FEHBlog

The Wall Street Journal reports tonight that

A Republican congressman who helped shepherd the party’s health-care overhaul bill through the House last month predicted Tuesday that a final bill will pass the Senate and land on the president’s desk before August.  House Energy and Commerce Chairman Greg Walden’s estimate, described at The Wall Street Journal’s CFO Network meeting in Washington, suggests he is optimistic that Senate leaders will be able to meet a self-imposed July 4 deadline for passing their health legislation.

The Washington Examiner weighs in with an article about the ongoing Senate deliberations.

The major consulting firm, PwC, came out its Health Research Institutes’s annual projection of next year’s health care cost trend.

Heading into 2018, the healthcare industry appears to be settling into a “new normal” marked by more moderate fluctuations in a single-digit medical cost trend.  HRI projects 2018’s medical cost trend to be 6.5%—the first uptick in growth in three years.

Following health plan benefit design actions in the next Open Season, PwC expects the net increase to be 5.5%.  PwC describes the mid single digit growth to be unsustainable.  

PwC advises employers to consider the following actions:

• Target work site health promotion programs to the right people.
• Evaluate the value of drug spending.
• Focus more on provider arrangements to tackle price.

Congress remains in session on Capitol Hill this week. Here’s a link to the Week in Congress’s report on last week’s activities on the Hill.

The Centers for Medicaid and Medicare Services, which includes the HHS agency responsible for ACA implementation, CCIIO, has issued a request in the Federal Register seeking “recommendations and input from the public on how to create a more flexible, streamlined approach to the regulatory structure of the individual and small group markets.”  The comment deadline is July 12, 2017. Comments can be submitted on regulations.gov.  It’s another step in the right direction.

Last Friday, the FEHBlog noted a recently filed putative class action lawsuit against prescription benefit managers over Epipen pricing.  An Epipen is a device that allows a layperson, e.g., a parent, or  patient to self-inject a generic antihistamine drug to control a violent allergic reaction.  Mylan, the Epipen manufacturer, took advantage of an effective monopoly position to crank up prices.  The effective monopoly was on the delivery device which is FDA approved, not on the drug, as explained in this New York Times article.

The lawsuit raises an ERISA challenge to the current PBM pricing methodology which involves negotiation prices and manufacturer rebates.  The plaintiffs, who likely are enrolled in high deductible plans, would prefer to see the rebates converted to lower drug prices, rather than lower health insurance premiums.  This lawsuit, if successful, which the FEHBlog tends to doubt, has wide-ranging ramifications.

Morning Consult discusses some steps that the new FDA Commissioner Scott Gottlieb is contemplating to address drug pricing concerns. Specifically,

Gottlieb, a former deputy FDA commissioner, said he wants to improve the process for approving generic versions of  “complex” drugs such as EpiPens, which consist of an old medication that has a new delivery system. Another step the FDA will take, he said, is to publish a list of drugs that are off-patent and lack generic competition.

The FEHBlog also was impressed by this New York Times article about the innovative efforts undertaken by an  Albany NY regional health plan, the Capital District Physicians’ Health Plan, to promote the use of generic drugs by network doctors. (Capital District Physician’s Health Plan is an FEHBP carrier.)

As a drug salesman, Mike Courtney worked hard to make health care expensive. He wined and dined doctors, golfed with them and bought lunch for their entire staffs — all to promote pills often costing thousands of dollars a year.
He’s on a different mission now: When he calls on doctors, he champions generic drugs that frequently cost pennies and work just as well as the kinds of expensive brands he used to push.
Instead of Big Pharma, he works for Capital District Physicians’ Health Plan, an Albany, N.Y., insurer. Instead of maximizing pill profits, his job is to save millions of dollars by educating doctors about expensive prescription drugs and the stratagems used to sell them.
“Having come from Big Pharma, I do really feel my soul has been cleansed,” Courtney said with a laugh. He formerly worked for Pfizer and Johnson & Johnson. “I do feel like I’m more in touch with the physicians” and plan members, he added.

A templatable idea, indeed.

A House Energy and Commerce subcommittee yesterday held a hearing to examine HHS’s role in healthcare cybersecurity. It’s clear that the subcommittee wants HHS to take the lead government role in this effort. HHS’s testimony discusses its accelerated efforts to accept this responsibility. Inside Cybersecurity points out that during the hearing

The Department of Health and Human Services announced that it has formed a cybersecurity communications center that is focused on helping the healthcare industry respond to cyber attacks and restructuring department operations to assist those cyber-defensive measures in the wake of the WannaCry ransomware attacks last month.
The Healthcare Cybersecurity Communications Integration Center, or HCCIC, will have “initial operational capabilities” by the end of the month, HHS officials told the House Energy and Commerce oversight subcommittee today.
The new HCCIC — which is modeled on a similar center at the Department of Homeland Security for sharing cyber-threat intelligence across industry sectors — was established in response to the WannaCry attack that affected healthcare providers throughout Europe and the United States, and HHS is in the process of getting internal buy-off on the system before its established as a long-term response to evolving cyber threats.
HHS is working with its “legal teams” to ensure the liability protections offered under Cybersecurity Act of 2015 are applied to the sharing of information under the HCCIC, said Leo Scanlon, deputy chief information security officer at HHS, in informing lawmakers of the new HCCIC.

