FEHBlog

Leaving Block Island today. Lovely weather. Yesterday, a woman working at a restaurant suggested that I try to stay cool. I replied that the weather on Block Island is much cooler and pleasant than Washington, DC, in August. Perspective is everything.

In any event, the federal government preliminary reported earlier this week that drug overdose deaths in our country reached a new high of roughly 72,000 in 2017, compared to 66,000 in 2016.

Among the more than 72,000 drug overdose deaths estimated in 2017, the sharpest increase occurred among deaths related to fentanyl and fentanyl analogs (synthetic opioids) with nearly 30,000 overdose deaths.

Illustrative of the nationwide public health problem, the New Haven (Connecticut) Register reports that more than 80 people have collapsed (but not died) on the New Haven Green due to smoking a synthetic marijuana laced with fentanyl, a very strong opioid.  The Hartford Courant adds

Two men were arraigned in state court Thursday afternoon on charges related to Wednesday and Thursday’s mass overdose of the synthetic marijuana drug known as “K2,” as stricken people continued to drop in and around New Haven’s downtown green. By Thursday afternoon, more than 85 overdose cases had been treated, according to officials.

New Haven police Chief Anthony Campbell said one of two men suspected of distributing the K2 was handing it out to build demand and clientele. Another suspect was charging money for the drugs. The chief said investigators believe more of the batch is still out in the community.

The Wall Street Journal reports that President Trump in a cabinet meeting suggested that the federal government bring its own lawsuit against the opioid manufacturers and investigate and seek to stop foreign suppliers of fentanyl and synthetic opioids.  The Journal adds that

the [new federal government] data also show a slight decline in deaths in the last month of 2017 and January 2018, suggesting that efforts to prevent opioid use and treat addiction may be starting to have an effect.

On the FEHBP front, retirement consultant Tammy Flanagan offers her perspective in govexec.com on whether what annuitants with FEHBP should do when they reach Medicare eligibility.  The FEHBlog wishes to point out that pursuant to 5 CFR Sec. 890.304(p):

(p) On becoming eligible for Medicare. An annuitant may change the enrollment from one plan or option to another at any time beginning on the 30th day before becoming eligible for coverage under title XVIII of the Social Security Act (Medicare). A change of enrollment based on becoming eligible for Medicare may be made only once.

The FEHBlog and spouse are vacationing this week on Block Island which is off the southern coast of Rhode Island (and is part of that state). It’s lovely here.

As the FEHBlog predicted and CNBC reports, Carl Icahn has waved the white flag on this effort to block Cigna’s acquisition of Express Scripts.

Speaking with CNBC about the decision, Icahn took a conciliatory note, saying: “The crossover was too big and given what the advisory firms said we realized there was no way we could win. Sometimes you have to be flexible. There’s no point in fighting just to fight. We won three proxy fights in a row which is really hard to do, so you lose one. It’s the way of life.”

Following up on another Weekend Update post, New Mexico Health Connections on Monday did bring another lawsuit seeking a preliminary injunction against CMS’s ACA risk adjustment rule. The New Mexico co-op which would owe CMS $5.6 million in risk adjustment contributions under this rule, is challenging the final rule for 2017 benefit year, issued on July 30, not the proposed rule for the 2018 benefit year, which was issued last week. The New Mexico co-op’s press release explains that

“We contend that the emergency regulation continues a risk adjustment formula that disadvantages small, new, and lower-priced health plans in favor of their larger, more expensive competitors,” Marlene C. Baca, Health Connections CEO, said in a written statement.

In other ACA litigation news, the federal district court for the Northern District of Texas has set September 10 as the date for a hearing on the preliminary injunction motion by a group of states lead by Texas to strike down the ACA in the wake of Congress’s decision to zero out the ACA’s individual mandate penalty beginning next year. Another group of states has intervened as defendants to support the ACA and the Justice Department has filed a brief partially support both sides.

Finally, the Hill reports that the CVS Health’s PBM arm “Caremark will allow its clients to exclude coverage of drugs with extremely high launch prices under a new program the company said is aimed at pressuring manufacturers to lower drug costs.”

The new program will use specific methods of comparing the cost and effectiveness of certain medications. CVS said such analyses for the effectiveness of drugs are common in Europe, but don’t exist in America. 

