FEHBlog

Govexec.com and Federal News Radio also reported on yesterday’s Senate subcommittee hearing features OPM Director Dr. Jeff Pon and GSA Administrator Emily Murphy, if you are interested in their perspectives.

Employee Benefit News adds some details on the House of Representatives’ HSA bill passed earlier this week. To wit — the bill, if approved by the Senate, would

allow [High Deductible Health Plans} HDHPs to cover up to $250 (self-only) and $500 (family) annually for non-preventive services that currently may not be covered pre-deductible. This will allow pre-deductible coverage for chronic condition treatment and telehealth services, for example. 

The article describes administrative concerns about the provision but implementing the provision is optional. If not 2019, then 2020. More flexibility is a good thing.

The Centers for Medicare and Medicaid Services released proposed calendar year 2019 changes to Medicare’s outpatient hospital prospective pricing system and its ambulatory surgical center benefits.

CMS is moving toward site neutral payments for clinic visits (which are essentially check-ups with a clinician). Clinic visits are the most common service billed under the OPPS. Currently, CMS often pays more for the same type of clinic visit in the hospital outpatient setting than in the physician office setting. * * *

The proposed rule aims to address other payment differences between sites of service, so that patients can choose the setting that best meets their needs among safe and clinically appropriate options. For 2019, CMS is proposing to:

• Expand the number of procedures payable at ASCs to include additional procedures that can safely be performed in that setting;
• Ensure ASC payment for procedures involving certain high-cost devices parallels the payment amount provided to hospital outpatient departments for these devices; and
• Help ensure that ASCs remain competitive by stabilizing the differential between ASC payment rates and hospital outpatient department payment rates.

As planned, the FEHBlog attended the Senate Homeland Security and Governmental Affairs subcommittee hearing today concerning how the Administration’s government reorganization plan impacts OPM and GSA. To recap, that plan would move the OPM policy shop to the Executive Office of the President, move the background check program to the Defense Department, and move OPM’s other operations, including the FEHBP, to the GSA which would be renamed the Government Services Administration. The opening statements of the two witnesses, OPM Director Dr. Jeff Pon, and GSA Administrator Emily Murphy as well as the video of the hearing can be found here.

The hearing room was packed. Here are the highlights from the FEHBlog’s perspective:

• The top OPM/GSA priority is to transition OPM’s HR Solutions to GSA. HR Solutions is a service that OPM sells to government agencies. GSA is generally responsible for selling and arranging to sell services and supples to government agencies. The OPM Director indicated OPM and GSA are considering whether this transition can be made without additional legislative approval. The Senators appeared to appreciate the synergies, and the Chairman requested a transition timeline.

• This HR Solutions transition is the subject of these OPM and GSA transition teams about which the Federal New Radio article reported on Monday.  Transition of the employee benefit functions, including the FEHBP, from OPM to GSA is not under active discussion now. It is considered phase two. The OPM Director remarked that he wants to fix the agency’s retirement program administration problems before transferring those functions to GSA. He thinks that fix will take 18 months. 

The U.S. House of Representatives this week has passed a series of healthcare related bills of interest to readers:

• A bill to repeal the ACA’s anti-innovation medical device tax, which currently is suspended (H.R. 184).
• A bill that would expand the availability and utility of health savings accounts (inside and outside the ACA’s heath insurance exchanges (H.R. 6311). The bill would permit federal employees over age 65 to continue to contribute to their FEHBP HSAs even though they are eligible for Medicare Part A. This bill also would extend the suspension of the ACA’s onerous health insurance tax from 2019 to 2021.
• A bill that would override the ACA’s silly provision that prohibits health plans, health savings accounts or medical flexible spending accounts from reimbursing over the counter drugs unless a doctor had a issued a prescription for the purchase. The bill also would allow the accounts to reimburse menstrual products (H.R. 6199)

Federal News Radio reports that

Following the General Services Administration’s lead, the Office of Personnel Management named an experienced executive to lead its reorganization effort.

Sources confirmed Kathleen McGettigan, OPM’s chief management officer, is heading up the intra-agency task force to  “break up” the agency under the Trump administration reorganization plan.

A subcommittee of the Senate Homeland Security and Governmental Affairs Committee will hear testimony from OPM Director Dr. Jeff Pon and GSA Administrator Emily Murphy on Thursday morning, July 26 on this matter.  The FEHBlog plans to attend.

