FEHBlog

The Senate is returning to Capitol Hill to consider competing shutdown resolution bills tomorrow.  The Wall Street Journal tracks shutdown stories here. The FEHBlog for what it’s worth thinks the shutdown will end next week, but don’t take that to the bank. The FEHBlog does wonder why Congress does not create a separate unemployment insurance program for federal employees due to these harmful quirks in the federal employment system.

Here are a few tidbits that caught the FEHBlog’s eye over the past couple days:

• The PwC Health Research Institute, per Healthcare Dive, released an upbeat report on 2019 trends in the healthcare industry.  For example, 

“With the average health insurance deductible triple what it was a decade ago, PwC believes 2019 could also be the year for value line products and services — àla the Southwest Airlines approach. Denver-based Ardás Family Medicine and Cityblock Health in New York City are examples of startups that are offering lower-cost delivery models.”

• The American Hospital Association joined by other healthcare organizations offered a proposal to improve interoperability of electronic medical records. Ten years ago, Congress decided to fund electronic medical records to the tune of $34 billion without considering interoperability which was a recognized government priority then as well as now. What a wasted opportunity!

• Becker’s Hospital Review reports that United Healthcare filed an antitrust lawsuit against “over 40” generic drug manufacturers.  The complaint alleges illegal price fixing practices involving 300 generic drugs.

• Reuters reports that Walgreen’s agreed with the Justice Department to settle a civil False Claims Act lawsuit based on Epipen billing practices. The settlement totaled nearly $270 million. Lawfuel provides details on the case here.   

Here’s a link to the Week in Congress’s report on last week’s actions on Capitol Hill. That publication indicates that both Houses of Congress are working from their home districts following Martin Luther King Day tomorrow.

Studies and surveys —

• Healthcare Dive informs us that “Total drug spend per hospital admission increased 18.5% between fiscal years 2015 and 2017, resulting in $1.8 million in additional costs for an average hospital, according to a report sponsored by the American Hospital Associations and fellow hospital organizations. Dive observes that “The report is the latest sortie in the ongoing PR battle between providers and pharmaceutical companies over who exactly is to blame for skyrocketing drug prices in the U.S.” Health plans are caught in the middle between the hospitals and the pharmaceutical manufacturers. 

• Fierce Healthcare reports on a recent study on the extent to which antibiotics are prescribed appropriately in the the U.S. “Researchers found 23.2% to be inappropriate, 35.5% potentially appropriate and only 12.8% appropriate. The remaining 28.5% had no related diagnosis code on which to base any judgment.”  No bueno.  This problem has been a tough nut to crack. 

Regrettably, tomorrow marks the fourth week of the partial government shutdown. OPM updated its furlough guidance earlier this week. Furthermore, Federal News Network reports that

President Donald Trump has signed a new bill into law guaranteeing back pay for federal employees impacted by the partial government shutdown. The Government Employee Fair Treatment Act covers both furloughed and excepted employees. It ensures they’ll receive retroactive pay whenever this shutdown ends — and appears to guarantee back pay during future lapses in appropriations.

On this past hump day, the FEHBlog cautiously commented about the then rocky contract negotiations between CVS Health and Walmart.  Other reported this news like it was a fact that Walmart had dropped out of the CVS retail pharmacy network. Last month, Tenet, the large healthcare system, was asserting that it planned to leave the Cigna network, which it described as “uninsurance.”  Two days later Cigna and Tenet announced a contract. Today, the news broke that CVS and Walmart had agreed to a new contract that keeps Walmart in the CVS retail pharmacy network.  Apparently Chicken Littling the situation to the public is a hot bargaining tactic.

Yesterday, HHS released its proposed 2020 ACA notice of benefit and payment parameters. This notice bears on OPM’s 2020 FEHBP benefit and rate proposal as it provides for the 2020 annual limit on cost sharing.  The proposed rule’s preamble states as follows:

We propose that the 2020 maximum annual limitation on cost sharing would be $8,200 for self-only coverage and $16,400 for other than self-only coverage. This represents an approximately 3.8 percent increase above the 2019 parameters of $7,900 for self-only coverage and $15,800 for other than self-only coverage.

The HHS Fact Sheet adds that

These [Rx cost reduction] proposals [described in the Notice’s preamble] include allowing individual market, small group market, and large group market health insurance issuers to adopt mid-year formulary changes to incentivize greater enrollee use of lower-cost generic drugs; and allowing such issuers and self-insured group health plans to except certain cost-sharing from the maximum out-of-pocket limit if a consumer selects a brand drug when a medically appropriate generic drug is available, and to except drug manufacturer coupons for specific prescription brand drugs that have a generic equivalent from the maximum out-of-pocket limit.

