Let’s start out with a little appointment news. The Federal Times reports that yesterday the Senate confirmed former Housing and Urban Development Secretary Shaun Donovan to be the new Director of the Office of Management and Budget. Mr.Donovan replaces Sylvia Mathews Burwell who is not HHS Secretary.  OMB basically runs the federal bureaucracy. Federal News Radio reports that the President has nominated OMB Senior Advisor Anna Rung to be the next Administrator of the Office of Federal Procurement Policy within OMB. OFFP is in charge of federal contracting which impacts the FEHBP because all FEHB plans are created by federal contracts. Finally, HHS Secretary Burwell has appointed Jocelyn Samuels to be head of the HHS Office for Civil Rights. Ms. Samuels replaces Leon Rodriguez. Both Ms. Samuels and Mr. Rodriguez came to OCR from the Justice Department’s Civil Rights Division. OCR is responsible for enforcing the HIPAA Privacy and Security Rules.

The Wall Street Journal’s Pharmalot blog reports that the European Union and two U.S. Senators are putting new pressure on Gilead to lower the astronomical price of its Hepatitis C drug, Sovaldi.  As the FEHBlog has noted, Gildead’s brazen pricing policy has emboldened other drug manufacturers to raise prices, even in relatively sleepy markets like vaccines and generic drugs that have been on the generic market for many years.

Finally, Forbes lists the ten most expensive cities for healthcare in the U.S.  The Forbe report is based on a Castlight Health study of most and least expensive U.S. cities for common healthcare procedures. Here’s a link the Castlight’s interactive map.

The FEHBlog recently noted articles on rising vaccine costs. The New York Times reported yesterday that even certain generic drug prices have been rising sharply.  “Dr. Aaron Kesselheim, a professor of health economics at the Harvard School of Public Health, noted, “’Studies show it is not until you have four or five generics in the market that the prices really are down.’” Pricing problems occur when competition drops off.

By late 2013, a number of generic manufacturers had largely stopped producing and distributing digoxin, then a cheap medicine whose use had declined, leaving only two companies dominant in the market. Both businesses — the Lannett Company and Global Pharmaceuticals, a division of Impax Laboratories — are small companies whose bottom line can rise and fall on the sales of a single drug.
Then this January, the Swiss manufacturer Covis began selling an “authorized generic.” Such medicines are made according to the specific formula of the company that makes the branded drug and holds the original patent (GlaxoSmithKline in the case of digoxin), and tend to be more expensive than a typical generic.
In late 2013, one of the companies began a price increase, and the others soon followed, records show. “It’s quite difficult to pinpoint who was the catalyst, but we are seeing a big step up,” said Anthony Raeside, an analyst at EvaluatePharma.

Reuters reports on a UnitedHealthcare study that applied an upfront bundled payment approach to oncologists. The bundled payment approach controlled the doctor’s charges, but oncology drug prices continued to skyrocket.  “It was not clear if the chemotherapy costs rose because drug prices rose or because doctors administered more treatments.” In any event, that result was surprising to the insurer.

Speaking of cancer treatments, Employee Benefit News reports on a new product that MolecularHealth is making available to self insured employers.

The core of the program, called MolecularHealth Corporate Oncology Program For Employers, or COPE, is the company’s TreatmentMAP process. Through TreatmentMAP, cancer tumors are analyzed to determine their genes and biomarkers and the program then creates an actionable report for the treating physician to get the patient “on the best treatment for them at that time with their particular disease,” explains Housman. “And if a treatment is not available, work with them to find what clinical trial options are available with that particular disease. So it’s really personalized to that patient’s particular tumor.” Safety and efficacy data of the suggested therapies is also incorporated into the treatment map, which carries a list price of $5,000.

Modern Healthcare reports that the Centers for Medicare and Medicaid Services recently released a monster proposed rule concerning Medicare Part B payments for doctors’ service in 2015. The proposed rule includes a significant expansion of Medicare Part B coverage of telehealth services.

