FEHBlog

Well, the FEHBlog had a happy Thanksgiving (except for the Redskins loss), and he hopes that his readers are enjoying the holiday too.

The Health Care Cost Institute, a private payer claims data research organization, issued its 2015 healthcare cost and utilization report. The news was not good.

Spending on health care for the privately insured in the United States increased 4.6 percent in 2015, outpacing previous years’ growth, finds a new report from the Health Care Cost Institute (HCCI). Spending grew just 3.0 percent in 2013 and 2.6 percent in 2014. Prices for outpatient, inpatient, professional services, and prescription drugs increased between 3.5-9.0 percent in 2015, a bigger hike than in the prior two years, according to the analysis. Price increases were the primary reason spending grew more quickly in 2015 than in previous years, and were the largest driver of spending growth throughout the four-year study period. * * *

“Using data from four of the nation’s largest health insurers, we’re able to look closely at the changes in health care use and prices over time to understand what is driving costs,” said HCCI Executive Director David Newman. “Year after year in our study period we see that rising prices are leading to spending growth.” 

 Here’s a link to the complete report.

Also Health Data Management reports that the HHS Office for Civil Rights took another healthcare provider scalp — a $650,000 negotiated fine and a corrective action plan against the University of Massachusetts.

The sanctions follow UMass reporting to OCR in June 2013 that a workstation infected with malware resulted in disclosure of protected health information on 1,670 individuals. Malware infected a workstation in the UMass Center for Language, Speech and Hearing because no firewall was in place.
OCR contends that UMass had incorrectly determined that the Center for Language, Speech and Hearing, which was the unit that experienced the breach, was not a covered entity under the HIPAA rules.
Further, OCR determined that while the breach occurred in mid-2013, UMass did not conduct and accurate and through risk analysis until September 2015. In recent years, OCR has increasingly been stringent on the need of HIPAA-covered entities to conduct risk analyses and address vulnerabilities.

Finally, the FEHBlog noticed this afternoon that the House Oversight and Government Reform Committee has scheduled a hearing on Federal Long Term Care Insurance premium spikes for next Wednesday November 30 at 2 pm.

The FEHBlog is outside the Capital Beltway for Thanksgiving again this year.  Nothing personal.

Inside the Beltway. according to Govexec.com

• Paul Conway will head up the [Trump transition /] landing team at OPM, where he served as chief of staff during the George W. Bush administration. He previously held the same role at the Labor Department and began his career in public service as an Education Department appointee in the Reagan administration. [Mr. Conway also is a patient advocate as President of the American Association of Kidney Patients.] and
• Lawmakers are preparing to bring renewed attention to U.S. Postal Service reform in the lame-duck session of Congress.

Congress is out of town this week for the Thanksgiving holiday.

The trial of federal government’s antitrust case against the Anthem-Cigna merger begins tomorrow before U.S. District Judge Amy Berman Jackson here in Washington, D.C.  Modern Healthcare explains that

In the first portion of the trial, expected to last through Dec. 2, U.S. District Judge Amy Berman Jackson will hear arguments on the national implications of the deal. The companies compete for business from large, self-insured employers to handle functions such as claims administration and designing provider networks. A second portion of the trial—unless Jackson decides there’s already enough cause to spike the deal after the first—will address regional markets.  Jackson has said she plans to rule on the case by late January. 

The Wall Street Journal adds some color:

The first few days of the trial could be crucial in setting the tone. The Justice Department is expected to start its case by summoning as witnesses Anthem CEO Joseph R. Swedish and Cigna CEO David Cordani.

The Journal adds that “A negative decision almost surely means the end of the Anthem deal, given its tensions with Cigna. Companies rarely keep litigating merger cases if they lose at trial because it is very difficult to keep a deal together for another year or two of litigation.”