“No one but manufacturers have, until now, had any control over the launch price of newly patented drugs. This new approach, harnessing the power of the market, could change manufacturer behavior,” CVS said in an announcement. 

CVS said the program will focus on expensive drugs that aren’t cost-effective, so medications that are deemed “breakthrough” therapies by the Food and Drug Administration will be excluded from this program.

The Senate returns to Capitol Hill this week while the House of Representatives are in their home districts. This Week in Congress has returned to the internet after being off the air for four months. While the first line of their report is incorrect, the FEHBlog finds the one pager to be useful.

On the mergers and acquisitions front, Bloomberg reports that both of the major shareholder proxy advisory companies have come out in favor of the Cigna / Express Scripts merger.  The Wall Street Journal explains in an editorial about the failed Rite-Aid / Albertson’s merger that

[T]he objections by Glass Lewis and ISS carry substantial weight since the Securities and Exchange Commission allows institutional shareholders to fulfill their fiduciary obligations by relying on the advice of third-party proxy advisers. Flouting their advice can invite investor lawsuits. Glass Lewis and ISS control 97% of the advisory market, which encourages herd voting among investors.  Proxy firms also don’t have to demonstrate that their recommendations are in the best interest of shareholders, which can cause conflicts of interest.

Just as the Glass Lexis and ISS objections to the Rite-Aid / Albertson’s merger killed the deal last week, it’s likely that their support for the Cigna / Express Scripts merger will carry the date, notwithstanding Carl Icahn’s opposition.

Healthcare Dive reports that

Employers feel they’ve squeezed out all of the savings that can come from high-deductible health plans and are seeking new ways to manage rising healthcare costs and improve employee health, according to a new report by Duke’s Margolis Center for Health Policy. 

The FEHBP hasn’t come close to squeezing all of the savings that can come from high deductible plans. Except at the very beginning in 2004, OPM has not been keen on them.

Finally, to close the loop on an ACA issue, the FEHBlog noted last month that the Centers for Medicare and Medicaid Services had suspended making payments to insurers in the ACA’s fully funded risk adjustment program due to a court ruling in New Mexico. Late last week, CMS issued a final rule intended to address the court’s concerns about the prior rule. The risk adjustment payments will resume in September with no change to distribution approach unless the court issues a preliminary injunction.

Let’s kick of this post with some healthcare related mergers and acquisitions updates —

• Forbes offers a useful update on the status of the CVS Health acquisition of Aetna.  Cautious optimism abounds. “CVS narrowed the window of time when executives believe the deal will close. CVS now says  the Aetna transaction will close in the later part of the third quarter or the “early part” of the fourth quarter . The company previously said the deal would close in the second half of this year.”  Also Becker’s Hospital Review briefs us on CVS Health’s second quarter 2018 earnings report. 

• The Wall Street Journal reports that earlier this week, “in a surprise move, Rite Aid Corp. and Albertsons Cos. called off their planned $24 billion merger on the eve of a shareholder vote in the face of mounting protests from investors.”  Rite Aid, of course, is a drug store chain while Albertsons is a grocery chain. In a follow up article the Journal observed that

It was Rite Aid’s second failed merger attempt in roughly a year. Federal regulators in 2017 shot down a planned tie-up with rival Walgreens Boots Alliance Inc. Rite Aid, now down to around 2,600 pharmacies, has a market-capitalization of under $2 billion. “There is no easy recipe for Rite Aid,” said Kurt Jetta, executive chairman of the Tabs Analytics consultancy, who previously advised Albertsons.

Speaking of pharmacies, Healthcare Dive reports that CVS Health is the latest pharmacy chain to begin offering telehealth services at their in-store clinics which usually are staffed by physicians assistants, in the FEHBlog’s limited experience.

Tibits —

• Health Data Management reports that the Centers for Medicare and Medicaid Services yesterday announced a proposed rule to overhaul Medicare’s accountable care organization program, which is six years old, in order to require the providers to offer some skin in the game.  The FEHBlog is a much greater fan of commercial ACOs which are based on contracts rather than much less flexible laws and regulations. 
• The New  York Times Upshot column discusses the difficulties confronted in studying the efficacy of workplace wellness programs. 
• HHS’s Office for Civil Rights, which enforces the HIPAA Privacy and Security Rules, released a July newsletter with guidance on proper disposal of electronic data storage devices that contain protected health information.
• The Wall Street Journal humorously reports on inexpensive “chatbot” apps that provide folks with talk therapy. Treat yourself.  

