May 29 is just another weekday for FEHBP carriers because the 2016 benefit and rate proposal must be submitted to OPM no later than this coming Sunday May 31 according to the call letter.

Time marches on though. The Wall Street Journal reports this afternoon that the board of directors of Humana, a major health insurer is considering selling the company to another health insurer such as Aetna or Cigna. Humana which is based in Louisville, KY, focuses on the Medicare market but also is an FEHBP carrier

The Ponemon Institute has released its 2015 study on the cost of data breaches. That’s another cost curve that is headed up. “Over the past year, the cost of data breaches due to malicious or criminal attacks has increased from an average of $159 to $174 per record.”

Today, the Department of Health and Human Services released a request for public comment on the future of the HIPAA health plan identifier. HHS pulled the rug out from under this initiative last year and with good reason for doing so. After all electronic claims have been processed for over 15 years without a health plan identifier. The comment deadline is July 28.

A couple months ago, the FEHBlog was doing backflips because the FDA had approved its first biosimilar drug Zarxio for marketing. Zarxio is biosimilar to a brand name cancer supportive drug Neupogen which Amgen manufactures. Yesterday the FEHBlog learned from Business Insurance that earlier this month the U.S. Court of Appeals for the Federal Circuit issued a preliminary injunction blocking the sale of the Zarxio pending an an Amgen appeal of a San Franciso federal district court decision rejected a Amgen patent challenge to Zarxio.  The Federal Circuit will hear oral argument on the appeal next Wednesday June 3. Lowering costs is not easy. But the FEHBlog remains confident that biosimilars will be on the U.S. market soon. After all, biosimilars have been offered in Europe for over a decade.

The FEHBlog cringes whenever he sees an email announcing a new set of Affordable Care Act FAQs.  He cringed yesterday when FAQ XXVII was issued. Part one of the FAQs was an effort by the regulators to circle the wagons around HHS. A few months ago, HHS released the 2016 notice of benefit and payment parameters, a massive annual rule making.  HHS explained in the preamble that health plans, beginning in 2016, must embed a self only out of pocket maximum in other than self and family coverage. Confusion reigned because HHS overlooked actually adding this requirement to the rules. Rather than amend the rule-making, HHS issued sub-regulatory guidance to cover its tail which climaxed in FAQ XXVII.  The ACA regulators collectively assert in FAQ XXVII that the embedded OOP maximum rule applies to all non-grandfathered plans, including group plans (e.g., FEHBP) and high deductible health plans. Cost curve up.

The other part of FAQ XXVII continues the saga of ACA FAQ XV which addressed in part the ACA’s provider non-discrimination rule, PHSA § 2706. In response to Congressional complaints, no doubt spurred on by the chiropractor and other allied health professional lobbyists, the ACA regulators retracted the meat of the guidance of FAQ XV which of course favored health plans. The other shoe should drop before long with a new rule.  Cost curve up again.

The reason that the FEHBlog cringes upon the release of ACA FAQs is that the FAQs typically announce consumer protections that push the cost curve up just as we creep ever closer to 2018 when the high cost coverage excise tax kicks in as discussed in a recent post.  It’s unfortuante that the ACA regulators can’t simply let health plans offer consumers choice. In the FEHBP some plans offer embedded self only OOP maximums in self and family coverage. Others don’t. If a consumer wants the embedded maximum, he or she can find it (via the summary of benefits and coverage or the plan brochure).

The Wall Street Journal reports that

[As] part of a growing push for so-called pay-for-performance deals amid complaints about the rising price of medications, some of which cost more than $100,000 per patient a year [, s]ome insurers and prescription-benefit managers are * * * arguing that they should pay less when drugs don’t work well in certain patients. Drug companies are countering with pricing models of their own, such as offering free doses during a trial period.

The FEHBlog does not quite follow this approach. If a much lower price is charged when the drug is ineffective, won’t that encourage use of the drug on those cases?  In any event, Drug Channels reports on the drug trend reports of Express Scripts, CVS Health, Catamaran, and Prime Therapeutics. .

Retired Admiral Earl Gay, special advisor to the OPM Director, has posted some timely thoughts on opm.gov for this national holiday. Thank you for your service Admiral.

