Sunday, May 15, 2011

Weekend Update I

The Blogger service that the FEHBlog uses was down on Thursday and Friday. Here are the items that the FEBlog had planned to post on Thursday.

The Federal Times reported on Thursday that the Federal Postal Coalition of federal and postal employee unions and associations "pressed Senators" to reject the House budget proposal's changes to federal employee compensation. The article notes that "Also the coalition objects to a proposal [from the White House deficit reduction commission] to turn the Federal Employees Health Benefits Program into a voucher-based system. Because that voucher would only increase by the gross domestic product plus one percentage point, the coalition said it would quickly fall behind medical inflation costs and essentially double employees' premium costs by 2030."  There was some talk that the White House would adopt this proposal but it hasn't happened.

The Milliman actuarial consulting firm released its 2011 Milliman Medical Index ("MMI").
The MMI includes an analysis of costs paid by the employer and costs paid by the employee. An increasing portion of the cost has been borne by the employee—in nine years, the total cost paid by the employee has also more than doubled. In 2002, the employee share of these costs was $3,634 and it now stands at $8,008.
Specific findings:

  • Between 2010 and 2011, the MMI increased by $1,319 or 7.3%.

  • Employees' share of the total cost is at an all-time high, having increased from 36.8% in the first year of the MMI (2005) to 39.7% in 2011.

  • The annual rate of increase for the MMI is down 0.5% from 2010 to the lowest rate since the inception of the MMI, but is still in excess of spending increases for most other sectors of the economy.

  • Even though hospital spending is only 48% of total healthcare spending, increases in facility spending (inpatient and outpatient combined) account for over 60% of this year's total increase in cost of healthcare.

  • The AP via AHIP HiWire reports on a letter that the American Medical Group Association, a trade association which represents 400 large medical groups like the Cleveland Clinic and the Mayo Clinic sent to CMS Director Donald Berwick on May 11. The trade association's press release includes the following startling statement:
    In an AMGA survey of its membership, 93 percent of respondents stated that they would not participate in the [accountable care organization] ACO program unless the requirements in the final rule reflect major modifications to the proposals. In their current form, the requirements would render the ACO program a missed opportunity to inject value and accountability into the delivery system.
    The AP article notes that
    Private insurers are also experimenting with versions of the accountable care idea, but successful adoption by Medicare is seen as the key to spreading it across the country. The Obama administration had estimated as much as $960 million in savings from the first three years of the program, and bigger amounts thereafter.
    [Donald] Fisher, the medical association head, said he does not think the administration will easily back off its approach, because on paper it saves the government money.
    The comment deadline on the ACO is June 6, 2011.

    The Wall Street Journal provides an update on efforts by large health insurance companies to divesify their product offerings.
    Diversification plans, touted in meetings with investors this year, include stepped up acquisitions and partnerships that will allow the companies to employ doctors directly, deliver health-information technologies, and participate in new hospital-doctor groups known as accountable-care organizations.
    The AIS Reports on Patient Privacy reports on steps that HIPAA covered entities are taking to ramp up efforts to keep an eye on their business associates.

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