The 114th Congress will convene on Tuesday January 6, 2015.  Unless Congress takes action on Medicare sustainable rate of growth (“SRG”) formula by the end of March, Medicare Part B payments to doctors will drop. Congress extended the ICD-10 coding mandate for at least one year in last winter’s temporary SRG fix, but the FEHBlog doubts that there will be another extension.

It is unfortunate that HHS chose an implementation date that coincides with the federal fiscal year and not the calendar year which is a common transition point for health plans and providers.  We will have to keep an eye on CMS to learn its transition plan, e.g., how long it at all will Medicare accept ICD-9 codes on claims with dates of service on or after October 1, 2015?  The FEHBlog expects that most health plans will follow CMS’s lead. This has the potential to be a claims processing nightmare because while health plans generally are prepared for the conversion, doctor’s offices tend to be behind the curve. It is unfortunate because the conversion will do nothing to enhance the electronic payment of claims which was HIPAA’s goal.

Meanwhile, the Obama administration continues to enforce the ACA in a draconian manner. But its enforcement approach is rather even handed because it seeks to burden both health plans and providers. The New York Times wrote last month about the Administration’s investigation of rather garden variety claims practices as unlawfully discriminatory presumably under PHSA Sec. 1557 which does apply to the FEHBP.  Last week, the IRS announced a new final rule clamping down on the billing practices of non-profit hospitals. The IRS rule does not take effect until 2016.  In both cases, consumer advocacy groups are instigating the enforcement actions.

The WSJ’s Phamalot blog reports on drug pricing trends for 2015. It’s an article worth reading.

Finally, the FEHBlog really enjoys reading the weekend issue of the WSJ and yesterday’s issue did not disappoint. The issue included this op-ed by two experts, one of whom, Stephen R. Quake, invented the molecular telescope. The authors pointed out that in 1816 roughly 200 years ago a French physician invented the current stethoscope, which is a listening device to help doctors hear bodily noises.  The molecular stethoscope is a blood test which identifies alien DNA in the blood. The alien DNA can be a sign of disease. The article explains in pertinent part.

Replacing expensive and dangerous invasive procedures with an
inexpensive and safe blood test is a major medical advance, and a safer
alternative to amniocentesis is only the beginning. Similar invasive
tests—such as biopsies—are beginning to be eliminated in areas ranging
from cancer detection to transplant rejection, potentially increasing
safety and performance while lowering the cost of care.
The
prenatal molecular stethoscope is the first truly widespread clinical
application to result from the human-genome project. The National
Institutes of Health has an opportunity to build on this new knowledge
of “alien” DNA in healthy individuals, and determine whether it may
change their clinical course—the molecular-stethoscope approach.
Meanwhile, whole genome sequencing of the germ-line, or native, DNA from
populations is under way, with seven ongoing world-wide projects, each
sequencing the native DNA from 100,000 or more individuals. It’s
projected that nearly two million people will be sequenced by 2017.

The FEHBlog believes that human genome project will deliver major improvements in health care over time. The improvements may bend the cost curve down. Keep hope alive. 

Earlier this week OPM released a benefit administration letter to agencies concerning the implementation of the new self plus one enrollment type for the FEHBP in 2016. The letter states that “OPM has estimated that approximately 30% of FEHB enrollments [approximately 4 million in total]  are family enrollments with only one family member. Thus, there may be as many as one million changes to the Self Plus One enrollment type.” Wow.

Happy New Year. It makes more sense to title this as the first post of 2015 rather than TGIF because yesterday was a holiday.  The FEHBlog is happy about the NCAA football championship playoffs. Good start to 2015.

The FEHBlog has been hearing a lot of H&R Block advertisements on the radio about their come talk with us about the ACA event on January 8. If you had FEHBP coverage throughout 2014, you have no tax issue at least as far as the ACA is concerned. For those without “minimum essential coverage,” Federal News Radio points out that the individual shared responsibility mandate penalty increases this year:

For 2014, the fine is the greater of $95 per person or 1 percent of household income above the threshold for filing taxes. It will jump in 2015 to the greater of 2 percent of income or $325. By 2016, the average fine will be about $1,100, based on government figures.

