Yesterday, CMS finalized its Medicare Part A prospective payment system rule for inpatient hospital services, and Modern Healthcare’s lede suggests that it’s not good news for hospitals.

In a final rule released Tuesday, the CMS said it will keep a controversial 1.5% cut to hospital reimbursement. Industry stakeholders had rallied against the move which aims to recoup a total of $11 billion in overpayments.  Hospitals expected the cut to remain at 0.8%​—as it has been ever year since 2014, two years after Congress mandated the CMS to recover funds allegedly lost as a result of incorrect coding on inpatient hospital stays.

The rule takes effect on October 1, 2016.  Robert Moffitt from the Heritage Foundation offer his expert views on the next 50 years of the Medicare Program here.  The FEHBlog predicts more Medicare cost shifting to FEHBP and other employer sponsored and for that matter ACA marketplace plans in the near term.

The Drug Channels blog offers seven takeaways from his review of the initial (subject to change) 2017 formulary lists released by CVS Caremark and Express Scripts. It’s interesting to see how the two companies’ strategies stack up.

Now that the political party conventions are over, members of Congress have five weeks to concentrate on the campaign trail, fund raising, etc. FYI, the Summer Olympics caused the back to back scheduling of the political party conventions and the late July scheduling of the PGA Championship.

The New York Times this morning offers a fascinating and lengthy article about the use of immunotherapy to treat certain cancers, including lung cancer.  Immunotherapy uses drugs to block so-called checkpoints that limit the strength of the human body’s killer cells known as T cells.  As the article explains,  this is the treatment that President Carter received to cure his advanced melanoma. Immunotherapy is not a sure thing but it is another tool to use along with radiation and chemotherapy.

Speaking of drugs, Modern Healthcare tells us that

A number of insurers, pharmacy benefit managers and technology companies are developing smartphone and computer apps to provide that information for patients and physicians. They provide coverage information before patients reach the pharmacy, inform patients where their prescription can be filled at the lowest cost, and offer alternatives that may be cheaper.The goal is to cut down on cost-driven noncompliance.

Bravo.

Employee Benefit News reports on the strategic importance of employer sponsore health plans acquainting their members with primary care providers.  The FEHBlog believes that encourage annual visits to the PCP is much more important than health risk assessments and third party administered blood tests. Let the doctors do their own work.

The Federal Times reports about three things that federal employees should watch ahead of the FEHB Open Season in November. The first item is the jump in Federal Long Term Care Insurance premiums that the FEHBlog has noted.  Joe Davidson from the Washington Post lets readers rant about the jump today. Tammy Flanagan from Govexec.com provides some sound advice in the FEHBlog’s view. The second item is the once in a blue moon Federal Employee Group Life Insurance Program open season which occurs in September, and the third concerns the FEHB Open Season.

The rest of today’s items also are follow-ups:

• Anti-trust lawsuit update. Business Insurance reports that “Cigna CEO David Cordani told investment analysts {today] that the insurer had stepped back to evaluate its options, but remains “fully engaged” in the [Anthem] merger process and will support Anthem as it takes on the Justice Department’s lawsuit independently.  That publication also advises that the Justice Department is opposing the defendants’ motions to expedite the trials. The FEHBlog thinks that the defendants have the stronger argument on this issue.

• Medicare Hospital Star Ratings. NPR reports that many well known hospitals received low star ratings from Medicare. 

In a statement, Rick Pollack, president of the American Hospital Association, called the new ratings confusing for patients and families. “Health care consumers making critical decisions about their care cannot be expected to rely on a rating system that raises far more questions than answers,” he said. “We are especially troubled that the current ratings scheme unfairly penalizes teaching hospitals and those serving higher numbers of the poor.”

This calls the credibility of the ratings into question, in the FEHBlog’s view. In the FEHBlog’s experience, your best bet is to ask a nurse about hospital quality.

• Zika.   The Washington Post reports that “Florida and federal officials on Friday confirmed the first local spread of the Zika virus through infected mosquitoes in the continental United States.” The Boston Globe’s STAT helpfully offers a daily Zika update. On the bright side, STAT reports that

A group of researchers has identified two dozen Food and Drug Administration-approved drugs that have shown some ability to block Zika from infecting human cells in the lab, according to a paper published Thursday in the journal Cell Host & Microbe. Some of these drugs — which treat infections, cancers, and even depression— also showed potential to prevent infection in certain cells tied to fetal defects in pregnant women. The research is preliminary and does not have immediate implications for people wanting to protect themselves from a Zika infection. Instead, it provides a winnowed list of drugs to study further, said Dr. Mariano Garcia-Blanco, the paper’s senior author.

