Weekend Update

Happy Memorial Day weekend! This is a time to remember the brave men and women who gave their lives for our country, including my cousin Army Captain Eric Paliwoda who was killed in action in Iraq in January 2004.

Business Insurance and Reuters  report on the Blue Cross Blue Shield Association's decision to award CVS Caremark an expanded contract to provide mail order and specialty pharmacy services to its Federal Employees Plan ("FEP") effective next year. Caremark will replace Medco as FEP's mail order and specialty pharmacy and will continue to provide FEP with a retail pharmacy network.

The U.S. Office of Personnel Management added a page to its website with guidance on the federal employment of transgendered persons. The guidance on insurance benefits states that

Employees in [gender] transition who already have Federal insurance benefits [which of course includes the FEHBP] must be allowed to continue their participation, and new employees must be allowed to elect participation, in their new names and genders.  If the employees in transition are validly married at the time of the transition, the transition does not affect the validity of that marriage, and spousal coverage should be extended or continued even though the employee in transition has a new name and gender. 

In the FEHBlog's view, this guidance does not run afoul of the Defense of Marriage Act  because the validity of a marriage is determined at the time when the marriage occurs. Of course, a spouse's decision to transgender a marriage could cause a divorce but if it does not the marriage remains intact.

Modern Healthcare and Health Data Management report on the HHS Office for Civil Right's 95 page long proposed rule to be published in the May 31, 2011 Federal Register concerning accounting for disclosures of electronic protected health information. In the preamble to the proposed rule, OCR explains that

The purpose of these modifications is, in part, to implement the statutory requirement under the Health Information Technology for Economic and Clinical Health Act (“the HITECH Act” or “the Act”) to require covered entities and business associates to account for disclosures of protected health information to carry out treatment, payment, and health care operations if such disclosures are through an electronic health record. Pursuant to both the HITECH Act [of 2009] and its more general authority under HIPAA, the Department proposes to expand the accounting provision to provide individuals with the right to receive an access report indicating who has accessed electronic protected health information in a designated record set. Under its more general authority under HIPAA, the Department also proposes changes to the existing accounting requirements to improve their workability and effectiveness.

This first purpose principally impacts health care providers who rather ironically have been financially incented to purchase electronic health record systems as recently discussed in the Federal Times. Section 13400 of the HITECH Act defines an electronic health record (“EHR”) as “an electronic record of health-related information on an individual that is created, gathered, managed, and consulted by authorized health care
clinicians and staff.” However, the unanticipated and broader second and third purposes will impact health plans too.

RAND has published a report on whether or not the Affordable Care Act will cause an increase in the number of self-funded health plans. Before Congress enacted the ERISA in 1974, most employer sponsored health plans were insured. For a number of reasons, such as the dichotomy in the scope of ERISA's preemption of state law, ERISA caused employers to see the value in self funding their health plans. Now, over 25 years later, most employers with 500 or more employees self fund their health plans.  The Affordable Care Act imposes financial penalties (in the FEHBlog's view) on health insurers, such as the 2% fee on health insurers that takes effect in 2014, which may cause smaller employers to consider self funding. The smallest employers likely will look to the exchanges. The report's executive summary explains that

Stakeholders expressed significant concern about adverse selection in the health insurance exchanges due to regulatory exemptions for self-insured plans. However, our microsimulation analysis predicts a sizable increase in self-insurance only if comprehensive stop-loss policies become widely available after the ACA takes full effect and the expected cost of self-insuring with stop-loss is comparable to the cost of being fully insured in a market without rating regulations.