The IRS expects health plans and employers to provide reports to enrollees and the IRS identifying which family members had the required coverage for which months of the year. These reports are knows as IRS Forms 1095-B and 1095-C. The ACA (IRC § 6055 (which the FEHBlog has discussed) requires this information in order to confirm individual taxpayer compliance with the individual mandate as most people still have employer sponsored coverage.

In order to prepared these reports, which must be distributed for the 2015 tax year (in January 2016) health plans have to collect Social Security Numbers for all members. Plans generally have Social Security Numbers for the enrollees and most spouses. Why? Federal law (known as Section 111) requires plans to gather this information in order to coordinate benefits with Medicare.  But they generally don’t have Social Security Numbers for eligible children. The IRS spells out the requirements for this collection process and health plans ignore these requirements at their peril because the ACA imposes enormous penalties on health plans for non-compliance with Section 6055. Fedsmith.com has an article about Blue Cross FEP’s data collection efforts which give you an idea about this mandatory undertaking. Cooperating with plans benefits members because the 1095 forms will be used to support their tax filings next year.

Fedweek has an article about the process for appealing FEHB plan claim disputes to OPM. This worthy process has been around since 1979.  Complete information about the process can be found in your FEHB plan  brochure (Sections 7 and 8). The article concludes “If you are not satisfied with the result of the OPM review, you may be able to challenge the claim in federal or state court, depending on the laws of your state.” Wrong. If you are dissatisfied with OPM’s decision, you must sue OPM in federal court under the Administrative Procedure Act.  State law is irrelevant / preempted.

The FEHBlog trusts that his readers have been enjoying the holiday season. Today is the end of 2014. The new benefit year for federal and postal annuitants begins tomorrow while the new benefit year for federal employees begins with the first day of the first 2015 pay period which appears to be January 12.

ACA-wise, the employer shared responsibility mandate takes effect tomorrow for the federal government and all other employers with 100 or more full time employees. OPM and the Postal Service already have handled this issue by rolling out coverage to employees who work at least 30 hours per week / 120 hours per month. Surprisingly to the FEHBlog, the Labor Department has not listed in the November 2014 unified agenda a rulemaking project for the ACA requirement that employers with 200 or more employees auto-enroll new employees in their health benefit plan.

Also missing from the unified agenda is an anxiously anticipated regulatory project that will provide guidance on the 40% excise tax on high cost health coverage (colloquially known as the Cadillac tax) that takes effect in 2018 — now only three years away. Unless of course Congress repeals it which is not out of the question,

Another major ACA provision this is missing in action is Public Health Service Act § 2717 which required the HHS Secretary to create health care quality improvement standards for group health plans and health insurance issuers within 24 months after enactment – March 23, 2012 — almost three years ago. Once implemented, group health plans and health insurance issuers would be required to annually report their compliance with these standards to plan enrollees and the government.

The new year also means that the ICD-10 coding set compliance data for health plans and health care providers is only 10 months away.  2015 also was anticipated to be the year in which health plans would be required to certify with HHS their compliance with the HIPAA operating rules but that obligation hinges on the issuance of an HHS rule. The unified agenda predicts that this rule will be issued in July 2015 which suggests to the FEHBlog that the certification requirement deadline will be pushed out into 2016. But you never know.

While on the topic of the ACA, the non-profit co-op plans created by the ACA have been in the news lately. The Des Moines Register reports that the Iowa co-op called Coopportunity Health has come under state receivership. Modern Healthcare reports that HHS recently provided $300 million in additional funding to these coops which the FEHBlog has described as the ACA’s Solyndras. The government has provided $2.5 billion in funding to these co-ops.  The spending simply was unnecessary, in the FEHBlog’s view.

Happy New Year to all!

Well, we now are in the middle of the two week long end of the year holiday period. The FEHBlog enjoyed the Christmas holidays with his wonderful family.  Congress is keeping the home fires burning too.  Nevertheless, the Pharmacy Times reports that a bipartisan team on Congressmen will be introducing a bill to increase the transparency of generic drug pricing in the FEHBP, Medicare Part D, and TRICARE next month.  The burden of the law would fall principally on the prescription drug managers. Community pharmacists are leading the charge for its passage.

