FEHBlog

The 2018 Milliman Medical Index was recently published.

Bad news: The MMI increased by $1,222 from 2017 to 2018.  For more than 10 years now, the MMI has been increasing at an average of just over $100 per month.
Good news: At 4.5%, the MMI’s annual rate of increase is nearly the lowest in 18 years. Only last year was lower, at 4.3%. Over the 18 years since the MMI was first measured in 2001, the annual rate of increase has averaged 7.4%. But for eight years in a row now, the rates have been below that average. As discussed later in this report, although the MMI’s dollar amount continues to grow, the rate at which it grows is clearly slowing.

While the MMI rate increase is slowing, the rate remains well above the CPI-U inflation rate, which most recently was up 2.5% annually.

Sen. Bill Cassidy, MD (R LA) issued a eight page long description of sensible policy changes that would make health care more affordable. Embedded in the good Senator’s paper was a cite to this interesting academic paper on hospital pricing that relies on data from the Health Care Cost Institute.

Healthcare Dive reports based on an Oliver Wyman study that number of payer-provider partnerships is ramping up, which is a good sign for cost control.

In other good news, the federal Agency for Health Care Research and Quality announced that “The National Scorecard on Rates of Hospital-Acquired Conditions, 2014 to 2016, the most recent report, shows that from 2014 to 2016, HACs fell by 8 percent, saving about 8,000 lives and about $2.9 billion in healthcare costs.”

Finally, a bevy of prescription drug benefit news reports

• Co-pay accumulators work according to the CNBC report. 
• Health Affairs discusses this status of a class of cholesterol inhibiting specialty drugs known as PCSK9 inhibitors. The author’s conclusion: “Ultimately, if patients are truly to benefit from innovative therapies, all stakeholders—including manufacturers, payers, and providers—must engage in efforts to ensure appropriate drug pricing, utilization management, and prescribing.” Amen to that sentiment. 
• CMS reports that the Medicare Trustees annual report projects lower spending for Medicare Part D, another sign that adding Medicare Part D EGWPs to the FEHBP is a dandy cost saving idea. 

Congress returns to work on Capitol Hill following a State/district work period last week. Healthcare Dive reports on bipartisan House bill to suspend the onerous Affordable Care Act health insurance fee for one more year beyond 2019 for which it is already suspended.  This is a tax which increases health insurance premiums in the ACA marketplace and elsewhere including the FEHBP by 3% (it’s in effect this year) should have been repealed long ago.

June is expected to be the final month of The U.S. Supreme Court’s October 2017 term. NPR offers an article discussing the noteworthy cases which have been argued but not yet decided this term. Those decisions and others will begin to be issued tomorrow morning at 10 am.

Speaking of summer breaks, the Blue Cross Blue Shield Association last week issued a report “shining the light” on skin cancer facts. Skin cancer is the most common cancer in our county. The report’s website can be skimmed for helpful facts and advice. Forbes offers an article on the report which lists the top states for skin cancer rates, which list includes the FEHBlog’s home state Maryland and the adjoining District of Columbia.

Finally, the American Hospital Association provides a conference video of a presentation on affordability strategies. In sum, “[h]ealth care leaders can utilize data, reexamine pricing and manage risk to make health care more efficient and affordable, a panel of hospital and health system leaders said during a session at this month’s AHA Annual Membership Meeting.” It’s good to see providers taking the initiative.  It takes payer and provider cooperation to make care affordable.

The American Medical Association issued a report finding a “decrease in opioid prescribing and increases in the use of state
prescription drug monitoring programs (PDMPs), number of physicians
trained and certified to treat patients with an opioid use disorder, and
in access to naloxone.” The AMA urges that

• All public and private payers should ensure that their formularies
  include all FDA-approved forms of medication assisted treatment (MAT)
  and remove administrative barriers to treatment, including prior
  authorization.
• Policymakers and regulators should increase oversight and
  enforcement of parity laws for mental health and substance use disorders
  to ensure patients receive the care that they need.
• All public and private payers—as well as pharmacy benefit management
  companies—must ensure that patients have access to affordable,
  non-opioid pain care.

