FEHBlog

Also as expected (the act of the deciding, not the outcome), the U.S. Court of Appeals for the D.C. Circuit issued its decision in the Anthem / Cigna merger case. By a 2-1 vote, the panel upheld the lower court decision to block the merger on anti-trust grounds as the Justice Department has sought.  The fate of the merger agreement now lies in the hands of the Delaware chancery court, which will hear Anthem’s motion to block Cigna from terminating the merger agreement on May 8.

Yesterday, the Senate confirmed the President’s nomination of Alexander Acosta to be Secretary of Labor by a 60-38 vote. President Trump’s cabinet finally has been filled. Before long we should have an OPM Director nominee.

The Pharmacy Times reports that Prime Therapeutics, a Blue Cross related prescription benefits manager, and Walgreens recently closed on the formation of “a combined central specialty pharmacy and mail services company, as part of a strategic alliance first announced by the companies last August. The company, AllianceRx Walgreens Prime, is headquartered in Orlando, Fla.”

AllianceRx Walgreens Prime will manage several consolidated mail service and central specialty pharmacy operations. Its workforce of approximately 3,000 employees nationally will be comprised of current Walgreens and Prime employees, including those currently working at the existing Prime location in Orlando. The AllianceRx Walgreens Prime brand will be rolled out in the marketplace over the coming months.
While Prime’s pharmacies will now be part of the combined company, Prime will continue its core function of providing pharmacy benefit management services from its locations in Minnesota, Nebraska, New Mexico and Texas. Similarly, Walgreens will continue to operate its more than 230 specialty pharmacies throughout the U.S., in addition to its retail pharmacies.

Also this week the FEHBlog ran across the website of Amino, Inc.   The company was co-founded by David Vivero, a former executive of Zillow, the online real estate company.  The company’s objective is to provide health care consumers with insights on healthcare pricing and quality at no charge.  The company relies on a database of de-identified medical bills. Interesting.

Reuters reports that Congress is poised to extend the continuing resolution funding the federal government for an additional week to allow the Congressional parties to complete their negotiations over FY 2017 appropriations.

The Wall Street Journal is reporting that the Republican majority in the House of Representatives are coalescing around the new, improved version of the American Health Care Act. “The bill has gotten new life because of a compromise crafted by Rep. Tom MacArthur (R., N.J.), a co-chairman of a centrist-leaning coalition of lawmakers called the Tuesday Group. His amendment would let states pursue federal waivers to opt out of some of the law’s insurance provisions.” A House floor vote could occur later this week if the stars continue to align.

Healthcare Dive provides us with six takeaways from the American Telemedicine Association conference.  The article is worth a gander as FEHBP carriers continue to roll out telemedicine coverage.

The large health insurer Anthem, a Blue Cross licensee, has been in the news alot lately. Fierce Healthcare features an interview with Anthem’s chief executive, Joseph Swedish. Following up on yesterday’s tidbits

Swedish confirmed Tuesday that Anthem has put out request for proposals for a new PBM provider, but he also emphasized that the insurer hasn’t yet ruled out any options—including Express Scripts. Anthem expects to have an update on its PBM plans in Q4, Swedish added, noting that “we’ve very excited about the opportunity to put together a new solution that serves our members better.”

Where are they now?  The Federal Times tells us that former OPM acting Director Beth Cobert is now the chief executive of The Markle Foundation’s Skillful labor-market initiative. The FEHBlog noticed last night on LinkedIn that former OPM policy director Jon Foley and former OPM healthcare and insurance director John O’Brien have form a consulting company called Westcott Partners. Best of luck to them all.

Yesterday, the U.S. Supreme Court declined to review an Arizona Court of Appeals decision (No. 16-912) and a U.S. Court of Appeals for the Eighth Circuit decision (No 16-504) which presented the same issue as Nevils — whether the FEHB Act preempts state anti-subrogation law. In contrast to Nevils, those court had answered the question in the affirmative. The Supreme Court made its unanimous ruling in Nevils even more emphatic for the benefit of the Missouri Supreme Court who must take the Nevils case again for the third time.

