FEHBlog

OPM today released its call letter for 2020 FEHBP benefit and rate proposals. Here’s a link to the letter. FEHBP carriers must submit their 2020 benefit and rate proposals to OPM no later than May 31, 2019.

The Health Care Cost Institute released an interactive report on U.S. health care spending by locality over the period 2012 through 2016. Healthcare Dive notes that “Despite huge variations between cities and towns, one trend held true: Over the four-year period, the average area saw healthcare prices rise 13% and utilization drop by 17%.”

Forbes comments on a recently announced strategic alliance between Blue Cross of North Carolina and Cambia Health Solutions “that merges operations and management of two companies operating Blues plans on the East and West coasts.

Reuters reports that “The rate of first-time opioid prescriptions declined 54 percent between 2012 and 2017 in the U.S., largely because many doctors stopped prescribing the painkillers, according to a study of more than 86 million people covered by private insurance.” That’s good news, and this pendulum swing mimic what happened in this country in the early 20th century according to the excellent Sam Quinones book Dreamland about this opioid catastrophe.  The problem for health plans at this stage is covering addiction treatment which made difficult by the fact that there is no unquestioned standard of care.

Healthcare Dive tells us that “Bipartisan leaders of the Senate Finance Committee have invited the five biggest pharmacy benefit managers to testify next month [April 3] on their role within the drug pricing system, the latest to take the hot seat on the topic.” The FEHBlog will keep an eye on that.

The FEHBlog was intrigued by this AHRQ news that the agency has released on the Apple Store and Google Play a free app called Question Builder. Patients can

Use the Question Builder app to:
Prepare and organize questions by type of medical encounter.
Take photos of insurance cards, pill bottles, or even a skin rash.
Access consumer education materials and videos. 

The agency notes that “All input resides on users’ own devices; nothing is stored in the app.” Health plans should publicize this app to their members.

The Senate Homeland Security and Governmental Affairs Committee held a hearing on the postal reform recommendations publicly issued by a Presidential Task Force, including the OPM Director, late last year.  The FEHBlog has been following Postal reform because one of the reform initiatives that the Postal Service pushed was to set up a Postal Service Health Benefits program within the FEHBP. Under this new program, annuitant coverage would be fully integrated with Medicare thereby reducing the Postal Service’s FEHB funding burden.

The FEHBlog, who did not watch the hearing, ran across this valuable Govexec overview of the hearing which in the FEHBlog’s estimation aligns with the written testimony. To wit,

Gary Grippo, the Treasury Department’s deputy assistant secretary for public finance and one of the leaders of the postal task force, * * * argued that a popular, bipartisan proposal to require all postal retirees to use Medicare as their primary form of health care coverage [as described above] would shift postal liabilities to taxpayers. Such a move, he said, would break with the mandate that the Postal Service remain self-sufficient. [OMB Deputy Director / OPM Acting Director Margaret] Weichert, too, said the administration was “categorically opposed” to anything that would shift USPS away from self-funding, which she suggested Medicare integration would do.

• The Pew Charitable Trusts last week released a study on the prescription drug coverage landscape in the United States. The top three findings were 

• Net spending increased each year of the study period, from $250.7 billion in 2012 to $341.0 billion in 2016. 

• Total health insurance premiums allocated to the pharmacy benefit of health plans increased from 12.8 percent in 2012 to 16.5 percent in 2016. 

• Policies with capped out-of-pocket expenses and cost-sharing assistance from manufacturers helped shelter patients from rising drug costs throughout the study period.

FEHBP member cost sharing for prescription drugs is capped in accordance with the Affordable Care Act.  FEHBP coverage for prescription drug skews much higher than 16.5% because the Program has a large cadre of Medicare prime annuitants. For those enrollees and spouses, Medicare pays for hospital care while the FEHBP pays for prescription drugs. 

• Avik Roy posted a column in Forbes explaining why the specialty drugs are the principal driver of prescription drug spending – the ACA’s provision on bio-similar drugs is ineffective. Check it out.

The President released his Fiscal Year 2020 budget proposal yesterday. FY 202 begins on October 1, 2019. While this Office of Management and Budget document recognizes the existence of the Federal (“GSA”)Employees Health Benefits Program, it does not recognize the existence the Office of Personnel Management. As Bloomberg Government predicted (previous FEHBlog post), the FEHBP entry in the budget proposal (page 127) is listed under the General Services Administration (“GSA”).