The FEHBlog in interested in the President’s Postal Service Reform Committee because the Postal Reform bills in Congress (e.g., HR 756) would create a Postal Service Health Benefits Program within the FEHBP. OPM Director Pon sits on the Committee which Treasury Secretary Mnuchin chairs.

Congress has paused work on its bill pending consideration of this report, which is scheduled to be submitted to the President on Friday August 10. Govexec.com reports this morning that

While the report is completed and expected at the White House by Friday’s deadline, multiple individuals engaged in discussions with the task force told Government Executive the administration will not make it public immediately. The report is already being circulated within the administration, those individuals said, but the White House will not widely release it for at least a couple of weeks.

Of course, that makes sense.

Healthcare Dive reports that Carl Icahn has gone public with this campaign to defeat the proposed merger of Cigna and Express Scripts.  The Wall Street Journal adds that

[Mr. Icahn] suggests that Cigna instead strike a multiyear partnership with a pharmacy-benefit manager—potentially Express Scripts—and buy back stock.

Cigna said in a statement Tuesday that Mr. Icahn appears to be making a financial bet against the transaction. His comments demonstrate a “lack of understanding of the dynamics of the health-care industry,” Cigna said.

Cigna’s shareholders of record on July 10 will vote on the transaction on August 24. The Express Scripts shareholders will vote on the same day. Both votes requires majority support for the merger agreements to close, assuming no federal government objection.

Health Payer Intelligence helpfully suggests some ways that health plans can adjust cost sharing in order to improve the health of people with chronic ailments. One size does not fit all.

The Centers for Medicare and Medicaid Services announced today that its giving Medicare Advantage and Part D plans significantly more latitude in managing prescription drug benefit costs. Specifically Medicare Advantage plans will be permitted to negotiate prices for drugs, typically injectables, that are covered under Part B and Medicare Advantage and Part D plans will be able to implement step therapy arrangements under which patients try out more cost effective drugs before using the more expensive substitute.

On the government reorganization front, Nextgov reports that

The government’s head of background investigations is fully in favor of moving his office, staff and workload under the Defense Department, a shift that is expected to become official under an impending presidential executive order.

Congress passed legislation last year requiring the National Background Investigations Bureau—part of the Office of Personnel Management—to transfer investigations of Defense personnel and contractors to that department. NBIB would retain only the civilian government portion, but that partial shift would ultimately be untenable, according to administration officials.

“The truth is that that split would have been debilitating, distracting and, frankly, counterproductive,” NBIB Director Charles Phalen said during an Aug. 7 Nextgov event on insider threats. “Good news is, after further review … the administration had determined that bifurcation is probably not a good idea.” 

Both Houses of Congress are out of town this coming week, although the Senate will be back here for the week of August 13. Before leaving town, the Senate passed 92-6 its amended version of the interior department minibus appropriations bill (HR 6147) which includes OPM and FEHBP appropriations.  The two Houses of Congress now must establish a conference committee to resolve differences between their respective versions of HR 6147.

The FEHBlog nearly fell out his breakfast nook yesterday morning when he read in the Wall Street Journal that

Activist investor Carl Icahn has built a sizable stake in Cigna Corp. and plans to vote against the health insurer’s $54 billion purchase of Express Scripts Holding Co., the latest sign of trouble for the planned tie-up.

Mr. Icahn, whose stake amounts to less than 5% of Cigna’s shares outstanding, believes the company is paying too high a price for the pharmacy-benefit manager, which faces threats on a number of fronts, according to people familiar with the matter.

He therefore plans to vote against the merger. Last evening, the Journal’s Heard on the Street columnist reported that while Cigna’s second quarter 2018 report suggests the Mr. Icahn has a valid point, his “uphill” challenge may be in the FEHBlog’s “a day late and a dollar short.” The Cigna / Express Scripts merger requires the supporting vote of a majority of stockholders (of record as of July 10, 2018) by August 24, 2018.

Here are links to Healthcare Dive’s reports on Cigna’s and Aetna’s second quarter earnings reports for your information. Both companies and their merger partners do business in the FEHBP.

