FEHBlog

Today is the OPM specified deadline for FEHB plan carriers to submit their 2019 benefit and rate proposals to the agency. No doubt carriers are breathing a sigh of relief. The agency now must evaluate the proposals and eventually reach agreement with the carriers over the next six to eight weeks.

In September, OPM announces the 2019 maximum government contribution. Under FEHB Act Section 8906, the government contribution is capped at 75% of the selected plan’s premium.  Federal employees and annuitants will be able to select their 2019 plan during Federal Benefits Open Season that runs from mid-November to mid-December.

The Washington Post reports that effective next year the State of California plans to bar hospitals with low scores on certain quality metrics from holding in-network status in health plans participating in the State’s Obamacare and Medicaid exchanges. Times up according to the article. It struck a chord with the FEHBlog because OPM under its “plan performance system” bases 65% of each nationwide FEHB plans already miserly gross profit on similar quality metric scores. Now OPM hopes that Congress will base the FEHBA government contribution in part on these quality scores. Financially punitive, metric driven approaches like California’s, OPM’s, the ACA’s questionable readmissions penalty on hospitalsare prime examples of the “tyranny of metrics.” In the FEHBlog’s view, the approaches are not good for healthcare because they drive up administrative expenses in efforts to boost quality metric scores, among other concerns.

The Health Care Cost Institute blog reports that Emergency room “spending among the commercially insured continued to rise in 2016, driven by the price and use of high severity cases (2009-2016).” So while health plans have been seeking to divert members to lower cost facilities like urgent care centers, etc., the hospitals have been jacking up their prices for the people who need to visit the emergency room.  The Affordable Care Act has done little, if anything, to control health care spending, again in the FEHBlog’s view.

The FEHBlog, who likes his own high deductible plan with health savings account, noted this Employee Benefit News article suggesting that people of all ages make voluntary contributions to their health savings account before their retirement plans.

While a 401(k) plan will beat an HSA if left to retirement, reality hits when withdrawals are made from the 401(k) to pay for things like medical expenses — not to mention a 401(k), and other traditional retirement plans, are burdened with taxes and penalties. With healthcare being one of the biggest expenses most individuals will face during retirement, an “HSA first” approach makes the most sense, as it offers a unique triple-tax advantage [tax free deposits, tax free growth, tax free healthcare spending]. 

For those who are uncomfortable with this strategy, there are several additional benefits to an HSA, such as: 

• 100% of unused funds roll over year-after-year

• Funds go with you even if you switch employers

• Can pay for the eligible expenses of your legal spouse and tax dependents regardless of their insurance

• Can be used for Medicare premiums as well as qualified long-term care premiums 

An individual can also reimburse for out-of-pocket health expenses at any time — even 30 or 40 years in the future. During that time, money grows in the HSA tax free. Some refer to the HSA as a “stealth IRA” when it’s used this way.

Pretty, pretty good.

The House of Representatives and the Senate are on holding district / State work periods this week.

CNBC reports that “Starting in 2019, LabCorp will no longer be the exclusive lab provider for UnitedHealth, but it will gain access to Aetna. Meanwhile, Quest will lose its exclusivity with Aetna, but will be among UnitedHealth’s preferred providers.”  Over the weekend, the FEHBlog read Bad Blood, Wall Street Journal reporter John Carreyrou’s book about the rise and fall of the lab services provider Theranos. Fascinating.

Healthcare Dive reports about a successful Colorado experiment involving integrating behavioral health with primary care. Practically speaking that integration happens routinely so it makes sense to prepare for it.

Health Payer Intelligence offers ways that healthcare payers can get healthcare providers to use their electronic payment systems.

Electronic payment systems allow payers and providers to collaboratively improve the claims management process and enhance payment accuracy within a single platform. Digitally-based claims payments may lead to more efficient healthcare systems that allow payers and providers to focus on other organizational improvements.

Time marches on.

We have finally reached the end of the great federal holiday drought which runs from Presidents’ Day in mid -February to Memorial Day weekend which starts tomorrow.

