FEHBlog

Congress remains in session on Capitol Hill this coming week. The continuing resolution funding the federal government runs out on Friday, March 23.  The Wall Street Journal is reporting that a leadership omnibus bill will be released tomorrow. The FEHBlog expects another continuing resolution rather than an omnibus appropriations bill this week. Here’s a link to the Week in Congress’s report on last week’s actions on Capitol Hill.

The week’s highlight is the OPM / AHIP FEHBP carrier conference in Arlington, Virginia. The FEHBlog was pleased to see that the new OPM Director Dr. Jeff Pon on the first day’s agenda. The day and half conference will be held on Thursday March 22 and Friday March 23.

As promised, here’s the FEHBlog’s take:

1. Medical liability — OPM wants to make a number of reforms to medical malpractice litigation affecting FEHBP members, e.g., capping non-economic damages to $250,000. First off, medical malpractice litigation cases typically are heard in state courts.  This proposal strikes the FEHBlog as being outside OPM’s authority. In any event, the FEHBP has eight million members while the U.S. population is 325 million. The FEHBlog can’t imagine that these changes would have an impact on medical malpractice insurance premiums or defensive medicine. How would the doctor know that he had a looser leash because the patient is covered under the FEHBP?

2. Modify the government contribution based on plan performance — From the inception of the program in 1960 until 1997, the government contribution toward FEHBP coverage was based on the so-called Big Six formula. The government contribution was 60% of the average premium taking into account the two government wide plans (Blue Cross and at the time Aetna), the two largest employee organization plans, and the two largest HMOs participating in the FEHBP (usually the California Kaisers).  The government contribution was capped at 75% of the selected plan’s premium.  In 1990, Aetna terminated its government wide indemnity benefit plan. Congress provided an Aetna fix to the Big Six formula — a “phantom” Aetna rate was included in the formula. In 1996 for 1997, Congress replaced the Big Six formula with the so-called Fair Share formula.  The Fair Share formula sets the government contribution at 72% of the enrollment weighted average premium capped at 75% of the selected plan’s premium. OPM is proposed to set the government contribution at 70% of the enrollment weighted contribution. The employee will continue to pay at least 25% of the selected plan’s contribution. OPM will give each plan up to five additional percentage points for a good plan performance assessment score or subtract up to five additional percentage points based on a poor plan performance assessment.  The FEHBlog is not a fan of the plan performance assessment. Leaving that aside, assuming for the sake of argument that this proposal actually will save the government money, OPM should allow for raise the 75% cap to 77% or even higher.  Otherwise the plans with lower premiums and higher plan performance scores will be hurt as they already are at a 75% government contribution.

3.  Incorporate portions of the federal health programs anti-kickback act into the FEHBP — This is an Inspector General objective which would be very disruptive to the FEHBP if adopted by Congress as the FEHBlog has previously explained. The anti-kickback act is designed to prevent providers from screwing around with government set pricing for Medicare, Medicaid and Tricare. FEHBP carriers negotiate their pricing with providers contractually. For that reason, Congress exempted the FEHBP from this law in 1996 when it applied this Medicare law to Medicaid, Tricare, and certain other federal healthcare programs. The FEHBP is not a public program. The FEHBP is employer sponsored healthcare / commercial program. Similarly, in 2013 the Departments of Health and Human Services exempted the qualified health plans participating in the Affordable Care Act marketplaces. The FEHBlog could go on at greater length. This very bad idea would create a ton of work for lawyers. OPM should move the FEHBP toward the commercial marketplace not toward Tricare.

4. Modify the government wide indemnity benefit plan definition — The government wide indemnity benefit plan slot in the FEHBP has been vacant for over 25 years. OPM now wants to modify the definition such that the insurer filling the slot does not have be licensed in all States and the District of Columbia, which is a surprisingly high bar currently. However, in the FEHBlog’s view, the slot has remained vacant because OPM requires the government wide carriers to use an archaic financing method as required by the 1959 statute. OPM should ask Congress to be given authority to adopt a financing mechanism that is commercially appropriate for 2018. That might attract a new carrier.

