The FEHBlog had a great trip to Denver and he is happy to be back in DC with access to a PC.

Congress returns to DC this week. The top item on its agenda (besides getting out of town to campaign) is a short term continuing resolution to fund the federal government past September 30 when Fiscal Year 2015 begins. Happily, the Hill’s Floor Action blog has resumed its practice of providing a schedule of the coming week’s activities in the legislative chambers.

Govexec reports that the federal workforce has grown steadily since last April following a series of steady sequestration drops. According to the article the federal government ended August with about 2.72 million employees.

The Federal Times reports that OPM has decided to allow federal employees participating in the health care flexible spending account programs to carry over up to $500 of any unused balance beginning next year, rather than lose it. “The ability to carry money from one year to the next will replace the current system, in which employees have a grace period of up to two and a half months to use any remaining money” OPM also is reducing the minimum contribution from $500 to $100.

CMS’s actiary released a national heathcare spending report last week. Cost curve up.

The CDC released a state by state map of obesity prevalence based on on 2013 data. A federal health care task force of which the FEHBlog has been unaware the Community Preventive Services Task Force issued recommendations for pre-diabetic folks — increase physical activity and better dietary habits — A/K/A common sense. .

CAQH CORE announced that its helpful coordination of benefits database program has been rolled out nationwide. “A CAQH SolutionTM, COB Smart determines when an individual is covered by more than one insurer and also indicates which insurer should pay first. The solution streamlines coordination of benefits (COB) activities so that healthcare claims can be processed correctly the first time.” Very cool.

40 years ago today, President Gerald R. Ford signed the Employee Retirement Security Income Act of 1974 into law. ERISA’s principal focus was on pension plan regulation, but the law’s scope also encompassed private sector health and other so-called employee welfare benefit plans. Business Insurance provides a nice retrospective on ERISA, which was enacted 15 years after our beloved Federal Employee Health Benefits Act of 1959.  Both laws have become much more complicated since then which always is good news for lawyers.

Labor Day means that we are close to the end of the August Congressional recess (on September 8) and OPM’s release of 2015 FEHBP premium information (sometime later this month). The Wall Street Journal reports that “Almost a year since the last partial government shutdown began, many House Republicans say they have little desire to start another.” Because Congress is only expected to be holding sessions for around 20 days before adjourning for the election season, we can expect Congress to pass a continuing resolution to take us into the new federal federal fiscal year that starts on October 1. The continuing resolution will likely last at least three months.

Last Friday, according to Govexec.com, the President issued an alternative pay plan which will result in a 1% across the board pay raise for federal employees beginning January 1. 2015.

Last week, the FEHBlog noted that Community Health Systems, a hospital chain, had lost 4.5 million patient records to computer hackers. Healthcare Dive reports that according to a Forbes report, the theft could cost the hospital chain $75 to $100 million due to litigation (which already have been filed), government investigations, etc. The National Law Review notes that

Hospitals should be accustomed to protecting data against privacy breaches as part of their HIPAA obligations, but outright cybertheft is a threat that many providers have not likely considered. The FBI, which is now investigating the Community incident, said in April that health care providers typically do not use the same high levels of security technology as companies in other industries (such as banking or retail). This makes providers an easy target for hackers. If a leading hospital system like Community can be breached, then hospitals of every size are at risk.

Health plans should be on guard too. In this day and age, it also is essential for HIPAA covered entities and business associates to carry cyber-liability insurance.

The FEHBlog also noted last week that the IRS has issued draft forms and instructions that health plans and large employers will use to comply with the Affordable Care Act’s onerous IRC §§ 6055 and 6056 reporting requirements that kick in for the 2015 reporting year. LifeHealth Pro notes that the forms are filled with ACA gobbledygook which is hardly surprising. It will be incumbent on health plans and large employers to educate recipients about these forms. Otherwise they will be flooded with customer service calls in early 2016 (which could happen despite best efforts).

Finally the New York Times reported yesterday that according to clinical trial results Novartis is on track to release a prescription drug that will vastly improve treat of chronic heart failure.

The drug [LCZ696] reduced both the risk of dying from cardiovascular causes and the risk of being hospitalized for worsening heart failure by about 20 percent in a large clinical trial.

Of course, there’s no such thing as a free lunch. Five to six million people in the U.S. suffer from this serious disease.

Some Wall Street analysts predict the drug, a tablet taken twice a day, will achieve billions of dollars in annual sales. Seamus Fernandez, an analyst at Leerink Partners, said on Saturday that the results were “near best case” and “could result in faster uptake, higher penetration and more robust branded pricing.”
As a proprietary drug, LCZ696 is likely to be expensive. Tim Anderson, an analyst at Sanford C. Bernstein & Company, estimates that it might cost $7 a day in the United States, or about $2,500 a year. Existing drugs are generic, costing as little as $4 a month, so insurers might balk at paying for the new drug.