The final rule should be out in the Spring.

CMS reported earlier this week that the agency has completed the process of mailing out new Medicare ID cards to beneficiaries. Historically the Medicare ID cards used the beneficiary’s Social Security Number as the Medicare ID number. The new Medicare ID cards uses an anonymous ID number. Better late than never.  Back in time, FEHB plans also used the Social Security Number as the Plan ID on the ID cards. OPM squelched that many moons ago.

Healthcare Dive identifies watchable 2019 healthcare industry trends for payers and providers.  The number one trend for payers is contentious negotiations and contract disputes with participating providers.

In this regard —

• The Wall Street Journal reports on contentious negotiations between prescription benefit manager CVS Caremark and Walmart.  Walmart could leave the CVS Caremark employer sponsored plan networks but plans to remain in the CVS Caremark Medicare Advantage 

“Walmart is one of the country’s largest retail pharmacy players, offering pharmacies in nearly all of its approximately 4,600 U.S. stores. CVS said it retains a large network of more than 63,000 pharmacies without Walmart, and less than 5% of its members enrolled in affected plans use only Walmart for prescriptions.But the impact could be heavier for the employees of clients in rural areas and the South, where Walmart is a particularly important presence, said Nadina Rosier, who is head of the pharmacy practice at advisory firm Willis Towers Watson. “It truly depends on your vantage point,” she said.  ‘If you’re  a member who works for an employer where Walmart is the dominant player, you’re going to feel the pain.’”

This story will be fast moving.

• On the flip side, Tenet Healthcare, a large nationwide provider, announced deals with payers Anthem and Humana according to Modern Healthcare. 

CNBC reports on a seven year contract between the Walgreen’s pharmacy chain and Microsoft. This announcement follows up on last week’s disclosure of a deal between Walgreen’s and Alphabet’s life sciences unit, Verily. The article suggests that these deals are defensive plays by healthcare providers and technology companies to be positioned to compete against Amazon.
 

Congress remains in session this week on Capitol Hill. Here’s a link to the Week in Congress’s report on last week activities on the Hill as well as a Congressional Budget Office report on the federal deficit.

Modern Healthcare reports on a southern California hospital system that “requir[es] in-hospital physician groups to contract with the same insurance carriers as ” the hospital system does. Angry patients cause hospitals to implement the requirement, which prevents surprise bills for patients. That’s a much more practical solution than passing a bunch of complicated laws.

Last week, the Wall Street Journal reported that

The birthrate in America has been declining, but some places are more fertile than others, according to a new look at federal data that reveals significant variation in fertility rates around the country. Only South Dakota’s and Utah’s fertility rates reached the level needed to sustain the current population.

The number of babies born in 2017, around 3.85 million, was the lowest since 1987. In order for the country’s population to essentially replace itself, researchers say that 2,100 babies should be born for every 1,000 women. In 2017, the total fertility rate—an estimate of the total number of children a woman will eventually have in her lifetime—was 1,765 births per 1,000 women, well below what is known as the replacement level.

Hispanic women had the highest fertility rate of the ethnicities studied, and passed the 2,100 births per 1,000 women needed to sustain the population in 29 states. Black women reached that level in 12 states, while white women didn’t reach that level in any state.

Kenneth M. Johnson, senior demographer at the University of New Hampshire who wasn’t involved in the study, said that the data paints a more-nuanced understanding of fertility patterns that can help identify challenges for particular regions, such as potential labor-force shortages and challenges caring for an aging population. Low birthrates could disrupt the economy as the country’s population ages out of the workforce, though researchers say those effects could be offset by factors such as immigration. 

The first full workweek following the holidays has been a busy one for the FEHBlog. The FEHBlog hopes that this partial government shutdown will end soon. Here’s link to an ABC News article on the impact that the shutdown has on furloughed employees from a federal employee benefits perspective.

Regarding the Texas v. U.S decision holding the Affordable Care Act (“ACA”) unconstitutional based on Congress’s decision to zero out the individual mandate as of January 1, 2019, I listened earlier this week a 20 minute long podcast by law professor Richard Epstein.    Professor Epstein believes that the zeroing out of the individual mandate penalty removed a constitution defect in the ACA that the Chief Justice John Roberts had avoided in 2012 by upholding the statute under Congress’s taxing authority. The constitutional defect is that the law required people to purchase a product so that Congress could regulate it. Now that people are buying the product voluntarily the defect  is gone and the ACA stands.