Thanks to this Fedweek article, the FEHBlog realized that OPM had made public a justification to Congress for its budget proposal including its related legislative proposals. The discussion of OPM’s legislative proposals for our beloved FEHBP begin on page 21. The FEHBlog will discuss his concerns about those proposals over the weekend.

Marilyn Tavenner, the current president of America’s Health Insurance Plans (AHIP), the health insurance industry’s trade association, is retiring at the end of May. Her successor will be AHIP Chief Operation Officer Matt Eyles. Good luck to both of them.

The New York Times Upshot column has an interesting take on U.S. health care costs based on a new study published in the AMA Journal.

The quality of health care looks pretty good, [the study] finds, while its spending on social services outside of health care, like housing and education, looked fairly typical. 

When it came to many of the measures of health system function, the United States was in the middle of the pack, not an outlier, as [Harvard’s] Dr. [Ashish] Jha had expected. Many analysts have called for the country to shift its physician training away from specialty care and toward more primary care medicine, for example. But the study found that 43 percent of U.S. doctors practice primary care medicine, about typical for the group. 

It’s often argued that patients in the United States use too much medical care. But the country was below average on measures of how often patients went to the doctor or hospital. The nation did rank near the top in its use of certain medical services, including expensive imaging tests and specific surgical procedures, like knee replacements and C-sections. 

The data are consistent with other evidence that health care systems are beginning to converge, as information and technologies spread around the world among doctors and administrators.   

Becker’s Hospital Review reports that the Blue Cross and Blue Shield Association has arranged for Lyft to transport Blue Cross members in certain zip codes to their local Walgreen’s or CVS Pharmacy.  
“CVS will fund Lyft rides to pharmacies for Blue Cross customers in Pittsburgh living within select “transportation deserts,” and in a similar pilot program in Chicago, Walgreens will pay for Lyft rides for members located far from public transportation.” Smart move.

OPM’s website issued a welcome to the new OPM Director Pon and Deputy Director Rigas.  The FEHBlog welcomes them too.

Modern Healthcare reports that HHS Secretary Azar spoke to an AHIP conference last week about the Administration’s drive toward value based payments and more consumer choice. “Azar said he would also ease up on insurers on the regulatory front. ‘We know the amount of time and money that goes into complying with well-meaning but often byzantine rules and regulations regarding consumer communications.'”  We can only hope that OPM Director Pon shares a similar message with FEHB carriers at the OPM AHIP FEHBP carrier conference on March 22 and 23.

Speaking of value based payments, Health Payer Intelligence informs us that

Value-based care helped close 50 million gaps in care between 2013 and 2017 while reducing care costs, lowering ED utilization, and increasing provider care quality, according to a new report from UnitedHealthcare (UHC). 

UHC examined data from more than 110,000 physicians and 1100 hospitals that treat people enrolled in UnitedHealthcare employer-sponsored, individual, Medicare, and Medicaid health plans. The payer found that adoption of value-based care programs in all their business segments consistently benefited payers, providers, and patients.

Similarly, Mercer consultants and the American Benefit Council offer their report on employer innovations in health care coverage.

According to Healthcare Dive,  “Shareholders for both CVS Health and Aetna voted Tuesday in New York City to approve the $69 billion merger between the pharmacy chain and the insurer.”  Both companies expect that the merger will receive necessary government approvals and close by the end of this year.

Just when the FEHBlog thought there was nothing more to stay about last week’s HIMSS conference, he noticed this Healthcare IT News report on the successful use of blockchain technology in health care.

“How do you actually guarantee that you know where the data has been throughout its lifetime, and who has touched it?” said Robert Barkovich, CEO of Health Linkages. In a blockchain-based system, manipulation or falsification of data “will not be possible because the hashes will not match – you mathematically prove the integrity of the data.” 

