PriceWaterhouseCoopers reports that “Employer medical cost trend has plateaued. PwC’s Health Research Institute projects employer medical cost trend will be 6 percent for 2019, the same as 2018. Cost reduction efforts will shift to prices.”  That plateau remains well above the CPI-U.  Will it ever come down to the CPI-U?

Health Payer Intelligence informs us that

The Partnership for America’s Health Care Future (PAHCF), a newly formed coalition, consisting of leading healthcare provider societies and payer organizations, has committed to strengthening the nation’s private and public payer ecosystems. 

AHIP, the American Medical Association (AMA), the BlueCross BlueShield Association, PhRMA, and the Federation of American Hospitals are founding members of the consortium. 

PAHCF’s mission includes improving the quality and scope of Medicaid and Medicare, creating greater stability in the employer-sponsored insurance market, and supporting patients to make cost-effective healthcare decisions.

Good luck to them.

In this regards, Health Leaders Media reports about Blue Cross of Arizona’s successful Shared Savings Program.

HLM: Where do you see this model in five years? 

Wallace: First and foremost, we wanted to make sure we could bring all stakeholders to the same side of the table with an aligned vision. We’ve been able to prove that out.We’re already in discussions with multiple health plans across the country, specifically in four states and we will be in pro forma financial modeling in the next 60-90 days with two of those plans.We created this joint venture entity for other health plans to buy into, and it is important to have an equity position in the joint venture, which means finding the right partner. Ownership will be diluted down allowing other partners to participate.The benefit is they have a key structure in place where we have a set of metrics that we know are improving quality and the outcomes are bringing the cost of care down, and it’s been proven.  

U.S. District Judge Richard Leon this afternoon rejected the Justice Department’s effort to judicially block the vertical merger between AT&T and Time Warner. The Wall Street Journal reports

“I conclude the government has failed to meet its burden,” Judge Leon said. “The court has now spoken and the defendants have won.” 

In a highly unusual conclusion to the court session that underlined the magnitude of AT&T’s victory, Judge Leon urged the government to let the companies close their deal without further legal interference. 

The judge said he hoped the Justice Department would have the “wisdom” not to seek an emergency stay of his ruling, saying such a legal maneuver would be “manifestly unjust” to AT&T and Time Warner.  * * * 

The case marked the first time in 40 years that a court had seen a fully litigated challenge to a so-called vertical merger that combines companies at different links in the same supply chain. Such cases are considered more difficult for the government to win than the typical “horizontal” merger case, where the government challenges the combination of two head-to-head rivals and the loss of competition is more apparent. 

The court’s decision is good news for the vertical health care mergers now undergoing Justice Department review, e.g., CVS Health and Aetna, Cigna and Express Scripts, and Walmart and Humana.

The Hill reports that Department of Health and Human Services offices are meeting with prescription drug manufacturers for the purpose of encouraging them to lower prices voluntarily.

“We are working with stakeholders across the spectrum including drug companies, [pharmacy benefit managers], distributors, patients, health care professionals, physicians, insurers, etc., to respond to President Trump’s call to action and help patients pay less for their prescription drugs,” an HHS spokesperson told The Hill on Monday when asked about the meetings with drug companies.

According to Reuters, a new survey shows even though the ACA has required that in-network preventive services be covered at 100% since 2011, most Americans have not obtained those services. “Researchers looked at survey data from nearly 2,800 people over age 35 and found only 8 percent were getting all of the highly recommended preventive services with the greatest potential for improving health.”  As the old saying goes, you can bring a horse to water, etc. In the FEHBlog’s view, personal responsibility remains a key to good health.

The FEHBlog has been away for a few days attending a friend’s wedding and enjoying time with his grandson. He’s currently on the Vamoose bus traveling from New York City to Bethesda, MD.

What has been happening since last Tuesday?

