Monday, October 10, 2011

Weekend Update

The FEHBlog took a few days off to tour around New England. The FEHBlog returned to a Washington Post article about the Postmaster General Patrick Donahoe attacking the FEHB Program.:
During an interview late last week, Donahoe was clearly annoyed and angry with the Obama administration and Congress for not endorsing his plans to remove USPS from FEHBP — a massive program providing an array of options for life insurance and health, dental, vision and long term care based on a worker or retiree’s occupation, labor union and geographic location.
“How do you manage 200 health care plans effectively?” Donahoe asked in reference to FEHBP’s various options. “There should be one plan for the federal government, then we’d really get — not only could we prefund, we’d probably get a refund.”
Donahoe’s mention of prefunding is in reference to a 2006 law that requires the Postal Service to pay about $5.5 billion annually to prefund future retirements of postal workers — an expense he said “that has killed us financially."
This tirade comes on the heels of OPM''s recent announcement that FEHBP premiums will increase by 3.8% next year which is lower than the projected national average. That is a minor miracle because of the FEHBP's demographics -- one half of the enrollment is annuitants and the active enrollees are an older group, and the FEHBlog understands that Postal Service active employees are on average older than Civil Service employees. How is this accomplished? Competition among plans -- not a single payer -- works in the FEHBP just as it likely will work in the Affordable Care Act's health insurance exchanges in 2014.

Last week, the Institute of Medicine released to the Health and Human Services Secretary its recommended criteria for the essential benefits package that plans operating in the ACA's health insurance exchanges.  According to IOM's press release
The ACA stipulates that the essential health benefits should reflect the scope of benefits covered by a typical employer plan and include 10 specific categories.  To refine the package, HHS staff should determine what is typical of small employer plans because they will be among the main customers for policies in the state-based exchanges, the report says.  HHS officials should gauge potential services and products against a set of criteria, including medical effectiveness, safety, and relative value compared with alternative options, and evaluate whether the package as a whole protects the most vulnerable individuals, promotes services that have proved effective, and addresses the medical concerns of greatest importance to the public, the report says. 
Benefits that have been mandated for insurance coverage by individual states should be subject to the same review and criteria.  Products and services that do not meet the criteria should not be included.Because the package must be affordable to the small firms and individuals who will be the principal customers for the exchanges, its comprehensiveness should be balanced with its potential cost, the committee concluded.  The report recommends that HHS determine what the national average premium of typical small employer plans would be in 2014 and ensure that the package's scope of benefits does not exceed this amount
These are very reasonable criteria, in the FEHBlog's view. AHIP commented that “With this thoughtful report, the IOM is urging policymakers to strike a balance between the affordability of coverage and the comprehensiveness of coverage. We agree that this balance is critical to ensuring that individuals, working families and small employers can afford health insurance. The recommendation that the initial EHB package reflect the scope of benefits and design provided under a typical small employer plan is an important step toward maintaining affordability."

However, the Secretary must establish the benefits following a public hearing. Modern Healthcare reports that
HHS Secretary Kathleen Sebelius acknowledged the agency's commitment to public engagement in the issue when the report was released last week. Sebelius said in a statement that she's heard from states, insurers, patients, providers and employers about essential health benefits and that she looked forward to reviewing the IOM's recommendations.
“But before we put forward a proposal, it is critical that we hear from the American people,” Sebelius said in her statement. “To accomplish this goal, HHS will initiate a series of listening sessions where Americans from across the country will have the chance to share their thoughts on these issues.”
Here's the rub as explained by the Washington Post
A[n ACA] provision * * * gives the federal government authority to define “essential benefits” that will be offered on the health insurance exchanges, or marketplaces, to individuals and small businesses starting in 2014. If states mandate a benefit but it isn’t on the federal list, the states would be responsible for the cost of the coverage.
As a result, autism benefits and dozens of other state-required benefits, covering services and conditions such as infertility, acupuncture and chiropractic care, could be at risk.
Modern Healthcare adds that the IOM report appreciating this issue "sought flexibility for states in its third recommendation. That suggestion said states administering their own exchanges that wish to adopt a variant of the federal package should be allowed to do so—but only if the state-specific criteria are “actuarially equivalent” to the national package and it's supported by a process that has included meaningful public input."

As previously discussed, and recognized by the IOM, the FEHB Act creates broad categories of benefits to be covered and preempts state mandates -- which facilitate plan competition. FEHB plans and other employer sponsored plans operating outside the exchanges would not be required to offer the essential benefits package approved by HHS, but they could not impose lifetime or annual dollar limits on any of those HHS identified benefits.

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