Following up on Sunday’s post, the House did pass HR 4414, the expatriate plan clarification bill yesterday. Although it was a bipartisan measure, the Hill reports that White House is not thrilled with the bill. This may be another measure that’s taken up in the lame duck session following the November mid-term elections.

Business Insurance is reporting this afternoon that

Health spending during the first quarter [of 2014] was on pace to increase by $43.3 billion in 2014, according to the first best guess from the Bureau of Economic Analysis. That would mean a 9.9% rise in consumer spending for hospitals, nursing homes, physician visits and other healthcare services — much higher than the spike economists and federal actuaries projected would come as millions gained insurance through the Patient Protection and Affordable Care Act. 

The first-quarter health spending is an increase of 2.4% at a quarterly rate from the prior quarter and is up 5.4% from the same quarter a year ago. The gross domestic product figures do not include spending for healthcare goods, such as pharmaceuticals or medical equipment. Overall economic growth during the first quarter was down sharply at 0.1% for the quarter, which the BEA said was a result of exports and weak private investment in inventory. Healthcare contributed 1.1% to the growth in overall gross domestic product, the largest contribution of any service industry.

Wow. These preliminary results are subject to change as more data.

OPM is concerned about reducing hospital readmissions.  AHRQ just released a statistical brief on 2011 hospital readmissions. The report discloses that for privately insured patients aged 16 to 64,

Maintenance chemotherapy accounted for the largest share of readmissions (4.2 percent) among privately insured patients; however, it should be noted that these were most likely planned readmissions for cancer treatment. Mood disorders resulted in 19,600 readmissions (3.2 percent of privately insured readmissions).

Health care complications among the privately insured resulted in 49,700 readmissions and $844 million in costs. These conditions included complications of surgical procedures or medical care, complications of a device or graft, and septicemia.

The average readmission rate for these 10 high-volume conditions among the privately insured was 15.9 per 100 admissions. Readmission rates among these conditions ranged from 8.7 for coronary atherosclerosis to 64.4 for maintenance chemotherapy. 

In comparison the average readmission rate for 10 high volume conditions was 19.6 per 100 for the Medicare population and 20.0 for the Medicaid population.

Yeah! The Wizards won! And Congress returns to Washington this week. According to the Hill’s Floor Watch blog, attention will turn to FY 2015 appropriations bills:

The budget deal struck last December eased the process for appropriators since it established a top-line spending figure of $1.014 trillion for 2015. Both Republicans and Democrats are more optimistic that they can pass most if not all 12 appropriations bills for the first time in years.

The Hill also reports that on Tuesday, “The House will reconsider a [bipartisan] bill [H.R. 4414] that failed to pass before the recess under suspension of the rules, which requires a two-thirds majority. The measure, HR 4414, would exempt expatriates’ health plans from having to comply with ObamaCare regulations. It will be taken up this time under a rule requiring only a simple majority.”  There are thousands for federal employees working abroad and passage of this bill would make their lives simpler.

Ihealthbest reports that last Wednesday a CMS official told an AHIMA group that announcement of a new ICD-10 deadline is imminent but declined to give any more details like the proposed date which can be no sooner than October 1, 2015. Government Health IT provided background on the ICD-11 now under development.

The Washington Post had an article today about the actuarial problems facing plans in the ACA exchanges which will have to make 2015 benefit and rate proposals in late May or June. FEHB plan carriers face a similar problem as their 2015 benefit and rate proposals are due on May 31 but their Open Season ended last December and this past March.

Spending on hepatitis C already had been on the rise * * * due to the 2011 introduction of two drugs that added about $50,000 in costs per patient. The drugs, known as protease inhibitors and sold by Merck & Co. and Vertex Pharmaceuticals Inc. generally improved cure rates to a range of 66% to 79% for people with the most common type of hepatitis C, from 40% to 45% for older drugs.