The trial of the government’s antitrust case against the Aetna-Humana merger begins soon after the Thanksgiving holiday before U.S. District Judge John Bates, also in Washington, D.C.  The Journal explains that

The Aetna case, in contrast [to the Anthem-Cigna case], focuses heavily on the market for private Medicare plans, Humana’s main line of business. The government says the merger would eliminate aggressive competition between the companies to enroll seniors in so-called Medicare Advantage plans. The insurers say their transaction would combine two complementary companies that would offer better, more cost-effective insurance products.

All four insurers participate in the FEHBP in various capacities.

FCW reports that on Friday the U.S. Office of Personnel Management’s Inspector General issued a report on the state of the agency’s compliance with the federal information security law for federal government information technology systems, FISMA.  “More than a year after the massive data breach at the Office of Personnel Management was revealed to the public, the agency still has a litany of IT weaknesses and deficiencies, according to a new inspector general report.” Meanwhile the Federal Times reports about a speech that the acting OPM Director Beth Cobert recently made to a contractors’ association.

One of the more intriguing of issues Cobert spoke on was the dearth of not only new talent coming into the federal government, but also the trickle of cybersecurity expertise.
“Both the government and the private sector fundamentally need more help with cybersecurity expertise working for us than exists today in the country,” she said.
She said that while estimates vary, some speculate that the cybersecurity talent shortfall could be as high as a million positions needed, prompting OPM, the departments of Defense, Homeland Security and others to develop a cyber recruitment strategy for new professionals, while navigating the issues of retaining them. 

Not a good situation.

OPM is asking FEHBP plan carriers to call their members attention to a new government website, healthfinder.gov  OPM explains that the websit

provides personalized recommendations for – and plain language information about – clinical preventive services based on age, sex, and pregnancy status.  Once users enter this information, the tool generates a list of evidence-based preventive services along with actionable guidance to help them stay healthy.  The recommendations come from the U.S. Preventive Services Task Force (USPSTF), the CDC Advisory Committee on Immunization Practices (ACIP), and the Health Resources and Services Administration (HRSA)—the same authorities that guide preventive services covered by FEHB plans.  Importantly, HHS is committed to refreshing this tool as new preventive service recommendations are implemented.

All that you have to do is type in your gender and age. Check it out.

In April 2016, the FEHBlog attended portions of the HCP/LAN spring conference in lovely Reston Virginia.   This is a government / private sector collabotative intended to boost the use of value based payments by health plans. The FEHBlog was struck by the fact that the meeting was heavily attended.  The FEHBlog must have overlooked the invitation to the fall conference which occurred last month. Here is a press release on that conference.

Time marches on. Govexec.com reports that House and Senate leadership plan to pass a continuing resolution funding the federal government through March 31 to allow the incoming Trump administration an opportunity to weigh in on spending for the last six months of the current federal fiscal year.  The current continuing resolution expires on December 9.

Walt Francis has issued another report criticizing the FEHBP elements of the postal reform bill pending before Congress, H.R. 5714. In order to place the report in perspective, readers must understand that over a decade ago Congress began to require the Postal Service to pre-fund its retiree coverage.  The Postal Service in order to control this cost is reasonably demanding that its retiree coverage be fully integrated with Medicare.  This requires a change in the law.  Because the bill would preserve one of the most important pieces of the FEHBA — single risk pools per plan option — reducing Medicare eligible annuitant costs will lower premiums for the entire population.  The Medicare law allows FEHB plans to integrate their prescription drug benefits with Medicare Part D.  The postal reform bill would require that this EGWP feature be added to the Postal Service health plans established by the law.  Mr. Francis explains:

Part D EGWP participation would apply to all postal annuitants over age 65, virtually none of whom are currently enrolled in Medicare Part D. All FEHBP drug benefits are at least as generous as those in Part D, and most are better, so almost no federal annuitants currently enroll in Part D. Moreover, the Office of Personnel Management (OPM), the agency that administers the FEHBP, would dictate EGWP designs. One might assume that under OPM-approved EGWP plans, drug benefits would remain unchanged, with no additional cost to enrollees, but OPM could nonetheless decide to force changes in drug benefits and/or premiums.

