Thousands of FEHBP members are Medicare eligible. OPM offers a useful website that discusses the relations between the two programs.  This post builds on that information.

The open season for enrollment in Medicare Advantage and Medicare prescription drug plans (“PDP”) begins on October 15. Today, the Centers for Medicare and Medicaid Services released the Star ratings for those plans “which comes on the heels of the recent release of [2019 Medicare Advantage and PDP] benefit and premium information.”

The Chicago Tribune today projects Medicare Part B premiums for 2018. The article advises that the government will announce Part B premiums and other traditional Medicare cost sharing amounts for 2018 in the next four to six weeks.

U.S. News and World Report ranks the best States in the U.S. for aging. The FEHBlog’s state, Maryland, is 28.

Fedsmith has posted a perspective on 2018 federal health insurance costs. The FEHBlog respectfully disagrees with the Fedsmith article’s perspective for the following reasons:

• Fedsmith’s article unfavorably compares FEHBP premium increases to other employer sponsored health plans. However, the article does not consider the FEHBP’s unique demographics. The FEHBP’s enrollment breaks down to 50% employees and 50% annuitants and the average age of federal employee — late forties — is substantially older than the average age of most employer sponsored plans. Demographics have a significant impact on benefit costs.
• Fedsmith’s article states that “KFF noted that premium increases for employer-provided health insurance in private industry were similar to the rise in workers’ wages (2.3%) over the same period.  For Federal employees and retirees, the experience is different as they cannot expect as large a percentage increase in their income as the percentage increase in FEHB premiums.”  The percentage comparison drives the FEHBlog batty. Percentage comparisons are only valid when the you are comparing apples to apples.  The employee share of health insurance premiums in total are smaller amounts than salaries or annuities. The percentage comparison is invalid in this situation. 
• It should not be forgotten that carriers hold the risk on providing this coverage. 

The House of Representatives will be in session for a shortened week while the Senate will be on a district work break for this week which begins with a federal holiday, Columbus Day. Here’s a link to the Week in Congress’s report on last week’s actions on Capitol Hill.

In other news

• OPM released advice to federal employees on the opioid abuse crisis.  
• The Society for Human Resource Management discussed the latest IRS guidance on large employer and insurer ACA reporting for calendar year 2017 required to be issued in early 2018.
• It’s worth noting that United Healthcare prevailed last week in a False Claims Act lawsuit in which the federal government alleged that UHC and other insurers had misrepresented Medicare Advantage risk adjustment scores. The FEHBlog noted this lawsuit last year in a post noting that the FEHBlog was glad that the FEHBP did not have complicating factors like risk adjustment. Indeed the House Ways and Means Committee is sponsored a Medicare Red Tape Relief Project.  But all health care payers and providers continue to have their regulatory crosses to bear. 

Rates charged under [FEHB] health benefits plans *** shall reasonably and equitably reflect the cost of the benefits provided.

OPM has developed the community rating policy by regulation and contract.  Essentially, community rated FEHB HMOs must price their plans to achieve an 85% medical loss ratio for their FEHBP contract in a contract year (including a three month claim run out period). In contrast, the ACA requires insurers in the large group market to achieve an 85% medical loss ratio market wide over a three year period. Community rated HMOs that fail to reach the 85% threshold must pay the surplus to a penalty fund that is distributed pro-rata among the FEHB community rated plans. OPM indicated in the latest semi-annual regulatory agenda that it plans to propose a new community rating rule in the near future.

A nice way to finish the week – a favorable article about our beloved FEHBP in the Washington Post.

The FEHBlog will be attending the Washington Nationals playoff games against the Cubs this evening and late tomorrow afternoon. Hope springs eternal.

This is the time of the year when the FEHBLog receives comments. Because the FEHBlog is a lawyer who represents FEHB plans, he won’t comment any particular plans rates. He is willing to explain rate development.

All of the fee for service plans develop their rates based on experience rating. The carrier negotiates the rate with OPM. OPM adds a 4% load to the negotiated rate in accordance with the FEHB Act. The net to carrier premium is paid into a U.S. Treasury account. The carrier can draw down on that account to pay benefits, administrative expenses that the government is willing to reimburse up to an annual ceiling, and a service charge awarded by OPM under their plan performance assessment system.

The financing mechanism causes plans to build reserves when experience, meaning health care costs, is good and lower reserves when experience is bad. OPM requires a minimum level of reserves. Excess reserves can be use to moderate premium changes.

Because the reserves are held in the U.S. Treasury, the government enjoys the investment return on the reserves and if an experience rated carrier drops out of the FEHBP, its surplus plan reserves are distributed pro-rata among the remaining plans in the FEHBP.

HMO participating in the FEHBP can elect to use experience rating or community rating, which requires a separate blog post.

Here are links to the OPM 2018 rates announcement and the Federal Times, Govexec, and Federal News Radio articles about that announcement.

A reader asked the FEHBlog why the employee / annuitant contribution for self plus one can be higher than the employee / annuitant contribution for self and family coverage. The reader pointed out a particular plan.

The FEHBlog looked at the 2018 rate chart for that plan and as he expected the total premium for self and family coverage is higher than the total premium for self plus one coverage. OPM does not permit the total premium for self plus one coverage to exceed the total premium for self and family.

