FEHBlog

The House Appropriations Financial Services and General Government Subcommittee passed its 2018 appropriations bill through a voice vote Thursday afternoon. The draft does not offer an alternative to the president’s proposal of 1.9 percent raise.
Trump proposed a 2.1 percent pay raise for members of the military. The Senate agrees with the president’s proposal, but the House Armed Services Committee suggested a 2.4 percent raise for troops next year.

The bill contains the three traditional FEHBP-related appropriations provisions — an abortion coverage restriction (which is noted in the Committee announcement), a female contraception coverage mandate, and a prohibition on applying full Cost Accounting Standards coverage to the FEHBP.  This is only the start of the formal legislative process.

Following up on yesterday’s Drug Store News, the Drug Channels blog offers its observations on the modified Walgreen’s deal with Rite Aid.

Modern Healthcare reports that while significant gains were made to reduce in-patient readmissions in the first three years of the government motivated reduction program, little further progress has been made since 2013.  Gathering the low hanging fruit was useful. The second stage is usually more challenging.

As recently as 2011, all-cause readmissions cost the nation $41 billion, according to a 2014 Agency for Healthcare Research and Quality report. Medicare’s tab alone was $26 billion annually, $17 billion of which was attributable to avoidable rehospitalizations. By 2014, Medicare spending on readmissions fell by $9 billion.
While improvements were made during the first three years of the readmissions program, concern is mounting that momentum has stalled. There’s been no more than 0.1% reduction on average between 2013 to mid-2016, according to a December 2016 JAMA study.

That publication also is reporting that hospitals are struggling with collecting patient bills. The FEHBlog was struck by this statistic:

In the past five years, health insurers went from paying 90% of patient-care costs to only about 70% and that’s causing massive headaches for providers.

The FEHBlog doubts this is an issue with FEHB coverage.

Walgreens Boots Alliance, Inc. (Nasdaq: WBA) announced today a new definitive agreement with Rite Aid Corporation under which Walgreens Boots Alliance will purchase 2,186 stores, three distribution centers and related inventory from Rite Aid.

The consideration for the transaction will be $5.175 billion in cash, the assumption by Walgreens Boots Alliance of the related real estate leases and the grant of an option to Rite Aid, exercisable through May 2019 and subject to certain conditions, to become a member of Walgreens Boots Alliance’s group purchasing organization, Walgreens Boots Alliance Development GmbH. Walgreens Boots Alliance will also assume certain limited store-related liabilities as part of the new transaction.

This new agreement replaces the previous merger agreement with Rite Aid, announced in October 2015 and amended in January 2017, and the agreement to divest certain Rite Aid stores to Fred’s, Inc. announced in December 2016. Both of these agreements have been terminated, and Walgreens Boots Alliance will pay Rite Aid the $325 million termination fee with respect to their merger agreement.

The new transaction is subject to the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. The initial closing of the new transaction is expected to occur within the next six months.

Upon the initial closing of the new transaction, Walgreens Boots Alliance will begin acquiring the stores and related assets on a phased basis over a period of approximately six months, and intends to convert acquired stores to the Walgreens brand over time.

According to a chart in the Journal article, Walgreens currently has 13,020 stores in the US; CVS Health has 9676, and Rite Aid has 4,523.  

Postal reform: After many years of trying, the committee under Chaffetz approved legislation to stabilize faltering Postal Service finances. The bipartisan bill was supported by postal management, unions and industry mailers. This major accomplishment, however, turned to frustration when the Republican leadership did not schedule the bill for a House vote.
That leaves him the “most frustrated and just flat-out disappointed … I’m fairly critical of my own leadership because I see no good reason not to move it. It saves money, it’s bipartisan and it’s desperately needed … I’m dumbfounded as to why it hasn’t been brought up.”
Asked why, the offices of House Speaker Paul D. Ryan (R-Wis.) and Republican Majority Leader Kevin McCarthy (Calif.) had no comment.

The FEHBlog also spotted this helpful American Hospital Association cybersecurity page.  The resource leads with information about the sources of the latest ransomware attacks — the Petya and WannaCry viruses.

