FEHBlog

Govexec.com reports on the federal annuitant cola of living adjustment announcement made today.

The 2.8 percent increase applies to retirees under the Civil Service Retirement System. Those under the Federal Employees Retirement System will receive 2 percent. FERS employees only receive the full percentage increase if it is less than 2 percent. If the change is 2 percent to 3 percent, FERS retirees get 2 percent. And if the increase is 3 percent or higher, FERS retirees receive 1 percentage point less than the full increase.

The new COLAs will take effect starting with federal retirees’ December 2018 benefits.

Federal News Radio reports that OMB Deputy Director Margaret Weichert is taking on her new part time job as OPM acting director with gusto. Govexec.com adds that

Weichert said OPM is moving forward on its reorganization plan, and has already taken steps on the administration’s proposal to consolidate background checks within the Defense Department and to move many of OPM’s transactional functions to the General Services Administration. She pledged to push forward the plan to fold what remains of OPM into the Executive Office of the President in the White House, a key point of tension between the administration and Pon [according to Govexec.com]

“Independence [of OPM] if it’s not delivering the actual mission, isn’t of the primary concern,” Weichert said, adding that there is “no better place” for the strategic direction of federal personnel issues than the White House. She explained that Trump asked her to serve as acting director in part because she has “a lot of experience in delivering complex, large organizational change.”  

That reorganization plan also would move the FEHBP and other federal benefit operations to GSA.

The FEHBlog was taken by this Weichert observation from the Federal News Radio article:

Though Weichert said she and OPM were celebrating and acknowledging the 40th anniversary of the civil service reform law, today’s federal workforce has outgrown the statutes and provisions that informed the 1978 act. * * *

“Although incredibly well-intended, all of the original components of Title 5 and updates to it since then were well-intentioned, but layers and years of statute and added regulation have made it very complex and very cumbersome to operate nimbly and agilely in the 21st century,” Weichert said.

Amen to that. In the FEHBlog’s view, the same problem afflicts the FEHBP even though the nearly sixty year old original law was the model of simplicity.

Govexec.com has offered its version of the backstory on OPM Director Pon’s departure from the agency last Friday. His departure, in stark contrast to U.N Ambassador Nicki Haley’s departure yesterday, was not graceful. The Govexec.com article notes that “Multiple individuals confirmed that senior aides to Pon were also removed from OPM, including his chief of staff and his confidential assistant.” In support of this assertion, the FEHBlog found that the online OPM organization chart is “under maintenance.”    

OPM today posted on its homepage an October 4 statement from then Director Pon applauding “No Time to Wait: Part 2”, a report recently released by the National Academy of Public Administration.”

In Part 2 builds on the framework of Part 1 with a more-detailed plan of action to transform the public service:

• Build flexibility in the pursuit of mission.
• Replace the over-defined job specifications of the current system with a competency-based, talent-management model.
• Reinforce the pursuit of merit-system principles.
• Lead from the center.
• Transform the federal government’s human capital backbone.

Federal News Radio reports on a speech by OMB Deputy Director and OPM acting Director Margaret Weichert made earlier today.  In the course of this speech, Director Weichert

outlined some of her top priorities in the new role [at OPM]. “There’s a lot that I need to get from a baseline perspective, but what I did tell the team yesterday is I have two primary areas of focus,” the President’s Management Agenda — particularly building the  workforce of the future — and general management * * *.

Not much difference between the Pon and Weichert messages. The FEHBlog suspects that the Administration wants speedier implementation.

Also today, the U.S. Justice Department announced that

it is requiring CVS Health Corporation (CVS) and Aetna Inc. (Aetna) to divest Aetna’s Medicare Part D prescription drug plan business for individuals in order to proceed with their $69 billion merger.  The proposed divestiture to WellCare Health Plans, Inc. (WellCare), an experienced health insurer focused on government-sponsored health plans, including Medicare Part D individual prescription drug plans, would fully resolve the Department’s competition concerns.

This is a big step forward but not the final step as CVS and Aetna are working on wrapping up loose ends with state regulators as discussed in this Healthcare Dive story.  The FEHBlog expects that both the CVS – Aetna and Cigna – Express Scripts mergers will close as planned later this year.

OPM and the Department of Health and Human Services are encouraging federal employees and annuitants and their family members to get a flu shot this fall as FedWeek reports. Here’s a link to HHS’s website with details on the flu shot and how to get the vaccination.

In Affordable Care Act news:

• Fierce Healthcare reports that insurers and trade associations are rolling out association health plans. 
• Politico reports that the Senate rejected an effort to overrule the Trump Administration’s shot term health plan rule. The rule still faces court challenges.

