The House of Representatives is expected to vote on and approve the continuing resolution today, and Federal New Radio and the Washington Post report on the bill’s impact on federal employees, e.g., the extension of the pay freeze. The Senate is expected to seal the deal tomorrow.

Sunday September 15 is the day that Walgreen’s returns to the Express Scripts / Medco fold of participating pharmacy chains after a nine and a half month absence that had a negative financial impact on Walgreens.  As the FEHBlog noted last year, Walgreen’s picked the contract fight with the PBM over financial issues.  Crain’s Chicago Business News reports that TRICARE, an Express Scripts customer, has decided to stick with a narrow retail network excluding Walgreen’s.

The FEHBlog notes that the pharmacy chains have not given up on their antitrust lawsuit challenging the Express Scripts acquisition of Medco that was finalized last Spring. Drug Store News reports that the pharmacy chain plaintiffs in that lawsuit pending in Pittsburgh after refiled their complaint after the court dismissed the original complaint last month without prejudice. Note to plaintiffs — the barn is empty.

Congress returns to Washington for a few weeks before recessing for the final stage of the 2012 political campaigns. The good news is that according to the Hill 

The House is expected to take up the six-month continuing resolution during the week, which could set up Senate passage by the end of the week. House and Senate leaders agreed to a six-month spending bill before leaving for the August break.

The six month long continuing resolution will fund the federal government through March 31. 2013.

Last week, the Institute of Medicine issued a report stressing the need to revamp our health care system.  According to the report

The costs of the [health care] system’s current inefficiency underscore the urgent need for a systemwide transformation.  The committee calculated that about 30 percent of health spending in 2009 — roughly $750 billion — was wasted on unnecessary services, excessive administrative costs, fraud, and other problems.  Moreover, inefficiencies cause needless suffering.  By one estimate, roughly 75,000 deaths might have been averted in 2005 if every state had delivered care at the quality level of the best performing state.

The report places emphasis on the ability of technology improvements to share quality data and thereby reduce inefficiencies. The FEHBlog certainly hopes so because Government Health IT News reports that the federal government has spent nearly $7 billion giving healthcare technology away to hospitals and doctors. Caveat — Modern Medicine reports that “Electronic health records (EHRs) have forced primary care physicians (PCPs) to focus on the computer screen, and a new study from the University of Florida indicates that this trend may be keeping PCPs from recognizing and properly treating some cases of depression.”

The FEHBlog is skeptical of the $750 billion number (but not the $7 billion number) because it’s so large and public health valuations like this are so screwy. The FEHBlog read a Wall Street Journal review about a book positing that the recent rise of auto-immune diseases like autism, multiple sclerosis, and diabetes stems from improvements in public health. In brief, our immune systems get bored and turn on our own bodies as a result.

But let’s end on a high note. Recently, the FEHBlog wrote about a New York Times article in which research scientists found a cure for a colleague’s cancer by analyzing his genome. The New York Times reports today that scientists by using genome scanning have made a valuable discovery.

The first large and comprehensive study of the genetics of a common lung cancer finds that more than half the tumors from that cancer have mutations that might be treated by new drugs that are already in the pipeline or that could be easily developed.

Most excellent.

TGIF indeed.  The FEHBlog arrived at the world headquarters of the Ermer Law Group on Tuesday to discover that a water pipe break on Sunday that occurred five floors above his office had result in his space being filled with fans. A contractor broke through drywall to force air that would dry the walls and avoid mold (a good result). The fans were not removed until today. It’s peaceful here now.

Mike Causey from Federal News Radio is reporting that “Insiders say that the Office of Personnel Management is pulling out all stops in an effort to hold the 2013 premium hikes below the already low levels of this year.”  We shall see soon.

Speaking of Open Season, the Society for Human Resource Management reports that “Satisfaction levels are rising among Americans enrolled in consumer-driven health plans (CDHPs), while they are declining among those in traditional health plans, according to a new report by the nonprofit Employee Benefit Research Institute (EBRI).” However, the overall satisfaction rate is higher for traditional plans (57% vs. 46% in 2011).