Federal News Radio reports on OPM’s workforce goals for 2015.  OPM is requiring agencies to designate Senior Accountable Officials who will be responsible for improving employee engagement.

OPM earlier this month imposed now obligations on FEHBP carriers to root out fraud, waste, and abuse.  FEHBP carriers have every incentive to take such actions because they bear the financial risk of their health plans. In any event, the FEHBlog takes note of this fact because the Wall Street Journal wrote yesterday about how hard it is root fraud out of Medicare. The article explains that Medicare has problems screening bad actors out of the program and kicking bad actors out once they are identified. The article makes an interesting point:

[S]imple improvements to the screening process would make it easier to spot fake medical providers.  “Even to get a driver’s license, you need to take a driver’s education course and pass a test,” said Ryan Stumphauzer, former head of the Medicare Fraud Strike Force in Miami. “Why not perform this type of common-sense screening before handing out Medicare billing privileges? Ask basic questions: Does the applicant have education, training or experience in health care? Are they versed in basic Medicare rules and regulations?”

Hopefully Congress will impose this vetting obligation on the providers and their professional associations where the burden belongs.

Healthcare Data Management reports that 2014 was a landmark year for health care data breaches.
In the good old days before electronic records, there probably were a lot fewer breaches. Of the 10 most recent breaches according to Beckers Hospital Review, only one (#10) involved paper records. Putting this genie back in the bottle is impossible at this point (as illustrated by ONC’s new five yer plan) but the government, which also has suffered data breaches, needs to be more understanding and take the lead in efforts to improve data security, in the FEHBlog’s view.

The FEHBlog thought that he could take a week off, but noooo, the ACA regulators kept up the drumbeat of new rules with an proposed rule updating the summary of benefits and coverage (“SBC”).  The SBC is a four double side page explanation of health plan coverage to be accompanied by a uniform glossary of health insurance terminology. Of course, is the brainchild of the ACA, and it sits on top of the lengthier and definitive summary plan description for ERISA plans and plan brochure for FEHB plans.  The FEHBlog is not sure how many people actually use the SBC, which was introduced a couple years ago, but the ACA regulators have decided in their infinite wisdom to update it with, e.g., a new “coverage example” for a simple leg fracture to accompany the existing examples of diabetes 2 treatment and the delivery of a baby. Timothy Jost in Health Affairs already has taken the time to review the proposed changes here. The rule is now in its comment period. The ACA regulators anticipate that the new SBC will be used beginning on September 15, 2014   Congress should require health care providers to give their patients a list of the networks in which they participate and sample prices. That would really improve transparency.

The other big news is that last Friday December 19, the Food and Drug Administration approved for marketing Abbvie’s “Viekira Pak (ombitasvir, paritaprevir and ritonavir tablets co-packaged with dasabuvir tablets) to treat patients with chronic hepatitis C virus (HCV) genotype 1 infection, including those with a type of advanced liver disease called cirrhosis.”  Genotype 1 is the most common form of Hepatitis C.  Gilead Sciences no longer has a monopoly with its Sovaldi and Harvoni drugs for that disease. On Monday, the Chicago Tribune reported that the large prescription drug manager Express Scripts announced  that on January 1, 2015, it will only offer Abbvie’s drug for Hepatitis C genotype 1 infections.   “Express Scripts did not say how much AbbVie would cut the $83,319 wholesale cost of the drug, but said it will be comparable to the price Gilead Sciences charges in Western Europe for its blockbuster drug Sovaldi, which costs $51,373 in France and $66,000 in Germany, for example ”  The Wall Street Journal’s Phamalot blog added more perspective in its report which explains why Abbvie’s drug will not entirely supplant Gilead’s drugs and that Express Script’s deal is not exclusive.  “Sanford Bernstein’s Porges writes that he also expects Gilead ‘will need to make a significant concession to CVS/Caremark in order to retaliate against AbbVie and possibly secure an exclusive arrangement with CVS/Caremark.’”

Merry Christmas to all!

