FEHBlog

Here are links to the OPM 2018 rates announcement and the Federal Times, Govexec, and Federal News Radio articles about that announcement.

A reader asked the FEHBlog why the employee / annuitant contribution for self plus one can be higher than the employee / annuitant contribution for self and family coverage. The reader pointed out a particular plan.

The FEHBlog looked at the 2018 rate chart for that plan and as he expected the total premium for self and family coverage is higher than the total premium for self plus one coverage. OPM does not permit the total premium for self plus one coverage to exceed the total premium for self and family.

It’s the government contribution that can skew the employee / annuitant contribution. The maximum government contribution toward self plus family coverage ($521 bi-weekly) is $30 higher than the maximum government contribution for self plus one coverage ($491 bi-weekly). If the case of the plan in question there is less than a $30 difference between the total premiums for self plus one and self and family coverage. Hence the flip flop.

In the FEHBlog’s view, Congress should not have added a self plus one option to the FEHBP because the average family size (2.3 to 2.4 members) is small. That’s why there’s generally a small difference in total premiums for the two levels of coverage.  But no one asked the FEHBlog.

Here you go.

Yesterday, OPM announced that the agency has a new Chief Information Officer, David Garcia. “Mr. Garcia previously served as the Chief of Information Technology for the State of Maryland and Secretary of the Department of Information Technology from 2015 to 2017 [under Republican Governor Larry Hogan].” Good luck, Mr. Garcia.

Medpage Today reports that the Centers for Medicare and Medicaid Services has cancelled a controversial Obama Administration era proposal to change the way that Medicare Part B pays for drugs. The demonstration no doubt would have shifted costs onto the FEHBP and other employer sponsored coverage.

CMS also withdrew a January 2014 proposed rulemaking that would have required health plans to certify their compliance with operating rules applicable to HIPAA standard electronic transactions. CMS plans to “re-examine the issues and explore options and alternatives to comply with the statutory requirements.” Health plans continue to be responsible for complying with the operating rules.

Biopharma Dive discusses a recent Express Scripts study on the skyrocketing costs of specialty or biologic drugs. The Food and Drug Commissioner Scott Gottlieb, who is in the running for the HHS Secretary nomination, discussed on his blog yesterday the steps that his plan is taking to bring biosimilar drugs to consumers more quickly. “While FDA doesn’t control drug pricing, our policies do affect competition in the market. This is the nexus of our current efforts on drug pricing.” Well put.

Beckers Hospital Review reports that “The average cost associated with cybercrime hit $11.7 million per business, globally, in 2017, according to a report by Accenture and Ponemon Institute.” Holy smokes, Batman.

The FEHBlog enjoyed his grandson’s first birthday party today. He wonders when OPM plans to announce the 2018 government contribution. The call letter was released early this year and the premium announcement is late. The wild card is the onerous ACA health insurer tax which falls on the Blue Cross FEP and the HMOs to one extent or another. The FEHBlog would have bet the ranch that Congress would have further suspended or repealed the tax by now as it raises premiums in the ACA marketplace as well as the FEHBP. But no dice.

Tennessee Senator Lamar Alexander, the chair of the Senate Health, Education, Labor and Pensions Committee has resumed work on a bipartisan ACA fix bil; with Washington Senator Patty Murphy, the ranking minority member of that committee. We will have to see whether that bill or another one  at least continues to suspend the health insurer tax and the medical device tax for another year or two. It’s hard to believe the Cadillac tax is now scheduled to take effect in only two years, 2020. That crazy tax will really mess up the FEHBP.

Congress is in session this week on Capitol Hill. Here’s a link to Week in Congress’s report on last week’s activities. The U.S. Supreme Court starts a new term, the first Monday in October.

Of course, it’s worth noting that last Friday Tom Price resigned as Secretary of Health and Human Services. This position is top dog in the ACA bureaucracy. It will be interesting to see who President Trump nominates to succeed him. In the meantime, the President “designated Don Wright, MD, MPH, as Acting Secretary of Health and Human Services.”

The FEHBlog noted with interested that Aetna has formed a partnership with Meals on Wheels.

The objective of the collaboration is to create a best in class model for care coordination, integrating Meals on Wheels’ daily nutritious meals, social support and critical safety checks into a continuum of care required as people age. Meals on Wheels and Aetna will pilot this model in several markets, and identify best practices intended to improve vulnerable seniors’ health outcomes. Results from these pilots will help build a scalable operational model that will address the challenges seniors face in their daily living.

This collaboration is a perfect fit for the FEHBP which has a large cadre of elderly members.

Yesterday, The Senate leadership decided against holding a vote on the Graham-Cassidy health care reform bill as more fully explained in this Bloomberg report.

