Big regulatory week for the FEHBP -- redux

Yesterday, OPM reissued its interim final rule creating a new minimum loss ratio methodology for pricing community rated plans in the FEHB Program.

Today, the Department of Health and Human Services issued an interim final rule adopting common operating rules for electronic health plan eligibility verification and claim status checks. These operating rules which take effect on January 1, 2013, will make it easier for health care providers to engage in these electronic transactions with insurers. CAQH, a coalition of health insurers and providers, was developing these rules at the time Congress passed the Affordable Care Act. Congress decided to codify them which the FEHBlog views as a mistake because technology changes a lot faster than the law. Modern Healthcare reports that
"the rule will carry near-term costs for healthcare entities, including up to $5 billion for insurers and $800 million for providers over the first 10 years, according to an HHS spokesman." This new requirements come on top of the existing mandates to adopt new electronic transaction standards and the ICD-10 code set over the next eighteen months.

In a very interesting development, a Highmark, a western Pennsylvania health insurer, is making a major investment in the West Penn Allegheny Health System which according to a Forbes article was poised to shut down its hospitals in September for lack of capital.  The parties explained in a press release that

Highmark Inc. and the West Penn Allegheny Health System (WPAHS) today announced their intentions to pursue an affiliation aimed at maintaining the health system as a high-quality choice for health care services to millions of Western Pennsylvanians.

As part of the initial arrangement, Highmark is immediately providing a $50 million grant to the WPAHS, enabling the health system to sustain and strengthen its West Penn and Forbes Regional hospitals while assuring the continued delivery of quality medical services by the entire system. Highmark is making a total financial commitment of up to $475 million over four years, including $75 million to fund scholarships for students attending medical schools affiliated with WPAHS, and to support other health professional education programs. The management and boards of directors of Highmark and WPAHS will continue discussions in the weeks ahead with the goal of finalizing a definitive agreement.

The Wall Street Journal reports that

If state and federal regulators sign off on the plan, Highmark officials say the deal will allow them to move away from traditional fee models that reward providers for providing unnecessary procedures and services.

Instead they would pay salaries to doctors, offering them incentives to achieve quality and efficiency goals. The integrated model would also rely on primary-care doctors to coordinate patients' care and focus on preventive efforts. 

Of course, such integrated care is a goal of the Affordable Care Act, but the Journal's report goes onto explain the competition that West Penn faces from the University of Pittsburgh Medical Center. This should be interesting to follow.