The President’s Deficit Reduction Commission released its report today. One of the recommendations is to cap the exclusion on employer contributions toward health care coverage and reduce the Affordable Care Act’s high cost plan excise tax (a/k/a the Cadillac Tax) from 40% to 12%. Another recommendation is to use federal employees as guinea pigs to test a premium support system for the FEHB Program. As it stands the FEHB Program is a defined contribution program. The government contribution is the lesser of 72% of the enrollment weighted average premium or 75% of the selected plan’s premium. The Federal Times explains that “Under this [recommended premium support system], federal employees would receive a fixed subsidy from the government they can use to purchase health insurance from competing insurers. The subsidy would grow by no more than the gross domestic product, plus one percentage point, each year. This could save $2 billion in 2015 and $18 billion through 2020.”  This recommendation, like most others in the report, require Congressional and Presidential approval via a change in current federal law.

Last week, the Mercer benefits consulting company announced that “Growth in the average total health benefit cost per employee, which had slowed last year to 5.5%, picked up steam, rising 6.9% to $9,562, the biggest increase since 2004, according to the latest National Survey of Employer-Sponsored Health Plans, conducted annually by Mercer (for more information, visit http://www.mercer.com/2010-health-plan-survey). Health benefit cost rose three times faster than the CPI in 2010.”  This increase (plus the FEHB Program’s demographics) helps explain the average FEHB Program premium increase of 7.2% for 2011.

OPM released its financial statements and performance reports for fiscal year 2010 (which ended on September 30, 2010) yesterday.  FEHBP junkies will find interesting reading beginning at page 101. An improper payments report begins on page 123. FEHBP’s improper payments for FY 2010 are put at $91.1 million or 0.2% of the total spend.  The FEHBP’s improper payments rate is dramatically lower than the government-wide improper payments average of 5.49%, Medicare’s 10.5% ($34.3 billion), Medicaid’s 9.4% ($22.5), and Medicare Advantage’s 14.1%.

The Leapfrog Group issued its annual top hospitals list today, which includes 65 facilities across the country out of 1200 reviewed.

The AP reports that the House did pass by voice vote this afternoon the Senate approved measure (HR 5712) extending the Medicare Part B physician reimbursement patch through the end of December 2010. “Senate Finance Committee Chairman Max Baucus, D-Mont., and the panel’s top Republican, Charles Grassley of Iowa, say they are working on a 12-month postponement that would give them time to devise a new system for paying doctors. It is estimated that repeal of the current budget formula would cost $300 billion over 10 years that would have to be made up with other spending cuts or added to the deficit.”

The New York Times reports that renewed efforts to repeal the Affordable Care Act’s expanded IRS Form 1099 MISC reporting requirement failed in the Senate today. “Despite the inability to overturn the provision, Senate officials said they expected that another vote on repeal would come soon, given the support the idea has in both parties.”

The FEHBlog hopes that everyone enjoyed the Thanksgiving weekend.

As we head into the fourth week of the Federal Benefits Open Season, which ends on December 13, Govexec.com reports on the choices available to Medicare eligible annuitants who participate in the FEHB Program, a very large cadre.

Congress resumes its lame duck session this week. Congress is staring down the barrel of the expiration of the Medicare Part B physician reimbursement patch on Tuesday December 30 and the continuing resolution funding federal government operations on Friday December 3. The AMA News brings us up to date on the Medicare patch issues. It’s up to the House to adopt the month long extension that the Senate passed just before the Thanksgiving break. On the appropriations front, The Hill reports that

Democrats have not given up on moving an omnibus spending bill in the lame-duck session despite steep odds.

To keep the possibility alive, the House and Senate are expected to pass a short-term continuing resolution (CR) next week to keep the government running beyond Dec. 3, when the last continuing resolution expires, several staffers said. The shorter resolution would last either one or two weeks.

The idea is to give Democrats and Republicans time to negotiate an omnibus.

Modern Healthcare reports that “A new study examining safety practices at 10 hospitals found no reduction in patient harm attributable to medical care over a five-year period.”  Not good.