The Wall Street Journal reports that the Senate Majority Leader Mitch McConnell has postponed a Senate vote on the Better Care Reconciliation Act until sometime after the Senate returns from its Independence Day recess on July 10.  The House of Representatives leadership overcame a similar roadblock to a successful healthcare vote in the Spring.

The Congressional Budget Office issued a report on the Senate bill on Monday. The FEHBlog suggests reading the commentary on that report from Diana Furchgott-Roth of the Manhattan Institute on that report.

Healthcare Dive informs us that the CBO issued a couple of other reports on Monday which confirm that the Medicare program shift massive amounts of cost onto private section insurance programs, including the FEHBP.

Let’s wrap up with a few tidbits:

• U.S. News and World Report issued its children’s hospital rankings which is noteworthy because a DC hospital made the top ten. 
• MedCity News provided a useful analysis of 2017 FDA prescription drug approvals as we approach the mid-point of the year. 
• The Washington Post reports on cell phone apps, like Heal which provide doctors on demand, particularly in urban areas. 

The chief executive of Heal, Nick Desai, co-founded the start-up with his wife, Renee Dua, a physician. Their own parental trip to the emergency room inspired the service, after the couple, unable to contact their regular pediatrician, sat in an emergency room for seven hours with their feverish 3-month-old son.
“My wife turned to me and said, ‘There’s got to be a better way,’ ” Desai recalled. So Heal was born — a service that can work with patients’ insurance. For those without insurance, a visit costs up to $99. “Our number one, main goal is that, five years from now, you won’t have to go to the doctor’s office,” Desai said.

The FEHBlog is not sure how this type of app differs from telehealth app like those offered by American Well and Teladoc.

Congress is in session again this week on Capitol Hill. Here’s link to the Week in Congress’s account of last week’s actions there. The Week in Congress included a link that the FEHBlog has been trying to find – a Senate Budget Committee summary of the Better Care Reconciliation Act.

Tomorrow is the closing day of the U.S. Supreme Court’s curent term. Six decisions are anticipated. The Court already gave the FEHBP its victory in the Nevils case earluer this year.

On Friday, plaintiffs’ counsel in the massive multi-district class action arising out of Anthem’s 2015  data breach, which impacted FEHBP members, announced a proposed settlement of the lawsuits.  (Multi-district means that an assortment of related lawsuits filed across the country were consolidated before one court — here the U.S. District Court for the Northern District of California.)

The proposed settlement provides [among other things]for Anthem to establish a $115 million settlement fund, which will be used to 1) provide victims of the data breach at least two years of credit monitoring; 2) cover out-of-pocket expenses incurred by consumers as a result of the data breach; and 3) provide cash compensation for those consumers who are already enrolled in credit monitoring.

U.S. District Judge Lucy Koh will hold a hearing on the fairness of the settlement on August 17. More details are available here.

A similar multi-district case arising out of OPM’s 2015 data breach is pending in the U.S. District Court for the District of Columbia. The court heard several dispositive motions late last year. Here’s a link to the lead plaintiffs’ counsel website for that case.

Also last week, the Centers for Medicare and Medicaid Services issued a proposed 2018 rule for the Medicare Part D MACRA quality payment program for clinicians. The fact sheet is available here. Healthcare Dive explains that

MACRA will eliminate the sustainable growth formula and replace it with a .5% annual rate increase through 2019, after which physicians are encouraged to shift to one of two Quality Payment Programs: 1) Merit-Based Incentive Payment System (MIPS) or 2): Alternative Payment Model (APM). It is believed most physicians will enter into the MIPS program in the first year.

The article further notes that

The proposal allows for the exemption of small providers participating in the program by increasing the low-volume threshold to $90,000 or less in Medicare Part B charges or 200 or less Medicare patients annually. The original threshold was $30,000 in Medicare Part B charges or 100 Medicare patients. The agency believes the move will exclude about 134,000 clinicians from MIPS. 