Yesterday, the Congressional Budget Office released a report that “examines how budgetary outcomes under those proposals would compare with CBO’s adjusted baseline budget projections.” The report finds in its health programs section that OPM’s proposed legislative change to the FEHBP government contribution formula would have budgetary savings of nearly $5 billion over the period 2021 through 2028. OPM would work its magic by reducing the government contribution for most plans and raising it by 4% by those plans which in OPM’s view offer higher quality. OPM still has not released the legislative language as far as the FEHBlog know. But it appears that OPM will push forward with the plan with Congress.

Speaking of Congress, the Washington Examiner reports that a bipartisan group in Congress has introduced a bill to suspend the ACA’s onerous health insurer fee for 2020. It’s already suspended for next year, but surprisingly like a vampire it was reactivated for this year.  It’s a good idea to start early on this worthy initiative as the health insurer fee only raises premiums, particularly in the FEHBP.

Modern Healthcare reports that a group of health systems are continuing on their joint effort to create a generic drug manufacturer to serve health systems.

Intermountain Healthcare, Ascension, SSM Health and Trinity Health are working with the U.S. Veterans Affairs Department to pool their capital and fight back against drug companies that unexpectedly hike the prices of decades-old off-patent generic drugs. The providers also want to create a more reliable supply of generic drugs like sodium bicarbonate and saline that are vulnerable to shortages.

While the health systems didn’t specify what drugs their new venture will make, they want to provide both sterile injectables and oral medications either through their own facility or by contracting with existing manufacturers. 

Eighty percent of nearly 750 providers, payers and pharmaceutical companies polled said they are optimistic or cautiously hopeful that the new endeavor will change the status quo, according to a Reaction Data survey. Ninety percent of 605 hospitals and clinics surveyed said they would buy drugs from the new entity.

The FEHBlog also hopes that the joint venture succeeds.

Retired OPM official Reg Jones reminds us about the impact on life events on FEHBP coverage on FedWeek.com.

Federal News Radio reports that Congress has sent a Veterans Affairs healthcare overhaul bill to the President’s desk for signature. (Just so you know that FEHBlog know, a bill passed by Congress becomes law if the President doesn’t sign or veto it within 10 days after receipt as long as Congress is in session. That’s in the Constitution.)

Healthcare Finance News tells us about an interesting Milliman study prepared for AHIP. The study allocates an average premium dollar to various purposes.

Prescription drug prices and medical costs, which account for more than 45 percent of the average dollar, continue to rise, AHIP said, forcing premium increases. 

The researchers examined two years of data from commercial plans and from the individual market, from 2014 to 2016.

Cost curve up.

Health Payer Intelligence tells us that “Healthcare payers that wish to be known as innovators need to continually be on the lookout for emerging health plan market opportunities that offer strong profit potential.”  The article describes payer strategies.  In that regard, the FEHBlog noticed in Healthcare Dive that Anthem has purchased a palliative care company Aspire Health that really impressed the FEHBlog when he read an article about the company in December 2016.

Aspire, founded in 2013 by former U.S. Sen. William Frist and CEO Brad Smith, focuses on in-home care support for patients with serious illnesses. The model emphasizes care coordination through the use of a care team, including physicians, nurse practitioners, nurses and social workers.
The Nashville, Tennessee-based Aspire currently holds contracts with more than 20 health plans across 25 states. Terms of the deal, which is expected to close in the third quarter of this year, were not disclosed.

Good move, Anthem.

The Wall Street Journal reports that the House of Representatives Congress sent to the President’s desk the Senate’s right to try bill (S.  204).  “The version of the legislation that passed Tuesday is broad and allows patients access to an investigational drug if the patient is diagnosed with a life-threatening disease or condition.”  Health plans generally do not cover investigational drugs as the manufacturer usually assumes that cost. The President is expect to sign the bill into law. 


Healthcare Dive informs us that the Government Accountability Office is recommending that the Centers for Medicare and Medicaid Services continue Medicare’s prior authorization programs because those programs save money. The American Medical Association has been on a holy war against insurer prior authorizations for the same reason, at least in the FEHBlog’s opinion. This GAO report has to be a shot in the arm for all prior authorization programs. 


