As the blog of record for the FEHBlog, it’s the FEHBlog’s responsibility to link to the OPM Director’s initial Open Season blog post which occurred on Monday.

OPM also has posted its always interesting financial report for the most recently ended federal fiscal year September 30, 2016. Grant Thornton is OPM’s current CPA firm. Grant Thornton gave OPM a clean audit opinion (p. 47). Nevertheless, Grant Thornton issued a management letter (p. 49) which identified certain material weaknesses and a significant deficiency in internal controls, which generally relate to information management and security.   The Inspector General’s list of top management challenges begins on page 106. The FEHBP discussion in that list begins on page 110.  The OPM response to that list is found on page 133. Other information, including discusssion of improper payments, begins on page 124.

The Congressional Research Service has set the table for Congressional reconsideration of the Affordable Care Act by issuing a report on “Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act.”  From time to time over the next month or so, the FEHBlog will share his thoughts on key legislative changes. The first item that pops into the FEHBlog’s mind is leveling the income tax playing field so that everyone in the same tax bracket receives the same tax treatment for health benefits premiums.  President Obama boxed himself out of this approach by attacking Senator McCain for making this proposal back in 2008. As Professor Gruber has explained, this campaign exchange gave us the unworkable, counterproductive high cost plan excise or Cadillac tax and likely many of the multitude of ACA taxes.  Simplify, simplify, simplify.

The Federal Benefits Open Season starts tomorrow. OPM’s Open Season website is up and running. OPM claims to have an “improved” FEHB plan comparison tool which focuses on out of pocket costs. It’s certainly worth checking out.  The Open Season ends on December 12.

Congress also returns to Capitol Hill this week.  Federal News Radio reports on six legislative items to follow during the lame duck session. The lame duck session is scheduled for three weeks (not including Thanksgiving week) but the Washington Examiner reports that Congressional conservatives are seeking a quick lame duck that would extend federal government funding into the Trump presidency but not for the remainder of the current federal fiscal year, September 30, 2017.  The FEHBlog will be watching.

Govexec.com reports that

Kay Coles James and Linda Springer, who both served during the George W. Bush administration, are helping shepherd transition efforts for Republican President-Elect Trump at OPM and OMB, respectively, according to the campaign’s agency transition team organization chart published in Politico on Wednesday. James and Springer are listed under the Management and Budget category on the document, along with former Reagan attorney general and chief of staff Ed Meese, and Paul Winfree, director of the Heritage Foundation’s Institute for Economic Policy.

Ms. James and Ms. Springer each served as OPM Director during the G.W. Bush administration.

Happy Veterans’ Day to all, especially to veterans, of course.

Yesterday, post election of course, the Centers for Medicare and Medicaid Services announced Medicare Part A and Part B premiums and beneficary cost sharing for 2017.  As discussed, there’s an anomaly in the complex Medicare law affecting federal annuitants.  Federal annuitants who retired before 2016 and have their Medicare Part B premiums withheld from Social Security benefits — those annuitants receiving FERS benefits or who had Medicare qualifying private sector employment following their federal retirement — are in a protected category. Those post 2015 annuitants and annuitants receiving CSRS benefits (the youngest group and the oldest group oddly enough) fall outside the category.  The announcement explains that

Social Security benefits will be 0.3 percent for 2017. Because of the low Social Security COLA, a statutory “hold harmless” provision designed to protect seniors, will largely prevent Part B premiums from increasing for about 70 percent of beneficiaries. Among this group, the average 2017 premium will be about $109.00, compared to $104.90 for the past four years. 

For the remaining roughly 30 percent of beneficiaries, the standard monthly premium for Medicare Part B will be $134.00 for 2017, a 10 percent increase from the 2016 premium of $121.80. Because of the “hold harmless” provision covering the other 70 percent of beneficiaries, premiums for the remaining 30 percent must cover most of the increase in Medicare costs for 2017 for all beneficiaries. This year, as in the past, the Secretary has exercised her statutory authority to mitigate projected premium increases for these beneficiaries, while continuing to maintain a prudent level of reserves to protect against unexpected costs. The Department of Health and Human Services (HHS) will work with Congress as it explores budget-neutral solutions to challenges created by the “hold harmless” provision. * * * 

Medicare Part B beneficiaries not subject to the “hold harmless” provision include beneficiaries who do not receive Social Security benefits, those who enroll in Part B for the first time in 2017, those who are directly billed for their Part B premium, those who are dually eligible for Medicaid and have their premium paid by state Medicaid agencies, and those who pay an income-related premium. These groups represent approximately 30 percent of total Part B beneficiaries.