• Earlier this year, a group of twenty state attorneys general filed a lawsuit against the federal government alleging that Congress’s decision to zero out the ACA’s individual mandate penalty effective next year rendered the Affordable Care Act unconstitutional. The FEHBlog having been around this block a few times did not take the bait.  However, a group of States lead by California intervened as defendants to support the law. Last week, the federal government of course represented by the Justice Department filed its opening brief. Hysteria ensued as documented in this Healthcare Dive article.  The Justice Department argued based on the Supreme Court’s decision in NFIB v. Sebelius and the federal government’s position in that case that the zeroing out of the individual mandate renders the individual mandate and the interrelated guaranteed issue and community rating provision unconstitutional. The other parts of the law including the employer mandate and the Medicaid expansion provisions are severable and unaffected by the zeroing out of the individual mandate, As a lawyer, the FEHBlog understands the government’s position. The FEHBlog thinks its bad policy because the ACA marketplace has been open for business for five years with the individual mandate in force. If people don’t understand the value of health insurance coverage by now, it’s not happening. The FEHBlog reflects on the fact from its inception in 1960 the FEHBP has been offered on a guaranteed issue basis — no pre-existing condition basis — and premiums are reflect the cost of benefits provided to the entire group of enrollees — a basic health insurance approach. But the FEHBP like other employer sponsored coverage was doing OK before the ACA became law in 2010. The problem was the individual market and the ACA’s reforms have not been the cure. Congress needs to fix this problem. 
• The Center for Disease Control issued a report on the growing problem of suicide in the U.S.  Read the press release.  Healthcare Data Management reports on an interesting VA project to reduce suicide among veterans using social determinants. 
• The Office of Personnel Management according to FEDWeek is encouraging federal government agencies to offer wellness programs to their employees. OPM also requires FEHB plans to offer those programs. It would be helpful if OPM coordinated these efforts. 
• In encouraging news, Govexec.com reports that postal stakeholders have been found their interactions with the President’s Task Force on Postal Service Reform to be productive. 

The 2018 Milliman Medical Index was recently published.

Bad news: The MMI increased by $1,222 from 2017 to 2018.  For more than 10 years now, the MMI has been increasing at an average of just over $100 per month.
Good news: At 4.5%, the MMI’s annual rate of increase is nearly the lowest in 18 years. Only last year was lower, at 4.3%. Over the 18 years since the MMI was first measured in 2001, the annual rate of increase has averaged 7.4%. But for eight years in a row now, the rates have been below that average. As discussed later in this report, although the MMI’s dollar amount continues to grow, the rate at which it grows is clearly slowing.

While the MMI rate increase is slowing, the rate remains well above the CPI-U inflation rate, which most recently was up 2.5% annually.

Sen. Bill Cassidy, MD (R LA) issued a eight page long description of sensible policy changes that would make health care more affordable. Embedded in the good Senator’s paper was a cite to this interesting academic paper on hospital pricing that relies on data from the Health Care Cost Institute.

Healthcare Dive reports based on an Oliver Wyman study that number of payer-provider partnerships is ramping up, which is a good sign for cost control.

In other good news, the federal Agency for Health Care Research and Quality announced that “The National Scorecard on Rates of Hospital-Acquired Conditions, 2014 to 2016, the most recent report, shows that from 2014 to 2016, HACs fell by 8 percent, saving about 8,000 lives and about $2.9 billion in healthcare costs.”

Finally, a bevy of prescription drug benefit news reports

• Co-pay accumulators work according to the CNBC report. 
• Health Affairs discusses this status of a class of cholesterol inhibiting specialty drugs known as PCSK9 inhibitors. The author’s conclusion: “Ultimately, if patients are truly to benefit from innovative therapies, all stakeholders—including manufacturers, payers, and providers—must engage in efforts to ensure appropriate drug pricing, utilization management, and prescribing.” Amen to that sentiment. 
• CMS reports that the Medicare Trustees annual report projects lower spending for Medicare Part D, another sign that adding Medicare Part D EGWPs to the FEHBP is a dandy cost saving idea. 

Congress returns to work on Capitol Hill following a State/district work period last week. Healthcare Dive reports on bipartisan House bill to suspend the onerous Affordable Care Act health insurance fee for one more year beyond 2019 for which it is already suspended.  This is a tax which increases health insurance premiums in the ACA marketplace and elsewhere including the FEHBP by 3% (it’s in effect this year) should have been repealed long ago.