Congress is out of town this week. Here is a link to last week’s activities from the Week in Congress.  The House Energy and Commerce Committee last week unanimously (51-0) approved the 21st Century Cures bill which would provide a funding boost to the National Institutes of Health and the Food and Drug Administration. There are a bunch of health care related pay-goes according to this Modern Healthcare article. Health Data Management reports that the bill also includes some strict electronic medical record interoperability mandates.

This New York Times piece on hospital productivity caught the FEHBlog’s eye.  Enjoy the holiday.

Ah yes, today is the end of the great three day holiday drought that runs from Presidents’ Day to Memorial Day. The FEHBlog wishes everyone a great weekend.

Last Friday was the deadline for public comments on IRS Notice No. 2015-16 which was the first wave of guidance on the high cost coverage excise tax.  Beginning in 2018, the ACA imposes on 40% excise tax on the cost of employer sponsored coverage that exceeds $10,200 for self only coverage and $27,500 for self and family coverage.  The law includes permits an adjustment to those thresholds to the extent the cost of Blue Cross FEP Standard Option coverage over the period 2010-2018 exceeds 55%. That adjustment will wind being a big goose egg because according to the FEHBlog’s calculations, Blue Cross FEP Standard Option coverage has increased only 18% over the period 2010 through 2015. In any event, the FEHBlog suggest that readers take a gander at the American Health Insurance Plans’ comments to the IRS. AHIP makes many good points. In short this is a very disruptive tax which merits repeal.

Modern Healthcare offers an interesting story about the coverage conflicts between insurers on one side and doctors and patients on the other caused by the price of the very expensive Hepatitis C drugs. The most sensible solution is for Gilead Sciences to lower the absurdly high price (even after discounts), but that’s unlikely to occur.

Healthcare Dive reports on the indictment of a Texas anestheisologist who allegedly defrauded our beloved FEHB Program to the tune of $5 million.

The New York Times reports on CVS’s acquisition of Omnicare this week and its writer predicts that this acquisition signals the end of pharmacy mergers due to market concentration.  Omnicare’s principal business is distributing medications to nursing homes and other institutions, which is an obvious fit with CVS’s business. The article adds, however, that

One of Omnicare’s main moneymakers is expensive niche medicines, which it helps manufacturers distribute and get reimbursed for by insurers and the United States government. Those drugs account for about a quarter of company sales, and those sales are growing at an annual rate of more than 20 percent. But the lucrative business may end up conflicting with Caremark’s focus on extracting discounts from pharmaceutical firms.

It will be interesting to see how the Justice Department and the Federal Trade Commission react.

Today, the U.S. Office of Personnel Management published a final rule to help FEHB plan carriers in their ongoing efforts to recover benefits from other responsible parties and insurers.  For example, if an FEHB plan member is injured in a motor vehicle accident, the FEHB plan will cover the costs of treating the injury and then will pursue the motor vehicle insurers to recover the payments.  It’s equitable. The rule makes it clear that the FEHB Act overrides state laws that may interfere with this process.

Two recent note-worthy surveys:

• U.S. News and World Report has released a nationwide survey of the quality of hospital delivery of five common services.  
• Fierce Health Payer reports on two surveys of healthcare provider attitudes toward health insurers / their golden geese. 

Well we are less than two weeks away from the deadline imposed on FEHB plan carriers for submitting their 2016 benefit and rate proposals to OPM. It’s a busy time for carriers.

Fierce Health Finance reports that “The latest price data from the Altarum Institute indicate hospital prices rose 0.4 percent in March compared to March 2014, an increase Altarum referred to as “scant.” For the entire healthcare sector, prices rose 1.3 percent year-over-year.”  Over the same period, the CPI-U for all items declined by 0.1%.  So that’s a significant jump in healthcare.

Drug Channels reports that the drug store industry is maintaining a steady profit margin.

In an bit of good news, Health Day reports that due to the work of U.S. Preventive Services Task Force fewer men are undergoing the PSA screening test for prostate cancer. The USPSTF has concluded that the test creates more problems than it solves and doctors are accepting this recommendation.

Healthcare Finance reports that the incoming AMA President Steven Stack has not thrown in the towel on his effort to kill the ICD-10 coding system which is scheduled to take effect October 1. Health Data Management reports on a bill to expand ICD-10 testing and create an 18 month transition period (HR 2247).  CMS is planning on a clean break. We shall see.

