On Wednesday, the Senate passed its postal reform bill (S. 1789).  Section 104 of the bill would allow the Postal Service an opportunity to negotiate a separate Postal Service health plan with its Unions. The debate now moves onto the House of Representatives.

Yesterday, the House Oversight and Government Reform Committee held a business meeting to find budget cuts as an alternative to the Defense Department sequestrations otherwise required by last August’s budget control act.  According to the Washington Post’s Federal Eye

Democrats raised but ultimately withdrew amendments seeking to centralize prescription drug purchasing in the Federal Employees Health Benefits Program and seeking to delete tax breaks for high-income individuals under the House budget plan.

As many experts have pointed out, this effort to move prescription drug contracting from the carriers to OPM is ill advised.

Yesterday, as Bloomberg reports, the federal judge hearing the trade associations’ anti-trust challenge to the no-completed  Medco — Express Script merger denied the associations’ motion for a preliminary injunction tha would somehow unscramble the egg. The judge’s decision was no surprise to the FEHBlog.

Finally, yesterday the IRS released the following Affordable Care Act related Notices


Minimum Value

Information Reporting on Health Insurance Coverage

Yesterday the Centers for Medicare and Medicaid Services announced that it is proposing to increase Medicare Part A payments to acute care hospitals by 0.9% for the 2013 federal government fiscal year which begins on October 1, 2012. Modern Healthcare reports on provider reaction to the proposed rule.

CMS’s Office of Oversight also recently released new technical guidance on the medical loss ratio regulation which took effect last year under the Affordable Care Act.

Health Data Management reports that “More than 1.1 million beneficiaries are served by Medicare accountable care organizations being ramped up under authority of the Affordable Care Act, the Centers for Medicare and Medicaid Services has announced.” The AMA News is delirious with joy over the fact that physicians tend to control the ACOs, rather than nasty insurance companies. AHIP has posted an article about why ACOs will not replace health insurers.

Congress remains in session this coming week.

On the health care quality front, Thomson Reuters announced its top 100 U.S. hospitals — the chart breaks down hospitals into teaching hospitals and community hospitals by size. Also, the Centers for Medicare and Medicaid Services announced that results from a “national survey that asks patients about their experiences with
Medicare-certified home health agencies are now available on the
agency’s Quality Care Finder (www.medicare.gov/quality-care-finder) website.”

On the health care fraud front, the Justice Department announced on Friday a settlement of a False Claims Act case against the Walgreen’s pharmacy chain.  Walgreen’s was offering a $25 gift card to customers who transferred a prescription from another pharmacy. The program expressly excluded customers with coverage under Medicare, Medicaid, and other government programs. The government alleged that Walgreen’s did not enforce this exclusion thereby permitting violations of the Medicare-Medicaid anti-kickback act. Walgreen’s agreed to pay the government $7.9 million to settle the case without conceding liability.

“The law prohibits pharmacies from using their retail clout to lure
patients whose prescriptions are subsidized by the government,” said
Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. 
“Continuity with a pharmacist is important to detect problems with
dosages and drug interactions.  Patients should make decisions based on
legitimate health care needs, not on inducements like gift cards.”  

The FEHBlog levitated in his breakfast nook this morning when he read in the Washington Post that the local prescription benefit manager Catalyst Rx had been purchased by a competitor PBM SXC Health Solutions for $4.4 billion. According to the SXC press release, “Upon completion of the transaction [expected in the current quarter following regulatory approval], the combined  company will be an organization with $13 billion in revenue, which will be headquartered in Lisle, Illinois and will maintain a presence in Rockville, Maryland.” Clearly the parties assume that the Federal Trade Commission’s green light to the Medco merger into Express Scripts portends regulatory approval for this deal. These developments must be creating Defcon 4 for the drug store trade associations and others that oppose PBM mergers.

Standard and Poors released the February 2012 healthcare costs indices today. Healthcare costs covered by commercial health plans increased by 7.73% over the 12 month period ending that month as compared to a 7.03% increase reported for the 12 month period ending in January 2012. Hospital costs rose a much higher rate than physician office costs. Medicare claim costs increased by 2.73% up from 2.39% reported for January 2012.

