The FEHBlog listened to a New York Times investigative reporter Walt Bogdanich on NPR’s Fresh Air program while in the car last night. The reporter discussed his ongoing series of articles “about the medical and regulatory issues that have arisen as radiation therapies have become more ubiquitous in both dental and doctors’ offices.”  These eye opening articles, which have been running since early last year, are worth your attention as a patient and/or a parent.

Government Health IT News and Health Data Management report on the status of the HHS Office for Civil Right’s efforts to publish a final omnibus rule implementing the HITECH Act by year end.

Business Insurance reports that the IRS has released the slightly increased health savings account contribution limits and the high deductible health plan and maximum out of pocket expense cap for 2012.

Last week, the House Appropriations Committee chairman issued a schedule for consideration of FY 2012 appropriations bills. The Financial Services subcommittee will consider its bill, which includes FEHB Program appropriations, by June 13, and the full committee will consider that bill by June 23.

Last Wednesday, the Health subcommittee of the House Ways and Means Committee held a May 12 hearing on alternatives to Medicare’s sustainable rate of growth formula. The FEHBlog found the Blue Cross Blue Shield of Massachusetts testimony interesting reading. The BCBS MA representative discussed their Alternative Quality Contract (“AQC”) program.

The AQC [is] an innovative global payment model that uses a budget based methodology, which combines a fixed population-based budget (adjusted annually for health status and inflation) with substantial incentive payments for performance on a broad set of clinically important, nationally accepted measures of quality, outcomes, and patient care experiences.

First-year results show the AQC is on track achieve its original goals of improving patient care and moderating health care costs. In year-1 of the contract [2009], all AQC groups met their budgets, and  achieved a surplus.  On the quality side, the AQC groups’ first year improvements in the quality of patient care were greater than any one-year change seen previously in our provider network – well exceeding both the rates of improvement on quality measures that AQC groups were achieving prior to the contract, and exceeding rates of improvement among non-AQC physicians. 

Business Insurance reported that the House Energy and Commerce Committee approved HR 5, a medical malpractice reform bill, by a 30-20 vote.  The House Judiciary Committee approved a version of the bill on March 17. Both House committees with jurisdiction over the bill have now cleared it. 

The AHIP Coverage blog published an interesting chart about the profitability of different sectors of the health care industry. Based on Yahoo Finance data for the most recent quarter, hospitals enjoyed a  5% profit margin; health insurers 4%, and medical practitioners 3.6%. The average profit margin was 4.4%. The sectors with profit margins over 10% include drug and medical device manufacturers.

The Blogger service that the FEHBlog uses was down on Thursday and Friday. Here are the items that the FEBlog had planned to post on Thursday.

The Federal Times reported on Thursday that the Federal Postal Coalition of federal and postal employee unions and associations “pressed Senators” to reject the House budget proposal’s changes to federal employee compensation. The article notes that “Also the coalition objects to a proposal [from the White House deficit reduction commission] to turn the Federal Employees Health Benefits Program into a voucher-based system. Because that voucher would only increase by the gross domestic product plus one percentage point, the coalition said it would quickly fall behind medical inflation costs and essentially double employees’ premium costs by 2030.”  There was some talk that the White House would adopt this proposal but it hasn’t happened.

The Milliman actuarial consulting firm released its 2011 Milliman Medical Index (“MMI”).

The MMI includes an analysis of costs paid by the employer and costs paid by the employee. An increasing portion of the cost has been borne by the employee—in nine years, the total cost paid by the employee has also more than doubled. In 2002, the employee share of these costs was $3,634 and it now stands at $8,008.
Specific findings:

Between 2010 and 2011, the MMI increased by $1,319 or 7.3%.

Employees’ share of the total cost is at an all-time high, having increased from 36.8% in the first year of the MMI (2005) to 39.7% in 2011.

The annual rate of increase for the MMI is down 0.5% from 2010 to the lowest rate since the inception of the MMI, but is still in excess of spending increases for most other sectors of the economy.

Even though hospital spending is only 48% of total healthcare spending, increases in facility spending (inpatient and outpatient combined) account for over 60% of this year’s total increase in cost of healthcare.

The AP via AHIP HiWire reports on a letter that the American Medical Group Association, a trade association which represents 400 large medical groups like the Cleveland Clinic and the Mayo Clinic sent to CMS Director Donald Berwick on May 11. The trade association’s press release includes the following startling statement:

In an AMGA survey of its membership, 93 percent of respondents stated that they would not participate in the [accountable care organization] ACO program unless the requirements in the final rule reflect major modifications to the proposals. In their current form, the requirements would render the ACO program a missed opportunity to inject value and accountability into the delivery system.