It’s the time of the year on the FEHBP calendar when the focus shifts from benefit and rate negotiations for 2013 (which should be concluded) to the impending Open Season which runs this year from November 12 through December 10, 2012. Here’s a link to an OPM list of Open Season resources.

Historically but not recently, OPM would issue its press release about the following year’s government contribution and the employee share of the large plans shortly after Labor Day. Over the last decade, that announcement is made in late September. The FEHBlog expects that OPM will adhere to the recent schedule this year.

Modern Healthcare announced its list of 2012 Most Influential People in Healthcare. The top five include four government officials and a health insurance executive Mark Bertolini of Aetna (at #2). The next five include four health plan / health insurance executives and the HHS Secretary. Health care provider executives start to show up at number 12, with a dialysis company executive. Surprisingly to the FEHBlog at least, the OPM Director was not included on the list.

Modern Healthcare named Chief Justice John Roberts to be the most influential person. If the FEHBlog were in charge, he would have named the American voter as the greatest influence on healthcare this year.

The Health Affairs blog has an interesting piece on “Seizing the Opportunity to Improve Medication Adherence”  The authors encourage, among other things

more commitment *** by public and private payers to include
adherence quality measures as a basis for reimbursement or bonus
payments for providers and pharmacists. Adherence-related quality
measures and bonus payments can be expanded within Medicare to cover
more beneficiaries (e.g., those in Stand-Alone Prescription Drug Plans),
and similar policies can be adopted by Medicaid and commercial payers. 
Finally, further innovation and testing is needed of interventional
strategies that combine effective approaches for targeting patients at
the highest risk of non-adherence with efforts to personalize effective
interventional strategies that work best for each patient.

Happy Labor Day! Congress will resume its session next week following the August recess and the political conventions.

The FEHBlog nearly levitated out of his chair yesterday when he read this Steve Pearlstein column in the Washington Post yesterday assaulting Coventry Healthcare, Aetna, and the entire health insurance industry. (The FEHBlog knows that these companies don’t merit such abuse.)  Mr. Pearlstein places his hopes on provider controlled accountable care organizations replacing heath insurers and beseeching federal regulators to launch anti-trust challenges against Wellpoint’s recent acquisition of Amerigroup and Aetna’s acquisition of Coventry. However, the government did not question Cigna’s similar acquisition of Healthspring last year.  Moreover, as the FEHBlog has pointed out, the Affordable Care Act is feeding this health plan consolidation trend which according to Businessweek may be nearing an end. And without health insurance, the bottom would drop out for the health care industry.

In other anti-trust news, the Pittsburgh Post Gazette reports that last week a federal judge in that fair city dismissed a big chunk of the pharmacy chain’s anti-trust challenge to the Express Scripts’ acquisition of Medco last Spring. The court allowed a specialty pharmacy related issue to proceed and also allow the plaintiffs an opportunity to revise their complaint.

The AMA News gleefully reports that health insurer earnings have been dropping because patient utilization and doctors earnings are up this year. The AMA News further cautions that overwork is wearing down the profession. It’s quite a conundrum, as Newman would say.

As physicians are subsumed into hospital systems, they can get paid for
services at the systems’ rates, which are typically more generous than
what insurers pay independent doctors. What’s more, some services that
physicians previously performed at independent facilities, such as
imaging scans, may start to be billed as hospital outpatient procedures,
sometimes more than doubling the cost.

The result is that the same service, even sometimes provided in the
same location, can cost more once a practice signs on with a hospital.

Major health insurers say a growing number of rate increases are tied
to physician-practice acquisitions. The elevated prices also affect
employers, many of which pay for their workers’ coverage. A federal
watchdog agency said doctor tie-ups are likely resulting in higher
Medicare spending as well, because the program pays more for some
services performed in a hospital facility.

Cost curve up.

As discussed last week, the State of Maryland, which is the only remaining state that sets hospital charges, is reevaluating those rates. The State at the suggestion of the hospital association is considering raising rates while shifting costs from Medicare and Medicaid to the private sector. Kaiser Health News explains that if Maryland does not make a change that lowers Medicare costs then CMS may withdraw Maryland’s waiver from Medicare’s DRG rate setting system for hospitals . According to the article, that waiver allows Maryland hospitals to collect $1 billion more that they would if they were participating in the DRG system. CMS is using its leverage to urge Maryland to go big.