It occurred yesterday to the FEHBlog that the U.S. Court of Appeals for the D.C. Circuit had not yet decided Anthem’s appeal of the lower court’s decision blocking Anthem’s acquisition of Cigna.  By its terms, the merger agreement expires on Sunday April 30 at least as the FEHBlog understands it. Healthcare Dive reports that Anthem has moved the Delaware Chancery Court for a preliminary injunction barring Cigna from terminating the merger agreement, The motion will be heard on May 8. The FEHBlog expects that the D.C. Circuit, which is aware of the April 30 deadline, will rule before then.

HHS Office for Civil Rights took another scalp this week. According to the HHS press release, CardioNet, a Pennsylvania based wireless healthcare service provider, agreed to pay a $2.5 million fine and implement a correction action plan. The investigation stemmed from a data breach affecting 1,391 patients. Healthcare IT News explains that “The size of the settlement demonstrates OCR’s stance on the need for organizations to implement strong, HIPAA-compliant security policies.”  This is the third public HIPAA related settlement this month.

The Wall Street Journal reports that the large prescription benefit management company “Express Scripts announced Monday that Anthem, its largest customer, is unlikely to renew its contract once it expires at the end of 2019. Anthem, which accounts for roughly one-sixth of total Express Scripts revenue, has sued the company for allegedly overcharging on prescription drugs over several years.” That’s attention grabbing. The Journal provides more perspective on the “corporate feud” in its article.

Meanwhile, the Drug Channel blog takes a gander at prescription benefit manager Optum Rx’s 2016 insights report.

Finally, the Wall Street Journal offers Deloitte Consulting’s views on challenges facing health insurers this year and the Health Affairs blog gives advice to large employers who sponsor health plans.

Congress returns to work on Capitol Hill tomorrow. This week’s deadline is April 28 when the current federal resolution funding the federal government expires. The FEHBlog does not foresee a government shutdown when the same party holds the Presidency and control of both Houses of Congress.

Later this week, Thursday and Friday specifically, the popular Health Data Palooza will be held here in Washington DC.  The registration information is here.

The FEHBlog’s eye was caught by this Health Affairs study finding a “Small Decline In Low-Value Back Imaging Associated With The ‘Choosing Wisely’ Campaign, 2012–14.”   The Choosing Wisely campaign which was launched five years ago is an intiative that encourages patients to question a doctor when he or she recommends a service or supply that Choosing Wisely describes as questionable / low value based on medical society recommendations. The problem here, in the FEHBlog’s view, rests with the doctors who should know better, not the patients.

The FEHBlog’s eye also was caught by the Society for Resource Management article pointing out that the 2017 graduating class is composed of Generation Z, the generation that follows the Millenial Generation.  The FEHBlog’s youngest kid is member of the graduating class of 2017. He had no idea that his youngest kid was in a different generation from his older sisters and brother. You learn something new everyday. Anyway, Modern Healthcare featured an article last week about the health care demands of the Millenial Generation.

[The] millennial generation *** wants instant access to healthcare. They’re also looking for a healthcare encounter that is frictionless, convenient and defined by good customer service. The younger generation—and many tech-savvy older Americans—are no longer willing to put up with the long wait times and inconvenient access points traditionally offered by large hospital systems and office-based physician networks.
And that is presenting a big challenge to major health providers such as Advocate, a Chicago-based healthcare system with a dozen hospitals and 1,500 employed physicians. It is among the many major players now looking to establish new access points for younger healthcare consumers, who give less weight to name brands or personal referrals than previous generations.
But many are late to the game. When it comes to meeting the new consumer expectation for speed and convenience, traditional players such as Advocate face mounting competition from stand-alone urgent-care centers, in-pharmacy health clinics and telehealth consultations. In some cities, there’s even a return of on-demand home visits.

Interesting.

Well, Congress is nearing the end of its two week long home district work session. The continuing resolution funding the federal government expires on Thursday April 28 which is the 99th day of the Trump administration. UPI reports that the House leadership has worked up another amendment to the American Health Care Act in a continuing effort to obtain majority support for the bill. Of course, funding the government must be addressed first.

In an interesting development, the big health insurer United Healthcare made executive leadership changes according to this Twins Cities Business Journal article. The FEHBlog’s attention was caught by the following paragraph from the article —

In a conference call with investors, [a UHC executive] said the company changes up its leadership team every two to three years. “I think it provides fresh new focus, a lot of energy,” he said. “In many respects … we move [executives] from one spot to another to broaden experience as well.”