Modern Healthcare also reports that “As the National Committee for Quality Assurance ponders precisely how a well-run accountable care organization ought to function, the National Association of Chain Drug Stores is urging policymakers to remember the role of pharmacists in care coordination and cost control. * * * In comments (PDF) to the NCQA, the association said model ACOs should include pharmacists on its list of key stakeholders, governing body members and patient-care teams. The association also urged the organization to declare medication therapy management as a core element of cost savings in ACOs.” The FEHBlog recalls a PBM pharmacist telling him at least 10 years ago that health plans could generate cost saving by reimbursing retail pharmacists for advising customers and taking routine tests, such as blood pressure testing. She pointed out that plan members have the most day to day contact with their pharmacists.

OPM has released the Powerpoint presentation from its recent health care reform webinar as well as twelve pages of FAQs and Fast Facts mostly discussing the changes to child eligibility wrought by the Affordable Care Act. These changes take effect on January 1, 2011.

OPM also created a website about the expanded smoking cessation benefits that become available to FEHB plan participants on January 1, 2011.

Beginning plan year 2011, all FEHB program plans must cover:

Four tobacco cessation counseling sessions of at least 30 minutes for at least two quit attempts per year. This includes proactive telephone counseling, group counseling and individual counseling.

All 7 Food and Drug Administration (FDA) -approved tobacco cessation medications.

These benefits must be provided with no copayments or coinsurance and not subject to deductibles, annual or life time dollar limits.

HHS offers a very good stop smoking website with no cost help lines available to anyone.

Bloomberg by way of Business Insurance reports that

Diabetes or prediabetic conditions will strike half of all adult Americans by the end of the decade unless people drop extra weight, says UnitedHealth Group Inc., the largest U.S. health insurer by sales.

The disease will cost the nation almost $3.4 trillion, with more than 60% paid by the U.S. government, in the 10 years through 2020, according to a study released today by the Minnetonka, Minn.-based insurer. The number of Americans afflicted with high blood sugar will rise 44% to 135 million in 2020, from 93.8 million in 2010, researchers said. 

That’s a troubling prediction.

Fiercehealthcare.com reports that health insurer Humana is acquiring Concentra. “The acquisition will give Humana more than 300 medical centers in 42 states where Concentra delivers occupational medicine, urgent care, physical therapy and wellness services to workers. Nearly 3 million Humana customers live near a Concentra center. Concentra’s annual revenues are about $800 million.” That’s an interesting post Affordable Care Act business move for an insurer to make.

OPM posted on its health care reform website today a summary of the webinar held earlier this month. As the FEHBlog explained, the webinar helpfully covered dependent eligibility changes in the FEHB Program for 2011, including how to cover newly eligible children between over age 21 but under age 26 under an FEHB plan on January 1, 2011.

The Health and Human Services Department today released the interim final rule implementing the Affordable Care Act’s minimum loss ratio requirement applicable to health insurers (but not self-funded plans) next year. HHS adopted the National Association of Insurance Commissioners’ recommendations for this rule. An HHS fact sheet is available here. Businessweek reports that as a result of the end of market uncertainty over the rule’s content, “Several large health insurance stocks climbed Monday while the broader market fell”. In other words, it could have been worse for insurers.

Last week before the Senate left town for Thanksgiving, Jacob “Jack” Lew was confirmed to be director of the Office of Management and Budget according to the Washington Post. Mr. Lew held the same position for a spell during the Clinton Administration.

As we head into the third week of the Federal Benefits Open Season and the second week of Congress’s lame duck session, Congress has made movement in extending the life of the Medicare Part B physician reimbursement patch beyond November 30. The Hill reports that the Senate passed a bill that would extend the patch’s life until the end of the year. The $1 billion cost of the extension will be paid for by reductions in Medicare payments to physical therapists. The House is expected to take up this bill right after Thanksgiving. “[Senate Finance Committee Chairman Max] Baucus and [Finance Committee ranking member Chuck] Grassley also agreed they would work together to pursue a year-long fix to the formula that could be enacted before the month-long patch expires.”

The New York Time reports today on the “growing frenzy” of hospital and doctor group consolidation created by the Affordable Care Act (“ACA”). 