The Federal Times, Govexec.com and Federal News Radio have articles on OPM Director Pon’s surprise departure from the agency last Friday.  Federal News Radio provided a link to the White House announcement which reads as follows:

President Donald J. Trump today announced his intent to designate the following individual to a key position in his Administration: 

Margaret Weichert of Georgia, to be the Acting Director of the Office of Personnel Management.  Ms. Weichert currently serves as the Senate-confirmed Deputy Director for Management at the Office of Management and Budget in the Executive Office of the President.  She will assume the Office of Personnel Management duties in addition to her current duties at the Office of Management and Budget.

Earlier this decade, when the Obama Administration and Congress forced out the OPM Director Archuleta in the wake of the massive OPM data breach, President Obama reassigned Beth Cobert from OMB to serve as acting OPM Director. It was the first time that the Administration had filled an OPM Director vacancy with an OMB official. However, in the case of Ms. Cobert’s appointment, OPM lacked a deputy director who would be the logical person to serve as acting director. In the case of Ms. Weichert, the Administration went to OMB rather than designate the sitting OPM Deputy Director Michael Rigas. The FEHBlog here is making an observation, not seeking to draw any conclusion.

Happy Columbus Day, all.

If the FEHBlog had a Drudge like siren, he would use it here. According to FedScoop, the White House announced that “The Trump administration designated [OPM Deputy Director] Margaret Weichert to take the helm of the Office of Personnel Management as acting director, replacing Jeff Pon after just seven months.” Ms. Weichert will bold both positions for the near future. The Washington Post adds that “people close to Pon said he was at odds with the administration over its planned revamp of the personnel agency, which would have diminished his role and authority.”

Medpage reports that the Senate today easily passed the bipartisan opioid crisis response bill (H.R. 6)  thereby sending bill to the President to be signed into law.

Some of the provisions in the bill, which the House passed last week, include:

• Giving Medicare beneficiaries more information on alternative pain treatments, and expanding treatment options for enrollees who are addicted to opioids, while expanding treatment options for opioid-addicted beneficiaries.
• Partially repealing the the Medicaid Institutions for Mental Diseases (IMD) exclusion, which will allow state Medicaid programs to cover inpatient treatment in residential facilities.
• Allowing mothers undergoing addiction treatment to have their young children stay with them, and increasing accessibility of family residential treatment programs, which allows more parents to get help while still caring for their children in a supervised setting.
• Requiring state Medicaid programs to have safety edits in place for opioid refills, to monitor concurrent prescribing of opioids and certain other drugs, and to monitor antipsychotic prescribing for children.
• Directing the Centers for Medicare & Medicaid Services to issue guidance to states on options for providing services via telehealth that address substance use disorders under Medicaid.
• Accelerating the development and use of drug management programs for at-risk beneficiaries within the Medicare program by mandating that all prescription drug plans use such a program by 2022.
• Requiring FDA to develop evidence-based opioid analgesic prescribing guidelines for the indication-specific treatment of acute pain.

Readers may have noticed that according to press reports, that the average government contribution toward FEHBP coverage increased by 1.2% for 2019. The FEHBlog noted yesterday that the maximum government contribution increased by 0.3% for self plus one coverage and 0.7% for self and family coverage. The increase for self only coverage was 0.4%. So the maximum government contribution increase was under 1%. How then is the government contribution increasing by 1.2%? The government contribution toward FEHB coverage is 72% of the enrollment weighted average capped at 75% of the selected plan’s premium. Consequently, if a plan’s premium is below the maximum government contribution (and many are), the federal government picks up 75% of the any increase in the premium of an under the max plan. Those under the max plan increases account for the average 1.2% increase in the government contribution.

Yesterday, the U.S. Government Accounting Office released a report on postal retiree health benefits. The office’s conclusion is as follows:

About 500,000 postal retirees receive retiree health benefits. The Postal Service Retiree Health Benefits Fund pays most of the costs. 

The Postal Service has not made $38.2 billion in required payments to this fund through fiscal year 2017. If it makes no more payments, the Office of Personnel Management projects the fund will be depleted in fiscal year 2030. 

We highlighted several approaches to address this shortfall, such as requiring most eligible retirees to participate in Medicare, increasing cost-sharing, or reducing benefits. 

Congress should consider legislation to put postal retiree health benefits on a more sustainable footing.

Congress had been considering such legislation until the President decided to create his own Postal System Reform Task Force last April. The Task Force report was timely delivered to Congress in early August. Hopefully the President will get the reform ball rolling again in time for the lame duck session of Congress in November.