Sovaldi [manufactured by Gilead – price $84,000 for a course of treatment], when added to two older drugs, can shorten treatment duration to as little as 12 weeks from 48 weeks for the older drugs, while improving cure rates to about 90% for the most common type of hepatitis C. Olysio [manufactured by Johnson & Johnson — $66,000 for a course of treatment], which is typically given for 12 weeks combined with at least 24 weeks of the two older drugs, has shown a cure rate of about 80% for the most common type of the disease.

Note that the cost per patient for a course is treatment is $134,000 for Sovaldi and $116,000 for Olysio because the new drugs must be taken in combination wth the somewhat older drugs.  Paradoxically, the Federal Bureau of Prisons gets a 44% discount on these drugs from a VA program which is not available to state prison bureaus. The FEHBlog’s dad jokingly told him that the proper pricing policy is to stick the knife in the customer’s back and twist it two times and then turn it back a half turn to reach a fair price. These drug companies take this joke literally.

The Drug Channels blog writes about the Drug Store News rundown of the top fifty chain pharmacies in the U.S. Drug Channels also notes some differences between DNS’s list and their list, e.g., DNS does not include the country’s thrid largest dispensing pharmacy which is Express Script’s mail order pharmacy. Of course the number 1 pharmacy chain on DNS’s list CVS owns the other major prescription benefit manager.

Kaiser Health News writes about the manner in which doctors are becoming more aggressive in collecting bills from their patients. It’s always interesting to look at the other side of the coin. The FEHBlog does miss the AMA News.

Finally, CIGNA this week released its eighth annual experience study on its consumer driven plans. CIGNA is finding that these plans do bend the cost curve down.

Let’s start with a piece of good news. The FEHBlog nearly fell off his chair yesterday when he read that Congress as part of the doc fix law enacted last month repealed a flawed part of the Affordable Care Act. SHRM explains that “Section 213 of the law now eliminates deductible limits imposed under the ACA (found in Section 1302) for the small-group market employer health plans. The new law, which took effect immediately, will allow more flexibility for plan designs.”

The Internal Revenue Service announced the health savings account contribution limits and high deductible health plan floor amounts for deductibles and ceilings for in-network out of pocket maximums.The IRS informally has said that high deductible plans must use the lower of the IRS out of pocket maximum and the HHS out of pocket maximum under the ACA for 2015 and future years. The IRS response to a question actually posed by the FEHBlog may be found on page 2 of the linked American Bar Association document.

Bloomberg reports that Gilead beats its first quarter sales projection for its recently approved “Hep C” drug Sovaldi by $1 billion.  Total quarterly sales hit $2.27 billion which is not that surprising considering there are 3 million Americans with this disease and Gilead charges $1,000 per pill for Sovaldi which adds up to $84,000 per course of treatment according to this SFGate report. Hepatitis C is considered a silent epidemic because the disease can be asymptomatic for several years. The U.S. Preventive Services Task Force last year identified as a Class B recommendation “screening for hepatitis C virus (HCV) infection in persons at high risk for infection and “offering one-time screening for HCV infection to adults born between 1945 and 1965.” This means that Hepatitis C testing will become cost sharing free (in-network) for this large cadre of FEHBP members next year. Sovaldi could be an actuarial time bomb for FEHB plans. Bloomberg adds that

Express Scripts Holding Co. (ESRX), the largest benefit manager, has said it may try to start a price war once competing medicines from AbbVie Inc. and Merck & Co. reach the market. CVS Caremark Corp., the second-biggest pharmacy manager, has said it might try to slow down the use of the drug.

Competition sounds like the preferable route.