Last week, Express Scripts published a report on opioid / strong painkiller use/abuse which is a national health care problem,  The report which is worth reviewing goes into more details on the talk that the FEHBlog heard at an Express Scripts conference in October.  Solving this problem requires provider buy-in in the FEHBlog’s view, e.g, better prescribing practices, more patient oversight.

Also last week Cigna and Safeway published a study on the successful application of reference pricing to clinical laboratory charges.  Reference pricing is a benchmark approach that can be use with in-network providers.  Reference pricing encourages the plan participants to pay attention to the price of health care services.

The study involved two groups of employees enrolled in a Cigna health plan so that the researchers could draw credible conclusions about the effectiveness of the benefit design. The first group comprised Safeway employees who had a reference-based pricing benefit for lab services. The second group comprised employees of various employers who did not have this benefit but lived in the same community and received the same lab services as the Safeway employees.

Members of the first group had access to an online shopping tool that showed information about the cost, location and type of lab services in their geographic area based on the application of the reference-based pricing benefit. They also received educational information about this benefit. The result: Individuals with the reference-based pricing benefit demonstrated a 20% increase in selection of lab services below the reference price compared to those without the benefit (69% vs. 57%). 

“This study is an important first step, but we can’t conclude from it that the benefit alone drives the greatest behavior change,” Cigna’s Aube said. “Though not specifically demonstrated through this study, we do know that communication and education are essential to all of Cigna’s consumer-directed efforts. Our hypothesis is that it is a combination of benefit structure, with effective education and messaging, that presents the greatest opportunity to change behavior.” 

“We looked at very early data for this analysis,” said Safeway’s Dr. Bradley. “The understanding of reference pricing along with adoption of online tools to inform the consumer has increased significantly since the early days of 2011. Thoughtful application of reference pricing warrants consideration as a mechanism to improve value in health care and help individuals reduce their costs for certain services.” 

Jingle bells!

Although this is not an FEHBP matter, the FEHBlog was pleasantly surprised to read this ACA regulators’ press release issued today announcing their intent to allow employers to supplement ACA marketplace coverage for employees who fall outside the ACA’s employer shared responsibility mandate, e.g. employees of employers with 50 employees (100 for 2015) and employees who work less than 30 hours for employers subject to that mandate a/k/a part-time employees:

The proposed rules would allow group health plan sponsors, in limited circumstances, to offer wraparound coverage to employees who are purchasing individual health insurance in the private market, including through the Health Insurance Marketplace. The rule proposes two pilot programs for wraparound coverage. One pilot would allow wraparound benefits only for Multi-State Plans in the Health Insurance Marketplace and another would allow wraparound benefits for part-time workers who could otherwise qualify for a flexible savings arrangement who enroll in individual market plan.

Ihealthbeat reports that CMS has added more healthcare quality data to the Hospital Compare and Physician Compare websites. Those websites cover care rendered to all patients, not just Medicare patients.

Following on a couple of recent FEHBlog posts, not surprisingly health information technology groups are at odds over the CRomnibus’s electronic medical record interoperability mandate.  The underlying problem in the FEHBlog’s view is embedding technology requirements in law. However, the government could not be expected to shell out $30 billion on electronic medical record systems without attaching strings. Unfortunately the 2009 law omitted an interoperability string which has created the current problem,

Also, the Wall Street Journal’s Pharmalot blog predicts that the Philadelphia public transit health plan’s price gouging lawsuit against Gilead Sciences, which manufactures the only FDA approved Hepatitis C drugs, won’t be successful:

“Monopolists, themselves, are not unlawful. They are allowed to charge any price they want. It’s only if they take any anticompetitive conduct that a problem may exist,” says Ankur Kapoor, an attorney at the Constantine Cannon law firm who specializes in antitrust law. He notes that antitrust laws do not have price-gouging provisions, “I can’t recall seeing a case like this,” he says.  As a result, the Gilead pricing is unlikely to be considered illegal, experts say

The FEHBlog was intrigued by the health plan’s offensive use of the ACA’s anti-discrimination law, PHSA § 1557 in this lawsuit, a point that the WSJ article did not discuss. In any event, according to another WSJ article, the Food and Drug Administration may soon deprive Gilead of its monopoly status by approving a competitive drug manufactured by AbbieVie.  

