FEHBlog

The new 116th Congress opens on Thursday January 3, 2019, with the Democrats in charge of the House of Representatives and the Republicans in charge of the Senate.

Today, the federal judge hearing the Texas v. United States (a/k/a US v. Azar) case decided “In accordance with Federal Rule of Civil Procedure 54(b), the Court therefore DECLARES that 26 U.S.C. § 5000A(a) [the ACA’s individual shared responsibility [a/k/a individual mandate] provision is UNCONSTITUTIONAL and INSEVERABLE from the remainder of the Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119-1045 (2010).” The Court also stayed his partial final judgment pending appeals. Next stop is the U.S. Court of Appeals for the Fifth Circuit.

On Friday, the Department of Health and Human Services ‘released the “Health Industry Cybersecurity Practices (HICP): Managing Threats and Protecting Patients” publication. The four volume publication, aims to provide voluntary cybersecurity practices to healthcare organizations of all types and sizes, ranging from local clinics to large hospital systems.” Check it out.

One week into the partial federal government shutdown, OPM is highlighting a Furlough Guidance page on its website. It appears that the shutdown will continue for another week.

The FEHBlog is a big fan of primary care doctors. The Wall Street Journal has a front page article today about hospital / health system employed primary care doctors:

Patients are often in the dark about why their doctors referred them to a particular physician or facility. Increasingly, those calls are being driven by pressure [by hospital health system employers] to keep business within a hospital system, even if an outside referral might benefit the patient, according to documents and interviews with doctors, current and former hospital executives and lawyers. 

Losing patients to competitors is known as “leakage.” Hospitals, in response, use an array of strategies to encourage “keepage” within their systems, which in recent years have expanded their array of services. 

The efforts at “keepage” can mean higher costs for patients and the employers that insure them—health-care services are often more expensive when provided by a hospital. Such price pressure and lack of transparency are helping drive rising costs in the $3.5 trillion U.S. health-care industry, where per capita spending is higher than any other developed nation.

Of course, the Affordable Care Act has lead to a big jump in the number of primary care doctors who are employed by hospitals or health systems that join together hospitals and doctors. Another irony is that the employers are using their federal government funded electronic medical records to track their employed doctors’ referral practices. No bueno.

A few tidbits to wrap up the week:

•  Health Data Management discusses three cybersecurity trends for 2019. 
• Med City News reports that the Justice Department recovered over $2.5 billion based on False Claims Act claims in 2018. It’s the ninth consecutive year that the Justice Department’s False Claims Act recoveries topped $2 billion. The article discusses the recoveries obtained from the healthcare industries. 
• One of the FEHBlog’s most illuminating books of 2018 was journalist Sam Quinones’ Dreamland about the opioid crisis (currently selling on Amazon as a Kindle book for $6.99). I follow Mr. Quinone’s blog. His latest post is an eye opener.  

In Los Angeles, Craigslist has emerged in the last few months as a major new marketplace for illicit fentanyl. The online classified ad service has for several years been a virtual street corner, a place where drugs are sold under lightly veiled pseudonyms: black-tar heroin (“roofing tar”), crystal methamphetamine (“clear sealant”), or generic and most likely counterfeit oxycodone 30 mg pills (“M30”). But fentanyl, the deadliest of them all, is a new arrival, apparently within the last year, and for the moment appears to be for sale on Craigslist only on its Los Angeles site.

As the FEHBlog noted in earlier posts, heroin and fentanyl aren’t available at your local CVS or Walgreen’s pharmacy. Who would have thought Craigslist?

OPM today called interested parties’ attention to its length 2015 shutdown furlough guidance. The benefits discussion is found on pages 15-19.

In relevant litigation news —

• All of the parties in the Texas v. Azar (a/k/a Texas v. United States) case have agreed that the federal district court for the Northern District of Texas should authorize an immediate appeal of the decision declaring the Affordable Care Act unconstitutional to the U.S. Court of Appeals for the 5th Circuit pursuant to 28 USC Sec. 1292(b). If the district court agrees with the parties on this issue, the Court of Appeals then has the discretion to accept or reject this interlocutory appeal. 
• CNBC reports that 

A U.S. federal judge reviewing an agreement between the government and CVS Health allowing it to buy health insurer Aetna has indicated that he will not halt most integration between the two companies.