FDA Commissioner Scott Gottlieb, MD, yesterday announced administrative steps that the Food and Drug Administration is taking to accelerate approval of generic prescription drugs.

Similarly, Healthcare Dive discusses measures that the Centers for Medicare and Medicaid Services plan to take to remove road blocks to health care data sharing among healthcare providers. Why this interoperability feature was not built into electronic health records before the government threw $32 billion at the industry remains a disturbing mystery to the FEHBlog. In this regard, check CAQH’s Industry Roadmap for Healthcare Provider Data.

Today is the OPM specified deadline for FEHB plan carriers to submit their 2019 benefit and rate proposals to the agency. No doubt carriers are breathing a sigh of relief. The agency now must evaluate the proposals and eventually reach agreement with the carriers over the next six to eight weeks.

In September, OPM announces the 2019 maximum government contribution. Under FEHB Act Section 8906, the government contribution is capped at 75% of the selected plan’s premium.  Federal employees and annuitants will be able to select their 2019 plan during Federal Benefits Open Season that runs from mid-November to mid-December.

The Washington Post reports that effective next year the State of California plans to bar hospitals with low scores on certain quality metrics from holding in-network status in health plans participating in the State’s Obamacare and Medicaid exchanges. Times up according to the article. It struck a chord with the FEHBlog because OPM under its “plan performance system” bases 65% of each nationwide FEHB plans already miserly gross profit on similar quality metric scores. Now OPM hopes that Congress will base the FEHBA government contribution in part on these quality scores. Financially punitive, metric driven approaches like California’s, OPM’s, the ACA’s questionable readmissions penalty on hospitalsare prime examples of the “tyranny of metrics.” In the FEHBlog’s view, the approaches are not good for healthcare because they drive up administrative expenses in efforts to boost quality metric scores, among other concerns.

The Health Care Cost Institute blog reports that Emergency room “spending among the commercially insured continued to rise in 2016, driven by the price and use of high severity cases (2009-2016).” So while health plans have been seeking to divert members to lower cost facilities like urgent care centers, etc., the hospitals have been jacking up their prices for the people who need to visit the emergency room.  The Affordable Care Act has done little, if anything, to control health care spending, again in the FEHBlog’s view.

The FEHBlog, who likes his own high deductible plan with health savings account, noted this Employee Benefit News article suggesting that people of all ages make voluntary contributions to their health savings account before their retirement plans.

While a 401(k) plan will beat an HSA if left to retirement, reality hits when withdrawals are made from the 401(k) to pay for things like medical expenses — not to mention a 401(k), and other traditional retirement plans, are burdened with taxes and penalties. With healthcare being one of the biggest expenses most individuals will face during retirement, an “HSA first” approach makes the most sense, as it offers a unique triple-tax advantage [tax free deposits, tax free growth, tax free healthcare spending]. 

For those who are uncomfortable with this strategy, there are several additional benefits to an HSA, such as: 

• 100% of unused funds roll over year-after-year

• Funds go with you even if you switch employers

• Can pay for the eligible expenses of your legal spouse and tax dependents regardless of their insurance

• Can be used for Medicare premiums as well as qualified long-term care premiums 

An individual can also reimburse for out-of-pocket health expenses at any time — even 30 or 40 years in the future. During that time, money grows in the HSA tax free. Some refer to the HSA as a “stealth IRA” when it’s used this way.

Pretty, pretty good.

The House of Representatives and the Senate are on holding district / State work periods this week.

CNBC reports that “Starting in 2019, LabCorp will no longer be the exclusive lab provider for UnitedHealth, but it will gain access to Aetna. Meanwhile, Quest will lose its exclusivity with Aetna, but will be among UnitedHealth’s preferred providers.”  Over the weekend, the FEHBlog read Bad Blood, Wall Street Journal reporter John Carreyrou’s book about the rise and fall of the lab services provider Theranos. Fascinating.