CMS also announced that the annual deductible for all Medicare Part B beneficiaries will be $183 in 2017 (compared to $166 in 2016). Premiums and deductibles for Medicare Advantage and prescription drug plans are already finalized and are unaffected by this announcement.

Believe it or not, the new is better than the prognostications because CMS is drawing down from Medicare reserves.  A Wall Street Journal article explains that

The program’s reserve ratio, now 13%, is just below the 14% target recommended by the program’s actuaries, according to CMS. 

“It seems like a bit of good news compared to what we were expecting. A 10% increase is still an increase, but it’s less than” the initial 22% forecast, said Juliette Cubanski, associate director of the Henry J. Kaiser Family Foundation’s program on Medicare policy.

Premiums for higher income Medicare beneficiaries are higher than these figures. Those amounts are found in a table contained in the CMS announcement.

That likely takes one item off of Congress’s lame duck session plate.  The Congressional Budget office potentially added another item to that plate by issuing yesterday its report on the House Oversight and Government Reform Committee’s bipartisan postal reform bill, H.R. 5714. CBO reports provide budget impact scoring on proposed legislation. Issuance of the report allows the bill to move forward — in this case to the Ways and Means Committee for consideration of the impact on Medicare of the bill’s full integration of the Postal Service Health Benefits Program with Medicare.  Also when the House Oversight Committee passed the bill in early July the Committee leadership explained that they would be refining the bill over the summer.  The point is that it is now possible for Congress to push reform over the goal line if desired and time permits.

The biggest item on the lame duck session is extending the continuing appropriations bill beyond December 9. Given the election returns, I doubt that this will present a problem so there may be time to consider postal reform.  Time will tell.

Yesterday’s national election resulted in a unified Republican government in the United States for the first time since 2006.  Come January 20, Donald Trump will be the President, and the Republicans will control the 115th Congress.

Political control of the Office of Personnel Management also will change because the Senate has not confirm the President’s nomination of Beth Cobert to serve a four year term as permanent OPM Director.  Readers may recall that the now retired OPM Inspector General Patrick MacFarland asserted as he headed out the door that Ms. Cobert could not serve as acting Director while the Senate considered her nomination. The Inspector General relied on a U.S. Court of Appeals for the District of Columbia Circuit involving the National Labor Relations Board’s acting general counsel. The FEHBlog opined that the Inspector General was reading too much into the opinion.  Ms Cobert continued to serve as acting Director. Ironically on Monday the U.S. Supreme Court heard oral argument in the NLRB case. Here’s a link to the Scotusblog’s analysis of the oral argument.  Ms. Cobert likely will be out of office by the time that the Supreme Court decides this case next Spring.

Well, we finally have reached the week in which the national election occurs to be followed by the week in which the Federal Benefits Open Season and the lame duck session of Congress starts.

The Wall Street Journal observes that the outcome of the national election could prove “cathartic” to healthcare stocks.

Health-care stocks are the worst-performing sector in the S&P 500 so far this year, with shares down 7.7% compared with the broader index’s 2% gain as investors fretted about everything from Obamacare to drug prices. * * *

It isn’t the first time that health-care stocks have declined heading into an election. The biotech index has pulled back ahead of the past five presidential elections, including 2016, according to research by RBC Capital Markets. In the past four elections, it then rallied 10% to 15% from the election through roughly the next three months.

This movement strikes the FEHBlog as illustrating the federal government’s powerful impact on the health care sector.

On Friday, the U.S. Supreme Court agreed to hear an appeal from the Supreme Court of Missouri which involves an issue concerning the scope of the FEHBA’s state law preemption provision. The state court reached a conclusion which favored its state bar association. All of the federal courts of appeals which have considered the same issue — including the federal appellate court with jurisdiction over Missouri — have reached a conclusion that favors the FEHBP.  The Supreme Court should resolve the issue before July 2017.

The Washington Post on Friday wrote about a public spirited prescription drug development company called Trek Therapeutics.

Instead of hiring a small army of scientists and building an expensive laboratory, Trek is a virtual, 10-person company that operates out of a small incubator space in Cambridge, Mass. The company acquires experimental drugs that typically have been vetted through some degree of human testing.

It’s an interesting piece.

Govexec.com reports that OPM has clarified the earlier report about the number of current and former federal employees who will be affected by the December 1 change in ID security contractors.

Up to 150,000 hack victims will have to re-enroll in with ID Experts to
continue receiving credit monitoring, OPM said, as that population was
only affected by the initial hack and was therefore never offered
protection under the second ID Experts contract. An additional 450,000
to 500,000 individuals will receive notifications and a
renewed opportunity to enroll for the first time.

