The FEHBlog is still experiencing internet difficulties at home.

OPM announced on Wednesday that it is requiring FEHB plans to offer “Blue Button” technology to their members in mid-March 2012. “Blue Button allows patients to see, download and keep their personal health data by clicking the ‘Blue Button’ on a secure Internet site.” The Veterans Affairs healthcare system successfully has implemented the Blue Button for its patients. Although this strikes the FEHBlog as a good idea, the fly in the ointment is that while the VA delivers healthcare to patients, the FEHBP delivers benefit payments to enrollees. Now this is not black and white. Kaiser Permanente  is an example of a health care provider that participates in the FEHBP. It will be interesting to see how enrollees react to this new technology.

Standard and Poors reported yesterday that

The S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.13% over the 12-months ending November 2011. This is a decline from the +5.29% annual growth rate posted for October 2011.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered bycommercial insurance plans increased by 6.96% over the year ending November 2011, down from the +7.10% reported for October. Growth rates in Medicare claim costs rose by 2.37%, as measured by the S&P Healthcare Economic Medicare Index, down from the 2.55% reported for October.

The S&P Healthcare Economic Professional Services Medicare Index also dropped from +4.15% in the year ending October 2011 to +3.62% in November. The S&P Healthcare Economic Hospital Medicare Index increased slightly to +1.33% in November from its +1.28% October value.

That growth rate is somewhat higher than the CMS actuary report that health care costs increase about 3.9% in 2010.

In less than encouraging news related to this topic, Medscape reports that “Most Medicare demonstration projects aiming to reduce costs and improve the quality of care — prime goals of healthcare reform — miss their mark, according to a new study from the Congressional Budget Office (CBO) published online Wednesday.” And the AMA News reports that medical specialists are hiring laid off drug representatives to sell their services to primary care physicians.

The House of Representatives is back to work today and the Senate returns next Monday to face the tax extenders issue again. The American Medical Association is pushing for a permanent replacement for the sustainable rate of growth formula used to set Medicare Part B reimbursements to doctors. The Hill’s Healthwatch blog reports that

The AMA wants Congress to use savings from ending the wars in Iraq and Afghanistan to offset the cost of replacing the SGR. Some lawmakers have balked at using the savings as an offset, though Sen. Jon Kyl (R-Ariz.) warmed up to the idea last year, saying the war savings and the SGR both amount to fake money. [FEHBlog note — Good point!]

If Congress doesn’t tap into the war savings to offset its next doc fix, it will likely make targeted cuts to hospitals and other healthcare providers.

The New York Times reports that Walgreens is standing firm on its decision to end its contract with the large prescription benefits manager Express Scripts. According to the article, Walgreen’s stock price dropped by 25% in the last sixth months of 2011 while the contract negotiations ground onto failure. “A spokesman for Express Scripts said the company remained open to having Walgreen in its network, ‘but only at rates and terms that are right for our clients and in line with other pharmacies in our network.’”

The pharmacy benefit managers trade association announced today the launch of

a new ad campaign – “That’s What PBMs Do” – that highlights the core value proposition of pharmacy benefit managers (PBMs). The ad campaign focuses on key themes including:

• PBMs reduce pharmacy costs for employers, unions, and consumers
• PBMs play a key role in the Medicare Part D success story
• PBM mail-service pharmacy improves safety, savings, and convenience

“This ad campaign will educate policymakers and opinion leaders about the important savings and safety benefits PBMs provide to more than 216 million Americans,” said PCMA President and CEO Mark Merritt.”

Meanwhile Chain Drug Review reports that a coalition of consumer groups and “a growing number” of federal lawmakers are asking the Federal Trade Commission to reject the  Express Scripts merger with Medco on antitrust grounds.

OPM also has encouraged FEHB plans to offer discounts on fitness center membership. The Washington Post this morning reports about a study recently published in the New England Journal of Medicine finding that Medicare Advantage plan members who take advantage of similar programs were in better health than those who don’t. But there’s always a catch, the researchers express concern that the fitness programs can create adverse selection.