Federal officials are urging Maryland and its powerful health
industry to build on the state’s unique hospital rate-setting system to
develop sweeping cost controls – including those on doctors – that could
be used as a model for other states.

The proposals could eventually affect nearly every aspect of the
industry, and include rewarding doctors for cutting unneeded procedures
and pledging the state to keep per-capita Medicare costs rising more
slowly than those of the nation. 

The FEHBlog, who lives in Maryland, thinks that this big change will happen. The FEHBlog also believes that government price fixing doesn’t work.

The FEHBlog finally wants to point out that the Labor Department has improved its ACA web page which is the best place for one stop shopping for ACA related regulations, FAQs, model forms, instructions, etc. The ACA regulators, for example, have issued nine sets of FAQs which they number using Roman numerals like the Super Bowls. The FAQs have always been posted on the website but now the website provides one or two lines with the topics covered in the FAQa. The FEHBlog is grateful for the little things in lfe.

Congress remains out of session for the next two weeks and the national legislature will have to implement the continuing resolution deal upon its return as the current federal fiscal year ends on September 30.

The FEHBlog read a Washington Post article this morning about the growing trend of hospital systems to become health insurers.

[T]he North Shore-LIJ Health System, with 16 hospitals and more
than 300 outpatient centers in Long Island and New York City, is laying
the groundwork to be an insurer, as well as a provider of health care. Like other hospital chains across the country, it’s under intense
pressure from public and private insurers, as well as employers, to
accept flat-rate payments for care, rather than reimbursements for every
service. And that puts pressure on hospitals not just to manage costs,
but to keep people well – in short, to act more like insurers.

As the article explains, many health care providers accepted risk  in arrangements with health plans in the 1990s and lost their shirts. This time around the providers expect that improved technology and greater experience with clinical algorithms will avoid the pitfalls of the 1990s. However, from the FEHBlog’s viewpoint, medicine remains as much as art as it is a science.

Speaking of technology, the Department of Health and Human Services last week proposed the second round of meaningful use standards that providers must use a condition to receiving federal funding for their electronic health technology. There still is no free lunch.  HHS also finalized the regulation that adopts a health plan identifier standard for electronic transactions and allows the one year extension in the compliance date for the mandatory use of the ICD-10 code set in those transactions.  The FEHBlog never ceases to be amused by the HHS press release crowing about the savings created by this rule that was authorized by a law — HIPAA — passed over 15 years ago. It just points out the silliness of embedding technology standards in federal law.

Also HHS unveiled an update to its medicare.gov website.

Anyone who is curious about rising health insurance costs need only look at two recent news articles.

The first concerns a recurring FEHBlog topic — cost shifting from Medicare to commercial plans. A Washington Post article about Maryland’s hospital rate regulators are considering a proposal by the Maryland hospital association to jack up their revenue substantially by charging commercial payers even more and Medicare and Medicaid even less under the rationale of “rebalancing.”  Maryland is the only state that continues to regulate hospital charges. CMS requires Maryland hospitals to pay the Maryland regulated rates rather than the standardized DRG charges for Medicare patients. “It brings Medicare costs down, so it gives something” to federal
officials seeking price relief, said Barry Rosen, a Baltimore lawyer who
works for insurers. “It sure raises the price of care to people in
Maryland.”

The other article from the AP concerns a study published in the AMA Journal suggesting the bariatric or weight control surgery can reduce the number of diabetes type 2 cases.

Congress remains out of session this week.

The big news today is that Aetna is acquiring Coventry Health Care subject to standard anti-trust review and the approval of Coventry’s shareholders. Both Aetna and Coventry offer HMOs in the FEHBP and Coventry also underwrites three employee organization sponsored plans. Here’s a link to Aetna’s investor presentation.

House minority leader Nancy Pelosi once said “we have to pass the [Affordable Care Act] bill so that you can find out what is in it.” Business Insurance reports that employers are now learning about Section 1341 which creates a transitional reinsurance program for qualified health plans operating in the exchanges. Here’s a link to a CMS presentation about the program. The provision, which HHS administers, requires health insurers and self-insured health plans to fund this program to the tune of $12 billion in 2014, $8 billion in 2015, and $5 billion in 2016, the last year of the program. According to Business Insurance,

Benefit consultants have made preliminary projections. Aon Hewitt, for
example, estimates that the 2014 assessment will be in the range of $60
to $80 per health care plan participant, while Towers Watson & Co.
puts the first-year assessment range at between $70 and $90 per plan
participant. 