The bill keeps all the provisions from the House of Representatives’ healthcare bill that increases the benefits of health savings accounts, which is good news for employers and employees. Under the plan, individuals can put $6,550, up from $3,400, and families can put $13,100, up from $6,550, into a tax-free HSA.
It also makes the accounts more flexible by: allowing both spouses to make catch-up contributions to one HSA beginning in 2018, letting people use their HSAs to pay for over-the-counter medications, which was restricted under the ACA and lowering the tax penalty if you use an HSA to pay for unqualified medical expenses to 10%, from 20%.

We may have reached the beginning of the end of this legislative process. (The FEHBlog is not betting the ranch on this statement though.)

Govexec.com reports that the President has nominated Michael Rigas to be deputy director at OPM. That’s currently a vacant position.

Rigas is chief of staff at the Massachusetts Department of Veterans’ Services. Before joining that agency, he worked in Republican politics and advocacy, at the Massachusetts Republican Party and conservative think tank The Heritage Foundation.
During the George W. Bush administration, he was associate administrator of the General Services Administration, where he worked on efforts to increase the amount of government contracting to woman- and veteran-owned businesses.

The Senate Homeland Security and Governmental Affairs Committee has not yet scheduled a confirmation hearing for George Nesterczuk, the President’s nominee for OPM Director.

Healthcare Dive provides its perspective on Cigna, which is a network provider in the FEHBP.

The Washington Post reports that Democrats on the House Oversight and Government Reform Committee sent a letter to OPM  inquiring about the Federal Long Term Care Insurance Program which experienced premium spikes last year. “An agency spokesperson declined to say what, if anything, has been done to stabilize the program since the November hearing [before that Committee]. Even basic questions related to the number of people in the program were deferred.”

The text of Senate bill which is described as the Better Care Reconciliation Act is available here.

The Senate leadership is expected to release its version of the American Health Care Act tomorrow. Stay tuned.

The FEHBlog recently mentioned the HCP/LAN spring forum. HCP/LAN is a public / private partnership to promote alternative payment methods for healthcare.  HCP/LAN has provided a link that allows you to view the forum webcast and the presentations.

Teladoc, one of the large telehealth vendors, announced a deal to acquire a medical consultancy known as Best Doctors.  The Teladoc press release explains that

Teladoc will marry its award-winning technology, industry-leading engagement capabilities, and robust, scalable platform with Best Doctors’ world-renowned network of medical experts, analytics expertise, patient decision-support, and regional expertise on a global scale. The newly combined company offers a highly differentiated suite of virtual care delivery solutions for a broad range of market segments, spanning the full spectrum of employers to health plans and health systems. Furthermore, Teladoc will now develop and deploy global expansion plans, meeting a broader spectrum of care needs outside the U.S.

Healthcare Dive reports that hospitals and other health care providers are filling vacant spaces in shopping malls across the country.  The FEHBlog noted that the Wall Street Journal which first reported the foregoing phenomenon reported today that TJX, the owner of TJ Maxx and Marshalls, is doing well by sticking to the retail store model.

TJX gets almost all its sales from its roughly 3,800 physical locations and plans to open 250 stores this year. Its revenue and profits are climbing and it envisions expanding to 5,600 stores worldwide over time.
The Framingham, Mass., company isn’t shifting business online or using big data to figure out what shoppers want. Instead, it has become one of the country’s fastest-growing retailers by sticking with a playbook from a vanishing era. It relies heavily on the instincts of its merchandise buyers, many of whom have been with the company for decades. TJX stores rapidly turn over limited quantities of products that are all sold at bargain prices. The result is a rarity in retail—a constant treasure hunt.

One size does not fit all.

Congress remains in session this week, here’s a link to the Week in Congress’s report on last week’s activities on Capitol Hill.  Note that the House passed three healthcare related bills last week that essentially act as amendments to the American Health Care Act (left column of the link).  The Hill provides us with an outline of the Senate leadership working group’s changes to that bill.

To get ready for the 2017 health insurance open season this fall, you may want to spend one of your lazy, hazy days of summer comparing prescription drug benefits between your FEHBP plan options. It could save you some out-of-pocket costs in 2018.

Her article explains how to engage in this exercise.

