Roll Call reports on federal employee union lobbying efforts to convince Congress to accelerate into this year age 26 coverage in the FEHB Program.

Milliman, a benefits consulting firm, released its last Medical Index last week finding that the “average total medical spending for its “typical American family of four” reached $18,074, an increase of $1,303 over last year. The total-dollar increase is the highest in the history of this study.” 

Mercer, another benefits consulting firm, released a survey on employer reaction to PPACA’s immediate reforms including the age 26 change and the elimination of lifetime benefit maximums (which generally do not exist in the FEHB Program). “Many employers are bracing for higher health care costs resulting from compliance with health reform mandates that take effect with the 2011 plan year. According to a survey of nearly 800 employers released today by Mercer, the cost impact will range from moderate to severe, depending on the employer’s circumstances.” This, of course comes on top of the cost increases that Milliman found.

Towers Watson, another benefits consulting firm, released a survey on employer reaction to the 40% high cost plan excise tax that takes effect in 2018. The reaction is fear.

“The original concept of the excise tax was to penalize employers with excessively rich health benefit plans,’ said Randall Abbott, a senior consultant for Towers Watson. ‘Assuming even reasonable annual plan cost increases to project 2018 costs, many of today’s average plans will easily exceed the cost ceiling primarily directed at today’s ‘gold-plated’ plans.” * * *

“All it takes to drive costs above the excise tax cap for six in ten employers is an 8% average annual cost increase. And, without making plan design changes, that’s what many employers are projecting,” said Dave Osterndorf, a consulting actuary with Towers Watson. “This rate of increase has been typical for the past several years. We see it as an open question as to whether the recently passed PPACA will mitigate cost trends in the near term for employers.”

It’s not a pretty picture.

I plowed through some of the PPACA minimum loss ratio comments posted on the regulations.gov website and I found these to be worth reading — AHIP’s comments and attachment and Oliver Wyman (actuarial firm) comments and associated study. I must say that regulation.gov is one difficult site to navigate.

The clock is ticking again toward the end of the month when the COBRA/TCC continuation coverage subsidy and the moratorium on the 21% cut in Medicare Part B payments to physicians end. The AMA News reports on the medical profession’s strategy for Congress to enact a five year freeze.

Business Insurance reports on a Towers Watson Consulting survey of 661 employers finding that 16% of those employers said they would extend the coverage [to adult dependents up to age 26] before the [PPACA] required effective date [typically January 1, 2011], 78% said they would wait until the effective date and 6% did not yet know.”  The study indicates that employers lack the resources necessary to accelerate implementation into this year.

The Washington Post has called my attention to a May 11, 2010, Congressional Budget Office report on S. 1102, Sen. Joe Lieberman (I Conn.) bill to extend FEHB Program coverage (and certain other statutory federal employment benefits) to the same sex partners of federal employees.

CBO estimates that enacting S. 1102 would increase direct spending by $101 million over the 2010-2015 period and $310 million through 2020.1 We estimate that enacting the bill would not have any direct impact on federal revenues. Over the same period, CBO estimates that discretionary spending would also increase, by $394 million, assuming appropriation of the necessary funds. Providing additional health insurance benefits through the Federal Employees Health Benefits (FEHB) program would account for the largest increase in both mandatory and discretionary spending—$294 million and $355 million, respectively.

Senator Cardin’s bill (S 3341) which would allow OPM to accelerate the increase in the dependent child eligibility age to 26 regardless of marital status, now has twelve co-sponsors, including Sen. Susan Collins (R Maine), the ranking minority member of the Senate Homeland Security and Governmental Affairs Committee, to which the bill was referred.

Friday was the Department of Health and Human Services’ (“HHS”) deadline for submission of public comments on implementation of new Public Health Service Act sections 2718 and 2794 (added by PPACA Sections 1001 and 1003). Section 2718 is the minimum medical loss ratio (“MLR”)  provision, and Section 2794 requires HHS and the relevant state to review unreasonable health insurer premium increases. The comments of the National Association of Insurance Commissioners (“NAIC”) are available here. The NAIC will be providing further guidance concerning the MLR provision on June 1.

