Business Week reports that at least five large states –Georgia, New York, Pennsylvania, Ohio, Texas and California — are considering filing lawsuits to challenge the Express Scripts / Medco merger if the Federal Trade Commission approves the deal, presumably with required changes.

Two pharmacy groups opposing the acquisition said last week the FTC asked them to suggest ways to revise the deal so it wouldn’t harm competition. The request may indicate the agency will approve the deal with conditions, said Jeffrey Schmidt, a former director of the FTC’s Bureau of Competition. 

The states could seek a temporary delay in the acquisition’s close and a court order to permanently prevent the deal’s consummation, said Billy Vigdor, an antitrust lawyer with Vinson & Elkins LLP in Washington who represents investors with an interest in the deal.

The article notes that 25 states plus the FTC are scruntizing the deal.

Last week, Standard and Poors that its monthly healthcare economic composite index  (covering both commercial insurance and Medicare) increased by 5.21% in January 2012, which as a decline from the 5.30% growth rate in December 2011. The gap between the increase in commercial insurance vs. Medicare costs is striking, as usual.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 7.05% over the year ending January 2012, down from the +7.11% reported for December 2011. Growth rates in Medicare claim costs rose by 2.40%, as measured by the S&P Healthcare Economic Medicare Index, down from the +2.52% reported for December. 

Looking at the narrower sub-indices, the Professional Services Medicare Index hit a two-year low of +3.32% in January 2012, down from +3.73% in December 2011. The Hospital Medicare annual growth rate increased in January at +1.56%, it was up from its +1.48% December level. The Professional Services Commercial Index decelerated to +6.02% in January from +6.15% in December; and the Hospital Commercial Index marginally decreased to +7.84% in January from +7.85% in the previous month.

Following up on Wednesday’s post, the FEHBlog noticed Blue Cross Blue Shield of Tennessee’s press release about the $1.5 million settlement with HHS over the data breach. The FEHBlog has no interest in piling on BCBST because there but by the Grace of God go all of us. However, the FEHBlog noticed that the stolen hard drives included data that BCBST was under no legal obligation to maintain — “audio and video recordings related to customer service telephone calls from
providers and members” and the total bill to date has been $17 million. “The company’s response to the crime included the encryption
of all its at-rest data—a voluntary effort which goes above and beyond current
industry standards.” Remember to destroy protected health information in accordance with the HHS rules.

Not surprisingly, CMS yesterday further extended from March 31, 2012 to June 30, 2012, the deadline by which providers must submit electronic claims to Medicare on the new X 5010 electronic transaction format. That format can accomodate the ICD-10 code set which has one more digit per code than the existing ICD-9 codeset. According to a CMS bulletin reported by Healthcare IT News,

• The Medicare Fee-for-Service (FFS) program is currently reporting successful receipt and processing of over 70 percent of all Part A claims and over 90 percent of all Part B claims in the Version 5010 format.
• Commercial plans are reporting similar numbers.

Yesterday a group of Republican Senators, led by Sen. Rand Paul of Kentucky introduced a Medicare reform plan — called the Congressional Health Care for Seniors Act (S. 2196) — that would transitions seniors into the FEHBP. The press release explains that

In order to ensure low premiums and prevent plans from cherry-picking patients, the CHCSA creates a new “high-risk pool” for the highest cost patients within the FEHBP. The federal government will directly reimburse health care plans for enrolling the costliest 5 percent of patients, which keeps premiums low while allowing high-risk patients to get the same high-quality health care as every other enrollee – federal employees and seniors alike.

Govexec.com reports that the proposal was not well received by the federal employee unions or NARFE because the seniors would be in the same risk pool as the federal employees and annuitants which would increase premiums for the FEHBP enrollees, even with the high risk pool.

On Monday, the Department of Health and Human Services issued the final rule governing the establishment and operation of State based health insurance exchanges and the small business oriented program known as SHOP. A fact sheet on the final rule is available here. Although the FEHBP is considered to be a consumer choice model among employer sponsored plans, this exchange rule appears to create a system that is more administratively complicated and much more technology dependent than the FEHBP.  For example, Business Insurance reports on how the rule requires the exchanges to inform employers that an employee has applied for exchange coverage and is eligible for a premium subsidy. The FEHBlog recognizing the limitations of technology hopes that the agency is not overreaching.