The AP article notes that

Private insurers are also experimenting with versions of the accountable care idea, but successful adoption by Medicare is seen as the key to spreading it across the country. The Obama administration had estimated as much as $960 million in savings from the first three years of the program, and bigger amounts thereafter.

[Donald] Fisher, the medical association head, said he does not think the administration will easily back off its approach, because on paper it saves the government money.

The comment deadline on the ACO is June 6, 2011.

The Wall Street Journal provides an update on efforts by large health insurance companies to divesify their product offerings.

Diversification plans, touted in meetings with investors this year, include stepped up acquisitions and partnerships that will allow the companies to employ doctors directly, deliver health-information technologies, and participate in new hospital-doctor groups known as accountable-care organizations.

The AIS Reports on Patient Privacy reports on steps that HIPAA covered entities are taking to ramp up efforts to keep an eye on their business associates.

The Affordable Care Act required HHS to prescribe the format for a new four page summary of coverage (to supplement the FEHB plan brochures and summary plan descriptions in the private sector) no later than March 23, 2011. However, no regulation has been issued. Today, the FEHBlog ran across a Kaiser Health News article explaining that focus groups are being organized to evaluate the summaries and the cost of treatment “labels” to be included in the summaries. The hang up appears to be these labels.

Given OPM’s call letter emphasis on controlling drug costs, I took note of two Reuters articles discussing comments made by a senior Food and Drug Administration official Janice Woodcock. In the first article, Ms. Woodcock announced that the pharmaceutical manufacturer pipeline is beginning to pump out more new drugs that the FDA has approved. In the other article, Ms. Woodcock projected that the FDA will issue guidance on a pathway for FDA approval of biosimilar drugs by the end of this year. The European Union already has created such a pathway. According to Reuters, “The worldwide market for copies of biotech medicines will grow to $3.7 billion by 2015 from just $243 million in 2010, according to a recent report from market analysis firm Datamonitor.” Interestingly, Reuters quoted Ms. Woodcock as follows:

She said the U.S. agency has yet to receive any actual biosimilar applications, but there is a great deal of industry interest.
“We are open for business right now,” Woodcock said.

Considering how aggressiveness of the generic manufacturers on the small  molecule side of the playing field (who have had an FDA regulatory pathway for 25 years), it appears that the biosimilar manufacturers are taking a wait and see attitude in this country.

The AMA News is all worked up this week about the new CMS Physician Compare website which evidently is suffering a case of garbage in, garbage out.

Finally, an article on a study concluding that colonoscopies may be overutilized caught the FEHBlog’s attention. The study’s findings, along with other research published today in Archives of Internal Medicine, suggest that doctors need to better target the tests to patients who are most likely to benefit, and conserve limited screening resources and prevent complications by sticking to recommendations more closely, researchers said.” Is it possible that over-utilization for this uncomfortable and expensive but lifesaving procedure occurs due to scare tactics by the news media? The FEHBlog does not know. It does goes to show how difficult it is to bend the cost curve down.

Happy Mothers Day!!

The Affordable Care Act expands FEHB Program coverage to Indian tribes at the tribes’ expense. OPM explains

Section 10221 of the Affordable Care Act incorporated S. 1790, the Indian Health Care Improvement Reauthorization and Extension Act of 2009 (IHCIREA). IHCIREA amended and reauthorized the Indian Health Care Improvement Act (IHCIA). Section 409 of the IHCIA allows eligible Indian tribes, tribal organizations, and urban Indian organizations to purchase Federal Employees Health Benefits (FEHB), rights and benefits for their employees. Eligible employees of urban Indian organizations and tribes or tribal organizations carrying out programs under the Indian Self-Determination and Education Assistance Act are entitled to purchase coverage, rights, and benefits for their employees, providing the necessary contributions are paid into the appropriate trust fund(s).

OPM has been working with the tribes for the past year in an effort to implement this provision.  Last week, OPM created a website dedicated to this ongoing effort. A May 2, 2011, OPM letter posted on the site explains that

In the coming weeks, we [OPM] will be circulating a consultation schedule, along with documents that will summarize and outline many of the questions we will work through during consultation. At the conclusion of the consultative process, we plan to convene a Tribal-Federal work group to discuss remaining technical requirements, and we will be providing additional information on that as well. We will conduct the consultative process over the summer, and make access to this coverage available as quickly as possible thereafter.