Healthcare Dive reports about a successful Colorado experiment involving integrating behavioral health with primary care. Practically speaking that integration happens routinely so it makes sense to prepare for it.

Health Payer Intelligence offers ways that healthcare payers can get healthcare providers to use their electronic payment systems.

Electronic payment systems allow payers and providers to collaboratively improve the claims management process and enhance payment accuracy within a single platform. Digitally-based claims payments may lead to more efficient healthcare systems that allow payers and providers to focus on other organizational improvements.

Time marches on.

We have finally reached the end of the great federal holiday drought which runs from Presidents’ Day in mid -February to Memorial Day weekend which starts tomorrow.

Yesterday, the Congressional Budget Office released a report that “examines how budgetary outcomes under those proposals would compare with CBO’s adjusted baseline budget projections.” The report finds in its health programs section that OPM’s proposed legislative change to the FEHBP government contribution formula would have budgetary savings of nearly $5 billion over the period 2021 through 2028. OPM would work its magic by reducing the government contribution for most plans and raising it by 4% by those plans which in OPM’s view offer higher quality. OPM still has not released the legislative language as far as the FEHBlog know. But it appears that OPM will push forward with the plan with Congress.

Speaking of Congress, the Washington Examiner reports that a bipartisan group in Congress has introduced a bill to suspend the ACA’s onerous health insurer fee for 2020. It’s already suspended for next year, but surprisingly like a vampire it was reactivated for this year.  It’s a good idea to start early on this worthy initiative as the health insurer fee only raises premiums, particularly in the FEHBP.

Modern Healthcare reports that a group of health systems are continuing on their joint effort to create a generic drug manufacturer to serve health systems.

Intermountain Healthcare, Ascension, SSM Health and Trinity Health are working with the U.S. Veterans Affairs Department to pool their capital and fight back against drug companies that unexpectedly hike the prices of decades-old off-patent generic drugs. The providers also want to create a more reliable supply of generic drugs like sodium bicarbonate and saline that are vulnerable to shortages.

While the health systems didn’t specify what drugs their new venture will make, they want to provide both sterile injectables and oral medications either through their own facility or by contracting with existing manufacturers. 

Eighty percent of nearly 750 providers, payers and pharmaceutical companies polled said they are optimistic or cautiously hopeful that the new endeavor will change the status quo, according to a Reaction Data survey. Ninety percent of 605 hospitals and clinics surveyed said they would buy drugs from the new entity.

The FEHBlog also hopes that the joint venture succeeds.

Retired OPM official Reg Jones reminds us about the impact on life events on FEHBP coverage on FedWeek.com.

Federal News Radio reports that Congress has sent a Veterans Affairs healthcare overhaul bill to the President’s desk for signature. (Just so you know that FEHBlog know, a bill passed by Congress becomes law if the President doesn’t sign or veto it within 10 days after receipt as long as Congress is in session. That’s in the Constitution.)

Healthcare Finance News tells us about an interesting Milliman study prepared for AHIP. The study allocates an average premium dollar to various purposes.

Prescription drug prices and medical costs, which account for more than 45 percent of the average dollar, continue to rise, AHIP said, forcing premium increases. 

The researchers examined two years of data from commercial plans and from the individual market, from 2014 to 2016.

Cost curve up.

Health Payer Intelligence tells us that “Healthcare payers that wish to be known as innovators need to continually be on the lookout for emerging health plan market opportunities that offer strong profit potential.”  The article describes payer strategies.  In that regard, the FEHBlog noticed in Healthcare Dive that Anthem has purchased a palliative care company Aspire Health that really impressed the FEHBlog when he read an article about the company in December 2016.

Aspire, founded in 2013 by former U.S. Sen. William Frist and CEO Brad Smith, focuses on in-home care support for patients with serious illnesses. The model emphasizes care coordination through the use of a care team, including physicians, nurse practitioners, nurses and social workers.
The Nashville, Tennessee-based Aspire currently holds contracts with more than 20 health plans across 25 states. Terms of the deal, which is expected to close in the third quarter of this year, were not disclosed.