Mergers and acquisitions tidbits:

• United Healthcare, according to Bloomberg, acquired Genoa Healthcare, a large chain of pharmacies that operate out of mental health and substance use disorder facilities.  
• Healthcare Dive reports that the two largest health systems in Texas — Dallas based Baylor Scott and White on the one hand and Houston based Memorial Hermann Health System on the other — have a sign a letter of intent to merger their companies. ”  Combined, the two would operate 68 hospitals, two health plans and more than 14,000 affiliated physicians” in the Lone Star State. 

If you find yourself scratching your head about the small gap between self plus one and self and family premiums in the FEHBP, please bear in mind that before Congress added the self plus one option self and family premiums were only 2.3 to 2.4 times self only premiums on average. Because of its older demographics, FEHB family sizes have been and remain relatively small. In other words, there really was no need to create the self plus one option (an OPM actuary told me that in 2009), the self plus one choice is there.

Also remember that the full premiums for self and family always are larger than the full premiums for self plus one. However, because OPM calculates the government contribution using a method required by law (enrollment weighted average), the larger government contribution for self and family may cause the enrollee contribution for self and family to be somewhat less than the employee contribution for self plus one for the same plan and same option.

For 2018 the government contribution for self and family increased by 0.7% (seven tenths of one percent) while the government contribution for self plus one increased by 0.3% (three tenths of one percent). This outcome unfortunately compounds the “flip flop” problem. If you did not face this problem for 2018, please check your plan’s 2019 premiums. If you do face this problem for 2019, simply change to self and family during Open Season.

Today is the the last day of the 2018 federal fiscal year and the federal government will be operating on a regular schedule.  Tomorrow is the first day of the U.S. Supreme Court’s October 2019 term. No FEHBA issues currently are pending before that Court.

The House of Representatives completed its pre-midterm election work last week and hit the campaign trail. Specifically, the House joined the Senate in approving the Defense/HHS etc. minibus appropriations bill. That bill which the President signed also provides for continuing appropriations through December 7 for  operations like the FEHBP without enacted FY 2019 appropriations. Here are links to the Federal News Radio bills on the second enacted minibus and the pending final minibus which will address whether federal employees will receive a pay raise next year.

The House also passed by a 393-8 vote the conference report on the opioid crisis response bill (H.R. 6, H. Res. 1099). Here is a link to the American Hospital Association’s site on the conference report.

Countable reports that the Senate will be continuing its work this coming week. Of note is the fact that the Senate plans to consider and approve the opioid crisis response bill this week. A favorable Senate vote would send the bill to the President to be signed into law.

In this regard, here’s a link to an interesting Opioid Institute article on using blockchain technology to help remedy the opioid crisis. On last Monday’s Econtalk podcast, the interviewer Russ Roberts spoke with Rodney Brooks, the Panasonic Professor of Robotics (emeritus) at MIT. Professors Roberts and Brooks discussed among other things Amara’s Law:

Roy Amara was a cofounder of the Institute for the Future, in Palo Alto, the intellectual heart of Silicon Valley. He is best known for his adage now referred to as Amara’s Law:

We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.

The discussion covered technology examples such as GPS (long run stage) and driverless cars (short run stage). Blockchain probably falls into the short term category too.

On the mergers and acquisition front last week, Cigna announced its combined Cigna / Express Scripts executive team and according to Healthcare Dive, Aetna sold its entire Medicare Part D business to Wellcare.

The deal — meant to grease the wheels for approval of the pending CVS-Aetna deal — does not affect individual or group Medicare Advantage plans or Medicare supplement plans or products Aetna said the purchase price of its Medicare Part D business is not material. Aetna’s standalone Medicare Part D members will continue to be covered by Aetna through the rest of the year. The deal is expected to close Dec. 31.

Both deals are expected to close later this year.

The Centers for Medicare and Medicaid Services announced late last week that

On average, Medicare Advantage premiums will decline while plan choices and new benefits increase. In addition, Medicare Advantage enrollment is projected to reach a new all-time high with more than 36 percent of Medicare beneficiaries projected to be enrolled in Medicare Advantage in 2019. This news comes as the agency releases the benefit and premium information for Medicare health and drug plans for the 2019 calendar year.  

The Medicare Advantage open enrollment season runs from October 15 through December 7, 2018.

OPM has posted Wednesday’s press release about 2019 FEHBP and FEDVIP premiums on its website. At the bottom of that press release, you will find links to 2019 premium charts. As a short cut for readers, here’s the links to the FEHBP premiums.