AHIP held its annual institute in Austin, Texas this week. Health Care Finance fills us in on an interesting panel of payer and pharma representatives discussing “the balance between innovation, the affordability of prescription drugs and how both organizations can work together.”

On a related note, the Washington Post reports that “A group of prominent cancer doctors is planning a novel assault on high drug costs, using clinical trials to show that many oncology medications could be taken at lower doses or for shorter periods without hurting their effectiveness.”  They formed a nonprofit called the Value in Cancer Care Consortium for this purpose. Bravo.

The FEHBlog’s curiosity was piqued by this BNA article about a putative class action lawsuit contending large prescription benefit managers are responsible for high Epipen pricing. By downloading the complaint, the FEHBlog learned that the complaint alleges that the PBM defendants violated the federal law governing private sector benefit plans known as ERISA by negotiating higher rebates with drug manufacturers instead of lower prices. The FEHBlog will keep an eye on this case.

Fierce Healthcare tells us about a Robert Wood Johnson survey which finds that healthcare provider sponsored health insurers, another progeny of the ACA, are finding the row tough to hoe.

[O]f the 42 insurance companies created or acquired by provider systems since 2010, only four had reached profitability by 2015. Two more of the plans are currently up for sale, and five have gone out of business entirely, suggesting the current insurance environment “is not conducive to profitability for new provider-sponsored plans,” according to the report’s author, Allan Baumgarten. 

It’s further evidence, assuming further evidence is necessary, that the ACA overreached in meddling with the U.S economy.

 * Cancer dominates the top 10 – Based on dollar amount and percentage of total stop-loss claims, malignant neoplasms and leukemia/lymphoma/multiple myeloma (cancers) took spots 1 and 2 on the top-ten catastrophic claims list, representing more than a quarter (26.7%) of total stop-loss reimbursements from 2013-2016;
* Breast cancer prevalence – Breast cancer is the most common form of cancer in the U.S., with an estimated 247,000 new cases reported in 2016, and an average paid claim amount of $147,100;
* Transplants costs are high – Bone marrow/stem cell transplants are the costliest transplant procedures, with an average paid claim cost of about $400,000. Transplants were the most common high-dollar claim condition among 20 to 39 year-olds;
* Highest individual claim – Of the top-10 conditions, the highest claim was $3.2 million, for malignant neoplasm (cancer). The attached chart details the highest claims in each top-10 condition;
* The top three highest-cost conditions – Leukemia, lymphoma and/or multiple myeloma (cancers); congenital anomalies (conditions present at birth); and malignant neoplasm (cancers) are more likely to result in million-dollar claimants due to their frequency; and
* IV medications tracked in the study pushed up costs – When looking at data on intravenous drugs, the report showed they accounted for 48% of total paid charges on the top five highest-dollar claimants. Of the 562 claimants exceeding $1 million between 2013 and 2016, 45 generated more than $1 million in high-cost intravenous medications.

The American Medical Association issued its annual physician practice benchmark survey.

Previous research has documented the long term trend away from physicians being practice owners and toward being employees as well as toward larger practice sizes (Kane, 2015). The new Benchmark data show that this trend continued through 2016. In fact, 2016 marked the first year in which less than half of practicing physicians owned their own practice—47.1 percent. This was about 6 percentage points lower than in 2012.

This is a clear consequence of the ACA.

The Wall Street Journal today reported on another interesting physician practice survey.

It is something nine out of 10 primary-care practices have said to at least one patient in the past two years, albeit more politely. According to research published last month in the journal JAMA Internal Medicine, 67% of nearly 800 practices reported dismissing one to 20 patients over two years while 15% reported dismissing 21 to 50 patients. About 10% reported dismissing no patients over the course of two years and 8% said they dismissed 51 or more patients.

The study was inspired by worries that patient dismissals may rise because some insurers are starting to reimburse doctors for health outcomes rather than services provided. That shift has been in the works, before the Affordable Care Act became law in 2010.