The FEHBlog had not heard this argument before, but he agrees with the Professor. The case is now pending for the U.S. Court of Appeals for the Fifth Circuit based on appeals noticed by the defendant Justice Department (which want the Court to declare unconstitutional a few provisions related to the individual mandate) and the intervening State defendants (who want the Court to declare unconstitutional the zeroing out of the individual mandate because it brought down the law). Professor Epstein’s approach knocks out the appeal while also reversing the district court decision entirely. The 5th Circuit will arrive at its decision later this year.

In other developments, Modern Healthcare reports on the closing days of the JP Morgan healthcare conference.

Baylor Scott & White leaders explained their pending merger with Memorial Hermann will land the system in Houston, one of the fastest-growing areas of Texas. CEO Jim Hinton told Modern Healthcare the added scale will create efficiencies that drive down costs. That’s what happened when his health system was created through a 2013 merger, he said. Since then, Baylor Scott & White has saved about $740 million, 128% of its original goal. “This notion that these mergers always result in higher costs—that may be true for other mergers, but that’s not been our experience, nor is that our intent,” Hinton said.

In the FEHBlog’s opinion that’s a red herring argument. The issue is not whether mergers lower costs (they do), rather the issue is whether they lower prices reflecting lower costs. As the FEHBlog has noted cost and price are independent variables. You can lower costs without lowering prices if the market permits.

Relevant Studies and Predictions–

• Because the FEHBP covers a lot of folks with Medicare coverage, it’s worth taking a look at this Fierce Healthcare article about a three year long study reported in January’s Health Affairs finding that Persistently high-cost Medicare patients tend to be younger, members of racial or ethnic minority groups, dual-eligible Medicaid patients or suffering from end-stage renal disease (ESRD),   
• The January issue of Health Affairs also discusses five key healthcare trends for this year. In the same vein, the American Medical Association reports on how blockchain technology is poised to change the healthcare industry. 
• Revcycle Intelligence discusses a new follow-up study to the landmark 2003 article titled “It’s the Prices, Stupid” which finds not surprisingly that “prices are still the primary reason why healthcare spending in the US more than doubled from 2000 to 2016,”  The article’s discussion of Medicare cost shifting to the private sector illustrates how the medical profession would be killing the golden goose by supporting Medicare for All.

A Heritage Foundation article features an article by Donald Devine who was the OPM Director in President Reagan’s first term. Mr. Devine was a disruptive influence over the FEHBP. While he was OPM Director, OPM mandated a 12% across the board benefit cut in the FEHBP in order to bring down premiums. The action did cause enrollees to give lower premium plans a shot. The action’s impact on FEHBP premiums was blunted by the fact that contemporaneously Congress began to heavily shift Medicare costs onto commercial health plans like those in the FEHBP. 

As many as one in five children experiences a mental-health issue in a given year. But children must often wait months and travel long distances for an appointment with a specialist. 

Telehealth is not the alpha and the omega of care but breaking the medical service ice is a good thing.

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

A front page article on this weekend’s Wall Street Journal questioned the profit levels available to carriers in Medicare Part D’s prescription benefit program.  Generally speaking, price and cost of production are independent variables. Not surprisingly to the FEHBlog at least, the punch line to the article is that the carriers’ pricing actions are legal, e.g., Congress needs to change the pricing methodology in the journalists’ view.  In contrast, OPM zealously controls carrier profit levels in the FEHBP.

The Obama Administration sought to ram value based pricing down the throats of hospitals via mandatory bundled pricing for certain surgical procedures. The Trump Administration rolled back these program, but it has held the door open to reinstating them. Healthcare Dive reports that

The first two years of the mandatory Comprehensive Care for Joint Replacement (CJR) bundled payment model for hip or knee replacement saw a “modest reduction” of 3% in spending for those two procedures, according to a new study in the New England Journal of Medicine. 

Hospitals in the CJR model saw a larger decrease in spending per joint replacement episode than those in the control group. That reduction was caused by a nearly 6% drop in the percentage of episodes in which patients were discharged to post-acute care facilities.  The CJR facilities didn’t see a significant difference in complications or percentage of joint replacement procedures for high-risk patients.

Is the juice worth the squeeze, as they say.

The 116th Congress was convened today. Nancy Pelosi (D Calif) was elected Speaker of the now Democrat run House. The House Oversight and Government Reform Committee which oversees OPM and the FEHBP changed its name to the Oversight and Reform Committee in order to illustrate the fact that its jurisdiction extends to the private sector (which was news to the FEHBlog).  Elijah Cummings (D Md) is the Chairman of that Committee.  Sen. Mitch McConnell (R Ky) remains Senate Majority Leader.