The HHS Office for Civil Rights announced yesterday (hat tip to my colleague Theresa Defino)

OCR opened a compliance review of Concentra Health Services (Concentra) upon receiving a breach report that an unencrypted laptop was stolen from one of its facilities, the Springfield Missouri Physical Therapy Center.  OCR’s investigation revealed that Concentra had previously recognized in multiple risk analyses that a lack of encryption on its laptops, desktop computers, medical equipment, tablets and other devices containing electronic protected health information (ePHI) was a critical risk.  While steps were taken to begin encryption, Concentra’s efforts were incomplete and inconsistent over time leaving patient PHI vulnerable throughout the organization. OCR’s investigation further found Concentra had insufficient security management processes in place to safeguard patient information. Concentra has agreed to pay OCR $1,725,220 to settle potential violations and will adopt a corrective action plan to evidence their remediation of these findings.  

OCR received a breach notice in February 2012 from QCA Health Plan, Inc. of Arkansas reporting that an unencrypted laptop computer containing the ePHI of 148 individuals was stolen from a workforce member’s car.  While QCA encrypted their devices following discovery of the breach, OCR’s investigation revealed that QCA failed to comply with multiple requirements of the HIPAA Privacy and Security Rules, beginning from the compliance date of the Security Rule in April 2005 and ending in June 2012.  QCA agreed to a $250,000 monetary settlement and is required to provide HHS with an updated risk analysis and corresponding risk management plan that includes specific security measures to reduce the risks to and vulnerabilities of its ePHI.  QCA is also required to retrain its workforce and document its ongoing compliance efforts.

Encrypt your laptops and mobile devices without delay!

Speaking of HHS’s Office for Civil Rights, the ACA includes a health care and health insurance non-discrimination provision (Section 1557) that falls under its purview. HHS is planning on proposing an implementing rule this summer. Last year HHS ask the public to submit comments to assist the agency with this rule-making. HHS received 169 comments. Here are links to the AHIP and BCBSA comments which suggest to this reader that the Section 1557 rulemaking may impact the FEHBP.

Congress is out of session this week. Saturday April 26 is National Prescription Drug Take Back Day. Here’s a link where you can find a location near you to safely dispose of unused prescription and OTC drug.

The FEHBlog has noted that the two largest prescription benefit managers CVS Caremark and Express Scripts recently issued their annual utilization reports. Consultant IMS Health issued its own study with the top line finding — “Total spending on U.S. medicines increased 1.0 percent on a real per capita basis in 2013, while the use of healthcare services overall rose for the first time in three years [as the impact of the Great Rescession receded].  The New York Times had a story about all three studies last week which notes that

the IMS report also found that more patients were opting to visit the doctor, go to the hospital and fill prescriptions for drugs in 2013. Visits to specialists increased by 4.9 percent, the report said, and patients filled an average of 12 prescriptions a year, an increase of 2 percent over the previous year.

It also worth noting that Express Scripts announced Friday afternoon that it has been awarded a monster seven year long contract to provide all sorts of prescription drug services to TRICARE.

Finally, last week, CMS’s Hospital Compare website added psychiatric care quality data according to iHealthbeat. CMS press release explains that

Beginning April 17, 2014, Hospital Compare will feature data from 1,753 inpatient psychiatric facilities on patient care for the period of October 1, 2012 through March 31, 2013.  Public reporting will allow consumers to directly compare facilities based on data collected for the following measures:

• Hours of Physical Restraint Use
• Hours of Seclusion Use
• Post-Discharge Continuing Care Plan Created
• Post-Discharge Continuing Care Plan Transmitted to Next Level of Care Provider Upon Discharge

Hospital Compare is based on data from all hospital, not just Medicare, admissions.

The Congressional Budget Office scored the President’s FY 2015 budget proposal yesterday. The scoring for the President’s / OPM’s legislative proposals for the FEHBP are found on page 3 of this CBO link.

Earlier this week the Wall Street Journal reported that some doctors and patients are feuding over what constitutes “free” preventive care for Affordable Care Act purposes. The FEHBlog certainly sides with the doctors because of course there really is no such thing as a free lunch. In any event, the FEHBlog got a kick out of this paragraph from the article:

Insurers also are trying to educate plan members. UnitedHealth Group Inc. website features a jovial professor playing a game of “Preventive or Not Preventive?” to help explain the distinctions. (A routine mammogram? Preventive. A follow-up six months later to check on a suspicious finding? Not preventive.)