“We observed further acceleration in healthcare costs annual growth rates in February,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “In keeping with the trends seen since the second half of 2011, February data signaled a general upward trend in healthcare costs, as measured by annual rates of change. Last month’s data, which was through January 2012, had shown a slight deceleration in most types of healthcare costs, but this was likely an anomaly in the actual trend. Over the past eight months or so, annual rates of change in per capita healthcare costs have generally been rising.

OPM gave testimony on the Federal Long Term Care Insurance Program before the Senate Special Committee on Aging today.  OPM reported that enrollment in this voluntary employee pay all program increased from 224,000 to 270,000 enrollees in the 2011 open season.

The Wall Street Journal had an interesting section yesterday about healthcare innovations. The lead article discussed how the medical profession is incorporating the quality of life improvement goals into treatment plans in order to encourage patient compliance.

The logic is simple. People are more likely to manage their condition
properly when they have more accessible, personal goals, like being able
to do more at work or keep up with their kids, instead of focusing only
on comparatively abstract targets like blood-sugar levels. And that, in
turn, leads to much better health.

The article explains that

The 2010 Affordable Care Act included $3 billion in funding for a new
Patient-Centered Outcomes Research Institute, which will use
quality-of-life measures as part of its evaluation of new treatments.
And in a report issued in January, the Institute of Medicine, an
independent group that advises the government on health policy, called
for a new national action plan to identify programs that help those with
chronic illness and the population as a whole “live well”—reflecting
“the best achievable state of health that encompasses all dimensions of
physical, mental and social well-being.”

The AMA News reports on the ABIM Foundation’s  Choosing Wisely campaign which encourages doctor and patients to make health care decisions based on medical evidence based recommendations. The program is endorsed my the AMA and many other medical associations. Here is a link to the program’s lists of specific, evidence-based
recommendations physicians and patients should discuss when the following types of health issues arise:

• When do you need an EKG or stress test for heart disease? (American Academy of Family Physicians)
• When do you need an imaging test for a headache? (American College of Radiology)
• When do you need antibiotics for sinusitis? (American Academy of Asthma, Allergy and Immunology)
• When do you need antibiotics for sinusitis? (American Academy of Family Physicians)

According to the program’s website, “several more specialty
societies have joined the campaign and will be unveiling their lists of
“Five Things Physicians and Patients Should Question” in fall 2012.” Now that’s a program that could bend the cost curve down.


The AP via Businessweek reports that prescription benefits manager Express Scripts has issued its annual Drug Trend Report. Express Scripts announced that “spending increased 2.7 percent in 2011, the lowest growth recorded in 18 years of measuring the statistic” due to the introduction of generic substitutes for blockbuster drugs like Lipitor. The FEHBlog found very interesting the fact that “diabetes treatments now make up the largest spending category for
prescription drugs [according to Express Scripts]. Diabetes spending per member per year rose 7 percent
to top cholesterol and high blood pressure or heart disease medicines.”

To tie this all together, the Wall Street Journal’s innovation section also discussed a United Healthcare lifestyle program which uses YMCAs to help control diabetes costs for health plans. “The YMCA gets reimbursed by insurance companies and employers for people
who enroll in the yearlong diabetes-prevention course. If class
enrollment goals are reached, and if participants lose 5% to 7% of their
body weight over the year, the Y gets additional payments.” The FEHBlog first heard about this innovative program at the OPM AHIP FEHBP carrier conference last month.

The House and Senate return from their Easter recess this week. Modern Healthcare reports that “members of Congress are already discussing the likelihood that they will
return soon after the polls close [in November] for an extensive lame duck session to
resolve numerous high-profile issues, such as (yet another) looming
Medicare physician reimbursement cut.”

Following up on Thursday’s post about anti-trust issues, the AMA News confirms that

Hospitals are merging or being bought and sold at an increasing rate,
according to recent reports. Data released Feb. 28 by Irving Levin
Associates indicated that 86 hospital merger or acquisition deals were
done in 2011, the highest number in the past decade. Seventy-five
happened in 2010 and 51 occurred in 2009. A report issued March 8 by
Moody’s Investors Service said these trends will continue but did not
predict how many mergers would take place.

The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute [“PCORI”]. Funded by the Patient-Centered Outcomes Research
Trust Fund, the institute will assist patients, clinicians, purchasers
and policy-makers in making informed health decisions by advancing
clinical effectiveness research. The trust fund will be funded in part
by fees paid by issuers of health insurance policies and sponsors of
self-insured health plans [beginning later this year. The fee will be $1 per covered life for the first year and $2 per covered life in subsequent years ending in 2019.