Business Insurance reports on the first round of guidance that the ACA regulators have issued to the States about the State health insurance exchanges that the ACA requires to be operational in 2014. 

In the initial guidance, HHS notes that states will have the option to establish exchanges as a governmental agency, either as part of an existing agency or through the creation of a new state agency. Alternatively, an exchange could be part an independent public authority, as is the case in Massachusetts. The guidance also says exchanges could negotiate rates with insurers or could act as a “clearinghouse” that would be open to all qualified insurers.

CVS Caremark announced last week the results of

A new study by Harvard, Brigham and Women’s Hospital and CVS Caremark researchers has found a direct correlation between the amount of a patient’s out-of-pocket co-pay and likely abandonment of the prescription, with patients having a co-pay of $50 almost four times more likely to abandon a prescription at a pharmacy than those paying $10. The study also found that e-prescriptions are 65 percent more likely to be left abandoned at a retail pharmacy by patients than are hand-written prescriptions. * * * The researchers said that if the 3.27 percent abandonment rate observed during the study period is applied to the 3.6 billion prescriptions filled at pharmacies in 2008, approximately 110 million prescriptions would be abandoned. The researchers outlined a predictive model for pharmacists to apply to help them recognize likely candidates for abandonment that includes

• Reviewing the individual’s benefit plan and tiered co-pays. The study said cost is the strongest predictor of abandonment. The data shows a 1.4 percent prescription abandonment rate for patients with co-pays of $10 or less, a 3.4 percent rate for patients with co-pays between $30 and $40 and a 4.7 percent rate for patients with co-pays of $50.
• Understanding past pharmacy behavior. Patients with first-fill prescriptions are three times more likely to abandon prescriptions than those who are re-filling their medication.
• Identifying the age of the patient. Younger patients are more likely than older patients to abandon their medications.
• Reviewing the drug class. The study found that opiates, anti-platelets and statins were the least likely to be abandoned, while insulin and proton pump inhibitors were more likely to be abandoned.

The FEHBlog wonders why retail pharmacies don’t require customers to pay at the time that prescription fill or re-fill request is made. That’s the common practice among mail order pharmacies.

The Federal Times offers readers a cornucopia of articles focused on the FEHB Program in this week’s issues. The topics include

• plan member satisfaction ratings
• continuing interest in plans with lower premiums
• expanded coverage of in-network preventive care and smoking cessation programs in 2011
• extended eligibility of children under self and family to age 26 beginning in 2011, and
• the availability of new GEHA and MHBP sub-options that will reimburse annuitants for at least a portion of the Medicare Part B premiums.

On Monday, the Affordable Care Act regulators issued an amendment to the interim final rule on grandfathered plans. The accompanying press release explains that the amendments allow[s] group health plans to change insurers “and remain grandfathered, as long as the change in issuer does not result in significant cost increases, a reduction in benefits, or other changes described in the original grandfather rule.” The change is prospective only, e.g., the group health plan decided to change insurers in September but the change takes effect January 2011.  This change is in alignment with the original rule’s provision permitting group health plans to convert from insured to self funded status without losing grandfathered plan status. This change has little impact on the FEHB Program because for most plans the grandfathered plan ship has sailed.

OPM announced yesterday that the agency is revising the Privacy Act system of records notice, initially published on October 5, concerning the FEHB Program claims data warehouse that it intends to create in order to improve the FEHB Program. OPM explained that

Based on the comments we have received since we published the initial notice, OPM is considering revisions to the systems notice to, among other things, provide greater specificity regarding the authorities for maintaining the system, clarify its intent to significantly limit the circumstances under which personally identifiable records may be released, and provide a more detailed explanation of how the records in this system will be protected and secured. If OPM publishes a revised systems notice, the public will have the opportunity to comment on the revised notice before OPM begins operating the system.

OPM will continue to accept comments on the October 5 notice until December 15, 2010.