CMS has created a useful website for its statutorily mandated Social Security Number (SSN) Removal Initiative.  CMS is replacing the SSN with a new eleven character Medicare Beneficiary Indicator (MBI) on Medicare enrollment cards. The card replacement process begins next April and will end in April 2019.  As the FEHBlog understands it, CMS will use both the SSN (a/k/a HCIN) and the MBI in Medicare electronic transactions, such as cross over claims, until January 1, 2020. At that point only the MBI will be used. As there are over 1 million enrollees with Medicare coverage plus dependent spouses in the FEHBP, this is a transition that warrants FEHB carrier and annuitant attention.

Health Data Management reports on a new Advisory Board survey of consumer interest in telehealth services.

According to [that] survey, up to 77 percent of
consumers would consider seeing a provider virtually, and 19 percent
already have. The results suggest that the healthcare industry has
largely underestimated and, to date, failed to meet consumer interest in
virtual care. The Virtual Visits Consumer Choice Survey is Advisory
Board’s ninth nationwide consumer choice survey designed to better
understand the tradeoffs that consumers make when they need different
types of care.

The article suggests that health care providers need to get on board the telehealth train.

It’s a momentous day. The Trump administration issued its first ACA FAQ which is number 38. The FAQ concerns the mental health parity provisions of the 21 Century Cures Act which Congress passed last December.

Speaking of complicated laws, the OPM Inspector General issued its semi-annual report to Congress for the period ended March 31, 2016, yesterday.  The Inspector General demands that Congress extend the federal health care programs anti-kickback act to the FEHBP. The FEHBlog, as a lawyer, should be jumping up and down for joy over this demand because adding legal complexities mean mean more work for lawyers.

But he’s not.  In 1996, as part of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Congress extended this anti-kickback act  beyond the  Medicare and Medicaid programs to all federal healthcare programs with the express exception of the FEHBP.  This was not an oversight. The House Ways and Means Committee explained in its contemporaneous report that

the Committee decided that the current anti-kickback statute is not well suited to the Federal Employee Health Benefit Program (FEHBP) which operates more like a private sector program with a wide range of primarily managed care options for federal employees. The fee-for-service and entitlement nature of the Medicare program and other federal health programs give rise to potentially fraudulent or abusive practices that are not present in an environment with managed care coverage.

H. Rep. No. 104-496, at 83 (104th Cong., 2d Sess. 1996).  The Committee’s rationale applies equally if not more strongly over twenty years later as FEHBP carriers have increased their reliance on provider networks. See FEHBA § 8902(n).

On the general health care cost front, the government has come out with two interesting reports:

• The Labor Department’s Bureau of Labor Statistics reports on its “experimental disease-based price indexes, which adjust expenditures on disease for inflation.” 
• The Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary released state-level health care spending data for the period 1991-2014.  “David Lassman, the lead author of the report noted that, ‘recent economic and health sector factors have had clear impacts by state, both by payer and in the rates of overall per capita personal health care expenditure growth; however, during the 2009 to 2014 period, the variation in spending between the lowest and highest states was virtually unchanged.’” 

On Thursday, San Diego, California-based Adamis Pharmaceuticals received a nod from the FDA to begin marketing its version of the device. Shares of the NASDAQ-listed company spiked 50 percent following the news.

Via phone, Mark Flather, senior director of investor relations and corporate communications for Adamis, said the company won’t release a definitive price until the product launches in the second half of this year. The expectation is, however, that it will meet customers’ demand for a more affordable product. “We expect to be cheaper than the other offerings on the market,” Flather stated.

• The Hill reports that the Trump Administration is developing an executive order on drug pricing.  

Executive orders can’t change or make laws, but they can be used to direct agencies to pursue certain regulatory actions.

One such policy under discussion could be to direct federal agencies to pursue value-based purchasing contracts for drugs. Value-based contracts require manufacturers and insurers to work together on payment for a drug based on how it performs.

Another policy that is under discussion would instruct agencies to pursue trade policies that would strengthen the intellectual property rights of pharmaceutical companies.

OPM began to encourage FEHB carriers to implement value based purchasing contracts a few years ago.