Analysts don’t expect AbbVie to overtake Gilead in the hepatitis C market, but believe it can capture a decent share of a market that continues to grow. AbbVie hasn’t disclosed pricing for its regimen, but some expect that the company could gain market share by selectively discounting it versus Gilead’s Harvoni, which costs about $94,500 for a 12-week regimen. Gilead’s Sovaldi hepatitis C drug, which was introduced a year ago, costs $84,000 for a standard course of treatment.

Have a good weekend.

[T]he package includes language directing ONC [the Health IT Czar] to decertify electronic health record systems that prevent the electronic exchange of health information. The new law states, “ONC should take steps to decertify products that proactively block the sharing of information because those practices frustrate congressional intent, devalue taxpayer investments in (certified EHR technology) and make CEHRT less valuable and more burdensome for eligible hospitals and eligible providers to use.”

The law also includes a coupe of provisions requiring reports to Congress.  My money is riding on the private sector to fix this pressing problem. Ihealthbeat further notes that 257,000 eligible healthcare professionals will get smacked with meaningful use penalties starting January 1, 2015. Of course, the cost of those penalties ultimately will be shifted onto private sector payers.

The Christian Science Monitor reports that Congress also passed the ABLE Act which will allow for the creation of tax free savings accounts for disabled people.

The ABLE Act helps people with disabilities save for health-care costs, housing, lifelong education, and other needs. Under current law, a child diagnosed with a disability can’t have assets worth more than $2,000 or earn more than $680 per month without forfeiting eligibility for government programs like Medicaid. The ABLE Act would allow a tax-free savings account up to $100,000 to pay for disability-related expenses.

In Monday’s Federal Register OPM announced a proposed rule for a new performance assessment system for FEHBP carriers.  Federal News Radio provides an overview of the proposed rule. The comment period for the proposed rule ends on January 14, 2015.  When contemplating carrier performance, the important facts to bear in mind are that the FEHB Act requires carriers to compete and also bear the insurance risk. That’s plenty of motivation for good performance and as the FEHBlog noted earlier this month a recent Morning Consult survey of 500 federal employees found that federal employees genuinely appreciate their plans.

The Drug Channels blog offers highlights of CVS Health’s latest specialty market forecasts here. Reuters reports that a new specialty infusion drug from Amgen that treats a rare leukemia called acute lyphoblastic leukemia. Price tag — $178,000 per treatment.

Because it’s the holiday season, let’s wrap things up with this day brightener article from Fierce Health Payer about how Aetna is using technology “to connect members who have recently been diagnosed with breast cancer to members who have already survived the disease. The insurer aims to help its members address the emotional impacts of cancer in addition to all the physical issues.”

The Hosue has adjourned for the holidays, and the Senate has one more day of sessions to handle nominations.  Before leaving town, Congress passed several bills blurbed in this Week in Congress, most significantly the CRomnibus bill and the National Defense Authorization Act. As the FEHBlog has noted, the CRomnibus keeps most of the federal government funded through the end of the current fiscal year. Hopefully, both the Senate and House next year will address appropriations in regular order rather than using an omnibus.

The Federal Times calls to our attention the fact that the NDAA includes a few provisions affecting federal employees, most significantly, a “section [that] allows retired employees to return to the federal workforce without taking a cut to their salaries.” Congress extended this pilot program for another five year period. “Before the authority [first] was granted in 2009 an agency rehiring a retiree
had to offset their salary by the amount of the annuity unless it got a
waiver from the Office of Personnel Management.”

Last Friday, the FEHBlog noted that the Republican Senate Conference last week voted to require all of their staff to be covered under the DC Health Link rather than the FEHBA. Newsmax points out that the Republican House Conference rejected a similar motion. The Washington Post reported last winter that 88% or over 12,000 of the enrollees in the DC Health Link’s small business option are members of Congress and their official staff members. The Democrat Conferenes in Congress like the House Republicans permit legislators to designate their staff members who have to leave the FEHBA for the DC Health Link.