Kaiser Health News attacked Anthem’s plan to require members to use lower priced medical imaging centers that are not owned by hospitals. Hospitals, which tend to be tax exempt, use these centers to spread their heavy overhead. In the Obama era, you could expect that the ACA regulators eventually would issue an ACA FAQ reining in or cancelling challenged insurer medical mangement practices whether or not they made sense.  The Obama administration issued 37 ACA FAQs over six years or so while the Trump administration has issued one that dealt with the recent 21st Century Cures Act in nine months.

In other news,

• OPM has not yet made the 2018 FEHBP premium / government contribution change announcement. You will see it here as soon as the announcement occurs. The FEHBlog expects that to happen this week. 
• Express Scripts medical director discusses pricing approaches for the new wave of expensive gene therapy drugs known as CAR-T therapies.
• United Healthcare has rolled out to employer sponsored groups a third party weight loss program, called Real Appeal, which leveraging interactive digital tools to create healthier habits for employees according to this Employee Benefit News report.

Both Houses of Congress are back in town this week. The Senate Finance Committee is holding a hearing on the Graham – Cassidy health care reform bill tomorrow. The Wall Street Journal accurately describes the bill as “on the ropes. “The major trade groups representing insurers, hospitals and physicians issued a joint statement Saturday opposing the bill, describing themselves as being in ‘total agreement’ over the Graham-Cassidy effort.” 

Sen. John McCain (R Ariz.) came out against the Graham-Cassidy healthcare reform bill today, which certainly lets the air out of the balloon as only three Republican votes are needed to defeat the bill if the Democrats remain firm. The FEHBlog heard Sen. Lindsay Graham express hope last night that Democrats would sign onto his bill but the FEHBlog expects that might only happen if the Republicans had 51 votes or even 50 votes (plus the Vice President). The FEHBlog has read several articles suggesting that the Graham-Cassidy bill is not ready for prime time, such as this one.

The Senate Finance Committee will be holding a hearing “to consider” the Graham-Cassidy healthcare reform bill (H.R. l628)  on Monday September 25 at 2 pm. Senate Majority Leader Mitch McConnell (R KY) expects to hold a vote on the bill later in the week.

The bill is an interesting policy play because it would devolve healthcare policymaking from Washington, D.C. to the states and do away with the unpopular ACA individual and employer mandates. The bill would not impact the FEHBP.

Although the Graham-Cassidy bill would not repeal the health insurer tax, the FEHBlog expects that Congress will not allow this currently resurrected tax return to life for 2018. However, this action likely will not occur until after the 2018 government contribution is finalized. Nothing is simple.

Bloomberg has an interesting report on the problems in successfully bringing lower priced FDA approved bio-similar drugs to market.  “Because of their complexity, biologic drugs can have more than 100 patents — which can be used to fend off competition.”  For example, as Market Watch reports

When Pfizer Inc. began selling a cheaper [bio-similar] version of Johnson & Johnson’s rheumatoid arthritis therapy Remicade, investors worried about the impact on sales of the blockbuster drug.
But new competition turned out to be more of a nibble. Pfizer PFE, -0.06%  now says there’s a reason for that, alleging that Johnson & Johnson JNJ, -1.10%  negotiated contracts that left Pfizer’s Inflectra biosimilar out in the cold.
In an antitrust lawsuit filed Wednesday, Pfizer alleged that Johnson & Johnson set up “a web of exclusionary contracts” on hospitals and clinics to keep a “stranglehold” on Remicade’s market share.

This lawsuit could have broader ramifications for the drug supply chain over time.

CVS Health announced additional steps to combat the opioid epidemic yesterday. For example

CVS Caremark will roll out an enhanced opioid utilization management approach for all commercial, health plan, employer and Medicaid clients as of February 1, 2018 unless the client chooses to opt out. This program will include limiting to seven days the supply of opioids dispensed for certain acute prescriptions for patients who are new to therapy; limiting the daily dosage of opioids dispensed based on the strength of the opioid; and requiring the use of immediate-release formulations of opioids before extended-release opioids are dispensed.

CVS’s Chief Medical Officer also was the lead author of a Health Affairs article on the PBMs’ role in helping resolve this crisis.

A federal district judge has dismissed the two lawsuits that were filed in reaction to the OPM data breach. In a 74 page long decision, which the FEHBlog has perused, the Court held that the plaintiff federal employee unions and affected federal employees had not demonstrated constitutional standing to bring a lawsuit over the data breaches. The Court explained that

“The judiciary does not operate as a freestanding advisory board that can opine about the conduct of the executive branch as a general matter or oversee how it manages its internal operations. The Court’s authority is derived from Article III of the U.S. Constitution, and a federal court may only consider live cases or controversies based on events that caused actual injuries or created real threats of imminent harm to the particular individuals who brought the case. In other words, before a court may proceed to the merits of any claim, the plaintiffs must demonstrate that they have constitutional “standing” to sue. Also, a court may not entertain an action against the United States if the government has not expressly waived its sovereign immunity, that is, unless it has given its consent to be sued in that particular situation. And once a plaintiff overcomes those hurdles, he or she must state a valid legal claim.”