 Here are few closing tidbits:

• HHS Office for Civil Rights sanctioned a healthcare provider because it was unable to produce a written HIPAA business associate agreement for a particular vendor. It’s good practice for covered entities and business associates to routinely inventory those agreements. 
• Walgreen Co. agreed with the Justice Department to settle False Claims Act charges based on its alleged failure to comply with Medi-Cal’s billing policies for off-label drugs. Off label drug coverage is a delightfully complex issue. A doctor can prescribe a prescription drug for a purpose that is not on the FDA approved label, but that does not mean that the health plan must cover it.  In this case, Medi-Cal, California Medicaid, added hoops for off-label drug coverage. And of course, the drug company is prohibited from marketing a drug for off-label uses. 
• Federal News Radio offers a two part report on its interview with Linda Springer about government reorganization. Ms. Springer is a senior advisor to the Director of the Office of Management and Budget. She was one of the OPM directors during the George W. Bush administration. 

Nearly eleven years ago, U.S. Supreme Court Justice Ruth Bader Ginsburg authored a 5-4 decision in Empire Healthchoice v. McVeigh. The case concerned a federal court jurisdiction issue but in the course of the opinion, the FEHB Act’s state law preemption provision (5 U.S.C. Sec. 8902(m)(1)) was placed under a cloud. This provision allows for uniform nationwide administration of FEHB plans. The court’s decision lead to a lot of costly litigation.

Today, Justice Ginsburg righted the ship by authoring a unanimous opinion strongly upholding the FEHBA’s state law preemption provision. The Court held in Coventry Health Care v. Nevils that the FEHBA preempts a Missouri state law prohibiting health insurers from recovering benefit payments from the responsible party, e.g., the person who caused the auto accident. As Congress directed, where FEHBA contract terms “relate to the nature, provision, or extent of coverage or benefits (including payments with respect to benefits),” § 8902(m)(1) ensures that those terms will be uniformly enforceable nationwide, free from state interference.” Amen.

Thank you Justice Ginsburg , the other members of the Court, and Miguel Estrada, the Gibson Dunn lawyer who argued the case for Coventry, for this outcome which will simplify FEHBP administration.

Happy Easter.

Members of Congress and Senators remain in their home districts / States for another week.

Last Friday, the Centers for Medicare and Medicare Services proposed to give hospitals a “total increase in inpatient operating prospective payments of 2.9 percent in fiscal year 2018,” which begins October 1, 2018.  CMS explains that

CMS is committed to transforming the health care delivery system – and the Medicare program – by putting a strong focus on patient-centered care, so providers can direct their time and resources to patients and improve outcomes. In addition to the payment and policy proposals, CMS is releasing a Request for Information to solicit ideas for regulatory, policy, practice and procedural changes to better achieve transparency, flexibility, program simplification and innovation. This will inform the discussion on future regulatory action related to inpatient and long-term hospitals.

Fresh approach.

Also last week, Drug Channels provided on outlook on specialty drug prices.  Drug Channels predicts that specialty drugs will represent 42% of the prescription drug market in 2021.

Here are [Drug Channels’] three key factors behind the projections: 

    Pharmacy industry revenues have been shifting from traditional brand-name drugs to specialty drugs. We estimate that in 2016, specialty drugs accounted for 28% of the pharmacy industry’s prescription dispensing revenues, up from 17% of revenues in 2011. This shift will continue, because the next-generation pharmaceutical blockbusters will primarily be specialty products aimed at smaller patient populations than were the mass-market blockbusters of yesteryear. Consequently, most of the industry’s best-selling drugs by revenue will be specialty drugs, not traditional drugs. 

    The generic wave is ending, which means that the growth rate of generic substitution will slow in coming years. Over the past five years, the generic dispensing rate (GDR)—the percentage of prescriptions dispensed with a generic drug instead of a branded drug—grew by 26 percentage points, from 63% in 2006 to 89% in 2016. We project that by 2021, GDR will have grown by only 3 percentage points, to 92%. 

    From 2009 to 2016, brand-name drugs with about $167 billion in retail sales faced generic competition. Annual brand sales facing generic competition averaged $21 billion annually. From 2016 to 2019, however, brand-name drugs with total sales of $19 billion will lose patent protection—an annual average of about $6 billion. Since generic drugs have much lower prices than do brand-name drugs, revenues from traditional drugs will grow slowly.