A Government Reorganization fact sheet accompanying the budget proposal states in pertinent part that

The [OPM] reorganization will continue in FY 2019 with planning and initial implementation, including the transfer of background investigations to the Department of Defense and other OPM functions to the General Services Administration (GSA), to the extent permitted by law. The Budget reflects the complete reorganization of OPM’s remaining functions within GSA in FY 2020, including OPM’s Retirement Services and Healthcare & Insurance organizations, through a combination of legislative proposals and appropriations to cover GSA’s transition costs of assuming OPM’s remaining functions.

By the way the FEHBP entry states that GSA is seeking legislative approval to modify the FEHBP government contribution in a way that would save the federal treasury $1.884 billion over the period 2022 through 2029. Details will be forthcoming likely next week.

Congress remains in session on Capitol Hill this coming week. The Senate Homeland Security and Governmental Affairs Committee will be hold a postal reform hearing on Tuesday March 12 at 2:30 pm.  OPM Acting Director Margaret Weichert is one of the witnesses at that hearing. Here’s a link to the Week in Congress’s report on last week’s Congressional actions.

The President’s Fiscal Year 2020 proposed budget will be released in two steps beginning tomorrow. Bloomberg Government reports

Government management is going to be highlighted in President Donald Trump’s fiscal 2020 budget set for release on March 11, but the centerpiece will be the follow-up to the sweeping overhaul and reorganization plan put out in June 2018, said the official who is familiar with the budget plan.

Where the 2018 plan listed 34 reorganization proposals, this year will focus on the merger of the Office of Personnel Management into a single entity within the General Services Administration, the agency primarily responsible for federal buildings and support services.

That section of the budget proposal will be worth checking out.

Healthcare Dive reports on favorable financial prospects for healthcare payers in 2019 although it opines that payers are facing strong headwinds beginning in 2020. Surprisingly the article does not mention the ill advised Medicare for All movement which would torpedo the privacy healthcare payer industry, including as the FEHBP and Medicare Advantage.  

Healthcare Dive and the Wall Street Journal  report that

The Trump administration is sounding out the medical industry on requiring hospitals, doctors and other health care providers to publicly disclose the secretly negotiated prices they charge insurance companies for services, a move that would expose for the first time the actual cost of care.

The comment deadline is May 3 according to Regulations.gov.

This action if taken would be a lot more meaningful than the recently implemented rule requiring hospitals to post their chargemaster rates that hardly anyone pays. This action also could be very disruptive to health plan networks.  Per the Wall Street Journal —

Employers and patients, given clearer comparisons, might change their habits—though consumers often show limited inclination to shop for health-care services, even when they face significant costs under high-deductible health plans. “You can’t shop for care if you don’t know what the prices are,” said HHS’s Mr. Rucker. Once publicly available, patients may have the benefit of third-party technology companies aggregating the price data and building shopping tools that show the negotiated costs for services charged by various hospitals and providers.

To a certain extent though people already have this information in many circumstances. For example, the FEHBlog is currently receiving physical therapy. He can see what his health plan is paying the physical therapy clinic from the explanation of benefits. This action would give patients and health plan sponsors the pricing information  before the first visit.  The information aggregators, the apps, the new tools for employers, would create the genie in the bottle effect here. We shall see.

Following up on yesterday’s post, Govexec.com reports that stakeholders are rallying around President Trump’s decision to nominate Dale Cabaniss as permanent OPM Director. That bodes well for Senate confirmation of the nomination.

Food and Drug Commissioner Dr. Scott Gottlieb announced that he will be voluntarily leaving his position next month. Forbes discusses that unfortunate development here.

In other drug news,

• The Wall Street Journal reports that  “The Food and Drug Administration approved a controversial drug for depression that could be the first of a long-awaited wave of new treatments, but that has also raised concerns about abuse  The drug, a nasal spray that manufacturer Johnson & Johnson has branded Spravato, is a close chemical relation to ketamine.  * * * Studies have shown that ketamine can relieve symptoms of depression within hours, rather than the weeks it takes for traditional antidepressants to start having an effect. The FDA approved use of Spravato for patients with “treatment-resistant” depression, meaning those who have been unable to find relief from at least two treatments. J&J estimates about three million to five million Americans suffer from this condition.”
• The Chattanooga Times Free Press reports that prescription drug manufacturer Lilly “will introduce a version of the diabetes treatment Humalog that will be called Insulin Lispro and come with an initial price 50 percent lower than Humalog’s current rate of about $275 per vial. The company said it is working to make the insulin available as quickly as possible.”