The FEHBlog on Sunday discussed generic drug savings. Business Insurance reports today that “Health care plans have reduced pharmaceutical costs by dispensing generics more often, but they could do a better job of monitoring whether plan members take their medication as prescribed, a report by the National Business Coalition on Health concludes.”  This is just one of the findings in the Coalition’s annual eValue8 report.

CMS announced today that it has

established the new Center for Medicare and Medicaid Innovation (Innovation Center). Created by the Affordable Care Act, the Innovation Center will examine new ways of delivering health care and paying health care providers that can save money for Medicare and Medicaid while improving the quality of care.  CMS also announced the launch of new demonstration projects that will support efforts to better coordinate care and improve health outcomes for patients. 

According to the press release the new demonstration projects will test the “health home” and “medical home” concepts which are designed to strengthen primary care and better coordinate care for patients.

Well, as we enter the second week of the Federal Benefits Open Season, Congress returns for its lame duck session and Medicare starts its annual Open Season for Medicare Advantage and prescription drug plans.

The Federal Times reports that

More than six weeks after the Oct. 1 start of the fiscal year, agencies are operating off a continuing resolution that generally leaves spending at fiscal 2010 levels. The [continuing] resolution [that Congress passed before the November 2 election] expires Dec. 3; the question is whether lawmakers will belatedly approve a dozen fiscal 2011 spending bills — possibly as a catch-all “omnibus” package — or punt a final decision into next year by passing another continuing resolution.

In addition to appropriations, Congress may consider the American Medical Association’s request to keep the Medicare Part B reimbursement “patch” in effect through the end of next year. Absent Congressional action, Medicare Part B reimbursements will be cut by 23% on December 1.

Business Insurance reports that “Senate Finance Committee Chairman Max Baucus, D-Mont., said Friday that he will introduce legislation to repeal a[n Affordable Care Act] requirement that employers furnish 1099 statements if they do more than $600 in business with a corporate vendor.” A similar effort failed in September.

The Hill reports that “An employer-backed group [called Save Flexible Spending Plans] is pressing the new leaders in Congress to alleviate restrictions placed on flexible spending accounts by the health reform law. The group is demanding that Congress delay or repeal the Affordable Care Act’s requirement — effective next year — that flexible spending account (and group health plan) participants must obtain a doctor’s prescription for over the counter drugs (except insulin) in order to receive plan reimbursement. The OPM presenters discussed this change in last week’s webinar. According to the Hill, the group’s chairman, Joe Jackson, “called the provision ‘an utter waste of consumers’ and physicians’ limited time’ that will only increase healthcare costs.

Speaking of drugs, Reuters reports that “The U.S. healthcare system will reap at least $70 billion in savings over the next four years as brand-name medicines become available as lower-cost generics.”

The healthcare system has become ever more efficient at driving patients to generics. When a generic alternative is available, doctors prescribe it 93 percent of the time, up from 83 percent in 2003, according to IMS.

Among the high-profile drugs losing U.S. patent protection during the 2011-2014 period are the world’s two top-selling medicines: Pfizer Inc’s (PFE.N) Lipitor cholesterol treatment and the blood-clot preventer Plavix, sold by Bristol-Myers Squibb (BMY.N) and Sanofi-Aventis (SASY.PA).  Other widely sold medicines set to see generic competition include Eli Lilly’s (LLY.N) Zyprexa schizophrenia drug and Merck’s (MRK.N) Singulair asthma treatment.

In contrast to low priced generics, the New York Times reports about a

controversial review by the Centers for Medicare and Medicaid Services [CMS] to determine whether to pay for Provenge, which costs $93,000 per patient and extended lives by about four months in clinical trials. Medicare advisers will meet next Wednesday  [November 17] to discuss the drug, which was developed by Dendreon, a Seattle-based biotechnology company.

Provenge is the first so-called therapeutic cancer vaccine – meaning it works by training the patient’s immune system to attack the tumor – to win F.D.A. approval. The treatment is made for each patient from his own blood. Sales have been small so far because Dendreon’s manufacturing capacity has been limited.

A Washington Post report predicts that the CMS review panel will approve Medicare coverage of Provenge. According to the Post, “most private insurers already pay for Provenge, and Medicare patients can receive it while the government conducts its review.”