Congress will return to Capitol Hill later this week in an effort to resolve the FY 2019 appropriations issue that has created a partial government shutdown.  Here’s a link to the Week in Congress’s report on last week’s activities on Capitol Hill. The House passed a tax bill (HR 88) that would extend 2019’s suspension of the ACA’s onerous heath insurer tax beyond 2019 to the end of 2021. The bill would further delay the imposition of Cadillac tax by one year from the end of 2021 to the end of 2022. The ACA taxes anything that moves. It’s unlikely that the Senate do its bit by passing the bill in this Congress. The new Congress begins on January 3, 2019.

As the FEHBlog pointed out, these shutdowns do not materially impact the FEHBP because of OPM’s administration of the Program continues due to a 1% surcharge on FEHBP premiums. Speaking of premiums, OPM continues to make annuity payments during any shutdown. Half of FEHBP premiums are withheld from annuity payments. A 2013 OPM FEHBP carrier letter discusses how a full shutdown affects employee premiums payments. In this partial shutdown many large federal employers including the Defense Department and the Department of Health and Human Services are funded through September 30, 2019, so their employees will continue to work and receive paychecks from which the FEHBP premiums are funded.

If you changed plans in the recent Open Season and you are an annuitant, your new coverage begins on January 1, 2019. If you are an active employee, your new coverage begins on January 6, 2019, which is the first day fo the first pay period in 2019.  In either case, if you are hospitalized on the first day on which you new coverage would begin, coverage under the predecessor plan continues until your are discharged up to 90 days of confinement under OPM’s regulations.

Jingle bells.

Well that’s the FEHBlog gets for crowing about his prescience in anticipating no partial government shutdown with the continuing resolution extended into the new Congress. Now because the House passed a bill funding the border wall and disaster relief along with the predicted extension, a partial shutdown is likely because the Senate needs 60 votes to pass the House bill. The important consideration is that while OPM is one of the agencies funded under the continuing resolution, OPM’s work on the FEHB Program is funded by a 1% surcharge on FEHBP premiums, not on appropriations. Consequently, the FEHB Program will keep chugging along notwithstanding any partial shutdown. And so will the FEHBlog.

The Cigna / Express Scripts merger closed yesterday as scheduled.

“Today’s closing represents a major milestone in Cigna’s drive to transform our health care system for our customers, clients, partners and communities. Together, we are establishing a blueprint for personalized, whole person health care, further enhancing our ability to put the customer at the center of all we do by creating a flexible, open and connected model that improves affordability, choice and predictability. By approaching each individual as a whole person – body and mind as one – we are empowering and supporting customers to take control of their total health and well-being,” said David M. Cordani, President and Chief Executive Officer of Cigna. “As a combined company, we are also going deeper into our local communities to help close gaps in care, and our $200 million investment will be a key driver of transforming health care at the societal and local levels.”

Good luck to the new venture.

Joseph Antos, James C. Capretta, and Walton Francis write for the American Enterprise Institute suggest that to control taxpayer spending federal and postal retirees should get their health coverage through Medicare or FEHBP rather than a combination of the two.  Their suggestion if implemented would sink the FEHBP. Currently early retirees (pre age 65) are covered under the FEHBP. Medicare shifts costs on the cost of caring for active and early retirees. At age 65 retirees are covered under FEHB and Medicare. Basically Medicare covers the hospital care; FEHBP covers the prescription drug care, and the two programs split other outpatient care. The Medicare prime retirees subsidize the early retirees and older active employees. Without this subsidy (either by keeping the older retirees entirely in FEHBP or kicking them entirely into Medicare, FEHB premiums would skyrocket due to the aging demographics of the active employees and early retirees. Jingle bells.

A few other tidbits —

• HHS provides an update on its new Health Sector Cybersecurity Coordination Center.
• Becker’s Hospital Review discusses a final HHS rule overhauling Medicare’s accountable care organization program. 
• The same publication also provides a handy list on recent development in the healthcare information technology arena. 
• Fierce Healthcare updates us on the judicial proceedings concerning the CVS Health / Aetna merger. 
• Healthcare Payer Intelligence reports that HHS is formally bringing down the curtain on its effort to add a health plan identifier to the set of HIPAA standard identifiers. The time would have been better spent on a patient identifier. 

Healthcare Dive reports that Cigna’s acquisition of prescription benefits manager Express Scripts is expect to close tomorrow.  In contrast to the CVS Health acquisition of Aetna, this closing is not subject to review by a federal court. The  Justice Department triggered federal court review of the CVS Health / Aetna deal by filing a lawsuit concerning the merger in order to ensure that Aetna sold off its Medicare Part D business. In retrospect that looks like overkill.