Researchers looked at the impact of a program that rewards people who agreed to receive one of 131 elective procedures from a designated lower-price provider. The checks ranged from $25 to $500, depending on the price and service.  Over 12 months, prices paid for the targeted services dipped 2.1%, leading to $2.3 million in savings, or about $8 per person. The biggest effects were seen in MRI and ultrasounds, with no noticeable price drop in surgical procedures.

It’s a start.

And, Health IT Analytics reminds us that

Emergency department (ED) visits for people with at least one chronic condition contributed to nearly 60 percent of all annual visits in 2017 and $8.3 billion in spending, says a report from Premier. Of these visits, over 4.3 million were potentially preventable, suggesting that these patients need access to higher-quality primary care.  

Costly chronic conditions are only growing more prevalent as the US population ages, the report noted, and hospitals and health systems are increasingly facing financial pressures as the industry shifts to population health management approaches and value-based care.

Smarter use of primary care is the FEHBlog’s preferred strategy for lowering healthcare costs.

Finally Reuters reports that “The Trump administration is working on a new payment approach for treating kidney disease that favors lower cost care at home and transplants, a change that would upend a [high cost] dialysis industry that provides care in thousands of clinics nationwide.” Go get ’em.

The White House website reports that

Today, President Donald J. Trump announced his intent to nominate the following individual to a key position in his Administration: 

Dale Cabaniss of Virginia, to be the Director of the Office of Personnel Management for a term of four years. 

Ms. Cabaniss previously served as Chairman of the Federal Labor Relations Authority [2001-2008] and spent more than 20 years in the United States Senate overseeing civil service issues on the Committee on Governmental Affairs  [1993-1996] and the Committee on Appropriations [2010 – 2018]. Ms. Cabaniss earned her B.A. from the University of Georgia [1983] and J.D. from the Catholic University of America [1993].

OMB Deputy Director Margaret Weichert currently is serving as Acting OPM Director in addition to her regular day job. The nomination requires Senate consent.

Congress remains in session on Capitol Hill this coming week. Here is a link to the Week in Congress’s report on last week’s actions there.

Last week, OPM General Counsel Mark Robbins’ second job at the Merit System Protection Board ended when his term on that Board expired per the Federal News Network.  While OPM now has a full time general counsel, the MSPB now has no Board members, which of course is not Mr. Robbin’s fault.  The Senate needs to fill the empty slots. The MSBP hears federal employee disciplinary appeals and related federal employment issues. The appeals are first heard by administrative law judges. The administrative law judges are still working but there’s no one to hear appeals from the administrative law judge decisions.

The Wall Street Journal reminds us that

Bigger bills [for budget busting gene therapy drugs] aren’t very far off. Analysts expect a Novartis gene-therapy treatment for spinal muscular atrophy, which hasn’t yet reached the market, to generate $1.7 billion in sales by 2023. Novartis said at its investor day last year it believes the drug is cost-effective at a price tag of $4 million to $5 million per patient. Other drugs in development by smaller companies are expected to achieve similar sales over that time frame. Given the long lead times in drug development, tens of billions of dollars in market value is predicated on insurers covering gene therapies under development in much the same way that today’s medicines are. The perfect opportunity to rethink how medicine is paid for is here. But, should that be squandered, patients, insurers, investors, drug makers and the government could end up in a bitter battle over who will pay for these medical breakthroughs. 

How true.

Kaiser Health News reports that

Eight hundred hospitals will be paid less by Medicare this year because of high rates of infections and patient injuries, federal records show. The number is the highest since the federal government five years ago launched the Hospital Acquired Conditions (HAC) Reduction Program, created by the Affordable Care Act. Under the program, 1,756 hospitals have been penalized at least once, a Kaiser Health News analysis found. This year, 110 hospitals are being punished for the fifth straight time.

Here’s a link to Kaiser’s list of penalized hospitals.

P.S. This was the 2500th FEHBlog post.