Take a look at this Healthcare Dive report on a Mayo Clinic study of opioid prescription coverage in the commercial insurance and Medicare Advantage markets over the period 2007 – 2016.

Also consider the Wall Street Journal’s set of charts seeking to explain why Americans spend so much on healthcare.

As this series of charts shows, Americans aren’t buying more health care overall than other countries. But what they are buying is increasingly expensive. Among the reasons is the troubling fact that few people in health care, from consumers to doctors to hospitals to insurers, know the true cost of what they are buying and selling.

Providers, manufacturers and middlemen operate in an opaque market that can mask their role and their cut of the revenue. Mergers give some players more heft to enlarge their piece of the pie.

Consumers, meanwhile, buoyed by insurance and tax breaks, have little idea how much they are really spending and little incentive to know underlying costs. 

In the FEHBlog’s view, high deductible plans coupled with health savings accounts do provide consumers with a greater incentive. Efforts are underway to create more transparency. The charts indicate why it’s a tough row to hoe. The Drug Channels blog reminds us that

In June, Alex Azar, Secretary of the U.S. Department of Health & Human Services (HHS), summarized his long-range vision for a new drug channel system: 

“[W]e may need to move toward a system without rebates, where PBMs and drug companies just negotiate fixed-price contracts. Such a system’s incentives, detached from artificial list prices, would likely serve patients far better.” (emphasis added)

No one has yet explained what a system without rebates would look like. 

The Drug Channel blog posted his vision of such a new system for public comment.  Keep the faith and have a good weekend.

Medpage Today reported on yesterday’s Senate Health Education Labor and Pensions Committee third hearing on controlling health care costs. This hearing focused on administrative savings.

CMS announced yesterday that “for the second year in a row, the average basic premium for a Medicare Part D prescription drug plan in 2019 is projected to decline. At a time when health insurance premiums are rising across-the-board, basic Part D premiums are expected to fall from $33.59 this year to $32.50 next year.”

HHS released its short term health plan rule this morning.

The rule allows for the sale and renewal of short-term, limited-duration plans that cover longer periods than the previous maximum period of less than three months. Such coverage can now cover an initial period of less than 12 months, and, taking into account any extensions, a maximum duration of no longer than 36 months in total. This action will help increase choices for Americans faced with escalating premiums and dwindling options in the individual insurance market.

The rule is effective in 60 days.

Federal News Radio reports that

The Homeland Security Department is standing up a new one-stop shop aimed at protecting and sharing cyber threat information with major industries, including banks, electric companies and telecommunications companies.

DHS Secretary Kirstjen Nielsen, speaking Tuesday at an agency cybersecurity summit in New York, said the National Risk Management Center would help break down some of the communication barriers that exist between the government and sectors.

The new center builds on the work of the Automated Indicator Sharing Program launched in 2016. Here’s a link to the agency’s press release.

The Republican leadership of the House Energy and Commerce Committee sent a letter to the Federal Trade Commission last week asking the agency to conduct a retrospective analysis of prescription benefit manager mergers that occurred over the past decade or so — CVS Health and Caremark, Express Scripts and Medco, and Optum and Catamaran.  The purpose of the analysis would be to assess whether the FTC’s antitrust enforcement authority “has been effective as necessary.” The Committee asked for a reply to the request by August 10. The analysis is likely to occur.

The U.S. House of Representatives started its August recess last week. The Washington Examiner reports on the Senate’s plans for the coming week as it remains at work on Capitol Hill.  The FEHBlog noticed that the Senate Health Education Labor and Pensions Committee will be holding a full Committee hearing on healthcare spending on Tuesday beginning at 10 am.

The Office of Personnel Management announced last week that the agency has upgraded its unlocktalent.gov website which provides a lot of useful demographic and satisfaction with employment information on federal employees.  A lot of information is made available to the general public; other information is restricted to federal employees who can log into the site.

Healthcare Dive discusses an interesting Walgreen’s initiative called Find Care Now.

The [initiative’s] goal is to help consumers find convenient and lower-cost care such as urgent care centers co-located at Walgreens drugstores and telemedicine. The platform lists prices for services ranging from lab tests to an optometrist or hearing specialist to physician house calls and telehealth consultations.

Currently, 17 providers are taking part, including Advocate Health Care, New York-Presbyterian Hospital, MedExpress Urgent Care and MDLive.

Good luck.