June is expected to be the final month of The U.S. Supreme Court’s October 2017 term. NPR offers an article discussing the noteworthy cases which have been argued but not yet decided this term. Those decisions and others will begin to be issued tomorrow morning at 10 am.

Speaking of summer breaks, the Blue Cross Blue Shield Association last week issued a report “shining the light” on skin cancer facts. Skin cancer is the most common cancer in our county. The report’s website can be skimmed for helpful facts and advice. Forbes offers an article on the report which lists the top states for skin cancer rates, which list includes the FEHBlog’s home state Maryland and the adjoining District of Columbia.

Finally, the American Hospital Association provides a conference video of a presentation on affordability strategies. In sum, “[h]ealth care leaders can utilize data, reexamine pricing and manage risk to make health care more efficient and affordable, a panel of hospital and health system leaders said during a session at this month’s AHA Annual Membership Meeting.” It’s good to see providers taking the initiative.  It takes payer and provider cooperation to make care affordable.

The American Medical Association issued a report finding a “decrease in opioid prescribing and increases in the use of state
prescription drug monitoring programs (PDMPs), number of physicians
trained and certified to treat patients with an opioid use disorder, and
in access to naloxone.” The AMA urges that

• All public and private payers should ensure that their formularies
  include all FDA-approved forms of medication assisted treatment (MAT)
  and remove administrative barriers to treatment, including prior
  authorization.
• Policymakers and regulators should increase oversight and
  enforcement of parity laws for mental health and substance use disorders
  to ensure patients receive the care that they need.
• All public and private payers—as well as pharmacy benefit management
  companies—must ensure that patients have access to affordable,
  non-opioid pain care.

FDA Commissioner Scott Gottlieb, MD, yesterday announced administrative steps that the Food and Drug Administration is taking to accelerate approval of generic prescription drugs.

Similarly, Healthcare Dive discusses measures that the Centers for Medicare and Medicaid Services plan to take to remove road blocks to health care data sharing among healthcare providers. Why this interoperability feature was not built into electronic health records before the government threw $32 billion at the industry remains a disturbing mystery to the FEHBlog. In this regard, check CAQH’s Industry Roadmap for Healthcare Provider Data.

Today is the OPM specified deadline for FEHB plan carriers to submit their 2019 benefit and rate proposals to the agency. No doubt carriers are breathing a sigh of relief. The agency now must evaluate the proposals and eventually reach agreement with the carriers over the next six to eight weeks.

In September, OPM announces the 2019 maximum government contribution. Under FEHB Act Section 8906, the government contribution is capped at 75% of the selected plan’s premium.  Federal employees and annuitants will be able to select their 2019 plan during Federal Benefits Open Season that runs from mid-November to mid-December.

The Washington Post reports that effective next year the State of California plans to bar hospitals with low scores on certain quality metrics from holding in-network status in health plans participating in the State’s Obamacare and Medicaid exchanges. Times up according to the article. It struck a chord with the FEHBlog because OPM under its “plan performance system” bases 65% of each nationwide FEHB plans already miserly gross profit on similar quality metric scores. Now OPM hopes that Congress will base the FEHBA government contribution in part on these quality scores. Financially punitive, metric driven approaches like California’s, OPM’s, the ACA’s questionable readmissions penalty on hospitalsare prime examples of the “tyranny of metrics.” In the FEHBlog’s view, the approaches are not good for healthcare because they drive up administrative expenses in efforts to boost quality metric scores, among other concerns.

The Health Care Cost Institute blog reports that Emergency room “spending among the commercially insured continued to rise in 2016, driven by the price and use of high severity cases (2009-2016).” So while health plans have been seeking to divert members to lower cost facilities like urgent care centers, etc., the hospitals have been jacking up their prices for the people who need to visit the emergency room.  The Affordable Care Act has done little, if anything, to control health care spending, again in the FEHBlog’s view.

The FEHBlog, who likes his own high deductible plan with health savings account, noted this Employee Benefit News article suggesting that people of all ages make voluntary contributions to their health savings account before their retirement plans.