Good move, Anthem.

The Wall Street Journal reports that the House of Representatives Congress sent to the President’s desk the Senate’s right to try bill (S.  204).  “The version of the legislation that passed Tuesday is broad and allows patients access to an investigational drug if the patient is diagnosed with a life-threatening disease or condition.”  Health plans generally do not cover investigational drugs as the manufacturer usually assumes that cost. The President is expect to sign the bill into law. 


Healthcare Dive informs us that the Government Accountability Office is recommending that the Centers for Medicare and Medicaid Services continue Medicare’s prior authorization programs because those programs save money. The American Medical Association has been on a holy war against insurer prior authorizations for the same reason, at least in the FEHBlog’s opinion. This GAO report has to be a shot in the arm for all prior authorization programs. 


Two worthy initiatives:


1. Fierce Healthcare reports on a fresh effort to improve patient safety.

Led by the Institute for Healthcare Improvement (IHI), a newly launched steering committee will seek to refocus the industry’s attention on safety and quality goals, such as finding ways to cut down on medical errors. In all, a collection of 24 groups including private organizations like the American Hospital Association and the ECRI Institute will be part of the new committee.

The steering committee held its inaugural meeting today, and

2.  Fierce Healthcare also reports that Kaiser Permanente, which is the carrier with the third largest enrollment in the FEHBP, is investing $200 million in urban housing initiatives through a partnership with the U.S. Mayors and CEOs for Housing Investment.

Finally, the Internal Revenue Service has announced the inflation adjusted percentage that applicable large employers will use to determine whether the minimum essential coverage offered to employees is affordable as required by the Affordable Care Act for plan years beginning after December 31, 2018. The specified percentage is 9.86%, up from 9.56% this year.

Congress remains in session on Capitol Hill this week.

The Supreme Court issued a significant opinion last week striking down a federal law restricting sports gambling. Invoking a Constitutional law principle called “anti-commandeering,” the Court found the law defective because it sought to order around state governments, rather than U.S. citizens and residents (which is OK).   While recognizing that “The Constitution limits state sovereignty in several [significant] ways,” the Court remarked that

The legislative powers granted to Congress are sizable, but they are not unlimited. The Constitution confers on Congress not plenary legislative power but only certain enumerated powers. Therefore, all other legislative power is reserved for the States, as the Tenth Amendment [to the Constitution] con­firms. And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States. The anti-commandeering doc­trine simply represents the recognition of this limit on congressional authority. 

You learn something new everyday. (The Court noted that the use of the term anti-commandeering doctrine did not crop up until the 1990s a decade or so after the FEHBlog graduated from law school.)

OPM Director Dr. Jeff Pon reminded us last Friday about a useful OPM website unlocktalent.gov  If you scroll down the home page you will find a lot of useful demographics information about federal employees. If you are a federal employee, you can register to log in and get more details.

The Blue Cross Blue Shield Association issued a Health of America report on major depression. Here are the key findings:

• Major depression has a diagnosis rate of 4.4 percent in the United States, affecting more than 9 million commercially insured Americans.
• Diagnoses of major depression have risen dramatically by 33 percent since 2013. This rate is rising even faster among millennials (up 47 percent) and adolescents (up 47 percent for boys and 65 percent for girls).
• Women are diagnosed with major depression at higher rates than men (6 percent and nearly 3 percent, respectively).
• People diagnosed with major depression are nearly 30 percent less healthy on average than those not diagnosed with major depression. This decrease in overall health translates to nearly 10 years of healthy life lost for both men and women.
• A key reason for the lower overall health of those diagnosed with major depression is that they are likely to also suffer from other health conditions. Eighty-five percent of people who are diagnosed with major depression also have one or more additional serious chronic health conditions and nearly 30 percent have four or more other conditions.
• People diagnosed with major depression use healthcare services more than other commercially insured Americans. This results in more than two times higher overall healthcare spending ($10,673 compared to $4,283).