Modern Healthcare reports that healthcare providers who are not subject to any similar limit on their profits and clearly want to bend the cost curve up are urging HHS to clamp down on the health insurers. For example, “the Medical Group Management Association wrote in its comments that HHS should include administrative costs incurred by providers [to bill insurers] as a component of insurers’ administrative costs in defining medical loss ratios.”

I took a gander at reginfo.gov to find out whether any more PPACA regulations, such as the grandfathered plan rule and the lifetime and annual limit rule, are coming down the pike soon. I didn’t find PPACA regulations but I did find that the Office of Management and Budget is reviewing the final HHS notice of security breach rule.  This final rule will reflect HHS’s reaction to comments on the interim final rule issued last August.

Business Insurance notes that HHS, the Labor Department, and the IRS received over 5,400 comments on the February 2, 2010, interim final rule implementing the Wellstone Domenici mental health parity and addiction equity act of 2008.  The article quotes several benefits professionals who are hopeful that the agencies will accept the suggestion made by many organizations (and makes sense to me) that the effective date be delayed by one year.

The HHS Office for Civil Rights, which enforces the HIPAA Privacy and Security Rules, posted last week guidance on conducting security risk assessments for covered entities and business associates. The risk assessment is a crucial part of HIPAA Security Rule compliance.

HHS and the Justice Department held a press conference last Thursday concerning their efforts to ramp up efforts to fight health care fraud.

Last but not least OPM issued its FedsGetFit virtual cookbook.

OPM updated its healthcare reform web page today, reiterating its assurance that the agency is working to implement the new law (and I know that to be true.)  Sen. Ben Cardin (D MD) has introduced a Senate companion to the House bill (HR 5200) which would conform the FEHB Act’s dependent eligibility provisions to the health care reform law effective January 1, 2011 (increasing the dependent child age ceiling from 22 to 26 and removing the marriage cut off).  The bill also would authorize the OPM Director to accelerate the change into this year.

I was surprised by the statement in Sen. Cardin’s press release that “The non-partisan Congressional Budget Office has confirmed that this bill has no cost associated with it.” This conflicts with HHS’s projection that the dependent child expansion will increase premiums by seven tenths of a percent on average as discussed in a previous entry.There is no such thing as a free lunch.

The Washington Post reports on the Justice Department’s first opportunity to file a brief opposing one of the lawsuits challenging the Constitutionality of the health care reform law. This brief was filed in an action brought by a advocacy group in Michigan, not one of the lawsuits brought by the States.  On a related note, the Post also reports that

President Obama‘s new health-care law could potentially add at least $115 billion more to government health care spending over the next 10 years, if Congress approves all the additional spending called for in the legislation, congressional budget referees said Tuesday.

That would push the 10-year cost of the overhaul above $1 trillion — an unofficial limit the Obama administration set early on.

As OPM’s call letter for 2011 benefit and rate proposals calls for FEHB plan assistance with the First Lady’s initiative to control childhood obesity, it’s worth pointing out the Task Force’s first report.

Under the health care reform law, HHS is required to issue a regulation implementing the provision that extends dependent coverage to children up to age 26 regardless of marital status.  The HHS interim final rule, fact sheet, and frequently asked questions were issued today. As I anticipated, HHS took the most expansive approach to implementing this law. Under the regulations, the only permissible basis for dependent child coverage is the existence of a family relationship — financial dependency and residency with the enrollee are no longer required.

Modern Healthcare notes that  “According to HHS, the new benefit will cost $3,380 for each dependent, which will raise premiums by 0.7% in 2011 for employer plans. Premiums are also expected to rise by 1% and 1.2%, respectively in 2012 and 2013, although HHS expects the actual increase across the entire individual market will be smaller than these estimates.”  That’s likely on the low side for the FEHB Program which is an older group with (I expect) more adult children than the typical employer group.

The interim final rule requires a special open season for re-enrollment of the adult children, which may be combined with the general Open Season. That ball is in OPM’s court.

These changes take effect on January 1, 2011, absent Congressional action. Interestingly, Federal News Radio columnist Mike Causey described Congressman Van Hollen’s bill that would permit OPM to accelerate this change as a “long shot.” OPM has explained the available options for coverage until then.