While a 401(k) plan will beat an HSA if left to retirement, reality hits when withdrawals are made from the 401(k) to pay for things like medical expenses — not to mention a 401(k), and other traditional retirement plans, are burdened with taxes and penalties. With healthcare being one of the biggest expenses most individuals will face during retirement, an “HSA first” approach makes the most sense, as it offers a unique triple-tax advantage [tax free deposits, tax free growth, tax free healthcare spending]. 

For those who are uncomfortable with this strategy, there are several additional benefits to an HSA, such as: 

• 100% of unused funds roll over year-after-year

• Funds go with you even if you switch employers

• Can pay for the eligible expenses of your legal spouse and tax dependents regardless of their insurance

• Can be used for Medicare premiums as well as qualified long-term care premiums 

An individual can also reimburse for out-of-pocket health expenses at any time — even 30 or 40 years in the future. During that time, money grows in the HSA tax free. Some refer to the HSA as a “stealth IRA” when it’s used this way.

Pretty, pretty good.

The House of Representatives and the Senate are on holding district / State work periods this week.

CNBC reports that “Starting in 2019, LabCorp will no longer be the exclusive lab provider for UnitedHealth, but it will gain access to Aetna. Meanwhile, Quest will lose its exclusivity with Aetna, but will be among UnitedHealth’s preferred providers.”  Over the weekend, the FEHBlog read Bad Blood, Wall Street Journal reporter John Carreyrou’s book about the rise and fall of the lab services provider Theranos. Fascinating.

Healthcare Dive reports about a successful Colorado experiment involving integrating behavioral health with primary care. Practically speaking that integration happens routinely so it makes sense to prepare for it.

Health Payer Intelligence offers ways that healthcare payers can get healthcare providers to use their electronic payment systems.

Electronic payment systems allow payers and providers to collaboratively improve the claims management process and enhance payment accuracy within a single platform. Digitally-based claims payments may lead to more efficient healthcare systems that allow payers and providers to focus on other organizational improvements.

Time marches on.

We have finally reached the end of the great federal holiday drought which runs from Presidents’ Day in mid -February to Memorial Day weekend which starts tomorrow.

Yesterday, the Congressional Budget Office released a report that “examines how budgetary outcomes under those proposals would compare with CBO’s adjusted baseline budget projections.” The report finds in its health programs section that OPM’s proposed legislative change to the FEHBP government contribution formula would have budgetary savings of nearly $5 billion over the period 2021 through 2028. OPM would work its magic by reducing the government contribution for most plans and raising it by 4% by those plans which in OPM’s view offer higher quality. OPM still has not released the legislative language as far as the FEHBlog know. But it appears that OPM will push forward with the plan with Congress.

Speaking of Congress, the Washington Examiner reports that a bipartisan group in Congress has introduced a bill to suspend the ACA’s onerous health insurer fee for 2020. It’s already suspended for next year, but surprisingly like a vampire it was reactivated for this year.  It’s a good idea to start early on this worthy initiative as the health insurer fee only raises premiums, particularly in the FEHBP.

Modern Healthcare reports that a group of health systems are continuing on their joint effort to create a generic drug manufacturer to serve health systems.

Intermountain Healthcare, Ascension, SSM Health and Trinity Health are working with the U.S. Veterans Affairs Department to pool their capital and fight back against drug companies that unexpectedly hike the prices of decades-old off-patent generic drugs. The providers also want to create a more reliable supply of generic drugs like sodium bicarbonate and saline that are vulnerable to shortages.

While the health systems didn’t specify what drugs their new venture will make, they want to provide both sterile injectables and oral medications either through their own facility or by contracting with existing manufacturers. 

Eighty percent of nearly 750 providers, payers and pharmaceutical companies polled said they are optimistic or cautiously hopeful that the new endeavor will change the status quo, according to a Reaction Data survey. Ninety percent of 605 hospitals and clinics surveyed said they would buy drugs from the new entity.

The FEHBlog also hopes that the joint venture succeeds.