Added to the list of [Medicare Part B] covered telehealth services by the proposal are annual wellness visits, both for an initial visit, and for subsequent visits, if they include a personalized prevention plan of service.
It also proposed to add to the list telehealth sessions for psychoanalysis, family psychotherapy, both with and without the patient being present; and for “prolonged service in the office or other outpatient setting requiring direct patient contact beyond the usual service.”
The CMS rulemakers also propose to allow payments for telehealth services afforded to patients in “rural census tracts” even if those tracks are within metropolitan statistical areas. Census tracts are composed of smaller census blocks and block groups and have on average about 4,000 inhabitants. Populations of the 388 MSAs in the U.S. and Puerto Rico vary widely, from about 50,000 to nearly 20 million inhabitants. 

Health Data Management reports that FAIR Health, the non-profit that helps health plans set out of network pricing, has offered details on the use of its online consumer healthcare cost lookup system.

Finally, Fierce Health Finance reports that for profit hospital chains like Tenet and HCA are aggressively entering the urgent care center business in order to compete with the pharmacy chains.  

Congress returns to Washington this week.  The Arizona Republic projects that Congress has about 30 days remaining before the election to take legislative action.

The Washington Post published a primer for health care investors today that was quite informative. On Thursday, the FEHBlog linked to a Beckers Hospital Review projection of non-profit hospital revenues for 2014. The Post adds that

[R]oughly 80 percent of hospitals are still nonprofit, according to the American Hospital Association. But those who want to invest increasingly need to choose mega hospital networks as more hospitals merge to cope with the higher costs. Eighty-five hospitals and health systems merged or were acquired in 2013 — up from the 50 deals in 2009, according to Irving Levin Associates, a health research firm. In all, 283 hospitals changed hands last year, the firm’s Lisa Phillips says.

The Dallas Forth Worth Healthcare Daily published an interesting interview with Cigna’s regional CEO, LaMonte Thomas. Here’s the punchline:

What do you see the future of the company and the role of the insurer going forward?
I think as healthcare continuously evolves, the role that we’ll play is conveners: Conveners of the stakeholders as we continue to evolve and continue to grow and adjust as we learn more amid technology changes. There will be different access to information, to resources as the medical field evolves. So we’ll be conveners for employers, for hospital systems, and for those that are consuming healthcare.
We’ll provide and continue to provide coaching, we’ll continue to provide management and medical management services that we provide today. I don’t think that model changes much. For us at Cigna, since most of our business is self-funded, we’ll be serving greater resources for employers to help them in their efforts to continue to push their employees closer to the physician.
Our role for the physician is to provide data and resources to make it easy and helpful for both of those parties as they move closer together. In an ideal situation, if there’s risk and you’re paid on results rather than activity, then you’re incentivized to guide that person to the high quality place for the most cost efficient. You’re incentivized to write prescriptions for generics instead of name brand. So that role as navigator and transparency goes closer and closer to the physician, more so than companies like Cigna or other companies out there building models around transparency.
So you’ll be more of an intermediary between the two.
Absolutely, with us getting away from the middle of that relationship.

NCQA announced last weeks its 2015 changes to the HEDIS quality measures that are applied to health providers and plans, including FEHB plans.  Here’s one sensible change that the FEHBlog noticed:

Plan All-Cause Readmissions: To improve this measure’s accuracy, NCQA revised it to allow readmissions to serve as potential index admissions and added an exclusion for planned readmissions.  

Finally the FEHBlog got a big kick out of a letter that a Florida doctor sent to the Wall Street Journal in response to its editorial about the Supreme Court’s Hobby Lobby decision last week:

What has corrupted the debate over this issue is that we have abandoned the principle of individual responsibility and have transformed the idea of medical insurance into a concept of free medical care.

Amen, Dr. Stanley Spatz.

The FEHBlog is certainly glad that he vacationed on the Outer Banks last week and not this week. Here’s the hurricane that is now looming over that coast.