The Centers for Medicare and Medicaid Services issued earlier this week a final rule on 2017 payments to physicians under Medicare Part B.  No doubt after the election CMS will unveil 2017 Medicare Part B premiums and cost sharing amounts for Medicare participants.

CMS also issued a report on the latest results of the Hospital Value Based Purchasing Program. Modern Healthcare reports that a growing number of stakeholders believe that the time has come to pull the plug on this ACA program because it’s not having any appreciable impact on improving patient mortality rates.

Healthcare Dive informs us that the Leapfrog Group has issued its annual report on hospital safety.

Leapfrog’s fall 2016 Hospital Safety Grade program, which looked at patient safety at 2,633 U.S. hospitals, gave 844 an “A,” 658 a “B,” 954 a “C,” 157 a “D,” and 20 an “F.”

You can look up any particular hospital at the Group’s website.

Federal News Radio brings us up to date on TRICARE reform which is a topic tha the FEHBlog follows because a reform group has been suggesting that TRICARE should look more like the FEHBP.

Last week, the FEHBlog mentioned several new healthcare related rules, etc., from the federal government. Timothy Jost from the Health Affairs blog provides more details on those rules, reports, and FAQs here.

The Washington Post reports that some current and former federal employees affected by the OPM data breach will need to re-enroll for full identity protection services due to an upcoming contractor change. OPM has posted a transition announcement here.

The FEHBlog has chronicled the Washington Post’s series of articles on the opioid crisis afflicting the country. The Wall Street Journal reported yesterday that the crisis directly has affected children as well as adults — very young children who swallow opioids negligently left in the open and older children with drug problems.  The study published in JAMA Pediatrics “called for greater investment to tackle opioid storage, packaging and misuse. It called for better prevention programs in adolescence, with a particular focus on the overlap between opioid misuse and depression.”

Finally, the Wall Street Journal reports on a couple of companies whose products permit employers to share health care savings with cost conscious health plan members.

Employees can earn anywhere from about $25 to $500 for picking lower-cost providers, usually paid out in checks or gift cards. Employers typically pay the outside vendors a monthly fee of a few dollars per employee, or a cut of the total savings, to administer the rewards.
Without rewards, workers are unlikely to comparison-shop on their own, said Devon Herrick, a health economist with the National Center for Policy Analysis. Patients typically choose providers referred by their primary-care physicians or opt for the most convenient location, added Paul Ginsburg, a health economist at the University of Southern California.
“Workers will never do anything just for the benefit of the company,” said Mr. Herrick.

The companies mentioned in the article are Healthcare Blue Book and Vitals.

Congress remains on the campaign trail as the national election day draws close.  The Federal Benefits Open Season starts two weeks from tomorrow on November 14 when Congress comes back to town.

The FEHBlog did run across two interesting drug spending articles this weekend; both appeared in the Wall Street Journal.

The first article suggests that

The drug industry is showing signs it is slowing the pace of price increases after years of hefty hikes, alarming shareholders worried that pressure from politicians, consumers and employers will continue to stifle pricing power.  Shares of many drugmakers, wholesale distributors and pharmacy-benefit managers were battered Friday on new evidence in corporate earnings reports that pharmaceutical companies are declining to ratchet up prices as sharply as in previous years. 

Time will tell.

The other article highlights the important role of insurers in controlling prescription drug costs.

[A health plan] was dismayed when her health plan stopped covering her migraine drug Treximet earlier this year. To buy a pack at the pharmacy would cost $750, compared with a $20 copay when the drug was covered.
“Nothing’s worth $750 for nine pills,” she said. “It’s cruel.”
Instead, the 50-year-old stay-at-home mother from Memphis, Tenn., takes Treximet’s two active ingredients—sumatriptan and naproxen—as separate pills. For these two generic drugs, her copay is zero.

The article explains that

Treximet [which is manufactured by Pernix Therapeutic Holdings] is just one of many drugs whose active ingredients are generic drugs that can be purchased separately at a fraction of the cost. Others include acne cream Acanya, Duexis for rheumatoid pain and weight-loss pill Qsymia, according to data compiled for The Wall Street Journal by GoodRx, a group that compares pharmacy prices for prescription drugs. 

No wonder there’s been a backlash. Where is the competition that would help control these pricing practices? Does the government allow a patent in these situations? The process of drug pricing is akin to the process of making sausage.

The fun never stops. Yesterday, the ACA regulators released ACA FAQ 34. FAQ 34 concerns tobacco cessation therapy and mental health parity, which was yesterday’s topic of the day.  The FEHBlog noticed that OPM introduced to the FEHBP in 2011 the tobacco cessation program that is discussed in the FAQ.