Federal News Radio reports that “Two Virginia congressmen are demanding answers from the Office of Personnel Management on why the premiums for the Federal Long Term Care Insurance Program are rising by as much as 126 percent.”  In the FEHBlog’s view, the time has come for Congress to start providing a government contribution toward this enrollee pay all product.  Otherwise, people who have paid FLTCIP premiums for years will be forced to reduce or drop their coverage.

The Centers for Medicare and Medicaid Services have been quite busy this week. Earlier this week, as reported in Cardiovascular Business, CMS proposed a Medicare pilot program for bundling payments for cardiac care.  Like the hip and knee replacement bundled payment pilot, participation would be mandatory for those lucky hospitals that CMS selects out of 98 metropolitan areas.  Modern Healthcare reports on how hospitals are reacting to this proposal.  Today, CMS added a star rating system for U.S. hospitals to Hospital Compare.  Modern Healthcare reports that hospitals are not thrilled with this development.

The Boston Globe’s STAT is reporting that payers are not yet latching onto new tools for assessing the value of new prescription drugs.

HHS’s Office for Civil Rights claimed another University scalp this week as a result of alleged HIPAA privacy and security rule violations.  Healthcare IT News reports on a ProPublica survey of public complaints to OCR alleging HIPAA violations, most of which do not lead to scalping.

Reuters had an interesting story about the legal strategy that Aetna and Humana plan to use against the government’s antitrust lawsuit in an effort to block their merger.

The Justice Department lawsuit focused on a county-by-county analysis of where Aetna and Humana have what is deemed too much market share in providing Medicare Advantage for elderly people and in the individual health plans created under President Barack Obama’s healthcare reform law.
Aetna will argue in court that the Justice Department defined the market for Medicare Advantage too narrowly, which has caused it to see competition issues where they do not exist, Chief Executive Officer Mark Bertolini said in an interview. The government has failed to take into account that seniors can not only choose between Medicare Advantage plans sold by private players, but also have the government-run Medicare program as an option.
“Let a judge decide. Is Medicare Advantage competitive with Medicare fee-for-service? If that is indeed the case, then there isn’t any market we need to divest,” Bertolini said. “If we have to divest, can we provide an appropriate remedy? And we have.”

The FEHBlog believes that Mr. Bertolini’s argument finds support in President Obama’s recent American Medicare Association Journal article advocating that “Congress should revisit a public plan [for the ACA marketplaces] to compete alongside insurers in areas of the country where competition is limited. ” As previously noted, the FEHBlog is not a fan of the public option.  The Heritage Foundation expert Bob Moffitt had an article providing in-depth support for this position.

Barrons informs us about challenges facing the prescription benefit management industry.  This is an article worth reading.

Healthcare IT News reports that late last week the FBI arrested three people from Miami-Dade, Florida for a $1 billion scheme to defraud Medicare and Medicaid throught skilled nursing and assisted care facilities. That’s a lot of boxes of ziti as Tony Soprano would say.  Southern Florida with its high elderly popultion always has been a hot bed for health care fraud.

Finally the Washington Post this morning published another one of its feature articles about health care problems plaguing lower income populations in the U.S.  The unfortunate case here concerns a young women who graduated from prescription pain killers to heroin and methadone.  The principal cause of this problem — overprescription of opioids and other pain killers — has been the focus of a massive amount of public attention like this series of articles and a new federal law. Hopefully the problem will dissipate before long.

Aetna and Anthem each released statements saying they intend to fight for their deals. But the Anthem-Cigna tie-up appears to be on its deathbed, with Cigna expressing doubt of an approval. “We do not believe the transaction will close in 2016, and the earliest it could close is 2017, if at all,” Cigna’s statement reads. Cigna disclosed pessimism on the prospects of the deal in its first quarter regulatory filing with the Securities and Exchange Commission. 