The FEHBlog wants to point out with an EGWP which are common in the private sector the plan pays the Medicare Part D premium and the plan can wrap its prescription drug benefits around the Medicare Part D benefits.

Mr. Francis is correct that the bill as currently drafted would place OPM in charge of the EGWP.  The Medicare law does not dictate this outcome, and hopefully this feature of the bill will be eliminated as it is refined before passage.  The FEHB plan carrier who hold the insurance risk must be able to manage the full suite of benefits.  

The Medicare integration provisions of H.R. 5714 must be considered and approved by the House Ways and Means Committee.  There is now a CBO report on the bill which allows that consideration to occur. (No such hearing currently is scheduled.) Because Congress is anxious to get out of town after this tumultuous year, it’s likely that postal reform will be punted into 2017.

Here’s a head scratcher.  Kaiser Health News is reporting

Even if there’s a retail health clinic less than a 10-minute drive away, consumers are just as likely to go to the emergency department for low-level problems like bronchitis or urinary tract infections, a recent study found. 

“Our results aren’t necessarily the wooden stake in the heart of retail clinics,” said Grant Martsolf, a policy researcher at the Rand Corp. and the lead author of the study, which appeared online this month in the Annals of Emergency Medicine. Retail clinics can play an important role in providing easier, more timely access to primary care services, Martsolf said. But the study results suggest that clinics aren’t the solution that policy experts have been hoping for to reduce expensive but unnecessary emergency department visits, he said.

Old habits die hard evidently.

As the blog of record for the FEHBlog, it’s the FEHBlog’s responsibility to link to the OPM Director’s initial Open Season blog post which occurred on Monday.

OPM also has posted its always interesting financial report for the most recently ended federal fiscal year September 30, 2016. Grant Thornton is OPM’s current CPA firm. Grant Thornton gave OPM a clean audit opinion (p. 47). Nevertheless, Grant Thornton issued a management letter (p. 49) which identified certain material weaknesses and a significant deficiency in internal controls, which generally relate to information management and security.   The Inspector General’s list of top management challenges begins on page 106. The FEHBP discussion in that list begins on page 110.  The OPM response to that list is found on page 133. Other information, including discusssion of improper payments, begins on page 124.

The Congressional Research Service has set the table for Congressional reconsideration of the Affordable Care Act by issuing a report on “Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act.”  From time to time over the next month or so, the FEHBlog will share his thoughts on key legislative changes. The first item that pops into the FEHBlog’s mind is leveling the income tax playing field so that everyone in the same tax bracket receives the same tax treatment for health benefits premiums.  President Obama boxed himself out of this approach by attacking Senator McCain for making this proposal back in 2008. As Professor Gruber has explained, this campaign exchange gave us the unworkable, counterproductive high cost plan excise or Cadillac tax and likely many of the multitude of ACA taxes.  Simplify, simplify, simplify.

The Federal Benefits Open Season starts tomorrow. OPM’s Open Season website is up and running. OPM claims to have an “improved” FEHB plan comparison tool which focuses on out of pocket costs. It’s certainly worth checking out.  The Open Season ends on December 12.

Congress also returns to Capitol Hill this week.  Federal News Radio reports on six legislative items to follow during the lame duck session. The lame duck session is scheduled for three weeks (not including Thanksgiving week) but the Washington Examiner reports that Congressional conservatives are seeking a quick lame duck that would extend federal government funding into the Trump presidency but not for the remainder of the current federal fiscal year, September 30, 2017.  The FEHBlog will be watching.

Govexec.com reports that

Kay Coles James and Linda Springer, who both served during the George W. Bush administration, are helping shepherd transition efforts for Republican President-Elect Trump at OPM and OMB, respectively, according to the campaign’s agency transition team organization chart published in Politico on Wednesday. James and Springer are listed under the Management and Budget category on the document, along with former Reagan attorney general and chief of staff Ed Meese, and Paul Winfree, director of the Heritage Foundation’s Institute for Economic Policy.