In other mergers and acquisitions news, the Wall Street Journal reports that

[Drug manufacturers] Pfizer Inc. and GlaxoSmithKline PLC plan to combine their consumer health-care units and eventually spin off the joint venture, creating the world’s largest seller of drugstore staples like Advil and Sensodyne toothpaste. The deal, announced Wednesday, will free up both companies to concentrate on prescription medicines, which tend to be more profitable if also higher risk.

The Federal News Network brings us up to date on resolution of FY 2019 appropriations.

As the Senate plans to consider a continuing resolution later on Wednesday that would avoid a partial government shutdown at the end of the week, federal employees are still wondering whether they’ll get a raise in 2019. The prospects, at least for now, are grim.

Senate Majority Leader Mitch McConnell (R-Ky.) filed the continuing resolution, which funds the remaining agencies that still lack a full-year 2019 budget, through Feb. 8. The continuing resolution doesn’t include a proposed 1.9 percent pay raise for civilian employees in 2019, though a few Senate Democrats have said they’ll push for a budget anomaly in the CR that would adjust pay for civilian employees

Time will tell.

The FEHBlog noticed that OPM has posted on its website the OPM Inspector General’s semi-annual report to Congress for the period ended September 30, 2018, and OPM’s management response to that report.

Mark the tape. It looks like the FEHBlog’s prediction about pending FY 2019 appropriations made in Sunday’s post may prove correct. The Wall Street Journal reports tonight that

The White House signaled on Tuesday it wanted to avoid a partial government shutdown this weekend, even if Congress doesn’t meet President Trump’s full demands on border security, but partisan divisions stymied new negotiations, prompting Senate Republican leaders to start readying a short-term spending deal to keep the government running.

Senate Appropriations Committee Chairman Richard Shelby (R., Ala.) said Tuesday night he was preparing a short-term spending bill keeping the government open [beyond the current deadline December 21] until early February.

“Barring some unforeseen development, I think that’s where we’re headed,” Mr. Shelby said. 

In litigation news, the intervenor defendant States defending the Affordable Act in the Texas v. United States litigation has asked the judge to stay his unconstitutionality decision pending appeal and they have asked the judge for permission to immediately appeal the decision. The Court has ordered the plaintiff States and defendant the Justice Department to respond to the motion no later than Friday December 21. He has allowed the intervenor defendant States an opportunity to reply to the parties’ responses by Wednesday December 26. The Court is likely to rule on the motion by Monday December 31.

Forbes columnist Avik Roy offers some interesting ideas on how Congress can resolve this conundrum.

Congress’ response should be simple. Congress should pass a simple, standalone measure guaranteeing that insurers offer coverage in the individual health insurance market to anyone, regardless of prior health status. Congress could even add on a requirement that insurers charge people of the same age the same premium, regardless of health status. In this way, Congress can reiterate this basic and popular guarantee, regardless of what happens to other parts of the ACA as this litigation continues. Most importantly, they can demonstrate a new intent for Congress: showing that covering people with pre-existing conditions can be done without the entire Rube Goldberg complexity of Obamacare.

In other litigation news, Healthcare Dive reports that

In a packed [D.C.] courtroom hearing Tuesday [/today],  [U.S.] District Court Judge Richard Leon suggested CVS Health appoint a monitor to keep a close eye on suggested separations between CVS and Aetna [while the Court considers whether “the DOJ’s condition for approving the merger, requiring that Aetna divest its Medicare Part D businesses, is sufficient for antitrust concerns.”]

The Court has allowed the parties to express their views on the Court’s suggestion the close of business on Thursday December 20.

In other merger and acquisition news, Hartford [CT] Business reports

Cigna last week scored two key approvals on its proposed deal to acquire pharmacy-benefits manager Express Scripts for $67 billion. State regulators in New York and California on Thursday issued approvals for the proposal after receiving assurances that consumers would not pay for acquisition costs.

The deal appears on track to close this month. This deal does not require judicial approval.

Also the Minneapolis Star Tribune reports

In hopes of winning regulatory approval for a deal first announced last year, the parent company of DaVita Medical Group has agreed to lower by more than $500 million the sale price of its clinic business to UnitedHealth Group, according to a Monday regulatory filing.  

Bloomberg reported last spring

The insurance giant [UnitedHealth] has spent the past decade steadily adding physicians to its ranks, fortifying itself against competing insurers as well as hospitals who are buying up physicians. Once the physician groups it bought from DaVita Inc. are fully under its wing later this year, UnitedHealth’s OptumCare unit will have one of the largest collections of doctors in the U.S.