Yesterday, the President’s mental health parity task force released its final report.  The report made several recommendations, many of which were contemporaneously implemented as explained on the announcement page. The very last announcement (p. 34) concerns the FEHBP:

Review substance use disorder benefits in FEHBP. Federal Employees Health Benefits Program insurance carriers have made significant strides toward ensuring parity in mental health and substance use disorder benefits. Commenters noted that non-quantitative treatment limits may still need examination and modification to ensure full compliance, and consistent definitions of terms relating to residential treatment would provide greater transparency for consumers. In the coming year, the US Office of Personnel Management will undertake a detailed review of NQTLs [non-quntitative treatment limits] applicable to substance use disorder benefits, and take corrective action as indicated by the findings.

It’s nice to see kind words written about FEHBP carriers.

The International Foundation of Employee Benefit Plans alerts us that the ACA regulators are releasing another final rule addressing

• The definition of short-term, limited-duration insurance for purposes of the exclusion from the definition of individual health insurance coverage;
• The standards for travel insurance and supplemental health insurance coverage to be considered excepted benefits; and
• Amendment of a reference in the final regulations relating to the prohibition on lifetime and annual dollar limits.

The rule will be published in the Federal Register this coming Monday.

The FEHBlog recalls speakers warning about the looming cost of a new class of cholesterol fighting drugs called PCSK9 inhibitors.  Pharmalot reports that these drugs aren’t selling like hotcakes as first expected for a number of reasons. In that regard, Healthcare Dive reports on prescription drug value pricing arrangements created by health plans and PBMs.

Speaking of innovations, the Cleveland Clinic released a list predicting the top ten medical innovations for 2017.

Topping the 11th annual list is the harnessing of the microbiome, the gut bacteria swarming in all of us. Recent discoveries have revealed the power of microbes to prevent, diagnose and treat disease. The healthcare industry will soon be pouring resources into addressing the potential for new therapies, diagnostics, probiotics and other products.

Fingers crossed, of course.

Finally Fierce Healthcare reports on a study finding that consumer are willing to price shop for health services if they are given the necessary information. That’s good news.

The FEHBP now the Federal Benefits Open Season always has featured health fairs at federal agencies where employees can gather information and speak with plan representatives.  Congressmen and women with districts that have a large population of federal annuitants, like the FEHBlog’s, offer their own health fairs aimed at the annnuitants.  Benefeds in cooperation with OPM will be holding a virtual benefits fair online.

Can’t attend a health fair this year? No problem!  
For whatever reason—telework, geography, or just being busy—you can’t always make it to an onsite event. But, now you can attend online!
1.  Register for the virtual benefits fair online and confirm your
     email. Be sure to set a secure password.
2.  Log in anytime during the Federal Benefits Open Season, from
     November 14 to December 12, 2016.
3.  Visit individual carrier booths to compete in our nationwide virtual
     scavenger hunt and trivia-style games, watch videos, and get
     answers from the experts!
Live answers to your questions
Visit the virtual benefits fair during any one of our two live carrier chat days:
Monday, November 14, 2016, 10 a.m.–5 p.m. ET
Wednesday, December 7, 2016, 10 a.m.–5 p.m. ET  

Here’s the registration link.

Yesterday the Centers for Medicare and Medicaid Services gave the State of Vermont (pop.  625,000 people, 630,000 cows?) final approval to move forward with a plan to implement a “Vermont All-Payer Accountable Care Organization (ACO) Model. The CMS fact sheet explains that

Vermont will encourage Vermont payers and providers to participate in ACO programs such that by 2022, 70 percent of all Vermont insured residents, including 90 percent of Vermont Medicare beneficiaries, are attributed to an ACO. ACOs will continue to have payer-specific benchmarks and financial settlement calculations, but the ACO design (e.g., quality measures, risk arrangement, payment mechanisms, and beneficiary alignment methodology) will be closely aligned across payers. 

It will be interesting to see how if at all this initiative impacts the FEHBP.  This initiative is Vermont’s Plan B that follows up on a shelved effort to create a single payer system.

Also yesterday, the Internal Revenue Service released its handy dandy summary of 2017 inflation adjustments to tax provisions, several of which relate to health benefits. Many of the adjustments had been previously announced.

Mike Causey had a column yesterday which confirmed the FEHBlog’s understanding that the FEHBP-related provision of the House Oversight and Government Reform Committee’s bipartisan postal reform bill (HR 5714) find general support with most affected organizations.