It’s the government contribution that can skew the employee / annuitant contribution. The maximum government contribution toward self plus family coverage ($521 bi-weekly) is $30 higher than the maximum government contribution for self plus one coverage ($491 bi-weekly). If the case of the plan in question there is less than a $30 difference between the total premiums for self plus one and self and family coverage. Hence the flip flop.

In the FEHBlog’s view, Congress should not have added a self plus one option to the FEHBP because the average family size (2.3 to 2.4 members) is small. That’s why there’s generally a small difference in total premiums for the two levels of coverage.  But no one asked the FEHBlog.

Here you go.

Yesterday, OPM announced that the agency has a new Chief Information Officer, David Garcia. “Mr. Garcia previously served as the Chief of Information Technology for the State of Maryland and Secretary of the Department of Information Technology from 2015 to 2017 [under Republican Governor Larry Hogan].” Good luck, Mr. Garcia.

Medpage Today reports that the Centers for Medicare and Medicaid Services has cancelled a controversial Obama Administration era proposal to change the way that Medicare Part B pays for drugs. The demonstration no doubt would have shifted costs onto the FEHBP and other employer sponsored coverage.

CMS also withdrew a January 2014 proposed rulemaking that would have required health plans to certify their compliance with operating rules applicable to HIPAA standard electronic transactions. CMS plans to “re-examine the issues and explore options and alternatives to comply with the statutory requirements.” Health plans continue to be responsible for complying with the operating rules.

Biopharma Dive discusses a recent Express Scripts study on the skyrocketing costs of specialty or biologic drugs. The Food and Drug Commissioner Scott Gottlieb, who is in the running for the HHS Secretary nomination, discussed on his blog yesterday the steps that his plan is taking to bring biosimilar drugs to consumers more quickly. “While FDA doesn’t control drug pricing, our policies do affect competition in the market. This is the nexus of our current efforts on drug pricing.” Well put.

Beckers Hospital Review reports that “The average cost associated with cybercrime hit $11.7 million per business, globally, in 2017, according to a report by Accenture and Ponemon Institute.” Holy smokes, Batman.

The FEHBlog enjoyed his grandson’s first birthday party today. He wonders when OPM plans to announce the 2018 government contribution. The call letter was released early this year and the premium announcement is late. The wild card is the onerous ACA health insurer tax which falls on the Blue Cross FEP and the HMOs to one extent or another. The FEHBlog would have bet the ranch that Congress would have further suspended or repealed the tax by now as it raises premiums in the ACA marketplace as well as the FEHBP. But no dice.

Tennessee Senator Lamar Alexander, the chair of the Senate Health, Education, Labor and Pensions Committee has resumed work on a bipartisan ACA fix bil; with Washington Senator Patty Murphy, the ranking minority member of that committee. We will have to see whether that bill or another one  at least continues to suspend the health insurer tax and the medical device tax for another year or two. It’s hard to believe the Cadillac tax is now scheduled to take effect in only two years, 2020. That crazy tax will really mess up the FEHBP.

Congress is in session this week on Capitol Hill. Here’s a link to Week in Congress’s report on last week’s activities. The U.S. Supreme Court starts a new term, the first Monday in October.

Of course, it’s worth noting that last Friday Tom Price resigned as Secretary of Health and Human Services. This position is top dog in the ACA bureaucracy. It will be interesting to see who President Trump nominates to succeed him. In the meantime, the President “designated Don Wright, MD, MPH, as Acting Secretary of Health and Human Services.”

The FEHBlog noted with interested that Aetna has formed a partnership with Meals on Wheels.

The objective of the collaboration is to create a best in class model for care coordination, integrating Meals on Wheels’ daily nutritious meals, social support and critical safety checks into a continuum of care required as people age. Meals on Wheels and Aetna will pilot this model in several markets, and identify best practices intended to improve vulnerable seniors’ health outcomes. Results from these pilots will help build a scalable operational model that will address the challenges seniors face in their daily living.

This collaboration is a perfect fit for the FEHBP which has a large cadre of elderly members.

Yesterday, The Senate leadership decided against holding a vote on the Graham-Cassidy health care reform bill as more fully explained in this Bloomberg report.

Kaiser Health News attacked Anthem’s plan to require members to use lower priced medical imaging centers that are not owned by hospitals. Hospitals, which tend to be tax exempt, use these centers to spread their heavy overhead. In the Obama era, you could expect that the ACA regulators eventually would issue an ACA FAQ reining in or cancelling challenged insurer medical mangement practices whether or not they made sense.  The Obama administration issued 37 ACA FAQs over six years or so while the Trump administration has issued one that dealt with the recent 21st Century Cures Act in nine months.

In other news,

• OPM has not yet made the 2018 FEHBP premium / government contribution change announcement. You will see it here as soon as the announcement occurs. The FEHBlog expects that to happen this week. 
• Express Scripts medical director discusses pricing approaches for the new wave of expensive gene therapy drugs known as CAR-T therapies.
• United Healthcare has rolled out to employer sponsored groups a third party weight loss program, called Real Appeal, which leveraging interactive digital tools to create healthier habits for employees according to this Employee Benefit News report.