Finally, Federal News Radio reports on OPM’s efforts to expand the FEHBP to Indian tribal employees as required by the Affordable Care Act.  According to the article,

At most, 350,000 employees of tribes or tribal organizations could join FEHB.
“The population that we’re bringing into the FEHB is young and relatively healthy,” said National Congress of American Indians Policy Director Ahniwake Rose.

But with more than 8 million people already in the federal healthcare program, it “is probably not going to have any measurable impact one way or the other,” on existing participants, [OPM Healthcare and Insurance Director John] O’Brien said.

He expects about 25,000 employees of tribes to join the plan this year. They should have insurance cards by May 1, he said.

This tidbit from the report caught the FEHBlog’s eye:

Retail prescription drug spending (10 percent of total health care spending) grew only 1.2 percent to $259.1 billion in 2010, a substantial slowdown from 5.1-percent growth in 2009 and the slowest rate of growth for prescription drug spending recorded in the NHE.

This calculation was made using data that predates the huge conversion of brand name blockbuster drugs, like Lipitor that began late in 2011. Will we see a decrease in this spending category in future years?

Of course, this cogitation reminds me of the still ongoing dispute between Express Scripts and Walgreens. As the FEHBlog recalls, Walgreens wanted Express Scripts to pay for pharmacist advice to customers. Interestingly, CVS Caremark announced yesterday a study

highlights the central role pharmacists play in improving the health of their patients and how our programs leverage that expertise as we reinvent pharmacy care,” Foulkes said. “The program featured counseling by pharmacists at retail stores and a dedicated pharmacist call center for those identified as having diabetes. The pharmacist interventions resulted in increased patient adherence and encouraged higher initiation rates of medications needed to best treat diabetes. The results show we are helping people on their path to better health.”

The FEHBlog does expect that the pharmacy chains will win this battle over time.

The NHE reports “Physician and clinical services spending, which accounted for 20 percent of total health care spending, grew 2.5 percent to reach $515.5 billion in 2010, slowing from 3.3-percent growth in 2009.” The AMA News has been very concerned about this recession related slowdown. A recent AMA News story concerns a study which finds that more people from age 19 to 26 report having a doctor which offers a glimmer of hope for the medical community.

The FEHBlog is betting that the mapping of the human genome eventually will pull the cost curve down permanently. The Wall Street Journal reports that medical technology is on the verge of charging $1,000 — the cost of an MRI test — to map an individual’s DNA — down from $350,000 about five years ago. And the price will go lower over time.

But understanding how genes work together to cause a condition or to develop a treatment will require extensive laboratory research far beyond merely analyzing the genome, said Karen Kaul, a molecular pathologist at NorthShore University HealthSystem in Evanston, Ill., and spokeswoman for the American Society for Clinical Pathology.

“We are just beginning to scratch the surface about what [genomic] changes are clinically relevant,” she said. “I think we have to be realistic and a little cautious” about current genomic information.

True but as a wise philosopher once said “If you build it, they will come.”

Congress remains in recess this week.  The House returns on January 17 and the Senate returns on January 23.

The FEHBlog doubts that federal regulators will approve the merger of the two large prescription benefits managers Express Scripts and Medco after the government rejected the AT&T – T-Mobile deal. However, Business Week reports that “Even as U.S. regulators take a tougher stance on takeovers, traders are
convinced they can reap the biggest return in America by betting Express
Scripts Inc. will win antitrust approval to buy Medco Health Solutions
Inc.” The Business Week article explains why investors are distinguishing between the two deals.

The FEHBlog has been wrong before. The FEHBlog never expected that Walgreens and Express Scripts would fail to resolve their contract dispute when it was first reported last summer. But here we are six months later and Express Scripts has stopped covering Walgreen’s prescriptions. This dispute does not impact a lot of FEHB plan members but it affects a ton of TRICARE beneficiaries because Express Scripts is the sole PBM for TRICARE.

The Chicago Tribune explains why Walgreens is hurting but not down for the count. Business Week reports that Walgreens is asking Express Scripts to reopen negotiations. 