The FEHBlog spent his weekend driving up to New Haven, Connecticut, and back. The principal purpose of the trip was a visit a close friend who is hospitalized at Yale New Haven.  Consequently the FEHBlog has not had much time to think about this weekend update, but the trip was worthwhile.

Congress was in session last week as explicated in The Week in Congress.  Congress will continue in session this week and return to their home districts for the week following Memorial Day.

The House is working on the FY 2016 defense authorization bill which usually has government contracting implications for FEHB contractors and a 21st Century Cures Act which is aimed at the Food and Drug Administration. Here’s a link to a Health Affairs blog article on that important bill.  Health Data Management reports that the latest version of this bill also includes a rather strict electronic medical records interoperability mandate.

Prescription benefit manager Express Scripts issued a report titled, Super Spending: U.S. Trends in High-Cost Medication Use.  The report

examines prescription drug use among patients with exceedingly high annual medication costs under the pharmacy benefit. The number of U.S. patients estimated to have annual medication costs greater than $50,000 jumped 63 percent between 2013 and 2014, from 352,000 to 576,000 Americans. The population of patients estimated to be taking at least $100,000 worth of medication nearly tripled in the same time period, from 47,000 to 139,000 Americans.

And of course, the drugs at issue are specialty drugs and insurers covered virtually all of the costs.  This is a trend that needs to be curbed quickly as the ACA’s high cost coverage excise tax kicks in about 30 months from now (2018).  Express Scripts offers some strategies and tactics.

OPM and the rest of the federal government has been promoting cessation of tobacco use. The other major PBM CVS Health reported on a tobacco cessation study conducted on 2500 of their own employees.

The researchers randomly assigned approximately 2,500 CVS Health colleagues and their family and friends to one of four incentive-based smoking cessation programs or to usual care, which consisted of informational resources and free access to a behavioral-modification program and nicotine-replacement therapy. Across all of the incentive-based programs, participants were eligible for up to $800 for successfully quitting smoking but the programs differed in how incentives were accrued and disbursed. Two of the programs required participants to pay an upfront deposit of $150, which was reimbursed if participants successfully quit smoking.  Overall, study participants who enrolled in any of the four incentive-based programs were nearly three times more likely to quit smoking than those who received usual care alone. In addition, although participants assigned to the groups requiring an upfront deposit were more likely to decline participation than those in the pure incentive-based programs, deposit programs led to nearly twice the rate of abstinence from smoking at six months among people who would have accepted either type of program.

The study appears to confirm human nature. OPM, however, does not allow FEHB carriers this level of flexibility in crafting their smoking cessation programs.

The Health Care Cost Institute which is a consortium of health insurers released a report on the cost of diabetes care in the U.S.

The report, Per Capita Health Care Spending on Diabetes: 2009-2013, is one of the first of its kind to examine health care spending for adults and children with diabetes relative to those without diabetes, both in terms of total per capita health care spending and out-of-pocket costs. It is based on the health care claims of more than 40 million Americans younger than 65 covered by ESI from 2009 to 2013. HCCI identified 5.3% of the ESI population as having diagnosed diabetes (type 1 or type 2) in 2013, up from 4.7% in 2009.
“The number of people with diabetes continues to grow, as does the health care spending for these individuals,” said HCCI Executive Director David Newman. “We, and others, need to better understand the relationship between spending and actual health outcomes for people with diabetes, particularly children.” 

Good luck with that effort. HCCI does good work.

The NPR / Kaiser Health News report on Monday’s ACA FAQ XXVI says it all.  

The ACA regulators issued ACA FAQ XXVI) today.  These FAQs, which respond to consumer group complaints, address various aspects of the ACA mandate on non-grandfathered plans (most FEHB plans) to cover certain preventive services with no enrollee cost sharing when provided in network. 

CCIIO also issued FAQs on the new HHS mandate to embed an individual self only out of pocket maximums under other than self only enrollments. As indicated in the FAQs, HHS announced this mandate in the preamble to the 2016 notice of benefit and payment parameters but as unmentioned in the FAQs, HHS failed to appropriately amend the ACA rules. This oversight doesn’t seem to concern CCIIO. The FEHBlog is surprised that HHS has not issued an errata to the notice of benefit and payment parameters. That fix may be still be forthcoming.