The FEHBlog will continue to track the progress of this initiative.

Last week HHS Secretary Kathleen Sebelius (who wrote a Mother’s Day paean to the Affordable Care Act) had the pleasure of appearing before Senate and House Committees last Thursday about the Affordable Care Act implementation. The Senate Committee on Health, Education, Labor, and Pensions heard her testimony as part of a hearing on the Affordable Care Act’s impact on consumers. The FEHBlog notes the following observation from the Committee’s minority ranking member, Sen. Mike Enzi (R Wyoming)

During a hearing today on improving health quality and patient safety, Senator Enzi asked where the promised health care savings are for government initiatives like the Partnership for Patients program.  Enzi said that Congress should focus on substantive changes that can really improve patient care instead of providing funds to encourage providers to do what they should already be doing. 

Sen. Enzi added that he would be sending a letter to the CMS actuary requesting an estimate of the net savings that the Partnership for Patients program wll generate.   Secretary Sebelius also testified before the House Education and the Workforce Committee to discuss her agency’s implementation of the new law.

Kaiser Health News and Modern Healthcare report on the current state of the medical community’s efforts to fix the statutory sustainable rate of growth formula for adjusting the amounts that Medicare Part B pays doctors. For the past several years, the formula has produced a reduction that Congress has temporarily overridden thereby increasing the cost of correcting the problem. The current temporary fix expires at the end of this year. As Newman (from the Seinfeld show) once said in a slightly different context, it’s “quite a conundrum.”

Finally, although the FEHBlog suffers from allergies, the FEHBlog failed to notice that in March the allergy medicine Allegra became with Food and Drug Administration approval an over the counter drug. This means that health plans no longer cover Allegra. But it’s still good news for consumers. Consumer Reports has weighed in on OTC Allegra vs. generic OTC versions of the drug.

We found a 30-day supply of Allegra Allergy for $19.99 at Drugstore.com and $25.88 at Walmart.com. But a 30-day supply of generic loratadine at Drugstore.com was $6.99, and the Walmart store-brand version of loratadine (Equate) was just $3.81 for 30 pills. Those are some of the reasons generic loratadine was our recent Best Buy Drugs pick for allergy drugs.

Of course, not all allergy drugs work equally well for all people. In fact, our survey published last year found that allergy sufferers tried an average of three medications to get relief, and 26 percent tried five or more. Some even took two or more medications simultaneously to treat different symptoms. So if loratadine doesn’t work for you, it might be worth giving Allegra Allergy a try. 

Forbes reports that Walgreen’s earnings have been hurt by this switch.

Fortune Magazine reports on the Secretary of Health and Human Service’s ongoing process of developing an essential benefits package as required by the Affordable Care Act. The article explains (as discussed in the FEHBlog) why the outcome of this process is so important. The essential benefits package must be in place for the 2014 calendar year. Qualified health plans operating in the state health insurance exchanges must offer the essential benefits identified by the HHS Secretary.  Employer sponsored plan such as FEHB plans operating outside the exchanges may not impose lifetime or annual dollar limits on HHS designated essential benefits. It’s a big deal.

Reuters reports that Larry Merlo, CEO of CVS/Caremark, the pharmacy chain / pharmacy benefit manager, told analysts today that “Let me address the speculation with regards to the future direction of our company, “There are no plans to split up the company.”

Kaiser Health News reports on the new trend of health insurers, particularly Medicare Advantage plans, opening urgent care clinics for their members. “By giving urgent care, working longer hours, welcoming walk-ins, and offering care such as IV therapy that is not available at most doctors’ offices, the clinic can keep patients from running up big hospital bills.” Interesting.

With Congress back in session, the AHIP Hi-Wire offers a helpful status report on FY 2012 budget and related debt ceiling negotiations up on Capitol Hill.

Employee Benefits News reports on the 16th annual Towers Watson / National Business Group on Health survey of employers about purchasing value in health care. The report identifies the following top 12 tactics used by companies that consistently hold their health care cost increase at or below the median:

1. Differentiate cost sharing for use of high-performance networks or centers of excellence.
2. Reward based on biometric outcomes other than smoker, tobacco-use status.
3. Change plan options.
4. Use value-based benefit designs.
5. Reward or penalize based on smoker, tobacco-use status.
6. Audit of medical claim payments.
7. Provide employees with information on provider and/or hospital quality.
8. Use centers of excellence for treatments other than transplants.
9. Reward only those who complete requirements of a healthy lifestyle activity.
10. Require employees to complete the health risk appraisal and/or biometric screening to be eligible for other financial incentives for healthy activities.
11. Reward enrollment in healthy lifestyle activities.
12.Use hard-dollar return-on-investment calculations to support future decisions.