In response to the FEHBlog’s recent report that OPM has given FEHB plans its approval to cover gender reassignment surgery, a reader inquired when federal and postal employees and annuitants will learn which plans will be offering that coverage for 2015. FEHB plans typically disclose their benefit packages in mid to late September when OPM announces the next year’s government contribution amount.  The FEHBlog expects that LGBT publications will gather that information for their readers.

In furtherance of the FEHBlog’s point that the ACA’s mandate to provide “free” preventive care has raised costs for everyone, the WSJ’s Pharmalot blog reports that the ACA mandate has given a boost to vaccine prices.

One example is Prevnar 13, which prevents diseases caused by pneumococcal bacteria, and requires multiple shots priced at $136 each, with every child in the U.S. required to get four doses before entering school. The Prevnar line generated $4 billion in revenue last year. Michael Haydock of the Datamonitor Healthcare consulting firm, tells the [New York] Times “it’s expensive in part because it’s a very effective vaccine and also because they’re exploiting their monopoly.”

Although the vaccine has not changed, the cost has risen an average of 6 percent each year since its 2010 FDA approval, the Times writes. “You have to make back your investment and pay your shareholders, but at what point do you say, ‘Look, you’ve had your steak, gravy and potatoes and this is enough?’” Steven Black, a vaccine expert at Cincinnati’s Children Hospital, tells the paper. He was on the government panel that recommended children get an earlier Prevnar 7 version.

That blog also reports that several prescription benefit managers, in particular Express Scripts, have begun excluding an assortment of ointments, creams, and powders that compounding pharmacies use to make topical treatments.

For instance, the average cost for each prescription rose to $1,100 from $90, and for about a dozen such medications, the actual cost jumped by more than 1,000%. Consequently, the amount spent by its clients for compounded drugs increased to roughly $171 million in this year’s first quarter, up from $28 million during the comparable period in 2012.

“It’s an issue of waste,” says Glen Stettin, senior vice president for clinical, research and new solutions. “For nearly all of these products, there’s already a commercial preparation already available – a generic or brand-name product approved by FDA. And there is no evidence to support their use at all.”

Touche.

It’s nice to read other publications supporting your point of view. The RxObserver joins the FEHBlog on the bandwagon demanding that the Food and Drug Administration finally create a regulatory pathway for biosimilar drugs.

The European Union first established a clear biosimilars pathway in 2004.   Biosimilars are available in 27 industrialized nations – including Japan, Germany, the United Kingdom, France, and Canada – but have been effectively denied to American patients through a combination of bad policy and brand pharma-initiated roadblocks.  Express Scripts, a large pharmacy benefit manager, recently projected that biosimilars could yield $250 billion in savings by 2024 alone if the top 11 biosimilars candidates came to market.

And the Hill is reporting that at a recent conference a  Cal Berkeley economics professor James Robinson endorsed reference pricing.

Finally Becker’s Hospital Review provides a list of the top 50 non-profit hospitals ranked based on gross revenues. The winner is the University of Pittsburgh Medical Center with over $12 billion in revenue. The Pittsburgh Post Gazette reports that on settlement of a long standing dispute between UPMC and the local Blue Cross carrier Highmark.

Have a great weekend.

The FEHBlog is back from a relaxing vacation just as Congress headed out of DC for its Fourth of July recess which will end on July 7.  Here is a link to last week’s Congressional news.

Tomorrow is the last day of the current U.S. Supreme Court term. The Court has two more decisions to release before heading out on its summer vacation. In anticipation of the Hobby Lobby decision due tomorrow,  HHS on Friday released a report which includes the following findings

IMS estimated that the total number of prescriptions for oral contraceptives with no co-pay increased by more than four-fold from 6.8 million in 2012 to 31.1 million in 2013 (an increase of 24.4 million) in part due to the Affordable Care Act’s zero-cost sharing provisions for certain preventive services.

This increase in oral contraceptive prescriptions dispensed with no co-pay contributed to a reduction in out-of-pocket costs estimated by IMS at $483.3 million that would have been spent in 2013 had women bought the same mix of oral contraceptives as those purchased in 2012. 

