Tuesday Tidbits

  • Govexec.com reports that Rep. Steven Lynch has introduced a bill in Congress (H.R. 2715)  that “would prohibit [FEHBP prescription benefit managers] PBMs from switching drugs without a physician’s approval; demand PBMs return to the federal plan 99 percent of all rebates, market share incentives and other monies from pharmaceutical companies in exchange for FEHBP business; and create stronger disclosure requirements.” The National Treasury Employees Union came out in strong support of the bill.  NEWS FLASH:  The Office of Personnel Management introduced these reforms by contract five years ago as first explained in Carrier Letter No. 2010-04.  In contrast to Medicare, reforms can be implemented and revised contractually which is much more flexible than passing a law. 
  • In their press release, the NTEU states “FEHBP cannot buy drugs off the Federal Supply Schedule, which is why the program’s prescription costs are 15 percent to 45 percent higher than those for Medicare and federal health care systems run by the Veterans Administration and the Pentagon, the NTEU leader said.” Be careful what you wish for.  There are two components to cost — price and volume. In order to take advantage of statutorily low prices, the government must restrict the drug formulary to those low priced drugs.  In any event, the FEHBP already has high generic drug utilization in the FEHBP — a big cost saver — and the federal supply schedule focuses on drugs that are still under patent. 
  • This brings me to my final point related to this bill. The FEHBlog often reads that prescription drug spending is 30% or so of the FEHBP’s benefit spend. That is  ten to fifteen percentage points higher than the commercial sector.  The reason for the 30% figure is that the FEHBP has a boatload of annuitants with Medicare Part A hospitalization coverage. Medicare covers the hospital bills for these annuitants, and the FEHBP covers their prescription drug costs. The FEHBlog expects that absent Medicare, FEHBP’s spending on prescription drugs would be in line with other commercial carriers.
  • Yesterday, according to Accounting Today, the IRS released the 2016 dollar adjustments to limits on contributions to health savings accounts,  the minimum deductibles for high deductible health plans, and the upper limit on out-of-pocket cost maximums for those plans IRS Rev. Proc 2015-30).
  • The FEHBlog also noticed an interesting FierceHealthPayer article about a New Jersey health insurer QANI now part of Cigna that stratified its membership by high, moderate, and low utilizers / risks and then focused appropriate managed care attention on each segment. The attention relied on technology and member engagement.  “The engagement program has succeeded to the point that, as of 2015, QANI applies it across its membership base.”