The Wall Street Journal reports today that

Bristol-Myers Squibb Co. agreed to buy rival Celgene Corp. in a deal valued at about $74 billion, combining two leading sellers of cancer drugs and potentially signaling the return of dealmaking to the pharmaceutical industry.  Overall, the merged company will have nine products with more than $1 billion each in annual sales—most notably Celgene’s multiple myeloma drug Revlimid and Bristol’s lung-cancer treatment Opdivo.

In other merger and acquisitions news, Health Payer Intelligence tells us what’s up with CVS Health’s integration with its recent acquisition, Aetna.

The ACA’s health plan funded Patient Centered Outcomes Research Institute issued its 2018 year in review. The ACA’s health plan funding for the PCORI sunsets soon, but the FEHBlog predicts that Congress will renew the funding. Of possible interest to FEHB carriers is a 2018 Annual Meeting. break out session examining the potential of two PCORI funded telehealth studies to change practice and what needs to be done to speed telehealth’s adoption. Get some value out of this puppy!

Modern Healthcare informs us that

The gap between U.S. hospitals’ outpatient and inpatient revenue continued to shrink in 2017 as more patients elect to get care in cheaper outpatient settings, and some believe a flip is inevitable in the coming years. The American Hospital Association’s 2019 Hospital Statistics report showed hospitals’ net outpatient revenue was $472 billion and inpatient revenue totaled nearly $498 billion in 2017, the latest year for which the report covers, creating a ratio of 95%, up from 83% in 2013. * * *

Hospital profits reached $88 billion in 2017, a 12.5% increase over the previous year and a 27% increase from 2013. [Thanks ACA!] Total net revenue reached $1 trillion in 2017, compared with $998 billion in 2016. Expenses in that time were $966 billion, up from $920 billion. The AHA provided Modern Healthcare with an exclusive copy of the report. 

Happy New Year, FEHBlog readers. Health Payer Intelligence reminds us

“Starting January 1, 2019, hospitals will be required to post their price lists online in an effort to increase price transparency and empower consumers to make informed choices about their care.

The mandate stems from the 2019 inpatient and long-term care hospital prospective payment system (IPPS/LTCH PPS) final rule, released in August, in which CMS included the requirement for hospitals to update their public price lists at least annually.”

The FEHBlog hopes that this new transparency will encourage hospitals to rationalize their list prices.  Health Payer Intelligence wisely observes that

The new rule offers an opportunity for health plans to share educational materials and strategies about how to shop for care, maximize the value of high-deductible plans and health savings accounts (HSAs), and develop better financial management skills. 

Payers who successfully expand their role as a trusted resource for financial information and transparent, open discussion of the cost of care are likely to retain member loyalty in a highly competitive market.

The Wall Street Journal reports on the short and long term health benefits of teatotalling for one month annually as long as you are not a heavy drinker. A British practice of engaging in a Dry January has crossed the pond to the U.S.

In a 2016 issue of BMJ, two experts debated its pros and cons. Ian Hamilton, an associate professor of addiction at the University of York, took the con side.

“I think it would be better if people had regular breaks, not binge breaks,” he says.

He also notes that an abrupt withdrawal from alcohol for excessive drinkers can be life-threatening.

“Over 800 people died of alcohol withdrawal in 2016,” says George Koob, director of the National Institute on Alcohol Abuse and Alcoholism, part of the U.S. government’s National Institutes of Health. “If you’re a heavy drinker, you want to get medical help for detoxification, because it really can kill you.” Seizures or hypothermia are usually what kill people in these situations.

Still, moderate drinkers definitely benefit from consuming fewer calories when they drink less, Dr. Koob says. Alcohol itself is a significant source of calories; it also stimulates the appetite. Studies have found it causes people to eat more and to opt for unhealthy foods. “You tend to graze on chips and not necessarily carrots,” Dr. Koob says.

The FEHBlog who is a moderate drinker plans to give Dry January a shot.

On Friday, the FEHBlog called attention to journalist Sam Quinones’ blog post about the sale of illegal fentanyl on Craigslist in the Los Angeles metro area. The FEHBlog did so because he firmly believes that the appropriate health plan role at this stage of the opioid crisis is to focus on treatment of members suffering from opioid disorders, not policing physician prescription practices. Last Sunday’s New York Times featured an illuminating article on the current controversy among opioid disorder treatment centers — whether or not to supplement talk therapy with medications that take the edge of addiction.

Finally, Tenet Healthcare, a large nationwide healthcare system, announced today that it has entered into a new multiyear network contract with Cigna. Its immediately preceding Cigna contract was scheduled to terminate today.