It has been Friday for the FEHBlog all week as he has been vacationing on the Outer Banks. In a surprising development, Businessweek reports that the government recalculated the first quarter gross domestic product at a 2.9% decline. Two quarterly GDP declines in a row is a recession but the experts expect the 2nd quarter GDP to grow rather than decline again. According to this article,  

Starting from scratch a decade ago, enrollment in HSA-eligible health plans is estimated to range from 15.5 mil-lion to 20.4 million policyholders and their dependents, and it has also been estimated that there are 10.7 mil-lion accounts holding $19.3 billion in assets as of Dec. 31, 2013. Seventy percent of HSAs were opened since 2011.

The average HSA balance at the end of 2013 was $1,766, up from $1,280 at the beginning of the year. Average account balances increased with the age of the owner of the account. Account balances averaged $697 for owners under age 25 and $4,460 for owners ages 65 and older.

Reuters reports that “People who visit their primary care doctors shortly after high-risk surgeries are less likely to end up back in the hospital during the next month, according to a new study. Visiting a primary care doctor was particularly beneficial for the high-risk patients who experienced complications during their time in the hospital for surgery, though it made little difference for people without complications.” Interesting.

Finally, here’s an interesting survey report from Becker’s Hospital Review for customer service types —

[T]he majority (54 percent) of insured consumers are either sometimes or always confused by their medical bills.
The survey made several findings concerning price transparency. The survey found 63 percent of survey respondents want to know the full cost of care, including their insurance company’s portion, while 35 percent said they only cared about their direct medical costs. The survey also found 62 percent of survey respondents were either sometimes or always surprised by their out-of-pocket medical costs.
Although 80 percent of respondents said receiving pre-treatment cost estimates and pre-treatment insurance coverage estimates would be helpful in managing medical costs, only about 25 percent of the respondents had received pre-treatment cost estimates from providers.

It’s another lovely day on the Outer Banks of North Carolina. The Federal Times reports that today the House Appropriations Committee will consider the Financial Services and General Government spending bill that funds the FEHBP.  Govexec.com reports that signs point toward a 1% pay raise for federal employees next year. The FEHBlog took a look at the bill under consideration. He found that it includes the traditional FEHBP related provisions — a prohibition against full Cost Accounting Standards coverage, a contraception coverage mandate (except for faith based plans), and an abortion coverage restriction.

The Federal Times reports that OPM Director Katherine Archuleta recently issued a memorandum encouraging agencies to discuss available mental health resources with their employees. Those resources include employee assistance programs and of course FEHB plans. It would be nice if OPM arranged for better communication between the EAPs and the FEHB plans, in the FEHBlog’s opinion.

Modern Healthcare featured a fascinating report on hospital profit margins.

Modern Healthcare’s analysis found that the average operating margin in 2013 was 3.1%, down from 3.6% in 2012 based on data available for 179 health systems, which included acute-care, post-acute care, rehabilitation as well as specialty hospital groups and some stand-alone hospitals. A total of 61.3% of organizations in Modern Healthcare’s analysis saw their operating margins deteriorate over the previous year.

One tool that hospitals use to boost their profit margins is providing for their own doctors known as hospitalists to care for their acute care patients. Bloomberg reports that the Justice Department recently intervened in a False Claims Act lawsuit against a hospitalist company based on an upcoding charge.  But the FEHBlog has been thinking about hospitalists since his own (trusted) internist told him that hospitals frequently do not tell him about his patient’s admission in order to allow their hospitalists to care for his patients while confined to the hospital. These are often patients with chronic illnesses that my doctor regularly sees. That lack of coordination is appalling to the FEHBlog.

The FEHBlog is on vacation this week on the Outer Banks of North Carolina. But Congress is in session, and the Supreme Court has 11 more decisions to issue before it can go on its summer vacation. Decision days are today, Wednesday and Thursday this week according to the Scotusblog.