Congress remains in session on Capitol Hill this week. The House of Representatives heads off on its August recess at the end of this week. The Senate will continue in session for a few more weeks after this one.

Last week the House of Representatives passed on basically a party line vote a “minibus” appropriations bill, H.R. 6147, for the Interior Department, EPA, and Financial Services and General Government in the 2019 fiscal year. The bill includes OPM and FEHBP appropriations. The bill includes the three routine FEHBP appropriations measures — the abortion coverage restriction, the prohibition on full cost accounting standards coverage, and the contraceptives coverage mandate. During deliberations on the bill held on July 19, the House passed an amendment (No. 947) to the bill that would “prohibit Federal Funds from being used by the Office of Personnel Management to administer the Multi-State Plan program. The bill also was amended to prohibit funding of the District of Columbia’s individual health mandate intended to take effect after the federal mandate zeroes out on January 1, 2019. This Senate could take up this bill before it goes on mid-August recess. The House and Senate already are holding a conference committee on the first FY 2019 minibus which includes military construction.

Here are a couple of interesting tidbits:

• Business Insider features an interview with Cigna CEO David Cordani. Mr. Cordani favors employer sponsored health coverage. In the regard, the Wall Street Journal reports

“For the first time in six years, the share of U.S. workers offered health insurance through their employer has risen, a sign a tighter labor market is prompting businesses to offer more generous benefits. 

In March, 69% of private-sector employees were offered medical benefits from their employer, according to an annual survey the Labor Department released Friday. That’s up from 67% in 2017, and the first time the rate has increased since 2012.”

•  Healthcare Dive reports on Humana study concluding that telehealth coverage is cost effective.

“Telemedicine visits were paid out at an average of $38 — a much lower price tag than the $114 cost of a face-to-face consultation, according to a yearlong study from Humana. Researchers used 2,740 patient pairs that were matched for diagnosis, profession, pharmacy coverage, age, net worth, location and other factors.”

“As for prescribing practices, doctors who saw patients remotely prescribed antibiotics at a lower rate (36.1%) than doctors in-office (40.1%).”

Greetings from Amtrak.

Following up on Wednesday’s post, Senators Lankford and Heitkamp yesterday announced a hearing to be held on Thursday July 26 to discuss “The Challenges and Opportunities of the Proposed Government Reorganization on OPM and GSA.”  The FEHBlog will be tuning in.

A lot has been happening on the prescription drug front

• Per the Wall Street Journal, two major manufacturers Merck and Novartis have joined Pfizer in heeding the Administration’s request that they better control their pricing. Good for them.
• The Food and Drug Administration (“FDA”) is encouraging drug manufacturers to make efforts to convert appropriate generic prescription drugs to over the counter drugs. The difference between the two is that prescription drugs requires a doctor’s supervision usually for safety reasons. 
• The FDA also has released a Biosimilars Action Plan.  Biosimilars are generic, lower cost versions of specialty drugs. The Plan explains that to date the FDA has approved 11 biosimilars, including five in 2017 and one of those was to treat cancer.  “As the U.S. market continues to expand and evolve, economies of scale should allow biosimilars to pass on more savings to payors and, in turn, patients. Prices should continue to fall as markets become more competitive.” The Plan explains the steps that the agency is taking to assist biosimilar development and approval. 
• The FDA also announced yesterday the formation of a workgroup to consider importing prescription drugs into the United States for the purpose of improving price competition on sole source prescription and generic drugs. 
• Healthcare Finance reports on public comments, particularly from the AMA and AHIP, on the President’s blueprint to better control drug prices. 
• Finally Reuters reports that the Office of Management and Budget is reviewing a proposed HHS rule that likely would impact the use of prescription drug manufacturer rebates with the Medicare, Medicaid, Indian Health Service and other public federal health care programs, but not the FEHBP. 

The report finds ransomware attacks actually reversed course in 2018 and trends lower in the first half of this year. While ransomware attacks rose in 2017, with an 89 percent increase in the frequency of reported attacks, these attacks as major IT/hacking data breach events impacting over 500 patient records dropped from 19 major data breaches in the first half of 2017 (the comparison period) to 8 major data breaches in the first half of 2018, marking a decrease of 57 percent.