“The good news is in our study we found that no, it did not have an impact,” said Ann O’Malley, the first author on the study and a senior fellow at Mathematica Policy Research, a Princeton, N.J., policy-research organization. “The providers stuck with their patients. They did not seem to be worried that just because they were in this initiative and being measured on some sort of quality metric that they needed to cherry-pick their patients.”

Finally, the FEHBlog ran across this Health Data Management article about a successful initiative to increase the number of skilled practitioners to treat autism.   Here’s a Science Daily article about the Project ECHO autism program which is based at the University of Missouri.

Launched in March 2015, ECHO Autism is a partnership between the MU Thompson Center for Autism and Neurodevelopmental Disorders, MU Health, and the Missouri Telehealth Network Show-Me ECHO program. ECHO Autism clinics are conducted using high-quality, secure video conferencing technology to connect participating primary care clinics to a panel of experts.
Initial studies of the program have found that participating primary care providers demonstrated significant improvements in confidence across all sectors of health care for children with autism, including screening and identification, assessment and treatment of medical and psychiatric conditions, and knowledge of and referral to available resources.

The project is being expanded to Alabama and Alaska among other geographic areas.

Congress is back in town this week.  On Thursday morning, the Oversight subcommittee of the House Energy and Commerce Committee will hold a hearing on the Health and Human Services Department’s role in healthcare cybersecurity.

In a bit of good news, Modern Healthcare reports

As hospitals begin to control costs more consciously in a value-based environment, they are asking staffers to be more frugal.  “There’s a paradigm shift that’s happening across the country in terms of cost of care,” said Dr. Jay Bhatt, chief medical officer for the American Hospital Association, adding that clinicians are taking an increasingly active role in fiscal responsibility—mostly as a result of uncertainties in the industry. 

Uncertainty is a common sense reason for cost control. In contrast, Business Insider discusses the case of patient who costs his ACA health exchange plan $1 million per month.   The article which interviews a Kaiser Health Foundation leader explains  

The community rating, a provision of Obamacare, obligates insurers to price premiums the same for people of the same age in the same area. This prevented people with preexisting conditions from being charged more than healthy people and getting priced out of the market.
Without that provision, an insurance company could raise premiums for a sick patient substantially to offset some of their costs, but the price could be so high that it would be financially crippling for the patient’s family.
Additionally, the ACA eliminated lifetime limits for insurance plans. Before the ACA, insurers could set a cap on how much they would pay out to a patient over the course of their life.

The FEHBlog does wonder if the cost of care significantly increased because of the certainty of third party payment.  In any event, these types of consumer protections have existed in the FEHBP since well before ACA enactment in 2010.  The article does note that the proposed American Health Care Act would include an invisible risk pool that would help individual health insurers with these outliers cases.    

AHIP writes about health insurer efforts to integrate mental health and other medical care.  That’s encouraging.

A reader expressed concern to the FEHBlog that the Postal Reform Act would be a bad deal for Postal annuitants. The FEHBlog wishes to dissuade readers from this viewpoint. The Postal Service is pushing for this aspect of the bill because it expects that fully integrating the new Postal Service Health Benefit plans with Medicare will lower FEHB premiums for all PSHB enrollees.  That’s the FEHBlog’s expectation too.

Yesterday, the Congressional Budget Office issued its report on the House Oversight and Government Reform Committee’s bipartisan postal reform bill.  “CBO estimates that enacting H.R. 756 would reduce direct spending by about $6 billion over the 2017-2027 period; therefore, pay-as-you-go procedures apply. Enacting H.R. 756 would not affect revenues.”  This appears to the FEHBlog to be the green light for Congress to continue pursuing enactment of this law which would create a separate Postal Service Health Benefits Program within the FEHBP.

Today FEHBP carriers can breathe a sigh of relief as the 2018 benefit and rate proposal submission deadline now has passed.

Drug manufacturers can’t as NPR reports the Ohio Attorney General has filed a lawsuit seeking to hold five prescription drug manufacturers financially liable for the opioid crisis in that State.  The Wall Street Journal understandably sees parallels to, and distinctions with, the State Attorneys General lawsuit against the tobacco companies which was settled in 1998.  This no doubt will be an   intensively litigated lawsuit that will prompt more.  Medicaid has spend a ton of money on this problem which still exists.

Speaking of prescription drugs, Healthcare Dive discusses new value based reimbursement models used in a recent contract between Optum and Merck.

Closing the loop, Healthcare Dive reports that the Texas Governor has signed into law the State legislatures bill that allows telehealth vendors to operate in that large, populous State.  “The relaxed restrictions allow direct-to-consumer telehealth vendors like Teladoc, American Well and Doctor On Demand to establish videoconferencing operations nationwide.”