The FEHBlog is happy about such research results. The manufacturers should recognize that they could not charge astronomical prices without the price supports provided by health insurance. Moderation is a good thing. It appears that Novartis may understand this concept while Gilead Sciences does not in the FEHBlog’s view.

A reader of Wednesday’s FEHBlog inquired how Modern Healthcare picks the most influential people in healthcare. The answer is right here.

Govexec and FedSmith take note of the fact that yesterday was the deadline for public comment on OPM’s proposed rule extending FEHBP coverage with the full government contribution to temporary, seasonal, and intermittent employees who work on average at least 130 hours per month for at least 90 days. According to regulations.gov, OPM received 85 public comments. OPM proposed this rule in compliance with the ACA’s employer shared responsibility mandate. It is expected to be finalized effective January 1, 2015.

The U.S. Preventive Services Task Force is at it again.  According to Government Health IT, the Task Force has given a “B” recommendation to “coverage of behavioral counseling interventions for overweight and obese individuals with at least one other cardiovascular disease risk factor.” This recommendation will require FEHB plans to offer this coverage in-netowrk with no enrollee cost sharing beginning January 1, 2016.  The article discusses certain insurer pilot projects that currently are underway.

Finally, yesterday, the IRS released draft instructions for the forms (1095-B and 1095-C) that health plans (1095-B) and large employers (1095-C) will use to make ACA required reports beginning in January 2016 in accordance with Internal Revenue Code sections 6055 and 6056. The IRS is accepting public comments on those documents for the next sixty days or so.  

Modern Healthcare released its list of  top 100 most influential people in healthcare, and the FEHBlog’s not on it.  The top ten (in order) are President Obama, the Kaiser Permanente CEO, HHS Secretary Burwell, the United Healthcare CEO, CMS Administrator Tavenner, HCA’s CEO (hospitals), PhRMA’s CEO (top lobbyist!), Aetna’s CEO, Ascension Healthcare’s CEO (Catholic health system), and DaVita Healthcare’s CEO (dialysis centers).  The FEHBlog is surprised that the Labor Secretary, the Treasury Secretary, the OMB Director, and the OPM Director are not on the list.  The VA Secretary is 47.  Fun reading.

The FEHBlog noticed two articles advocating healthcare price transparency — one from the provider perspective and one from the payer perspective. It is encouraging that doctors are being asked to take cost effectiveness into account.

On the flip / discouraging side is this article from NorthJersey.com with a chilling discussion of how investors have been converting struggling non-profit hospitals to for-profit hospitals in order to take advantage of a loophole in New Jersey law that allows emergency rooms to gouge insurers.

Bayonne Medical Center wasn’t just bragging about efficiency when it posted a big digital clock on a highway billboard a few years ago to show the real-time waits in its emergency room. It wanted patients to come to its ER. Lots of patients.
It didn’t matter if the hospital was in the patient’s insurance network. On the contrary, to the businessmen who had recently purchased the medical center, those “out-of-network” patients held the key to reversing Bayonne’s fortunes.
These owners, who bought the hospital in bankruptcy, had found an unintended — and very profitable — consequence to a state regulation that was designed to protect patients with urgent medical needs. While the regulation required insurance companies to pay for emergency treatment at hospitals where their coverage wasn’t normally accepted, it did nothing to control the size of the bills the hospitals could submit to those insurers.
And that loophole enabled Bayonne, which had ended its contracts with some of the state’s largest insurers, to charge those higher out-of-network rates. The result was striking: The strategy contributed to a $17 million operational profit within two years of its 2008 takeover.

Fortunately for FEHB plans, the FEHB Act preempts such state laws and regulators, but cost curve up. In this regard, the Wall Street Journal reports on 2013 and 2014 hospital earnings here.

Kaiser Health News reports on an interesting case management service called Vital Decisions that some insurers offer seriously ill members. The program seeks to get these members more actively involved in managing their own health care.

Finally the Drug Channels blog discusses seven trends for specialty pharmacy’s bright future.

–

Congress remains out until after Labor Day. The FEHBlog has enjoyed a very pleasant weekend with his family in Chicago.

Fedsmith has a blog entry on the upcoming Federal Benefits Open Season. Fedsmith suggests that FEHBP premium increases for 2015 will be in line with 2013 (3.4%) and this year (3.7%) because federal employees are not directly impacted by the Affordable Care Act. Au contraire, the FEHBlog is afraid. FEHB plans do have a relatively stable but aging risk pool in contrast to the new ACA plans on the exchanges. Nevertheless, the FEHBP are subject to all of the same ACA mandates as private sector health plans and the insured FEHBP plans must struggle with the ACA’s onerous health insurer fee just like the plans on exchanges. It’s a mixed bag, but on the whole, cost curve up.

