It’s a momentous day. The Trump administration issued its first ACA FAQ which is number 38. The FAQ concerns the mental health parity provisions of the 21 Century Cures Act which Congress passed last December.

Speaking of complicated laws, the OPM Inspector General issued its semi-annual report to Congress for the period ended March 31, 2016, yesterday.  The Inspector General demands that Congress extend the federal health care programs anti-kickback act to the FEHBP. The FEHBlog, as a lawyer, should be jumping up and down for joy over this demand because adding legal complexities mean mean more work for lawyers.

But he’s not.  In 1996, as part of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Congress extended this anti-kickback act  beyond the  Medicare and Medicaid programs to all federal healthcare programs with the express exception of the FEHBP.  This was not an oversight. The House Ways and Means Committee explained in its contemporaneous report that

the Committee decided that the current anti-kickback statute is not well suited to the Federal Employee Health Benefit Program (FEHBP) which operates more like a private sector program with a wide range of primarily managed care options for federal employees. The fee-for-service and entitlement nature of the Medicare program and other federal health programs give rise to potentially fraudulent or abusive practices that are not present in an environment with managed care coverage.

H. Rep. No. 104-496, at 83 (104th Cong., 2d Sess. 1996).  The Committee’s rationale applies equally if not more strongly over twenty years later as FEHBP carriers have increased their reliance on provider networks. See FEHBA § 8902(n).

On the general health care cost front, the government has come out with two interesting reports:

  • The Labor Department’s Bureau of Labor Statistics reports on its “experimental disease-based price indexes, which adjust expenditures on disease for inflation.” 
  • The Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary released state-level health care spending data for the period 1991-2014.  “David Lassman, the lead author of the report noted that, ‘recent economic and health sector factors have had clear impacts by state, both by payer and in the rates of overall per capita personal health care expenditure growth; however, during the 2009 to 2014 period, the variation in spending between the lowest and highest states was virtually unchanged.’” 
On the prescription drug cost front
  • The Drug Channels blog muses on CVS Health’s recently announced approach to sharing manufacturer rebates with high deductible health plan members.  
  • Med City News reports that Mylans’s high priced Epipen product will have market competition later this year. 

On Thursday, San Diego, California-based Adamis Pharmaceuticals received a nod from the FDA to begin marketing its version of the device. Shares of the NASDAQ-listed company spiked 50 percent following the news.

Via phone, Mark Flather, senior director of investor relations and corporate communications for Adamis, said the company won’t release a definitive price until the product launches in the second half of this year. The expectation is, however, that it will meet customers’ demand for a more affordable product. “We expect to be cheaper than the other offerings on the market,” Flather stated.

  • The Hill reports that the Trump Administration is developing an executive order on drug pricing.  

Executive orders can’t change or make laws, but they can be used to direct agencies to pursue certain regulatory actions.

One such policy under discussion could be to direct federal agencies to pursue value-based purchasing contracts for drugs. Value-based contracts require manufacturers and insurers to work together on payment for a drug based on how it performs.

Another policy that is under discussion would instruct agencies to pursue trade policies that would strengthen the intellectual property rights of pharmaceutical companies.

OPM began to encourage FEHB carriers to implement value based purchasing contracts a few years ago.