Be still the FEHBlog’s heart. The Wall Street Journal is reporting that “U.S. consumers’ health-care costs fell in May for the first time in almost four decades.” Most of the drop is attributable to the upswing in public use of generic drugs.
The U.S. Supreme Court decided yesterday to permit the Federal Trade Commission proceed with its antitrust challenge to so-called pay for delay settlements. The Scotusblog report on the decision is here. In these cases, the brand name manufacturer pays off a generic drug manufacturer in the event of a patent challenge seeking early generic competition for the brand name drug. The Supreme Court however refused to hold that those settlements are presumptively unlawful The FTC must prove them to be unlawful under the rule of reason. The Wall Street Journal reports that “The high court’s ruling will probably deter some companies from deals, but not all, Sanford C. Bernstein analyst Ronny Gal said in a note to investors. “The industry is full of smart lawyers who could structure agreements to avoid visible reverse payments while transferring value between companies,” he wrote.”
Business Insurance reports that “Group health care plan costs are expected to increase an average of 5.4% in 2013 and 4.5% in 2014, a slight moderation from prior years as employer actions and health care market developments help hold down those increases, PricewaterhouseCoopers L.L.P. said in an analysis.” The PwC report identifies the following six trend factors:
Four factors deflate medical cost trend in 2014
Care continues to move outside costly settings such as hospitals to more affordable retail clinics and mobile health. Consumers value the convenience, and costs can be as little as one-third of the bill in a traditional healthcare site.
Major employers such as Walmart, Boeing, and Lowe’s now contract directly with big-name health systems for costly, complicated procedures such as heart surgery and spinal fusion. The employers are making the move to “high performance networks” far away from the home office in the belief that even with travel costs, these networks still deliver overall savings.
The federal government’s new readmission penalties take direct aim at waste in the health system, estimated to be as high as 30%. According to government data, hospital readmissions dropped by nearly 70,000 in 2012, and this trend is expected to accelerate through 2014 as hospitals focus on discharge planning, compliance and the continuum of care.
Seventeen percent of employers in PwC’s 2013 Touchstone survey today offer a high deductible health plan as the only option for employees. And more than 44% are considering offering it as the only option. When consumers pay more for their healthcare, they often make more cost-conscious choices.
Two factors inflate medical cost trend in 2014
Until recently, widespread adoption of generic medicines helped dampen overall medical inflation, but the rise of expensive complex biologics will nudge spending trends upward. Approvals of new biologics now outpace traditional therapies, and that pattern will continue in 2014 as research efforts target complex cases such as cancer.
Health industry consolidation has increased more than 50% since 2009—activity that is expected to continue through 2014. Higher prices are sure to follow in some markets. According to a recent report, hospital mergers can lead to price increases of up to 20.3% These price increases are especially acute in markets with one dominant system.
Kaiser Health News reports on a Senate hearing on medical price transparency. “At a Capitol Hill hearing Tuesday, journalist Steven Brill, who examined the issue of the high cost of health care in a much quoted March 2013 Time magazine article, told Senate Finance Committee members that President Barack Obama’s health care law will do very little to lower prices for consumers.” Ouch.
The AMA issued its annual health insurer report card. This is a one sided perspective but it’s worth examining.
The OPM Inspector General issued his semi-annual report to Congress for the period ended March 31, 2013. A copy of the report and the OPM management response is available here.
CMS has updated its Medicare coordination of benefits and secondary payer recovery website.