The FEHBlog has been writing about rapid increases in prescription drug costs, even generics. The FEHBlog nevertheless was surprised to read in the Wall Street Journal that Walgreen’s chief financial officer has lost his job because “Walgreen hadn’t factored in, among other things, a spike in the price of some generic drugs that it sells as part of annual [Medicare Part D] contracts” and lost $1 billion in revenue forecasted for 2016. In view of the cloudy crystal ball, perhaps the FEHBlog’s hunch that Gilead Sciences’ Solvaldi pricing decision embolden the generic drug manufacturers to jack up their prices is correct. Bad precedent.

Reuters reports that the FBI has issued a warning to healthcare companies the hackers are targeting them for their protected health information.  The FBI did so in the wake of a successful attack on Community Health Systems’ network that resulted in the disclosure of millions of patient records. CHS is a Fortune 500 company that operates acute care hospitals. CHS’s breach notice states the company’s belief that

the attacker was an “Advanced Persistent Threat” group originating from China, which used highly sophisticated malware technology to attack CHSPSC’s systems.  The intruder was able to bypass the company’s security measures and successfully copy and transfer some data existing on CHSPSC’s systems. 

The FEHBlog hopes that HHS Office for Civil Rights does not hammer CHS with a multi million dollar HIPAA civil penalty as the company is cooperating with the government and even the federal government’s own systems have been hacked by these Chinese groups. Ihealthbeat discusses legislator reactions to the CHS breach.

Finally, it’s worth noting that the Bipartisan Policy Institute last week issued an interesting white paper on transitioning healthcare from volume to quality. Good luck with that.

The FEHBlog regrets the one day delay in the mid-week update but he was on medical leave yesterday.

The 2015 government contribution for FEHBP coverage will be announced next month. Yesterday the actuarial consulting firm Towers Watson reported that U.S employers expect heath care costs to rise 4% in 2015. Bear in mind that most large employer coverage in the U.S. is self funded by the employer and therefore not subject to the ACA’s onerous health insurer fee. That fee does apply to FEHBP plans that are carried by insurance companies or HMOs and will jack the premium up a couple of extra points. Cost curve up.

In a bit of good news AIS reports that  

Although the FDA has yet to approve a product through the 351(k) biosimilar pathway, multiple follow-on drugs are working their way through the pipeline, noted Kate Keeping, senior director of biosimilars research for BioTrends Research Group at a June 30 webinar sponsored by the company.
“The United States is the only developed market to have no biosimilars, but development is ramping up,” Keeping said. As of June, 23 biosimilar products were in U.S. clinical trials, and as of April, 42 biosimilars were in development-phase meetings. According to Keeping, “Several Phase III biosimilar trials started this quarter,” including two for Herceptin (trastuzumab) biosimilars for early breast cancer, two for Humira (adalimumab) biosimilars for rheumatoid arthritis and one for Enbrel (etanercept) for RA and psoriasis.

Congress is out of town until after Labor Day. The Hill reports that when Congress returns in September it may enact legislation to create tax free savings accounts for people with disabilities. Funding these accounts would permit disabled people to save up to $14,000 annually without threatening their eligibility for Social Security disability or Medicaid.

The Affordable Care Act treats the health insurance industry as the whipping boy of the American economy. Consequently, it’s not surprising to read this AP article querying whether or not insurers have found new ways to avoid the sick. Here’s the rub

Ending insurance discrimination against the sick was a central goal of the nation’s healthcare overhaul, but leading patient groups say that promise is being undermined by new barriers from insurers. The insurance industry responds that critics are confusing legitimate cost-control with bias.

This fall the ACA regulators are expected to issue a patient non-discrimination rule implementing ACA § 1557 that undoubtedly will side with the patient groups and put more regulatory pressure on insurers when the real problem is the ever rising cost curve.

Speaking of the cost curve, the Washington Post has one of its “iconic” two full page Sunday news articles about a motorized wheelchair and scooter scam that has been hammering Medicare for decades. The thing that puzzles the FEHBlog is why Medicare beneficiaries who don’t need a wheelchair agree to participate in this scam. Here’s the uplifting conclusion to the article

Today, even while the wheelchair scam is in decline, that same “pay and chase” system is allowing other variants of the Medicare equipment scam to thrive.
They aren’t perfect. But they work.  In Brooklyn, for instance, the next big thing is shoe inserts. Scammers bill Medicare for a $500 custom-made orthotic, according to investigators. They give the patient a $30 Dr. Scholl’s.
In Puerto Rico, the next big thing seems to be arms and legs. In one case there, two dozen companies billed Medicare for $5.3 million in prosthetic legs inside of a year. In many cases, their “patients” had no record of amputations in their medical history. Many of them didn’t even live in Puerto Rico. But Medicare paid for the legs.