On April 12, 2012, the IRS and the Treasury Department issued proposed regulations
on this fee. The IRS and Treasury request comment on the proposed
regulations by July 16, 2012. Comments may be submitted electronically,
by mail or hand delivered to the IRS. Additionally, a public hearing is
scheduled for August 8, 2012. The preamble to the proposed regulations
provides instructions on how to submit comments and participate in the
public hearing.

The fee is expected to generate $2.6 billion in revenues through 2019.  Here’s the rub reported by LifeHealth Pro

To dispel fears that the “comparative effectiveness research” (CER)
institute will be a care rationing “death panel,” PCORI is supposed to
influence health care solely by publishing its findings and letting
physicians and hospitals decide for themselves how to use the
information. Insurers are not supposed to use PCORI’s work as the basis
for making specific coverage decisions.

 The PCORI Executive Director quoted a Board of Governors member as follows:

“Ultimately, we’re going to be listening to a lot of stakeholders but
our true North is going to be … patients and their caregivers … for whom
the consequences of a [health care] decision is the greatest,” he said.
“Help us frame a new way of thinking about how the health care system
ought to operate.”

 Time will tell the PCORI’s value.

Privacy officials for HIPAA covered entities and health plans must read this AIS interview with the HHS Office for Civil Rights Director Leon Rodriguez. OCR is responsible for enforcing the HIPAA Privacy and Security Rules. The article begins with the chilling sentence —  “The $1.5 million settlement that the Office for Civil Rights recently
reached with BlueCross BlueShield of Tennessee heralds a new era of
“monetary enforcement” by the agency, in contrast to its long-standing
approach of what OCR Director Leon Rodriguez termed ‘hand-holding.’” Bear in mind here that BCBST was a crime victim in this situation but that did not stop the government from imposing the sanctions for inadequate security. The times they are a changin.

Modern Healthcare reports “measured enthusiasm” from healthcare providers on the proposed one year long long ICD-10 delay. The AHIMA trade association of techies thinks that it could have been worse. And it could have been worse — HHS could have given a longer delay just to doctors. AHIMA thinks that a longer delay would have encouraged doctors to suspend work on the project.

A federal district court judge heard three hours of oral arguments on Tuesday about the drug store trade association’s motion to keep separate the respective assets of Express Scripts and Medco while their anti-trust action is pending. According to Drug Store News, the judge indicated that she will rule on the preliminary injunction motion and the defendant’s motion to dismiss later. What the FEHBlog finds interesting is that there has been no rush to the courthouse by any State Attorney General to challenge the merger. The fat lady may be warming up.

In other bit of anti-trust news, the U.S. Justice Department’s Anti-trust Division announced Tuesday that it was closing its investigation into Highmark’s affiliation agreement with the six hospital West Penn Allegheny Health System. In November 2011, Highmark announced a $475 million capital infusion into the financially ailing system which has sparked a controversy between Highmark and the competing hospital chain UPMC. The Pittsburgh Post Gazette surveys the reaction here.

Finally CMS announced that 27 accountable care organizations in 18 states have been admitted to the Medicare Shared Savings Program. Modern Healthcare reports that

The first ACOs will include more than 10,000 physicians, 10 hospitals, and 13 smaller physician-led entities and serve an estimated 375,000 beneficiaries. The announcement follows the January launch of the modified Pioneer Model ACOs with 32 healthcare groups. The mix of organization types—just over half are physician-led—was touted by CMS officials.

Of course, the AMA was ecstatic but be careful what you wish for because a lot of physician risk bearing health care organization went under in the 1990s due to bad risk management.

The FEHBlog never ceases to marvel at how HHS can keep its sunny side up. HHS trumpeted today the news that a newly proposed unique national health plan identifier number will save $4.6 billion over the next ten years. While the HHS press release credits the Affordable Care Act for this innovation, in fact this identifier was required by the Health Insurance Portability and Accountability Act (HIPAA) over 15 years ago in 1996.  In the FEHBlog’s view it was a colossal error to consign technology changes to law as HIPAA did.

The anticipated compliance date for this new proposed rule (unless of course the American Medical Association complains (FEHBlog joke) is October 1, 2014 according to the HHS fact sheet. The proposed rule also will create an identifier for healthcare claims clearinghouses and third party administrators and fix a problem with the national healthcare provider identifier.