Ihealthbeat reports that the recently formed (?) Coalition for ICD-10 is urging the HHS Secretary to set a new ICD-10 compliance date of October 1, 2015. The FEHBlog thinks that a calendar year switch January 1, 2016, would make more sense. But he certainly appreciates the reasons for the Coalition’s evident frustration.

Business Insurance reports that the Mercer consulting firm has projected the 2015 dollar amounts applicable to high deductible health plans and health savings accounts as follows:

Under an employer-sponsored HDHP, minimum annual deductibles will be set at $1,300 for single-coverage plans and $2,600 for family plans, while employee out-of-pocket costs will be capped at $6,450 for single-coverage plans and $12,900 for family coverage, according to Mercer’s report. Additionally, Mercer’s report projects tax-deductible contributions to employees’ HSAs will be limited to $3,350 for employee-only plans and $6,650 for family plans.

The Internal Revenue Service will set the actual 2015 dollar amounts next month. The IRS informally has said that high deductible plans must use the lower of the IRS out of pocket maximum and the HHS out of pocket maximum under the ACA for 2015 and future years. The IRS response to a question actually posed by the FEHBlog (who is an ABA member) may be found on page 2 of the linked document.

Finally, and appropriately for Easter / Passover weekend, Joe Davidson from the Washington Post has a feel good story about FEHB coverage in today’s paper. Have a pleasant weekend.

•     Drug trend for traditional drugs increased by 2.4%, a big turnaround from last year’s -1.5% decline. 
•     Drug trend for specialty drugs increased by 14.1%, its lowest rate since 2007.
•     Specialty drugs accounted for 27.7% of total spending, up from 24.4% in 2012.
•     Specialty spending remains highly concentrated within four therapy classes.

In a brief interview, FDA Commissioner Margaret Hamburg seemed to agree, saying that although addiction is a “huge concern” with opiate drugs, “it’s concerning when either a state, or Congress, steps in to make decisions about what drugs should be approved or what drugs should be withdrawn from the marketplace.” 

The FEHBlog was puzzled by the Commissioner’s statement that Congress which created the FDA could not interfere with the FDA but that’s beside the point. The FEHBlog is sympathetic with the Commonwealth’s position as reported by the Post:

Massachusetts Public Health Commissioner Cheryl Bartlett said that officials didn’t take the Zohydro ban lightly. Rather, she said, the decision came out of months of discussions about ways to combat the growing number of deaths linked to heroin and prescription drug overdoses — and out of a sense that the state should take whatever measures it could to prevent more harm.  “The idea that a new drug would come on the market that would add to the problems just didn’t seem to make sense,” Bart­lett said. “We’re not denying people pain medication. There are plenty of alternatives. We’re addressing another public health crisis.”

In any event, the federal court yesterday enjoined the Commonwealth from banning the FDA approved drug according to this Post report. That outcome does not surprise the FEHBlog in the least.

The FEHBlog has been following another court case now pending before the U.S. Court of Appeals for the D.C. Circuit.  The D.C. Circuit is reviewing a district court decision upholding the position of the Labor Department’s Office of Federal Contractor Compliance Programs that hospitals under network contracts with FEHBP HMO plans are federal government subcontractors that must comply with affirmative action program requirements that OFFCP enforces.  OPM’s long standing regulations are contrary to that outcome. The American Hospital Association is concerned that OFCCP’s aggressive efforts will disrupt FEHBP and TRICARE provider networks and related patient care.  The FEHBlog on March 14, 2014, noted that Rep. Tim Walberg (R Mich) has introduced a bill (HR 3633) to strip OFCCP of jurisdiction over FEHBP and TRICARE providers. At a hearing on his bill, Rep. Walberg explained that the Labor Department has implemented a 5 year long enforcement moratorium with respect to TRICARE but not FEHBP providers. In a letter to the DC Circuit. filed on April 10, 2014, OFCCP explained that    