This is significantly higher than the $1 or $2 per participant fee imposed on insurers and self insured plan sponsors to fund the Patient Centered Outcomes Research Institute but less than the fee that the law imposes just on health insurers. The charge to the FEHBP in 2014 will range from $480 to $720 million.

Public health issues are difficult to identify, let alone address. The San Francisco Chronicle reports that declining male circumcision rates will cost health care costs to increase. The circumcision rate has dropped from 79% in the 1980s to 55% now. The lack of protection may boost U.S. health-care costs by $4.4 billion
if rates plunge in the next decade to levels seen in Europe, where 10
percent of boys are circumcised, according to the analysis by health
economists at Johns Hopkins. Each time a circumcision is avoided, $313
is added in direct illness- related expenses, after taking into account
the cost of the procedure, [Aaron] Tobian [the study’s senior researcher] said in a telephone interview.

An identified public health issue is patient non-adherence to prescriptions. The AMA News reports that

The Food and Drug Administration cleared the smart pill, called the
Ingestion Event Marker, for marketing as a medical device on July 10.
The ingestible sensor is the size of a grain of sand and can be
integrated into an inert pill or an active medication. Fluid in the
stomach activates the sensor and sends a signal through body tissue to a
small, water-resistant patch worn on the torso. The patch detects when
the pill is ingested and wirelessly sends that data to an application
accessible by mobile phone or computer.

Health Affairs came out with an article on the growing use of retail clinics, a trend that the FEHBlog has been following because it has the potential for bending the healthcare cost curve down:

Retail clinics have rapidly become a fixture of the US health care delivery landscape. We studied visits to retail clinics and found that they increased fourfold from 2007 to 2009, with an estimated 5.97 million retail clinic visits in 2009 alone. Compared with retail clinic patients in 2000–06, patients in 2007–09 were more likely to be age sixty-five or older (14.7 percent versus 7.5 percent). Preventive care—in particular, the influenza vaccine—was a larger component of care for patients at retail clinics in 2007–09, compared to patients in 2000–06 (47.5 percent versus 21.8 percent). Across all retail clinic visits, 44.4 percent in 2007–09 were on the weekend or during weekday hours when physician offices are typically closed. The rapid growth of retail clinics makes it clear that they are meeting a patient need. Convenience and after-hours accessibility are possible drivers of this growth. However, retail clinics make up a small share of overall visits in the outpatient setting, which include 117 million visits to emergency departments and 577 million visits to physician offices annually.

Medpage has an expanded story of the Health Affairs article. Medpage notes medical society opposition to the clinics which ironically enough people often use when doctors offices are closed.

CMS clarified its position on the temporary enforcement safe harbor for certain employers, group health plans, and group health insurance issuers with respect to the ACA’s contraception coverage mandate. The FEHBlog finds this interesting because the FEHBA’s contraception mandate, which is found in the annual appropriations bills, includes exclusions for faith based health plans. It does not appear that this safe harbor is directed at such plans. Rather it is directed at religious employers, which the U.S. government is not. However, both the House and Senate appropriations committees have cleared include this exemption for faith based plans operating in the FEHBP.

Yesterday, Standard and Poors released its Healthcare Economic Indices for June 2012. Healthcare costs covered by commercial health plans increased by 8/09% over the year ending June 2012, down from an 8.40% increase reported for May 2012. Medicare claim costs rose by 2.27% down from a 2.50% increase in May.

“The past two months have generally been marked by a deceleration in the annual rate of change in health care costs. In June 2012, all nine of our Healthcare Indices’ annual growth rates decelerated from their May 2012 rates,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “In May, six of the nine indices we publish also saw a deceleration in their annual growth rates from April. In June, the Composite Index posted an annual rate of +5.78%, the Commercial Index +8.09% and the Medicare Index +2.27%. These rates were all down from their respective April and May 2012 levels.