The FEHBlog was disappointed to conclude that the Hill has stopped publishing its next week in Congress report on the Floor Action blog. The FEHBlog did some online research and found this helpful The Week in Congress website as a replacement. There’s a lot of attention to appropriations right now.

The New York Times had an article Saturday on how big PBMs like CVS Caremark and Express Scripts are pressing prescription drug manufacturers to bargain over prices or “be banned” from their formularies.   As you can tell from the examples of banned and approved drugs, the PBMs can attempt to excercise this leverage when there is more than one prescription drug available to treat a particular condition. In the most recent call letter for benefit and rate proposals, OPM gave FEHB plan carriers the green light to use such managed formularies in their plans beginning in 2016.

The ACA regulators have been pushing health plans to include more information on their explanations of benefits, e.g., diagnoses. Here’s a link to a story about such disclosure backfiring on the plan.

Tomorrow is the official first day of summer so today kicks off our first real summer weekend.

So change is in the air. Fierce Health Payer reports from the ACO Summit that

As many as 50 percent of [healthcare] delivery systems say they will be in the insurance business in the coming years.  Despite these new entrants into the market, WellPoint Chief Medical Officer Samuel Nussbaum, M.D., said payers will continue to exist, but in a different form due to the transformation of the healthcare industry. They won’t go off the map completely as there’s still a gap in providers’ ability to manage population health, have the necessary data analytics and coordinate comprehensive care, he said.  So what could payers look like in the blurred future? Aetna pointed to its strategy of virtual integration. “You won’t see Aetna buying groups or hospital systems,” said Joseph Zubretsky, senior executive vice president of national businesses at Aetna. Instead, the insurer will partner with providers in collaborations.

ABC News reports on a new type of FDA authorized cancer research technique that is akin to speed dating. According to that report

A bold new way to test cancer drugs started Monday in hundreds of hospitals around the U.S. In a medical version of speed dating, doctors will sort through multiple experimental drugs and match patients to the one most likely to succeed based on each person’s unique tumor gene profile.
It’s a first-of-a-kind experiment that brings together five drug companies, the government, private foundations and advocacy groups. The idea came from the federal Food and Drug Administration, which has agreed to consider approving new medicines based on results from the study.
Its goal is to speed new treatments to market and give seriously ill patients more chances to find something that will help. Instead of being tested for individual genes and trying to qualify for separate clinical trials testing single drugs, patients can enroll in this umbrella study, get full gene testing and have access to many options at once.
The study, called Lung-MAP, is for advanced cases of a common, hard-to-treat form of lung cancer — squamous cell. Plans for similar studies for breast and colon cancer are in the works.

In a man bites dog story (at least from the FEHBlog’s perspective), Kaiser Health News is reporting that the Public Citizen consumer advocacy group is urging hospitals to stop promoting “low-cost screenings for heart disease and stroke risk, saying the
promotions are “unethical” and the exams are more likely to do harm than
good.” The article explains

The programs are advertised on websites, in newspapers or through direct mail. Screenings — often performed in specially equipped buses — include  ultrasound tests for blockages of the carotid artery and weak spots in the abdominal aorta, a resting electrocardiogram, or EKG, a test of elasticity of the arteries and another for blockages in arteries serving the legs, a condition called peripheral arterial disease.
What the promotions don’t say, generally, is that most of the tests are not recommended for people without risk factors or symptoms.  Widespread screening of people without the risk factors could lead to misleading results and potentially even unnecessary surgery. Other medical experts warn that the tests could needlessly raise health-care spending.

If health plans must align their benefits with US Preventive Health Task Force Services recommendations, why shouldn’t providers similarly align their service offerings?

Becker’s Hospital Review reports on a June 2014 Accountable Care Organization update by Leavitt Partners. According to that update, Leavitt Partners has tracked 626 ACO’s across the U.S.  329 have government contracts; 210 have commercial contracts, and 74 have both. The total number of ACO covered lives is now over 20 million.