The FEHBlog listened to a good chunk of this morning’s Senate Homeland Security and Governmental Affairs hearing on the President’s government reorganization plan. The witness before the Committee was OMB Deputy Director for Management Margaret Weichert. The FEHBlog learned that OMB’s top reorganization priority is to move employee background checks from OPM to the Defense Department. Other top priorities include growing the cybersecurity workforce, implementing a customer service initiative, and creating an advance research institute. Ms. Weichert expects to identify by summer’s end ten to twelve initiative that the executive branch can implement without new Congressional action. Sen. Lankford (R Okla.) mentioned that he and Sen. Heitkamp (D N.D.) plan to hold an OPM oversight hearing in the next few weeks. Those Senators are the chair and ranking member of the Committee’s Subcommittee on Regulatory Affairs and Federal Management. Sen. Lankford added that the hearing will concern, among other topics, federal retirement issues.

On Sunday, the FEHBlog mentioned that the Senate Health Education Labor and Pension Committee planned to hold a hearing yesterday on controlling health care costs. Here’s a link to an interesting Health Data Management article coming out of that hearing on this important topic.

The FEHBlog has been noticing many articles about Medicares “340B Program.” The FEHBlog, however, is unfamiliar with the Program’s specifics. He read a July 17, 2018, D.C. Circuit decision on the Program which explained

[T]he so-called “340B Program,” which allows certain hospitals to purchase outpatient drugs from manufacturers at or below specified prices. See Public Health Services Act § 340B, 42 U.S.C. § 256b. When hospitals treat Medicare beneficiaries with these drugs, they are reimbursed through [Outpatient Prospective Pricing System] OPPS [which is part of Medicare Part B].

In setting the annual reimbursement rates for drugs obtained through the 340B Program, the Secretary must use either the “average acquisition cost” of the drug, taking into account “hospital acquisition cost survey data,” or, if those data are unavailable, the “average price” of the drug, as established under different provisions of Medicare. 42 U.S.C. § 1395l(t)(14)(A)(iii). The relevant cross-referenced provision fixes payment rates at 106% of the average sales price. See id. § 1395w-3a(b). If the average-price metric is used, this 106% figure may be “adjusted by the Secretary as necessary for
purposes of [OPPS].” Id. § 1395l(t)(14)(A)(iii)(II). The Secretary does not have acquisition cost survey data, so he historically has set the OPPS reimbursement rate for drugs purchased through the 340B Program at 106% of the average sales price, without any adjustments. See Hospital OutpatientProspective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs, 77 Fed. Reg. 68,210, 68,382–86 (Nov. 15, 2012). 

The current brou-ha-ha stems from the fact that the current HHS Secretary Alex Azar cut the 340B reimbursement rate to 77.5% of the average sales price, “cit[ing] various studies indicating that hospitals participating in the 340B Program are able to buy covered drugs at amounts significantly below the average sales price.”  This legal challenge to Secretary Azar’s decision was dismissed on the ground that it was not predicated on Medicare Part B claim decision as the Medicare judicial review law requires. The legal battle of course will continue. The FEHBlog appreciated gaining this information on the 340B Program.

Congress remains at work on Capitol Hill this coming week. The Senate Health Education Labor and Pensions Committee will be holding another hearing on Tuesday morning about reducing health care costs. The Senate Homeland Security and Government Affairs Committee will hold a hearing on the President’s government reorganization plan on Wednesday morning.  OMB Deputy Director Margaret Weichert will testify at the reorganization plan hearing.

Healthcare Dive reports that according to a recent Avalere study more insurers are using value based contracts with drug and medical device companies.

“Health plans continue to examine how outcomes-based contracts can be deployed to help patients get needed medicines while containing costs,” said Kathy Hughes, vice president at Avalere. “Health plans will look to build experience on what works and what doesn’t, including how to overcome perceived operational challenges.”

In the FEHBlog’s view, a cooperative working relations between the insurers and the vendors is the key to successful contracting.

The Wall Street Journal reported yesterday that

A small Colorado drugmaker recently raised the price for a spray form of sleep aid Ambien by as much as 843%, the latest example of how some firms are increasing prices despite mounting pressure. 

So far this year, companies have made 3,653 price increases on 1,045 different drug products, according to Raymond James & Associates, even as President Donald Trump and other members of his administration have criticized such moves. 