Two worthy initiatives:


1. Fierce Healthcare reports on a fresh effort to improve patient safety.

Led by the Institute for Healthcare Improvement (IHI), a newly launched steering committee will seek to refocus the industry’s attention on safety and quality goals, such as finding ways to cut down on medical errors. In all, a collection of 24 groups including private organizations like the American Hospital Association and the ECRI Institute will be part of the new committee.

The steering committee held its inaugural meeting today, and

2.  Fierce Healthcare also reports that Kaiser Permanente, which is the carrier with the third largest enrollment in the FEHBP, is investing $200 million in urban housing initiatives through a partnership with the U.S. Mayors and CEOs for Housing Investment.

Finally, the Internal Revenue Service has announced the inflation adjusted percentage that applicable large employers will use to determine whether the minimum essential coverage offered to employees is affordable as required by the Affordable Care Act for plan years beginning after December 31, 2018. The specified percentage is 9.86%, up from 9.56% this year.

Congress remains in session on Capitol Hill this week.

The Supreme Court issued a significant opinion last week striking down a federal law restricting sports gambling. Invoking a Constitutional law principle called “anti-commandeering,” the Court found the law defective because it sought to order around state governments, rather than U.S. citizens and residents (which is OK).   While recognizing that “The Constitution limits state sovereignty in several [significant] ways,” the Court remarked that

The legislative powers granted to Congress are sizable, but they are not unlimited. The Constitution confers on Congress not plenary legislative power but only certain enumerated powers. Therefore, all other legislative power is reserved for the States, as the Tenth Amendment [to the Constitution] con­firms. And conspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States. The anti-commandeering doc­trine simply represents the recognition of this limit on congressional authority. 

You learn something new everyday. (The Court noted that the use of the term anti-commandeering doctrine did not crop up until the 1990s a decade or so after the FEHBlog graduated from law school.)

OPM Director Dr. Jeff Pon reminded us last Friday about a useful OPM website unlocktalent.gov  If you scroll down the home page you will find a lot of useful demographics information about federal employees. If you are a federal employee, you can register to log in and get more details.

The Blue Cross Blue Shield Association issued a Health of America report on major depression. Here are the key findings:

• Major depression has a diagnosis rate of 4.4 percent in the United States, affecting more than 9 million commercially insured Americans.
• Diagnoses of major depression have risen dramatically by 33 percent since 2013. This rate is rising even faster among millennials (up 47 percent) and adolescents (up 47 percent for boys and 65 percent for girls).
• Women are diagnosed with major depression at higher rates than men (6 percent and nearly 3 percent, respectively).
• People diagnosed with major depression are nearly 30 percent less healthy on average than those not diagnosed with major depression. This decrease in overall health translates to nearly 10 years of healthy life lost for both men and women.
• A key reason for the lower overall health of those diagnosed with major depression is that they are likely to also suffer from other health conditions. Eighty-five percent of people who are diagnosed with major depression also have one or more additional serious chronic health conditions and nearly 30 percent have four or more other conditions.
• People diagnosed with major depression use healthcare services more than other commercially insured Americans. This results in more than two times higher overall healthcare spending ($10,673 compared to $4,283).

Earlier this week, the Food and Drug Administration approved for marketing two important new prescription drugs:

• NPR reports that the FDA approved “a first-of-its-kind drug that reduces the number of migraines among people prone to these sometimes crippling headaches.” The drug is called Aimovig  and it’s manufacturer is Amgen. 

“Drugmaker Amgen says is has set the list price at $6,900 a year. Some analysts had expected the initial price of this drug to be set substantially higher – at $10,000 a year or more. But high prices have recently been generating political backlash, and some expensive drugs have fizzled after insurance companies sharply limited which patients they would cover. 

“With the new migraine drug, those questions will come to the fore quickly, as Amgen says it’s ready to put the drug on the market within a week, and has programs in place to help ease the cost to some patients.”