Ms. James and Ms. Springer each served as OPM Director during the G.W. Bush administration.

Happy Veterans’ Day to all, especially to veterans, of course.

Yesterday, post election of course, the Centers for Medicare and Medicaid Services announced Medicare Part A and Part B premiums and beneficary cost sharing for 2017.  As discussed, there’s an anomaly in the complex Medicare law affecting federal annuitants.  Federal annuitants who retired before 2016 and have their Medicare Part B premiums withheld from Social Security benefits — those annuitants receiving FERS benefits or who had Medicare qualifying private sector employment following their federal retirement — are in a protected category. Those post 2015 annuitants and annuitants receiving CSRS benefits (the youngest group and the oldest group oddly enough) fall outside the category.  The announcement explains that

Social Security benefits will be 0.3 percent for 2017. Because of the low Social Security COLA, a statutory “hold harmless” provision designed to protect seniors, will largely prevent Part B premiums from increasing for about 70 percent of beneficiaries. Among this group, the average 2017 premium will be about $109.00, compared to $104.90 for the past four years. 

For the remaining roughly 30 percent of beneficiaries, the standard monthly premium for Medicare Part B will be $134.00 for 2017, a 10 percent increase from the 2016 premium of $121.80. Because of the “hold harmless” provision covering the other 70 percent of beneficiaries, premiums for the remaining 30 percent must cover most of the increase in Medicare costs for 2017 for all beneficiaries. This year, as in the past, the Secretary has exercised her statutory authority to mitigate projected premium increases for these beneficiaries, while continuing to maintain a prudent level of reserves to protect against unexpected costs. The Department of Health and Human Services (HHS) will work with Congress as it explores budget-neutral solutions to challenges created by the “hold harmless” provision. * * * 

Medicare Part B beneficiaries not subject to the “hold harmless” provision include beneficiaries who do not receive Social Security benefits, those who enroll in Part B for the first time in 2017, those who are directly billed for their Part B premium, those who are dually eligible for Medicaid and have their premium paid by state Medicaid agencies, and those who pay an income-related premium. These groups represent approximately 30 percent of total Part B beneficiaries.

CMS also announced that the annual deductible for all Medicare Part B beneficiaries will be $183 in 2017 (compared to $166 in 2016). Premiums and deductibles for Medicare Advantage and prescription drug plans are already finalized and are unaffected by this announcement.

Believe it or not, the new is better than the prognostications because CMS is drawing down from Medicare reserves.  A Wall Street Journal article explains that

The program’s reserve ratio, now 13%, is just below the 14% target recommended by the program’s actuaries, according to CMS. 

“It seems like a bit of good news compared to what we were expecting. A 10% increase is still an increase, but it’s less than” the initial 22% forecast, said Juliette Cubanski, associate director of the Henry J. Kaiser Family Foundation’s program on Medicare policy.

Premiums for higher income Medicare beneficiaries are higher than these figures. Those amounts are found in a table contained in the CMS announcement.

That likely takes one item off of Congress’s lame duck session plate.  The Congressional Budget office potentially added another item to that plate by issuing yesterday its report on the House Oversight and Government Reform Committee’s bipartisan postal reform bill, H.R. 5714. CBO reports provide budget impact scoring on proposed legislation. Issuance of the report allows the bill to move forward — in this case to the Ways and Means Committee for consideration of the impact on Medicare of the bill’s full integration of the Postal Service Health Benefits Program with Medicare.  Also when the House Oversight Committee passed the bill in early July the Committee leadership explained that they would be refining the bill over the summer.  The point is that it is now possible for Congress to push reform over the goal line if desired and time permits.

The biggest item on the lame duck session is extending the continuing appropriations bill beyond December 9. Given the election returns, I doubt that this will present a problem so there may be time to consider postal reform.  Time will tell.