Similarly, blockchain is already showing big potential for helping health systems manage pharma and medical device supply chain, patient recruitment for clinical trials, security and interoperability of Internet of Things and medical device data and privacy protections for precision medicine, he said. 

Finally, the Wall Street Journal reports on a dispute among provider and other advocacy groups about proper blood sugar targets for people with diabetes type 2.

“For most patients, an A1C between 7 and 8 seems to be the right spot where you maximize benefit and minimize burden,” says Jack Ende, president of the doctors group issuing the new guidelines and an internist at the University of Pennsylvania. 

Dr. Ende says the burdens of striving for a lower number include a greater risk of low blood sugar, which can cause fainting. Patients taking medication to reach a lower A1C level may face side effects and weight gain. Studies have found that the more aggressive treatment of diabetes didn’t reduce deaths or complications, including heart attacks or strokes, he says.

Interesting. Other groups argue for a lower target. Medicine in the FEHBlog view remains as much as art as a science.

Congress will again be in session on Capitol Hill this week. Here’s a link to the Week in Congress’s summary of last week’s actions on the Hill.

Modern Healthcare informs us about the seven big announcements made at the HIMSS health care technology conference last week. The FEHBlog only mentioned one of them while the conference was happening.

The FEHBlog often forgets that as a result of the Affordable Care Act, the FEHBP offers coverage to Indian tribal employees. Tribal employees represent a small percentage of total FEHBP enrollment which is around 4 million. The percentage just got smaller because according to the Caspar Wyoming  Star Tribune “The Northern Arapaho Tribe will end its enrollment in the Federal Employee Health Benefits Program effective March 31, Northern Arapaho Business Council chairman Roy Brown advised the “tribal desk” of the U.S. Office of Personnel Management last week.”

Modern Healthcare also had an interesting article about health system efforts to stop providing low value care. For example,

When leaders at Johns Hopkins Health System [in Baltimore MD] set out to eliminate wasteful clinical practices across the organization, they started with blood transfusions.
Although the system had a number of areas it could have focused on first, unnecessary blood transfusions were on the industry’s radar back in 2012, when Johns Hopkins began its effort.  

Using a consistently applied and closely monitored set of procedures, Johns Hopkins was able to save $2 million a year and consume fewer bags of difficult-to-collect blood.
More importantly, the academic health system created a template for reducing waste across the organization, allowing its quality oversight managers to pick through other areas with a lot of potential for eliminating waste. 

Keep up the good fight.

The FEHBlog notes that following yesterday’s announcement of Cigna’s plan to acquire Express Scripts, the three largest health insurers outside of the Blue Cross Association will be linked to prescription drug managers United Healthcare lead the way with Optum Rx which has grown internally and by acquisition and CVS Health is acquiring Aetna. Several Blue Cross licensees own Prime Therapeutics and Anthem, another large Blues licensee, is looking into adding a PBM. The combined businesses have more data to explore in an effort to control costs. It’s interesting that in 2011 OPM required the nationwide FEHB plans to competitively bid their PBM contracts every three years. Before long, those carriers likely will be competitively bidding a medical network and PBM package periodically.

The FEHBlog has noted that OPM’s focus per the call letter is on controlling opioid prescriptions, The pendulum already has swung away from over prescribing those dangerous drugs. Street opioids like heroin and fentanyl remain a problem that FEHB plans can’t address. The FEHBlog’s concern is with caring for the thousands of people whom the opioid crisis has harmed. That concern was hammered home by an article in today’s Wall Street Journal about how “The [opioid] addiction crisis that is killing tens of thousands of Americans every year is also creating a financial crisis for many families, compounding the anguish caused by a loved one’s destructive illness. Families are burning through savings and amassing huge debt paying for rehab that often doesn’t work.”  The first step needs to be reaching a medical professional consensus on treatment. This is a mess.