BNA has a story that clearly illustrates the convoluted nature of the ACA’s employer shared responsibility mandate.  Business Insurance reports on a further proposed complication to the rules implementing that mandate.

Finally, Fierce Healthcare tells us about an interesting JAMA Internal Medicine study on the impact of generic drugs on the prescription drug market and Drug Channels considers that market in the context of the recent CMS projection.

Any lawsuit would continue a string of merger challenges by antitrust enforcers looking to stop industry consolidation and would deal a blow to bids by Anthem and Aetna to gain scale by snapping up rivals. According to the terms of both tie-up deals, the companies have agreed to fight any government lawsuits in court. Such a move would likely require months of litigation to rescue takeovers that were struck last year amid a wave The Herof deals that swept the industry.
Aetna and Humana will probably fight any lawsuit in court, while Anthem and Cigna are less likely to litigate against the government, said Ana Gupte, an analyst at Leerink Partners.
“They’re obligated by the terms of their merger agreement, but they both may decide to walk away,” she said about Anthem’s bid for Cigna. “They recognize the probability is low, and there’s also been a lot of conflict between the two companies.”
For antitrust officials at the Justice Department, it’s standard practice to prepare complaints against deals even in cases that are ultimately settled with remedies like asset sales. But in recent years, the department has shown an increasing willingness to go to court to block deals it believes could stifle competition, and for months antitrust officials have signaled their skepticism about the insurer tie-ups.

Reportedly, the Justice Department likely will take official action by end of this month.

Govexec.com reports that big premium increases will be implemented on November 1, 2016,  for the Federal Employees Long Term Care Insurance Program.

The rate increase, which will affect most enrollees, will vary widely between 0 percent and 126 percent, depending on an enrollee’s option under the Federal Long-Term Care Insurance Program, according to the Office of Personnel Management. The average rate increase will be 83 percent, or $111 more per month, OPM said, for enrollees who opt not to change their coverage.

From Monday [July 25] through Sept. 30, federal employees and retirees with long-term care insurance will be able to view the new premium rates for the program and make changes to their coverage. 

Low interest rates are bad news for long term care insurers.

Here are a few tidbits:

• HHS’s Office for Civil Rights took another HIPAA scalp yesterday. 
• Health Affairs Blog, which has a new daily newsletter had interesting stories about off label promotion of prescription drugs and the scope of Public Health Service Act Section 1557.
• Finally, the FEHBlog got a kick out of this STAT interview with Nobel Prize winner Dr. James Watson.  Dr. Watson, now age 88, is one of pioneers of DNA research in the 1950s.  

On the cancer moonshot announced this year by President Obama:
The depressing thing about the “cancer moonshot” is that it’s the same old people getting together, forming committees, and the same old ideas, and it’s all crap . . .
On the prospects of curing cancer:
Everyone wants to sequence DNA [to treat cancer], but I don’t think that will help you cure late-stage cancer, because the mutations in metastatic cancer are not the same as those that started the cancer. I was pessimistic about curing cancer when gene-targeted drugs began to fail, but now I’m optimistic.

Congress is out of town. Healthcare Dive reports that a Senate hearing held last week, CMS Acting Director Andy Slavitt floated the popular idea of delaying the January 1, 2017 start date for the new MACRA system for compensating doctors under Medicare Part B.  The nub of the problem is that

As things stand, the final rules for MACRA [enacted in 2015] are slated to be published November 1, with implementation on January 1, 2017, giving providers just two months to learn and implement the rules.

CMS’s failure to address the problem could drive more doctors out of Medicare Part B.

Robert Pear from the New York Times brought us up to date on government oversight of health insurance premiums in the ACA marketplaces.   (OPM currently is reviewing FEHB plan benefit and rate proposals for 2017.)

Pear’s article reminds us that the ACA converted health insurers into public utilities which also are subject to heavy government oversight. Meanwhile, Modern Healthcare reports that doctor compensation generally is rising above the rate of inflation, which as health insurers have pointed out is a cause of rising health insurance premiums along with prescription drug costs, etc.

Travis Singleton, senior vice president at recruiter Merritt Hawkins, has been in the business 17 years and the year-over-year pay increases in the firm’s survey this year were the largest he’s seen. “It’s clearly showing a healthcare system at capacity,” Singleton said. “We’re now in year three of this sort of employment dominated model.”