The Congressional Budget Office released updated health care cost projections yesterday. Modern Healthcare reports that CBO projects that Medicare’s costs will double over the next decade and that Medicaid’s costs will grow at an even faster rate.

Blue Cross Blue Shield of Tennessee agreed to pay the federal government a $1.5 million penalty under the HITECH because 57 unsecured hard drives including protected health information were stolen from one of its facilities.  According to the HHS press release, “OCR’s investigation indicated BCBST failed to implement appropriate
administrative safeguards to adequately protect information remaining at
the leased facility by not performing the required security evaluation
in response to operational changes. In addition, the investigation
showed a failure to implement appropriate physical safeguards by not
having adequate facility access controls; both of these safeguards are
required by the HIPAA Security Rule.” A word is to wise ….

The Senate is in session this week while the House is in recess. The AMA News and Modern Healthcare discuss the Medicare Part B payment mess that Congress will face following the Presidential election. The statutory sustainable rate of growth formula is projected to require roughly a 1/3 cut in Medicare Part B payments to doctors for 2013 unless Congress acts.

The excitement begins to build for the annual OPM AHIP FEHBP carrier conference which will be held at the end of this month. Around that time OPM issues its carrier letter calling for benefit and rate proposals for the next year known as the call letter. Proposals are due at the end of May.

OPM has posted more information on its website for tribal Indian employers who decide to join the FEHBP.

The Wall Street Journal is reporting this afternoon that the Federal Trade Commission appears increasingly unlikely to block the Express Scripts – Medco merger “though the FTC may still seek to impose conditions on the deal, according to person familiar with the matter.” As the FEHBlog noted last year, the merger agreement includes certain business divestment provision intended to ease anti-trust concerns. The FTC is asking other vocal opponents of the deal, such as the National Association of Chain Drug Pharmacies and the National Community Pharmacist Association, “how else their objections could be addressed without blocking the deal.” While the deadline for an FTC decision is next week, “the companies have agreed to give the agency more time while the two sides work toward a possible settlement, people familiar with the matter said.” But of course, it’s not over until it’s over.

In 2009 then New York Attorney General Andrew Cuomo reached a settlement with Ingenix to spinoff its schedule for pricing out of network doctor services to an as yet unformed non-profit group which is now FAIR Health. This week now Governor Andrew Cuomo’s administration issued a report titled an “Unwelcome Surprise — How New Yorkers are getting stuck with unexpected medical bills from out-of-network providers. The report chastises both insurers and health care providers. In the FEHBlog’s opinion, the best way to avoid a surprise without increasing healthcare costs is better communication with members / patients.

Kaiser Health News reports about a book titled “The Patient’s Checklist” by Elizabeth Bailey. The book provides 10 checklists that “many essentials of a hospital stay, including sections on what to bring with you, medication management, how to make your hospital safer and more comfortable, and planning for your discharge.”  This is the kind of helpful information that empowers patients and their families to coordinate their own care.

The AMA News writes about efforts to control the costs generated by the costliest 1% of the American population — more than 20% of all health care costs.

An individual in the costliest bracket typically receives much of his or her care in hospitals — sometimes in multiple hospitals in the same city. Lack of care coordination is a significant driver of this spending. These missed connections are “probably the primary reason why we cannot manage costs on people who have multiple morbidities,” said Ira Klein, MD, chief of staff to the chief medical officer at the insurer Aetna

The article discusses efforts to improve coordination efforts but the article concludes by pointing out the key role that the patient and his or her family members can play in coordinating care.

Dr. Albert said sometimes the level of family involvement in a patient’s care is the difference between a frequent hospital visitor and a person who stays healthy. One of his patients, an 85-year-old widower, has congestive heart failure, hypertension and diabetes. The man ends up in hospitals regularly in part because he has difficulty adhering to his medication regimen. He has relatives nearby, but they are not closely involved in his care.

But another patient of Dr. Albert’s — a man with similar health problems — stayed out of hospitals for three years in a row before he died at the age of 90. The extended run was possible because the man’s wife doggedly tracked his medications and health care needs and monitored his diet.

“We called her his little pharmacist, his little nurse,” Dr. Albert said.

Such personal responsibility plays a key role in health care and controlling health care spending.