Business Insurance reports today that “large health insurers expect an increase in deals in the industry after last year’s U.S. health care overhaul made it tougher for smaller companies to compete.” As noted the in the FEHBlog, the Affordable Care Act also is driving up consolidation among health care providers.  It appears that one way or the other we will wind up with a single payer (FEHBlog effort at humor).

The Treasury Department and the Internal Revenue Service yesterday asked for public comment on approaches to implementing the shared responsibility provisions of the Affordable Care Act. These provisions require employers of 50 or more employee to provide health care coverage to their employees or pay a penalty. In the requuest (IRS Notice No. 2011-36), the government describes approaches for determining who is a full time employee. The comment deadline is June 17, 2011.

Finally, on the patient safety front, the AMA News reports about a federal government study finding a rapidly growing number of hospitalizations attributable to adverse medication side effects in a graying population over the period 2004-2008. “Less than a quarter of the drug-related ED visits and less than 10% of inpatient stays were due to mistakes by physicians, pharmacists or patients. The rest were cases in which patients took prescribed medicines as ordered but had side effects severe enough to send them to a hospital.” The article notes that electronic prescribing should help remedy this problem by alerting doctor #2 to the prescriptions issued by doctor #1.

Congress returns from its Spring break tomorrow. I noticed that the House of Representatives has refreshed its website. This coming week is Public Service Recognition Week as highlighted on OPM’s website.

On the good news front, “University of Wisconsin School of Medicine and Public Health researchers call it “wonderful news” that a much less expensive cancer drug seems to work well to treat the leading cause of blindness in people over the age of 50.”  According to a UW press release, “The National Eye Institute study compared Avastin, a cancer drug that is commonly used off-label to treat age-related macular degeneration (AMD) [at $50 per dose], and Lucentis, the Food and Drug Administration-approved drug for treating AMD [at $2,000 per dose]. The Comparison of AMD Treatments Trials (CATT) found that the two drugs had similar effectiveness.” At the OPM AHIP carrier conference, Robert Epstein, a Medco medical director gave a very entertaining and hopeful talk about anticipated, near term breakthroughs in these specialty drugs. Hopefully, this is just the start.

On Friday, the Health and Human Services Department issued a final rule implementing a value based purchasing program for hospital services covered under Medicare Part A. The program will not take effect until October 1, 2012, the beginning of the federal government’s 2013  fiscal year. The HHS press release explains that

In FY 2013, an estimated $850 million will be allocated to hospitals based on their overall performance on a set of quality measures that have been shown to improve clinical processes of care and patient satisfaction.  This funding will be taken from what Medicare otherwise would have spent, and the size of the fund will gradually increase over time, resulting in a shift from payments based on volume to payments based on performance. 
Some of these measures will assess whether hospitals:

• Ensure that patients who may have had a heart attack receive care within 90 minutes;

• Provide care within a 24-hour window to surgery patients to prevent blood clots;

• Communicate discharge instructions to heart failure patients; and

• Ensure hospital facilities are clean and well maintained.

The measures to determine quality in the Hospital Value-Based Purchasing Program focus on how closely hospitals follow best clinical practices and how well hospitals enhance patients’ experiences of care. When hospitals follow these types of proven best practices, patients receive higher quality care and see better outcomes.  And helping patients heal without complication can improve health and ultimately reduce health care costs.  For example, ensuring heart failure patients receive clear instructions when they are discharged on their medications and other follow-up activities reduces the likelihood that they will suffer a preventable complication that would require them to be readmitted to the hospital. 

The better a hospital does on its quality measures, the greater the reward it will receive from Medicare.  The measures selected for the Hospital Value-Based Purchasing program in FY 2013 have been endorsed by national bodies of experts, including the National Quality Forum.  Hospitals have been reporting on quality measures through the Hospital Inpatient Quality Reporting Program since 2004, and that information is posted on the Hospital Compare website. For a complete list of quality measures, visit www.HealthCare.gov/news/factsheets/valuebasedpurchasing04292011b.html.

Modern Healthcare reports that industry reaction to the new rule is mixed.  HHS explains in the press release that this rule helps achieve the patient safety and quality improvement objectives of the public/private Partnership for Patients initiative.  The AMA News reports on the medical profession’s favorable reaction to that initiative.