The median price increase is 8%, but some specific increases have been far greater. Aytu BioScience Inc. raised the list price of a 7.7 milliliter bottle of its sleep aid Zolpimist to $659 from $69.88, while increasing the price of a 4.5 milliliter bottle by 747% to $329.50, according to RELX PLC’s Elsevier Gold Standard Drug Database. The drug is a spray version of zolpidem, the key ingredient in Ambien, which is widely available as cheap generic pills. 

Chief Executive Josh Disbrow said Aytu raised Zolpimist’s list price to bring it in line with the cost of other brand-name sleep drugs. He said Zolpimist was for the small number of patients willing to pay more, often out of their own pockets, for the oral spray than for lower-priced pills.

As the FEHBlog’s late father who owned a small boiler and chimney cleaning business once  jokingly observed, “The proper pricing policy is to stick the knife in the customer’s back, twist it until the customer screams and then turn it back a quarter turn. That’s a fair price.”

H.R. 6301, which provides that a plan shall not be fail to be treated as a high deductible health plan (HDHP) by reason of failing to have a deductible for not more than $250 of specified services (twice such amount in the case of family coverage) during a plan year, was ordered favorably reported to the House of Representatives. The term ‘specified services’ means, with respect to a plan, services other than preventive care.

Another bill would let Medicare Part A beneficiaries currently prohibited from contributing to their existing HSAs once they turn 65 to continue to contribute.
Other bills would qualify significantly more health treatments, services and over-the-counter drugs for HSA spending and expand the definition of HDHPs to include Affordable Care Act (ACA) bronze plans and catastrophic plans.

The House also approved H.R. 6317, a bill to amend the Internal Revenue Code of 1986 to provide that direct primary care service arrangements do not disqualify deductible health savings account contributions, and for other purposes.

After a two-day markup session, the committee also moved to the House legislation providing retroactive relief from the ACA’s employer mandate from 2015 through 2018 and delay for one additional year (until 2023) the 40% Cadillac Tax.

In troubling news, Medpage today tells us that “The number of opioid overdose deaths in which fentanyl was detected in 10 states doubled during the first half of 2017 compared with the second half of 2016, according to the CDC’s Mortality and Morbidity Weekly Report.”  The reports concludes chillingly that “the potency of many fentanyl analogs, especially carfentanil, ‘might warrant multiple administrations of the effective opioid overdose reversal medication naloxone.'”

The Health Affairs Blog reports on a recent academic conference on health care cost control. Nothing definitive.

Finally, notwithstanding the FEHBlog’s unwillingness to predict whether the Justice Department will approve the CVS / Aetna merger, CNBC reports the stocks for those companies rose yesterday on “market rumors” that the Justice Department approval will happen soon. 

The FEHBlog discovered that the OPM Inspector General has posted on the internet his semi-annual report to Congress for the period ended March 31, 2018, and the agency has posted its management response to that report.

OPM today issued a final rule terminating effective September 30, 2018, the program offering stepchild coverage under the FEHBP and FEDVIP to the children of/ C domestic partners living overseas with a same sex federal employee.  This temporary program was ended for federal employees living in the U.S. effective January 1, 2016, soon after the Obergefell decision was handed down by the U.S. Supreme Court. “There is no change in coverage for children whose same-sex partners are married.”

Interesting tidbits outside the FEHBP:

• Healthcare Dive reports on Mercer Consulting’s recent national survey of employer sponsored health coverage.
• The Centers for Medicare and Medicaid Services today issued a proposed Medicare Part B physician fee schedule rule for the 2019 calendar year. CMS touts the rule as quite deregulatory and note that the rule provide for Medicare Part B coverage of telehealth services. 
• An Employee Benefit News article offers three ways to help employees understand the value of health savings accounts. 
• Health Data Management calls attention to a growing number of indictments and criminal complaints based on violations of the HIPAA Privacy and Security Rules. This is noteworthy because the criminal sanctions have been on the books for over 20 years.
• Finally, the Wall Street Journal reports tonight that the Justice Department has appealed to the U.S. Court of Appeals for the D.C. Circuit from the recent lower court decision permitting the AT&T / Time Warner merger to proceed. The FEHBlog has been tracking the case because it involves a vertical merger similar to the vertical healthcare mergers now under antitrust review, e.g. CVS / Aetna, Cigna / Express Scripts, and Walmart / Humana. No predictions, just keeping track.