The Washington Post reported yesterday about a study suggesting that the use of electronic medical records is not bringing down health care spending.  This morning I was with my 17 year old son who has had back pain. The doctor advised that the MRI was normal but he wanted to order at CT scan to rule out a stress fracture. I thought to myself here we go — more money down the drain. But the doctor explained what he noticed in the MRI which caused his to order the follow up test. It turned out that my son does have a stress fracture.  Good judgment by the doctor. The point is that the practice of medicine remains as much as art as it is a science, and electronic medical records won’t change that. However, it may improve record-keeping and care coordination,among other things.

Congress returns to work after a long weekend on Tuesday.

OPM continues to update its webpage that discusses the impending expansion of FEHB Program coverage to Indian tribal employers who elect that coverage for their employees. Here is a link to OPM’s helpful quick guide for tribal employers.

Businessweek reports that investors are expecting the Federal Trade Commission to approve the merger between the two large prescription benefit managers, Express Scripts and Medco Health Solutions.

The gap between Medco’s share price and the value of Express Scripts’ cash-and-stock bid narrowed to $4.41 this week, the smallest since the deal was announced in July, according to data compiled by Bloomberg. The transaction, valued at $71.71 a share yesterday, is still offering about a 90 percent annualized premium if it wins the Federal Trade Commission’s approval by the end of a 30-day review period that wraps up in two weeks, enabling the takeover to close as early as March 31, estimates Westchester Capital Management Inc. That’s the highest return among deals in the U.S. and Canada over $5 billion.

Here’s something to do over the weekend. GAO has created a Watchdog podcast on its recent report evaluating research on savings from generic drug use.

Meanwhile “industry insiders” are telling AIS Health that “the potential expense and length of time required to bring biosimilars to market under the [Food and Drug Administration’s] “conservative” regulatory draft guidance [recently mentioned in the FEHBlog] is giving some drug manufacturers pause. According to the AIS article these industry insiders are concerned that the FDA is not taking advantage of the fact that fourteen biosimilar drug applications already have been approved by the European Union. The FEHBlog assumes that the industry insiders are thinking that the FDA should provide a shortcut approval on these drugs.

Ihealthbeat reports that the National Institutes of Health announced on Wednesday the launch of its web-based Genetic Testing Registry.  The Registry, which is still under development, is intended “to serve as a centralized public resource for clinicians, researchers, and consumers to access information about the availability and scientific basis of numerous genetic tests.”

Finally, Business Insurance reports on a new National Business Group on Health survey finding that employers are continuing to ramp up the use of wellness incentives with their employees. “Just under 73% of employers used incentives in 2011 as part of their health improvement programs. The average incentive value was $460, up from $430 in 2010 and $260 in 2009.”

Shocker! Healthcare IT News reports that “A majority of respondents to a new survey from Edifecs, which develops technologies for regulatory compliance and data exchange, says an ICD-10 postponement would do little to improve readiness – but could have significant adverse effects.” Unquestionably delaying the compliance date for some covered entities but not others will increase costs for health plans. What will be the American Medical Association’s next target for disruption?

Speaking of the AMA, the AMA News reports that health insurers are branching out into businesses that don’t have minimum loss ratios / profit ceilings — a trend that the FEHBlog has been following with interest.

Kaiser Health News discusses another trend of interest to the FEHBlog — health insurers are opening retail stores in shopping malls. The stores are “a reaction to the shift from wholesale to retail in insurance sales,” says Paul Ginsburg, president of the Center for Studying Health System Change. “In wholesale sales, employers were the buyers. Now insurers are recognizing that retail will be more important.” Retail has been a sales focus in the FEHBP for over 50 years.  Not surprisingly therefore, Robert Krughoff, Walton Francis, and Robert Ellis have written in the Health Affairs Blog about how health insurers can learn marketing lessons from FEHBP Open Seasons.

Modern Healthcare reports that spurred by OPM’s requirement that FEHB plans offer “blue button” technology to their members, Health Level Seven announced that “by April 2012 it will have a file conversion tool and user’s guide to adapt its Continuity of Care Document message transport specification to the Blue Button format developed by the U.S. Veterans Affairs Department.”

Finally, Drug Store News reports that “The Food and Drug Administration on Tuesday announced it will hold a public hearing on March 22 and 23 to discuss how technology can expand which drug products can be switched from prescription to over-the-counter status.”  The FEHBlog recalls when a public outcry, rather than the manufacturer, pushed the FTC to move the antihistamine Claritin to over the counter status. Over the counter drugs typically are not covered by health plans so conversions can bend the health care cost ruler down.