OPM’s call letter also ask carriers to discuss in their benefit and rate proposal the “carrier’s genetic
testing strategy, scope of included testing, and any applicable vendor partnerships.”  In this regard, the Wall Street Journal reports today about the Food and Drug Administration’s March 6 decision  to authorize 23andMe to sell BRCA tests directly to consumers for $199. 23andMe’s tests looks for “three specific BRCA1/BRCA2 breast cancer gene mutations that are most common in people of Ashkenazi (Eastern European) Jewish descent.” The mutations are present in about 2% of that group. The Journal reports that

Under Commissioner Scott Gottlieb, the FDA has begun to ease the path to market of tests from an industry—called the laboratory-developed test business—that makes thousands of diagnostic tests and generates billions of dollars in annuals sales. In interviews and a policy address this week, Dr. Gottlieb laid out details of his lab-test deregulatory efforts, including the 23andMe decision.

This new direction for the FDA generally reverses course from Obama-era plans to more closely scrutinize this industry. “Lab-developed” diagnostic tests are those developed and used at hospitals and corporate labs to test blood and other cell samples sent in by doctors and hospitals. These differ from the traditional lab business, in which companies sell diagnostic equipment to hospitals. * * * 

The test worries some experts in the field. The American Cancer Society’s medical and scientific director, Otis Brawley, said these mutations are a very “incomplete picture of a person’s true cancer risk. Most doctors don’t understand this stuff, and that’s what genetic counselors are for.”

Rita Redberg, a cardiologist and editor of JAMA Internal Medicine, said she would want to see evidence that the 23andMe test is truly of benefit. “Unless this is going to save lives, we shouldn’t be rushing this out to the general public,” she said.

In any event, the Affordable Care Act requires FEHB plans and other health plans to cover with no member cost sharing “genetic counseling and BRCA testing, if appropriate [and performed in-network], for a woman as determined by her health care provider.

 Finally NPR reports that the U.S. Justice Department and 45 state attorneys general filed a lawsuit against a group of generic drug manufacturers “claiming that generic-drug prices are fixed and the alleged collusion may have cost U.S. business and consumers more than $1 billion.” The lawsuit was filed in the U.S. District Court for the Eastern District of Pennsylvania.  “In their complaint they suggest — but don’t allege — that the price-fixing conspiracy also involved drug distributors. Prosecutors are sending more subpoenas and planning a new complaint.” The FEHBlog will keep an eye on this case.

Last night by voice vote on the Senate floor

Nominations Confirmed: Senate confirmed the following nominations:

Michael Rigas, of Massachusetts, to be Deputy Director of the Office of Personnel Management.

Jeff Tien Han Pon, of Virginia, to be Director of the Office of Personnel Management for a term of four years.  Daily Congressional Record, Pages S1446, S1527

The Wall Street Journal reports this morning that “Health insurer Cigna Corp. plans to buy [prescription benefit manager] Express Scripts Holding Co. ESRX -1.56% in a cash-and-stock deal worth $52 billion, excluding debt, that the companies say will expand their health care offerings and help them control costs.”  The companies expect that the deal, which is subject to shareholder and regulatory approvals, will close this year.  Both companies are active vendors in the FEHBP space.

The FEHBlog is convinced that there is no such thing as a good surprise. Today’s surprise was Monday’s IRS bulletin which announced (p. 400) that

Annual contribution limitation. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,450. For calendar year 2018, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,850.

The problem is that last May the IRS (Rev Proc. 2017-37) announced that the 2018 HSA contribution limits would be $3,450 self only (ok so far) and $6,900 for family coverage. So that IRS had dropped the family maximum by $50.

What happened? The tax reform act requires inflation adjustments to be based on the chained CPI-U which produces lower adjustments than the traditional CPI-U.

If someone has maxed out their HSA contributions for 2018, the HSA bank should be able to refund the $50 overage. It would be advisable to ask. Remember that if you are 55 or older, you can make a $1000 catch up contribution on top of the statutory maximum.