On January 5, the Department of Health and Human Services issued new electronic standards for fund transfers under the Health Insurance Portability and Accountability Act (“HIPAA”).  This interim final rule has a  January 2014 compliance date. The press release explains that

Future administrative simplification rules will address adoption of:

• A standard unique identifier for health plans;
• A standard for claims attachments; and
• Requirements that health plans certify compliance with all HIPAA standards and operating rules.

The press release quotes the HHS Secretary as follows — “Thanks to the Affordable Care Act, health care professionals will spend less time filling out paperwork and more time focusing on delivering the best care for patients,” said HHS Secretary Kathleen Sebelius. The FEHBlog finds this statement to be quite humorous because HIPAA was enacted in 1996. HIPAA called for electronic funds transaction, health plan identifier, and claims attachment standards. Here we are over 15 years later and we are just getting the EFT standards. This is not a knock on the government. It is a knock on Congress for embedding fast moving technology standards in the law.

Kasier Health News offers an upbeat article on how collaborative efforts among insurers, providers, employers, and patients can save money and improve care. Well I’ll be darned.

Perhaps the biggest roadblock is the predominant fee-for-service system, which pays providers to deliver more services, rather than better, more efficient care. Health-care payers, including private insurers and Medicare, have been slow to change their payment models to reward outcomes rather than volume of care. That sometimes puts providers in the position of losing revenue by doing the right thing for patients.

Dr. Donald Storey, who worked on the Seattle collaborative as an Aetna medical director and now is a vice president at Premera Blue Cross, blames insurers’ reluctance to change on their having many different contracts with employers and providers. In addition, not everyone wants a more efficient system. “One man’s waste is another man’s income,” he says.

Some insurers have embraced collaboration. In Sacramento, Blue Shield of California, Catholic Healthcare West and Hill Physicians Medical Group have worked with CalPERS, the state public employee benefit system, to redesign care after they identified quality problems and high costs for 42,000 plan members.

Key areas were obesity-reduction surgery, hip and knee care, hysterectomies, and preventable emergency department visits and hospital readmissions. For example, Hill Physicians persuaded its OB/GYNs to perform more minimally invasive hysterectomies, which are safer and cheaper than open hysterectomies, when appropriate. Catholic Healthcare West hospital staff worked closely with patients on their medication instructions before discharge, to make readmissions less likely.

Redesigning care through a collaborative is “not easy to do. There’s a lot of investment of human resources, and we didn’t know if it would work or not,” says John Wray, senior vice president for managed care at Catholic Healthcare West. “But this was something we thought was important to try to learn from.”

It worked. Hospital length of stay and readmissions both declined 15 percent in 2010. That helped save more than $20 million, exceeding the $15.5 million target and allowing Blue Shield to keep CalPERS’ premiums flat in Sacramento for 2011. The remaining savings were split among the three partners, who would have lost money if the target hadn’t been hit.

In the same vein, the actuarial consulting firm Milliman provides a link to its recent report on bundled payments as an alternative to fee for service coverage.

My how time flies when it’s a four day work week. When Congress returns to work later this month, it must face the loose ends created by the two month long tax extenders act. One of this loose ends which impacts the health care industry is the Medicare Part B payment patch. Absent this patch the statutory sustainable rate of growth formula would cut Medicare Part B payments to doctors by 27.4%, leaving FEHBP plans, among others, to pick up the slack. Kaiser Health News offers an interesting FAQ on this important issue.

Modern Healthcare reports that “Highmark, the Blue Cross organization for western Pennsylvania, with a deal to acquire West Penn
Allegheny Health System, announced a $20 million investment in the
system’s Forbes Regional Hospital and a new medical group affiliation.”

Speaking of acquisitions, the Denver Post reports that “Aetna has purchased Lakewood-based Healthagen, developer of iTriage, a [free and very popular] mobile application [for the Iphone or Android phone] that helps injured or sick people determine what’s wrong and find local treatment.” Mobihealth News adds that “Aetna is also leveraging the mobile application in its accountable care organization (ACO) offering, where it will be a key component for consumer engagement, Aetna executives said during an investor day presentation this week.” And there’s no profit cap on technology at least for now.