The Affordable Care Act required health plans, including FEHB plans, to liberalize out of network emergency room care. Medscape reports that “In a survey of US emergency physicians, more than 80% said emergency visits are increasing in their emergency department (ED), with roughly half reporting significant increases, and more than 90% expecting increases in the next year.” While the increase cannot be blamed entirely on the Affordable Care Act, the liberalized coverage must be contributing to this trend. Meanwhile Medpage Today observes that

Although hospital outpatient care makes up only 5% of all outpatient visits in the U.S., it accounts for more than one-fifth of outpatient costs, according to Agency for Healthcare Research and Quality researchers.

Looking at 2008 data from the Medical Expenditure Panel Survey, Steven Machlin and Sadeq Chowdhury, PhD, found that the lion’s share (91%) of outpatient visits occurred in office-based settings, “but these visits accounted for only 64% of all ambulatory physician visit expenditures” due to the higher cost of hospital outpatient care.
The remaining 36% of outpatient care costs were divided between hospital outpatient care (22%) and emergency department care (14%), according to the study.

The average cost of an office-based visit was $199, compared with $922 for emergency department (ED) visits and $1,275 for hospital outpatient visits, the investigators wrote. “Physician visits in [hospital] outpatient settings were considerably more likely to involve surgery than other settings, which contributed to the notably higher outpatient expenses per visit.”

Among visits where no surgical procedure was involved, expenses per visit were generally highest for the emergency department and lowest for office-based visits, they noted.
Interestingly, a higher percentage of hospital outpatient visits — 58.4% — had no out-of-pocket costs for patients, compared with office-based visits (44%). For those visits that did involve out-of-pocket expenses, the average expense was much higher for hospital outpatient visits ($121 versus $29).

FEHBlog emphasis added.

Health Leaders reported on the coming of age of so-called “patient navigators” — case managers based at the provider of care’s facility rather than the insurer’s.

These case managers tend to be registered nurses who sometimes work from a remote location by phone. Or with increasing frequency Cigna, for example, a health plan with 11 million lives, started requiring embedded care coordinators in 2008 when it signed a contract with the Dartmouth-Hitchcock physicians group in New Hampshire. Today it has eight such contracts. And they’re being added “aggressively,” says Cigna spokesman Mark Slitt, with a total of 30 physician practice contracts including that language covering nearly 500,000 lives currently.

Jennifer Farlow, RN, BSN, is one such coordinator. She began in June 2010 with Atlanta area’s Piedmont Physicians Group, which has since added two health coaches and a clinical case manager to help out. Each month she receives a list of patients with the highest medical costs, including their frequency of emergency department use, and a gaps-in-care report listing people with chronic conditions, such as diabetes, who need monitoring. She checks the files for patients who haven’t been in to see their primary care physician in a while. She gets on the phone and calls each one.

What a great idea!

This Tuesday’s Tidbits focus on prescription drugs.

The IMS Institute for Healthcare Informatics released this month a report on the use of medicines in the United States in 2010. The report notes the following trends

Total spending on medicines increased from $300.3Bn in 2009 to $307.4Bn in 2010.
• The decline in the volume of protected branded products reduced spending in 2010 by $8.3Bn compared to 2009.
• Increases in the pricing of protected branded products – without consideration to off-invoice discounts or rebates – raised spending by $16.6Bn.
• Brands losing patent protection or exclusivity in 2010 resulted in a reduction in spending of $12.6Bn.
• Spending growth for new brands was $4.0Bn in 2010.
• Spending on generics – including both volume and price effects – increased by $7.6Bn in 2010 compared to 2009.

Finally, this coming Saturday April 30, the U.S. Drug Enforcement Administration will be holding its second National Prescription Drug Take Back Day. According to the DEA press release, “More than 5,100 sites nationwide have joined the effort that seeks to prevent pill abuse and theft. This is hundreds more sites than were established for the event last fall. The free event will be held from 10 a.m. to 2 p.m. local time. Government, community, public health and law enforcement partners at these sites will be working together to collect expired, unused, and unwanted prescription drugs that are potentially dangerous if left in the family’s medicine cabinet. Collection sites in every local community can be found by going to www.dea.gov and clicking on the “Got Drugs?” banner at the top of the home page, which connects to a database that citizens can search by zip code, city or county.” The FEHBlog plans to take advantage of this opportunity.