UnitedHealth is betting that controlling many doctors can provide patients better care at a lower cost, and steer them away from expensive hospital stays. Bringing more doctors in-house provides a buffer against rivals and places an imposing moat in the path of upstarts.

That’s a solid wager, in the FEHBlog’s view.

The House and Senate continue their work on Capitol Hill this week as the curtain begins to fall on the 115th Congress. Here’s a link to the Week in Congress’s report on last week’s actions here.

The continuing resolution funding several federal agencies, including OPM, runs out on December 21. Federal New Network offers various outcomes here.  The FEHBlog expects that the continuing resolution will be extended into the next Congress.

Last week, the Health and Human Services Department’s Office for Civil Rights, which enforces the HIPAA privacy and security rules, issued an interesting request for information.

We are looking for candid feedback about how the existing HIPAA regulations are working in the real world and how we can improve them,” said OCR Director Roger Severino. “We are committed to pursuing the changes needed to improve quality of care and eliminate undue burdens on covered entities while maintaining robust privacy and security protections for individuals’ health information.”

In addition to requesting broad input on the HIPAA Rules, the RFI also seeks comments on specific areas of the HIPAA Privacy Rule, including:

•     Encouraging information-sharing for treatment and care coordination
•     Facilitating parental involvement in care
•     Addressing the opioid crisis and serious mental illness
•     Accounting for disclosures of PHI for treatment, payment, and health care operations as required by the HITECH Act
•     Changing the current requirement for certain providers to make a good faith effort to obtain an acknowledgment of receipt of the Notice of Privacy Practices

Public comments on the RFI will be due by February 11, 2019. 

Healthcare Dive reminds us that the antitrust lawsuit against the Blue Cross Blue Shield Association continues to grind on in the courts six years after the complaint was filed.

Following up on Friday’s post, the FEHBlog’s mind was blown because he expected that the federal judge in Texas which would follow the recommendation of the U.S. Justice Department and strike down the individual mandate and two closely related provisions as unconstitutional, not the entire law.  That’s likely where the case will wind up after appellate court review and the Trump Administration has a plan to protect people with pre-existing conditions should that outcome be upheld by the Supreme Court.

The U.S. District Court for the Northern District of Texas decided this evening that the tax reform act’s zeroing out of the ACA’s individual shared responsibility tax penalty effective January 1, 2019, renders the entire Affordable Care Act unconstitutional effect as of that date. A copy of the judge’s opinion is available here.

The decision, of course, will be appealed to the U.S. Court of Appeals for the Fifth Circuit. Undoubtedly, the decision will be stayed pending the outcome of the appeal.

In a perfect world this decision would cause Congress to revise the law which is unduly complicated. But the world is imperfect. So we shall see.

Yesterday, AHIP, Blue Cross and several other organizations released a set of guiding principles to encourage the federal government to take steps toward solving the problem of surprise billing that typically occur in the course of emergency care.

STAT offers a report on FDA Administrator’s recent talk about reducing insulin prices.

Insulins are biologic drugs, meaning they’re made from living cells. But they haven’t been regulated the same way. Neither have copycat or generic insulins, known as follow-on insulins, been regulated the same way as most copycat biologic drugs, known as biosimilars. 

That’s set to change in 2020, when insulins will be regulated as biologics, and, thus, the copycats will be regulated the same way as biosimilars. 

That transition was written into the 2009 Affordable Care Act, and Gottlieb expects it will lead to more competition and lower prices for patients. “This is a watershed moment for insulin products,” Gottlieb said Tuesday, about the 2020 transition.

The FDA released guidance about how it intends to implement this change.  Congress is expected to consider surprise billing and drug pricing legislation next year,

The HHS Office for Civil Rights, which enforces the HIPAA Privacy and Security Rules, announced another settlement yesterday.  The settlement, which includes a $111,400 payment from and a compliance plan obligation on Pagosa Springs (CO) Medical Center (“PSMC”).

The settlement resolves a complaint alleging that a former PSMC employee continued to have remote access to PSMC’s web-based scheduling calendar, which contained patients’ electronic protected health information (ePHI), after separation of employment. OCR’s investigation revealed that PSMC impermissibly disclosed the ePHI of 557 individuals to its former employee and to the web-based scheduling calendar vendor without a HIPAA required business associate agreement in place.