The moratorium does not apply to healthcare providers that hold only FEHBP subcontracts. However, because plaintiffs hold both FEHBP subcontracts and TRICARE subcontracts, the practical effect of the moratorium is that OFCCP will not conduct compliance reviews of the plaintiffs for five years. However, the moratorium does not affect OFCCP’s jurisdiction over healthcare subcontractors, which the plaintiffs challenge in this appeal. Moreover, the moratorium specifically states that it does not affect “TRICARE subcontractors’ obligation to refrain from discrimination,” and that OFCCP will continue to investigate and redress “complaints of discrimination” that individual employees lodge with the agency.

How equitable.

The FEHBlog was an early endorser of the Choosing Wisely Campaign in which medical societies provide the public with “evidence-based recommendations that should be discussed to help make wise decisions about the most appropriate care based on a patients’ individual situation.”  OPM encourages FEHB plans to utilize the fruits of this campaign. Kaiser Health News, however, reports that the some of medical societies participating in this campaign may be motivated by self interest. Ruh roh.

Finally, Government Health IT reports that the U.S. may be on the verge of a new consumer driven health economy.

In Healthcare’s New Entrants: Who will be the industry’s Amazon.com?, PwC suggests that “market disruptors” — new industries, new technologies — will soon make a big mark on the $2.8 trillion healthcare sector. These new players are the leading edge of a what PwC calls a “new health economy” — one that “over the next decade will see today’s siloed healthcare industry become a wide open health marketplace,” said Kelly Barnes, PwC’s U.S. health industries leader, in a press statement. “To meet looming revenue threats, traditional healthcare companies will have to partner, innovate or can face fading away,” she added. “Meanwhile, the nimble and innovative new entrants can benefit from partnerships with existing healthcare organizations, which understand the complex regulatory and reimbursement landscape.”

Congress is on Spring break for the next two weeks.

In his last post, the FEHBlog noted that CVS Caremark had issued its annual report on prescription drug utilization. It turns out that the other mega PBM Express Scripts issued its annual utilization report last week too. Here’s a link to it.

Finally here’s a link to a troubling article from the Wall Street Journal. Several years ago doctors started to use a tool called a morcellator to pulverize the uterus. This approach required much less recovery time than a traditional hysterectomy. However, if there were cancerous rumors attached to the uterus and the surgeon did not remove all of the pieces of the broken up  tumors, the tumor fragments remaining in the woman’s body seriously endangered her health. Surgeons took a while to pick up on this rare problem. They now are addressing the problem and disclosing it to patients. The FEHBlog does not know what to make of this article. Even surgeons are humans who make mistakes, but The article is a head shaker.

Federal News Radio and others are reporting that HHS Secretary Kathleen Sebelius is resigning from her position tomorrow and President Obama plans to appoint OMB Director Sylvia Mathews Burwell to fill the vacancy. According to that article, 

The FEHBlog is pleased that his college UConn’s men’s and women’s basketball teams won their NCAA national championships earlier this week, repeating a feat first accomplished in 2014. Teams of destiny fulfilled.

The FEHBlog was not so pleased to read a Medpage article stating that OPM has mandated coverage of obesity medications. The article was based on an OPM carrier letter which encourages but nowhere mandates, FEHBP carriers to cover obesity drugs under appropriate limits.  The letter reads in relevant part

It has come to our attention that many FEHB carriers exclude coverage of weight loss medications. Accordingly, we want to clarify that excluding weight loss drugs from FEHB coverage on the basis that obesity is a “lifestyle” condition and not a medical one or that obesity treatment is “cosmetic”- is not permissible. In addition, there is no prohibition for carriers to extend coverage to this class of prescription drugs, provided that appropriate safeguards are implemented concurrently to ensure safe and effective use.