Last Monday May 3 was the deadline for submission of public comments on one of the most flawed federal regulations ever issued, the interim final rule implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 “MHPAEA”).  This law became applicable to the FEHB Program on January 1, 2010, and OPM did a good job implementing it with its 2010 call letter guidance. The agencies that produced this rule threw a monkey wrench into the works with a rule that does not produce parity and goes far beyond the the terms of the statute.  For more details, I direct your attention to the comments of the Blue Cross Blue Shield Association, United Health Group, and the National Association of Health Underwriters.

I have mentioned that a group of managed behavioral health organizations called the Coalition for Parity has filed a lawsuit alleging that the government violated the Administrative Procedure Act by issuing the MHPAEA rule in final form rather than following the normal path of issuing a proposed rule for comment. On May 3, the Government filed its brief in opposition to the Coalition’s summary judgment motion, and on May 7, the Coalition filed its reply brief. The case is now teed up for U.S. District Judge Colleen Kollar Kotelly who may decide to hear oral argument before issuing a ruling.

Following up on Sunday’s post, the House Oversight and Government Reform Committee held a business meeting today, and the FEHBP PBM transparency and price setting bill (HR 4489) was not considered. 

Also, as mentioned on Sunday, the Senate Homeland Security and Governmental Affairs subcommittee on federal workforce management held a hearing about federal work-life programs on Tuesday May 4.   Mr. Jonathan Foley, who testified on OPM’s behalf, provided an in-depth description of OPM’s federal workforce wellness initiatives.

Today, the House Energy and Commerce Health Subcommittee held a hearing on trio of health care transparency bills.  I found Harvard Professor Regina Herzlinger’s testimony to be thought provoking. Modern Healthcare reports that Subcommittee Chair Frank Pallone (D NJ) “said he would not commit to advancing legislation that requires providers, payers and vendors to publicly disclose the cost of their services.”

PPACA or the Affordable Care Act, of course, is the health care reform law that Congress passed in March 2010. Today, I discovered a consolidated version of PPACA that puts all of the pieces — the original Senate bill, the Senate amendments, and the reconciliation bill (HCERA) together for ease of reference.

Congressman Chris Van Hollen (D Maryland) introduced a bill today that would amend the FEHB Act so that it conforms with the dependent child eligibility provision in PPACA (Sec. 1001 creating Public Health Service Act Section 2714 — try out the consolidated PPACA).  In other words, the bill would increase the FEHB Act’s dependent children age ceiling from 22 to 26 and it would remove the current FEHB Act provision that terminates coverage if a dependent child marries. The effective date for the change is January 1, 2011, but the bill would allow the OPM Director to accelerate the changes into this year presumably by regulation.

HHS issued today an interim final rule creating PPACA’s Early Retiree Insurance Program effective June 1, 2010. Business Insurance explains that “Under a $5 billion program—authorized by the new health care reform law—employers with health care plans covering retirees from age 55 through 64 will be reimbursed for 80% of such retirees’ claims between $15,000 and $90,000. The HHS rule, however, excludes expressly FEHB plans from participation in the Program, notwithstanding the fact that FEHB plans are employer sponsored, cover millions of early retirees, and are underwritten by private sector carriers, not the federal government.

Businessweek reported yesterday that

The U.S. Chamber of Commerce and 12 other business groups asked members of President Obama’s cabinet * * * for more leeway in implementing the health-care overhaul.

The groups said they’re being forced to make contract, employee-benefit and other decisions without guidance on how to comply with provisions that take effect in September. The letter dated April 30 was sent to {Treasury Secretary Timothy} Geithner, Health and Human Services Secretary Kathleen Sebelius and Labor Secretary Hilda Solis.

The groups, which include the Blue Cross and Blue Shield Association, the National Retail Federation and the American Benefits Council, requested at least six months to comply with the regulations once they are implemented, and a “good-faith” standard for measuring compliance.

I also discovered today that Senator Tom Coburn (R OK) has created a web page with links to all of the Congressional Research Service reports on PPACA’s impact.

In Sunday’s post, I noted that the House Oversight and Government Reform Committee will be holding a business meeting on May 6 at noon to mark up HR 626. I somehow mis-clicked on their calendar because it hit me today that the House passed HR 626 last summer. So I wound up informing you about a meeting that was held last year. The Committee’s May 2010 business meeting will be held on May 6 at 10 am. The agenda has not yet been posted.