• Business Insider reports that the FDA approved the first drug “made expressly to treat signs of opioid withdrawal. The drug will be sold under the brand name Lucemyra by pharmaceutical company US WorldMeds, and its active ingredient is lofexidine. The compound stops the brain from getting flooded with the chemical transmitter that produces most of those flu-like withdrawal sensations.  Mark Pirner, the medical director of clinical research for US WorldMeds, told Business Insider the drug addresses an issue that’s central to the problem of opioid use disorder, or OUD.” This development will improve medication assisted treatment of OUD.  HHS Secretary Alex Azar cheered this news. 

On Monday May 14, OPM posted an indemnity benefit plan pre-notice solicitation on fbo.gov.  The Federal Employees Health Benefits Act calls for OPM to contract for a government wide service benefit plan, a government wide indemnity benefit plan, employee organization plans and comprehensive medical plans. The indemnity benefit plan slot which Aetna held from the inception of the FEHBP in 1960 until roughly 1990 has been vacant for nearly thirty years. OPM tried to solicit insurer interest in filling the slot in 2008 and it’s trying again this year. In the FEHBlog view, OPM’s efforts are bound to fail until the agency convinces Congress to change the financing mechanism from the antiquated retrospective experience rating method prescribed in the 1959 FEHBA (5 U.S.C. Sec. 8902(i)) to a modern approach based on the ACA’s medical loss ratio.

Following up on the President’s blueprint to lower prescription drug prices, here are links providing reactions from the healthcare industry, courtesy of Health Payer Intelligence, and Drug Channels.  Healthcare Dive reports that HHS Secretary Alex Azar

underscored proposed changes made in President Donald Trump’s “American Patients First” blueprint in a speech to the American Enterprise Institute, where he defended against criticism that Trump dropped support of Medicare directly negotiating drug prices.  Azar argued that the free market is better equipped to drive down costs while preserving consumers’ right to choose what works for them.  Trump’s plan seeks to merge some parts of Medicare Part B into Part D, which the pharmaceutical industry has opposed. The secretary warned that if pharma doesn’t bring the administration “a plan for which drugs make sense to move from Part B to Part D, we’ll decide that for them.” 

Congress remains in session this coming week on Capitol Hill. The Supreme Court is headed toward the end of its current term next month. The Hill identified five cases already argued before the Court that await their decision. None of them pertain to healthcare.

Bloomberg reports on healthcare and prescription drug industry reaction to the President’s blueprint for lowering prescription drug prices.

Federal News Radio discusses the Postal Service’s latest quarterly financial report and the state of Postal reform. In this regard,

“[Postmaster General Megan] Brennan says the Postal Service has been “fully cooperating” with the [President’s] postal task force.  “The Postal Service welcomes the task force study because we believe that it deserves to be studied, and that the larger public policy issues need to be addressed,” she said. 

The White House task force will also look at the root causes of the decline in mail volume, and whether the Postal Service should keep its monopoly on letter delivery.
Brennan said USPS isn’t prepared to let go of its letter business anytime soon. 

“That’s one of the few tools we have to help support the universal service obligation. We’re required to maintain an expansive transportation retail and delivery network to serve every address six days a week,” she said.

Health Payer Intelligence reports on the results of J.D. Power’s annual survey of health insurer customer service satisfaction.

The JD Power 2018 Commercial Member Health Plan Study found that consumer satisfaction with the health plan industry [was stable from 2017 to 2018] still lags behind other industries in terms of convenience, helpfulness, and the availability of user-friendly purchasing experiences.

“Commercial health plans have been battling a perfect storm of rising costs, payment reforms and consolidation, which has distracted them from focusing on improving overall customer satisfaction in the sector compared with other industries,” said Valerie Monet, Senior Director of US Insurance Operations at JD Power.

Only 47 percent of health plan members fully understood how their plan works.  Respondents said that they have significant trouble understanding certain administrative processes, such as when pre-approvals are needed for medical services or treatments.

Clearly room for improvement exists.