commission released their final policy statement on
ACOs and antitrust issues. The new policy eliminated the mandatory
review for a new ACO, a decision applauded by the American Medical
Association. But CMS encouraged provider groups to voluntarily seek a
Justice Department opinion. The policy also puts the responsibility for
gathering market share data on the government, rather than the
providers, says David Balto, an antitrust attorney and a senior fellow a
the Center for American Progress, a progressive Washington think tank.

Nonetheless, health insurers said they are still worried that groups
of hospitals and doctors that form an ACO will gain too much clout and
that will allow them to drive up prices to private insurers.

“We remain concerned about the trend of provider consolidation that
drives up medical prices and results in additional cost-shifting to
families and employers with private coverage,” the trade group,
America’s Health Insurance Plans, said in a statement. “Doing away with
the mandatory review process raises concerns that provider market power
may not be scrutinized sufficiently, potentially increasing health care
costs for consumers and employers.”

The full AHIP reaction is here.  The FEHBlog got a kick out of this Kaiser Health News headline — Nixon’s HMO’s hold lessons for Obama’s ACOs. What goes around, comes around.

Govexec.com published a story on the budding controversy over OPM’s proposal to carve out FEHB drug benefits to a single prescription benefits manager under contract with OPM, similar to TRICARE. In addition to quoting Bob Moffit’s blog post discussed in the last FEHBlog entry, Govexec.com obtained a quote from longtime FEHBP expert Walton Francis.

Walton Francis, author of Consumers’ Checkbook Guide to Health Plans for Federal Employees,
said OPM in effect would be negotiating and managing two health
programs — one for physician and hospital care and another for pharmacy
benefits. But whether the government should decide which prescription
drugs are available to beneficiaries is up for debate, he said.

“An alternative that would save money would be to have a very
restricted formulary where they won’t pay at all for name brand drugs,”
Francis said. “The question is whether employees and retirees want to be
in the system. Plans are reluctant to limit employee choices.” 

Exactly. The current competitive model protects enrollees.

Health care policy expert Robert Moffit wrote a column discussing the downside of the Administration’s proposal to carve out FEHBP drug benefits from the carriers to OPM.  He points out that

Today, if you are in the FEHBP and you don’t like a health plan’s drug coverage, you dump that plan and get a better one. Tomorrow, if Obama’s allies in Congress are successful, you will not have that option: You will get the restricted range of drug options that government officials decide to give you. That’s the way it’s done in Medicaid, for example, the poorly performing welfare program for the poor and the indigent.

All of this disruption would produce $1.6 billion of savings over ten years (according to the Administration) in a program that currently costs $43 billion a year. You may not agree with Dr.Moffit’s employer, the Heritage Foundation, but it’s hard to argue with his reasoning.

The federal government appropriately encourages veterans to join the federal workforce. Consequently, there are a lot of veterans in the FEHBP.  In the early part of the last decade, Congress created a TRICARE for Life program that effectively “carved out” a large number of Medicare eligible military retirees from the FEHBP because the TRICARE for Life program does not charge premiums to participants. Since then, the cost of the TRICARE for Life program has grown like Topsy. Govexec.com reports that

Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., last week submitted recommendations to the deficit reduction super committee in support of the Obama administration’s cost-saving proposal released last month. The plan would mandate annual fees under TRICARE-for-Life, which pays beneficiaries’ out-of-pocket Medicare costs. Fees would start at $200 in 2012 and increase annually to align with those paid by all TRICARE enrollees.

You have to watch that second bounce of the ball.

Benefits Pro reports that “new survey results from Mercer show employees are willing to take on higher ou-of-pocket costs if it means they get to keep their health benefits.