If you build it, they will come.  

Well, another week is coming to a close. The weather has been beautiful in DC. Our baseball team is in first place. Things are looking up for our football team.

Mike Causey in Federal News Radio is not upbeat about the Federal Benefits Open Season in today’s column. He laments that

Members of Congress and many
congressional staffers were moved out of the Federal
Employee Health Benefits
Program this year. So, if somebody suggests federal (and postal) workers pay a
bigger share of future premiums, Congress — now that it no longer benefits
— is more likely to say it’s a great idea. Or to propose a voucher system
to pay premiums. 

It’s not that gloomy because Members of Congress and their official staffers can return to the FEHBP upon retirement.

A fun read is the article with 50 things to know about 5 leading payers in Becker’s Hospital Review. The first item is “Hartford, Conn.-based Aetna was founded in 1853, and Eliphalet A. Bulkeley was the company’s first president.” Now that’s a first name that you don’t find used much anymore.

The Wall Street Journal’s Pharmalot blog discusses an analysis by the Drug Channels blogger concluding that half of all generic drug sold be retailers over the past year have risen in price.

Not all of the reasons for such increases are immediately clear but, in general, [Adam] Fein [the blogger] cites shortages as a prime culprit. And shortages typically occur for different reasons – manufacturers sometimes exit at a market if profit margins are insufficient, manufacturing glitches can cause supply disruptions and FDA crackdowns on plants with production lapses have also been blamed for slowdowns

The article also explains that the median change in generic drug prices was zero because the price of the other half of generic drugs declined.  Prescription drug pricing is simply unpredictable.

Kaiser Health News has a similarly themed report about the wide range of hospital rack rates for common blood tests. “One California hospital charged $10 for a blood cholesterol test, while another hospital that ran the same test charged $10,169.”  Stunning. As Kramer said retail is for suckers, but the rack rates can be the base for negotiating the network price.

OPM announced yesterday that this year’s Federal Benefits Open Season will run from Monday, November 10, 2014 through Monday, December 8, 2014.

Speaking of Open Season, the Employee Benefits Research Institute reports that while folks enrolled in traditional PPO plans are more satisfied with their coverage compared with folks enrolled consumer driven plans, the satisfaction gap is narrowing.

“As in previous years of the survey, in 2013 individuals in a CDHP or an HDHP were found to be less likely than those in a traditional plan both to recommend their health plan to friends or co-workers, and to stay with their current health plan if they had the opportunity to switch plans,” said Paul Fronstin, director of EBRI’s Health Research and Education Program. “However, the percentage of HDHP and CDHP enrollees reporting that they would be extremely or very likely to recommend their plan to friends or coworkers has been trending upward, while it has been flat among individuals with traditional coverage.”

The FEHBlog has been following the growth of medical clinics in pharmacies and retail stores. The Orange County Register reports that utilization of such urgent care centers is booming nationwide.

In a health care system beset by a shortage of primary care physicians, urgent care clinics are rapidly gaining a reputation as the place to go for quick and easy doctor visits. And even for people who have primary care doctors, the clinics offer evening and weekend services that are often more convenient than the typical doctor’s office hours.
Urgent care centers often appeal to people because of their informal, neighborhood feel.
“It’s a more friendly environment than the ER. It’s less intimidating. It’s not like going to the hospital,” says Dr. David Kim, medical director at MemorialCare’s Los Altos clinic.
The number of urgent care centers nationwide has grown 25 percent in the past four years to about 10,000, says Franz Ritucci, president of the American Academy of Urgent Care Medicine in Orlando, Fla. 

As further evidence of the boom, Forbes reports that Walmart is dipping its toes in this market. It recently opened six clinics, and it’s offering coverage to its employee health plan participants for a $4 co-payment.

The FEHBlog has been tracking the government’s investment in electronic medical records at hospitals and doctors offices. Health Data Management reports, sadly, that

Despite more than $24 billion in incentive payments to hospitals and eligible professionals who “meaningfully use” electronic health records and another $2 billion spent on interoperability standards and EHR certification, there is very little electronic information sharing among providers.  That is the conclusion of a new health policy brief from the journal Health Affairs and the Robert Wood Johnson Foundation authored by Janet Marchibroda, director of the Health Innovation Initiative at the Bipartisan Policy Center.