HHS also announced its proposal for one year delay in the ICD-10 compliance date for all covered entities. The FEHBlog misread the HHS tea leaves to expect a delay only for small medical practices. The newly proposed compliance date also would be October 1, 2014. The FEHBlog cannot yet find any reaction from the AMA which had clamored for a delay. However, Government Health IT reports the stunning fact that according to “the Regulatory Impact Analysis (RIA) of this proposed rule, HHS 
acknowledged that “a 1-year delay of the ICD-10 compliance date * * * would
add 10 to 30 percent to the total cost that these entities [read that as meaning health plans] have already
spent or budgeted for the transition.”

The Baltimore Sun reported on the oral argument presented to a panel of U.S Court of Appeals judges in Boston on Wednesday. At issue was the constitutionality of the Defense of Marriage Act which prohibits the FEHBP from covering same sex spouses. “Gay rights advocates said they were cheered by the tone of the argument.
The three judges asked relatively few questions during the hourlong
argument, but the most skeptical questions were directed to attorney
Paul Clement, * * * who is defending the federal law on behalf of House Republicans.” The FEHBlog agrees with the article’s conclusion that this case is headed to the Supreme Court.

Business Insurance reported on an important annual study issued by IMS Health on national prescription drug spending. The IMS Health report finds that prescription drug spending increased 3.7% to $320 billion while per capita prescription drug use dropped 1.1% and doctor’s office visits dropped by 4.7%. The AMA News continues to fret about this drop in doctors visits. There was a jump last year in new drug approvals (34) and older drugs shifting to generic status.

The AMA News article discusses a Willis survey of 2300 employers concerning the impact of Affordable Care Act compliance:

While only about a quarter of the responding employers have quantified the cost of compliance within their
health plans, a majority (nearly 56 percent) of those employers said the cumulative cost amounted to
an increase in cost; over 15 percent noted that the cost increase was between two and
five percent, and over 15 percent said that the cost increase was more than five percent.
Employers report that their most significant cost drivers are the provision of adult child coverage
up to age 26 and the removal of the annual/lifetime limits for “essential health benefits.”

Finally USA Today reports this morning that “A new report shows costs vary as much as 700% for some preventive
examinations, and as the federal health care law increases demand for
those procedures, it can mean an increase in premiums if employees don’t
pay attention to those costs.”  Keep your eye on the bouncing ball. Happy Passover!

Well the Federal Trade Commission announced yesterday morning following a 3-1 vote that it would not object to the merger of the two large prescription benefit management firms Express Scripts and Medco Health Solutions. The FTC did not attach any strings to this decision. The merger closed shortly after the announcement according to an Express Scripts press release. 

The opposition remains vociferous as illustrated by this press release from two drug store associations. Bloomberg reports that the federal judge in Pennsylvania has scheduled an April 10 hearing on the motion to undo the merger in a connection with a private anti-trust case. No state attorney generals have filed suit against the merged company yet.

It’s interesting that the press was reporting that the FTC asked the drug store trade associations and consumer groups for suggested strings to attach to the deal, but none were. It appears that Express Scripts and Medco did a very skillful job crafting this deal and the opponents simply overplayed their hand.

Senator Joe Lieberman (I CT) recently announced that he has 21 new Senate co-sponsors for his bill that would open up the FEHBP to same sex domestic partners of federal employees.  A panel of U.S Court of Appeals judges will hear a constitutional challenge to the Defense of Marriage Act tomorrow morning in Boston. The Defense of Marriage Act requires that the word spouse be interpreted to mean a person of the opposite sex whenever the word spouse is used in a federal statute or regulation. The FEHB Act defines family coverage to include the enrollee’s spouse. This issue is likely to reach the U.S. Supreme Court later this year. The DOMA issue is narrower than the Lieberman bill issue because there is only a small but growing number of states that recognize same sex marriage.

OPM’s 2013 call letter encourages FEHB plans to expand their wellness programs. The AMA News and Business Insurance report that wellness programs similarly are popular with state and private sector employers.

Finally, the AMA, now feeling its oats over the HHS announcement of a delay in the ICD-10 implementation date for certain covered entities has joined up with other medical groups to ask CMS to delay other regulatory deadlines so that the providers can focus on their patients.  Let’s not lose sight of the fact that the Affordable Care Act showered the health insurance industry with regulatory deadlines.