The Court declined to recognize that a data breach standing alone is a cognizable injury for standing purposes. The Court required that the breach be coupled with an injury in fact, e.g., an unreimbursed financial loss. Although two out of 38 plaintiffs showed a loss, those plaintiffs could not, in the Court’s opinion, demonstrates a connection between the data breach and that injury as the OPM breach did not extend to credit card numbers for example and the apparent thief was a state actor, China, not Tony Soprano. In sum, case dismissed for lack of standing. The Court also threw cold water on the claims that plaintiffs asserted.

The Court was sympathetic to the plaintiffs but the law is not grounded in sympathy. Perhaps the plaintiffs should look to Congress. No doubt the plaintiffs will appeal to the U.S. Court of Appeals for the D.C. Circuit.

Speaking of Congress, the Hill reports that Senate Health Education Labor and Pensions Chairman Lamar Alexander (R Tenn) has called off his effort to craft a bipartisan ACA fix with Sen. Patty Murray (D Wash.).  Sen Lindsay Graham is predicting, again according to the Hill, that the Graham- Cassidy ACA repeal and replace bill will receive 50 votes in the Senate which together with Vice President Pence’s vote would lead to Senate passage of the bill which must occur before October 1 under the budget reconciliation rules. The House is expected to pass the bill if it passes the Senate and the President has signalled that he will sign it.

The Graham-Cassidy bill would devolve ACA authority and funding from the federal to the state governments; it would make high deductible plans with health savings accounts more appealing; it would repeal the ACA’s individual and employer mandates as of last year, and it would repeal the medical device tax. Here are a link to FAQs and a link to the section by section analysis.

In other news:

• Walgreen’s received modified regulatory approval of certain Rite Aid assets. The Wall Street Journal reports that 

“Walgreens will now buy 1,932 Rite Aid stores for $4.38 billion, a far cry from the original $9.4 billion deal for about 4,600 stores struck in 2015.  Rite Aid will continue as a stand-alone company, operating about 2,600 stores, six distribution centers and its pharmacy-benefit manager, EnvisionRx. Its chief executive, John Standley, said on Tuesday the sale provides the company with a “more profitable store footprint” and stronger balance sheet as it engineers a turnaround.
The Federal Trade Commission spent roughly 18 months investigating the companies’ broader plan to merge and harbored an array of concerns about the effect on competition. In the face of continued FTC objections, the two companies scrapped their merger plans in June, agreeing instead that Walgreens would settle for acquiring about 2,200 Rite Aid stores.
After further discussions with the FTC, the companies dropped about 250 more stores from the transaction, Rite Aid said Tuesday. Walgreens will gain stores located primarily in northeastern and southern U.S.”

The transition of the 1,932 Rite Aid stores to Walgreen’s stores will begin next month.

• The Journal also reported that 

“Annual premiums [sum of employer and employee contributions] rose 3% to $18,764 for an employer plan in 2017, from $18,142 last year, the same rate of increase as in 2016, according to an annual poll of employers performed by the nonprofit Kaiser Family Foundation along with the Health Research & Educational Trust, a nonprofit affiliated with the American Hospital Association.

The trend of relatively gradual premium increases has continued for several years, with the growth of premiums damped by a shift toward bigger out-of-pocket costs for employees in the form of high deductibles—a move that slowed this year, as average deductibles were roughly flat compared with 2016.”

This reminds the FEHBlog that if history is a guide, OPM will announce 2018 FEHB plan premiums next week!

Yesterday, the FEHBlog said that Congress is out of town this week. My bad. The House is out of town this week but the Senate is here for a few days. The Washington Examiner reports that the Senate passed an FY 2018 defense authorization bill which will now go to a conference committee with the House. It’s interesting to watch the Graham – Cassidy ACA replacement bill gather steam. Fortune reports that the bill may be one vote away from Senate passage. It’s unfortunate that this bill does not include a repeal of the health insurer tax which punishes the FEHBP. The Washington Examiner reports that

[House Speaker Paul] Ryan, who had previously spoken positively about the legislation, noted that the House would not have time to amend the bill if the Senate did clear it. Instead, it would face having to simply approve the Senate measure.
“A conference committee is probably not possible,” he noted.
Republicans in the House “acknowledge and understand” that they wouldn’t have time before the end of the month for anything other than a vote to approve the Senate legislation, he added.