Volume still rules in reimbursement to provider organizations, despite a movement toward value-based payment schemes by the government and private payers, Singleton said. Consolidation of physician practices into larger groups and groups joining hospital systems have helped push up physician pay as well, Singleton said. 

The FEHBlog wishes Congress well under they return to Capitol Hill on September 6.  Here’s a link to the Week in Congress’s report on the current week’s activities on Capitol Hill, which included, as reported in NPR Shots, the passage of a bill to combat opioid abuse in our country.

Two more ACA health benefits co-ops bit the dust this week — one in Oregon and the other in Illinois. That leaves less than half of the original 24 co-ops in operation. Kaiser Health News reports on survival efforts being undertaken by the remaining co-ops.  What a foreseeable and colossal waste of taxpayer funds.

The Wall Street Journal reports this morning the prescription drugmakers power to raise prices remains strong (as the FEHBlog has previously noted). “More than two-thirds of the 20 largest​pharmaceutical companies said price increases boosted sales of some or most of their biggest ​products in the first quarter, according to a Wall Street Journal review of corporate filings and conference-call transcripts.”  David Howard, MD wisely suggests in the Health Affairs blog that policymakers need to back off and let insurers and PBMs to do their jobs.

Speaking of the Health Affairs blog, Dr. Timothy Jost writes about a recently proposed Labor Department rule that would impose a new ERISA reporting obligation on small employers and expand ERISA reporting for all group health plans (but not FEHB plans which already do plenty of reporting.)

Also on the reporting front, Thomson Reuters announces that the Internal Revenue Service has released draft 2016 1095-B and – C forms for public comment. These are the forms that health plans and employers use to document compliance with the ACA’s individual and employer shared responsibility mandates.

CMS came out with its annual projection of health care costs over the next decade.  This projection covers 2015-2025.  Fierce Healthcare cheerfully adds that

Healthcare spending will comprise 20 percent of the U.S. economy by the middle of next decade, according to new data from the Office of the Actuary of the Centers for Medicare & Medicaid Services and published in Health Affairs.
Expenditures on healthcare services will grow at an average rate of 5.8 percent per year between 2015 and 2025, about 1.3 percent higher than projected annual growth in the U.S. gross domestic product, CMS concluded. By 2025, healthcare spending will comprise 20.1 percent of the U.S. economy, up from 17.5 percent in 2014. Expenditures totaled $3.2 trillion last year.

A commenter expressed concern about the Postal reform bill’s Medicare integration provisions discussed in the mid-week post. FedSmith offers a rather bleak view here. On the bright side, the bill would subsidize Part B premiums for a few years. The FEHBlog does expect that full Medicare integration will control Postal Service Health Benefit plan premiums, and that PSHB plans may offer health reimbursement accounts that would help pay for Medicare Part B premiums. The full integration will help the Postal Service.

The House Oversight and Government Reform Committee yesterday approved without opposition its bipartisan postal reform bill (HR 5714).  This bill would create a new Postal Service Health Benefits Program within the FEHBP.  Unlike the FEHBP, the PSHBP would be fully integrated with Medicare for annuitants over age 65.

The bill now can be scored by the Congressional Budget Office. The House Ways and Means Committee also must give its blessing to the Medicare integration feature.  The entire Committee is pushing to get a bill enacted this year.  Here is a link to the govexec.com article.

The President wrote an article in the Journal of the American Medical Association suggesting improvements to his signature healthcare law.  Those improvements such as adding public option in the ACA marketplaces and  prescription drug control would further strengthen government control over the health care sector.  That’s not a sensible approach in the FEHBlog’s view.

For example, Medicare always has had a public option (traditional Medicare) which has shifted overall costs to the private sector plans including the FEHBP.  If a public option is added to the ACA marketplaces there are fewer places left for those costs to shift.  A large cost shifting target would be the FEHBP.  Kaiser Health News offers readers an assortment of news articles about the piece.

In other news,

• The HHS Office for Civil Rights has offered ransomware guidance to HIPAA covered entities, including FEHB plans, and their business associates.  Here is Health Data Management’s take on that guidance. 
• CCIIO has issued FAQs on the proper timing for implementing the recently revised ACA summary of benefits and coverage.  
• The American Health Policy Institute has released a study examining different approaches to high cost health plan members.