Even though both of these acquisitions strike the FEHBlog as pretty innovative, the CMS Innovation Center announced the names of 73 new innovation advisors, none of whom (evidently by law) are from the health insurance industry. “The Innovation Advisors Program is designed to broadly help individuals
refine, apply, and sustain managerial and technical skills necessary to
drive delivery system reform for the benefit of Medicare, Medicaid, and
Children’s Health Insurance Program (CHIP) beneficiaries.”

The FEHBlog wishes everyone a very happy and prosperous New Year. In 2012, we can expect final rules on the Affordable Care Act’s summary of benefits and coverage rule and the HITECH changes to the HIPAA Privacy Rule. Hopefully, common sense will prevail among the regulators. Business Insurance notes that another major regulatory action will involve the Affordable Care Act’s pay or play provisions applicable to employers.

Walgreen CEO Greg Wasson said Friday chances are probably “slim to
none” that the drugstore operator will reach an agreement with pharmacy
benefits manager Express Scripts before their current contract ends
Saturday.

Walgreen Co. announced that it is taking several steps
to help patients covered by an Express Scripts pharmacy network to
continue to use Walgreen locations after the agreement ends. It expects
to keep more than 120 Express Scripts clients, which include employers
and health plans.
Walgreen has said it expects about keep about 10
million of the prescriptions it fills for Express Scripts. It filled
about 88 million prescriptions in fiscal 2011, so that would amount to a
loss of almost 90 percent of the prescriptions.

That’s a lot of revenue to lose.

CMS dropped Chickasaw Nations Industries as the Medicare Secondary Payer Recovery Contract effective
September 30, 2011, and it has issued an RFP to combine the secondary payer recovery and coordination of benefits functions according to the Medivest Blog. In the meantime, GHI is performing this combined contract.  Senator Claire McCaskill explained the Government’s dissatisfaction with CNI in this fact sheet. Personal injury lawyers with aged clients have been having problems with delays encountered in trying to settle Medicare liens against tort recoveries — at topic discussed at Congressional hearing in June 2011.

The National Quality Forum has released a 2011 update to its list of Serious Reportable Events in Healthcare, such as wrong site surgeries and medication errors. The AMA News explains that

Hospitals in 24 states and the District of Columbia are required to report on some version of the National Quality Forum’s list, and items from the list have been selected for nonpayment by private health plans, Medicare and many state Medicaid programs. Four new items — part of the first update to the list since 2006 — are:

• Death or serious injury of a new born baby associated with labor or delivery in a low-risk pregnancy.

• Patient death or serious injury resulting from the irretrievable loss of an irreplaceable biological specimen (e.g., for a biopsy).

• Patient death or serious injury resulting from failure to follow up or communicate laboratory, pathology or radiology test results.

• Death or serious injury of a patient or staff associated with the introduction of a metallic object into the magnetic resonance imaging area.

The list now contains 29 serious reportable events.

Happy New Year!

The FEHBlog hopes the everyone is enjoying the holidays. It’s a slow week as we wind down 2011 and look forward to 2012.

Last week, CMS released a list of the thirty two health care organizations that will be serving as “pioneer” accountable care organizations beginning next week. “Under this initiative, operated by the Centers for Medicare &
Medicaid Services (CMS) Innovation Center (Innovation Center), Medicare
will reward groups of health care providers that have formed ACOs based
on how well they are able to both improve the health of their Medicare
patients and lower their health care costs.”

OPM has added a progress report to its web page concerning the Affordable Care Act mandated expansion of FEHBP coverage to Indian Tribal employees. OPM leads the progress report with the following announcement

OPM is excited to announce that Indian tribes, tribal organizations and urban Indian organizations may purchase FEHB coverage for their employees beginning in Spring of 2012. The earliest effective date of coverage for these employees is May 1, 2012. Tribes, tribal organizations and urban Indian organizations may also purchase FEHB coverage effective after this date.

Finally, the Tennessean reminds us that on January 1, 2012, doctors will face a one percent cut in Medicare Part B reimbursement if they are not using an electronic prescription system.