Yesterday’s national election resulted in a unified Republican government in the United States for the first time since 2006.  Come January 20, Donald Trump will be the President, and the Republicans will control the 115th Congress.

Political control of the Office of Personnel Management also will change because the Senate has not confirm the President’s nomination of Beth Cobert to serve a four year term as permanent OPM Director.  Readers may recall that the now retired OPM Inspector General Patrick MacFarland asserted as he headed out the door that Ms. Cobert could not serve as acting Director while the Senate considered her nomination. The Inspector General relied on a U.S. Court of Appeals for the District of Columbia Circuit involving the National Labor Relations Board’s acting general counsel. The FEHBlog opined that the Inspector General was reading too much into the opinion.  Ms Cobert continued to serve as acting Director. Ironically on Monday the U.S. Supreme Court heard oral argument in the NLRB case. Here’s a link to the Scotusblog’s analysis of the oral argument.  Ms. Cobert likely will be out of office by the time that the Supreme Court decides this case next Spring.

Well, we finally have reached the week in which the national election occurs to be followed by the week in which the Federal Benefits Open Season and the lame duck session of Congress starts.

The Wall Street Journal observes that the outcome of the national election could prove “cathartic” to healthcare stocks.

Health-care stocks are the worst-performing sector in the S&P 500 so far this year, with shares down 7.7% compared with the broader index’s 2% gain as investors fretted about everything from Obamacare to drug prices. * * *

It isn’t the first time that health-care stocks have declined heading into an election. The biotech index has pulled back ahead of the past five presidential elections, including 2016, according to research by RBC Capital Markets. In the past four elections, it then rallied 10% to 15% from the election through roughly the next three months.

This movement strikes the FEHBlog as illustrating the federal government’s powerful impact on the health care sector.

On Friday, the U.S. Supreme Court agreed to hear an appeal from the Supreme Court of Missouri which involves an issue concerning the scope of the FEHBA’s state law preemption provision. The state court reached a conclusion which favored its state bar association. All of the federal courts of appeals which have considered the same issue — including the federal appellate court with jurisdiction over Missouri — have reached a conclusion that favors the FEHBP.  The Supreme Court should resolve the issue before July 2017.

The Washington Post on Friday wrote about a public spirited prescription drug development company called Trek Therapeutics.

Instead of hiring a small army of scientists and building an expensive laboratory, Trek is a virtual, 10-person company that operates out of a small incubator space in Cambridge, Mass. The company acquires experimental drugs that typically have been vetted through some degree of human testing.

It’s an interesting piece.

Govexec.com reports that OPM has clarified the earlier report about the number of current and former federal employees who will be affected by the December 1 change in ID security contractors.

Up to 150,000 hack victims will have to re-enroll in with ID Experts to
continue receiving credit monitoring, OPM said, as that population was
only affected by the initial hack and was therefore never offered
protection under the second ID Experts contract. An additional 450,000
to 500,000 individuals will receive notifications and a
renewed opportunity to enroll for the first time.

The Centers for Medicare and Medicaid Services issued earlier this week a final rule on 2017 payments to physicians under Medicare Part B.  No doubt after the election CMS will unveil 2017 Medicare Part B premiums and cost sharing amounts for Medicare participants.

CMS also issued a report on the latest results of the Hospital Value Based Purchasing Program. Modern Healthcare reports that a growing number of stakeholders believe that the time has come to pull the plug on this ACA program because it’s not having any appreciable impact on improving patient mortality rates.

Healthcare Dive informs us that the Leapfrog Group has issued its annual report on hospital safety.

Leapfrog’s fall 2016 Hospital Safety Grade program, which looked at patient safety at 2,633 U.S. hospitals, gave 844 an “A,” 658 a “B,” 954 a “C,” 157 a “D,” and 20 an “F.”

You can look up any particular hospital at the Group’s website.

Federal News Radio brings us up to date on TRICARE reform which is a topic tha the FEHBlog follows because a reform group has been suggesting that TRICARE should look more like the FEHBP.