Fierce Healthcare reports on a study showing that every reason still exists for health plans to use benefit designs that avoid unnecessary emergency room utilization.

Finally, CMS introduced on Tuesday a new Medicare enrollment card that uses “a unique, randomly-assigned number called a Medicare Beneficiary Identifier (MBI), to replace the Social Security-based Health Insurance Claim Number (HICN) currently used on the Medicare card. CMS will begin mailing new cards in April 2018 and will meet the congressional deadline for replacing all Medicare cards by April 2019.”

The FEHBlog wishes his readers a Happy Memorial Day.

Congress is out of town this coming week.  The Hill identifies five important agenda items facing the Congressional leadership before the August recess.

It’s a big week for FEHBP carriers as their 2018 benefit and rate proposals must be submitted to OPM no later than Wednesday May 31.

The Wall Street Journal offered two interesting analyses this weekend:

• This first reports that rural areas of the country are now worse off than inner cities — a flip flop from the 1980s.  “[T]he total rural population—accounting for births, deaths and migration—has declined for five straight years.”  “And even after adjusting for the aging population, rural areas have become markedly less healthy than America’s cities. In 1980, they had lower rates of heart disease and cancer. By 2014, the opposite was true.”  That’s not all. 

Consolidation has shut down many rural hospitals, which have struggled from a shortage of patients with employer-sponsored insurance. At least 79 rural hospitals have closed since 2010, according to the University of North Carolina at Chapel Hill.

Rural residents say irregular care and long drives for treatment left them sicker, a shift made worse by high rates of rural obesity and smoking. “Once you have a cancer diagnosis…your probability of survival is much lower in rural areas,” said Gopal K. Singh, a senior federal health agency research analyst who has studied mortality differences. 

The opioid epidemic—and a lack of access to treatment—have compounded the damage. In Hardin County, prosecutor Brad Bailey said drug cases, which accounted for less than 20% of his criminal cases a decade ago, have surged to 80%.

• The second reports on the growing financial burden that Medicare Part D plan coverage imposes on its beneficiaries, particularly seriously ill people.   

Medicare’s drug program, which began in 2006, is unique among Medicare benefits for being administered entirely by private insurers. Lawmakers have praised the program for its popularity with seniors and for keeping spending well below initial estimates.

But spending on the drug program has soared in recent years, growing faster than all other areas of Medicare per enrollee basis, a trend that is expected to continue through 2025, according to projections by the trustees. The uptick in spending has caused concern among government officials and analysts about Part D’s sustainability and the financial burden that higher drug prices are putting on patients.

The Journal’s report is based on its review of data from the Medicare Part D claims warehouse.  

The median out-of-pocket cost for a drug purchased through Part D was $117 in 2015, up nearly half from $79 in 2011, in inflation-adjusted dollars, the Journal’s analysis found. The analysis excluded low-income patients whose copays are paid primarily by the government.

Some 220 Part D drugs had annual out-of-pocket costs of $1,000 or more in 2015, up 86% from 118 drugs in 2011. 

Factors driving the trend include sharply rising drug prices, which grew by an average 14% a year from 2011 to 2015, and the introduction of new medicines with prices that commonly exceed $50,000 annually, according to the Journal’s analysis. In addition, the complicated design of Part D requires patients to pay a percentage of their drugs’ total retail price, a particular burden for those who use expensive medicines. 

Doug Badger, a senior fellow at the Galen Institute, writes “Bludgeoning the opposition with CBO numbers [on the American Health Care Act] does not advance debate.  It silences it.”  Well put. Mr. Badger’s backs up his statement here.

Healthcare Dive reports that Steward Healthcare is poised to be the largest for profit hospital operator in the U.S. following the announcement of its acquisition of a competitor. Healthcare Dive explains

The merger is part of an ongoing trend that also recently included a Geisinger and Jersey Shore deal. Steward and Community Health Systems (CHS) also announced earlier this month that Boston-based Steward purchased eight CHS hospitals. These moves show Steward attempting to become a bigger player in the competitive for-profit hospital industry.
While Steward is rapidly increasing its footprints, other large for-profit hospital systems like CHS and Tenet are divesting hospitals, as they face financial issues, including flat or lost revenue in the first quarter of the year, and mounting debt.
The deal will give Steward nearly 7,500 patient beds across 10 states and about 38,000 employees, including “more than 1,800 directly employed multi-specialty physicians and several thousand aligned physicians,” according to Steward Health Care.

Of course, the “ongoing trend” was initiated by the ACA.

A truism if there ever was one — “Coordination of care among healthcare providers is the single most important criteria influencing member satisfaction with their health plan, according to the J.D. Power 2017 Member Health Plan Study.”  Of course, the statement begs the question – how?