Yesterday, the Centers for Medicare and Medicaid Service finalized their recently proposed rule intended to help stabilize the individual health insurance market. The rule floats the FEHBlog’s boat because it simplifies the system yet sensibly enforce the important rules.

In contrast, Accord reports on a Treasury audit finding that the IRS has not been able to impose employer mandate penalties on its any “applicable large employer” because of, among other reasons, “several major issues with the technology being used to assist the IRS enforce the employer mandate.”   The ACA simply can be too complicated to enforce.

Employee Benefit News tells us about trade association recommendations on controlling prescription drug costs. According to the PBM trade association’s (PCMA) president the wave of the future is narrow pharmacy networks.  “The aim is to determine which drugstores are most convenient for employees and then negotiate substantial discounts where there are competing drugstores in those areas.”

Earlier this week, HHS’s Office for Civil Rights announced another HIPAA security rule violation settlement with a health care provider. The investigation that lead to the settlement was triggered by a large data breach (> 500 affected patients).

Finally the FEHBlog got a kick out of this Wall Street Journal article reporting that

Plaintiffs’ lawyers have long solicited clients through television advertisements that warn of a drug’s potentially harmful side effects.
Now, a powerful congressman, backed by the leading doctors’ group and some drug companies, is pushing back, saying the ads are to blame for patients suffering harm or even dying after dropping treatment. Rep. Bob Goodlatte (R., Va.), chairman of the House Judiciary Committee, wants the ads to include a warning that patients should talk with their doctors before adjusting medication.

What’s good for the goose, etc.

Today, the Office of Management and Budget (“OMB”) ended the temporary federal hiring freeze implemented upon the President’s inauguration. Federal News Radio reports that OMB has replaced the hiring freeze with a detailed structure for reorganizing government agencies.

Last week, OMB issued in depth guidance on the President’s one rule in, two rules out Executive Order 13,771.  The FEHBlog is suprised that to date he has not noticed any HHS roll back of ACA rules, such as the onerous Public Health Service Act Sec. 1557 rule, or sub-regulatory guidance, such as the ACA FAQs. that would loosen the choke chain that the ACA placed on health plans. That is the third leg of the Republican House leadership’s health care reform strategy. The FEHBlog must remain patient.

Federal News Radio also reflects on the fact that it’s been nearly two years since OPM announced its large data breaches.  The article observes that

the biggest harm from the OPM breaches has been the public’s erosion of trust in the agency and in government at large to protect personal data, said Charlie Phalen, director of the National Background Investigation Bureau (NBIB).
“It’s a big deal in the sense that we need to renew the faith of the American public that we can protect that information,” he said during an Apr. 10 discussion of the long-term impacts of the OPM data breaches at the Intelligence and National Security Alliance’s Counterintelligence Threats Summit in Arlington, Virginia. “By and large, that’s the biggest piece. It is less of a big deal holistically in terms of dangers to people. The problems that will be encountered will be individuals in the wrong place at the wrong time if this is exploited in some shape or form.”

AHRQ posted the results of study which supports ongoing Congressional efforts to reduce the state law malpractice burden on physicians, e.g., H.R. 1215. In sum,

Medical malpractice law is intended to foster high quality care and discourage negligence among health care providers. This observational study took advantage of differing malpractice laws by state and examined the extent to which the malpractice environment is associated with hospital quality. Investigators assessed quality using several measures: validated processes-of-care measures, such as whether evidence-based actions were appropriately taken for common conditions like myocardial infarction, pneumonia, heart failure, and surgical care; patient experience as measured by the Hospital Consumer Assessment of Healthcare Providers and Systems; imaging efficiency as reported by Medicare’s Hospital Compare website; AHRQ Patient Safety Indicators; and 30-day readmission and hospital mortality rates. There were no associations between any of these quality outcomes and the rate of paid claims per 100 physicians. Areas with a higher malpractice geographic cost index had lower 30-day mortality but higher readmission rates, and higher malpractice costs were correlated with more inefficiency in some types of imaging. The authors conclude that malpractice environment does not appear to be associated with quality, but higher malpractice costs may lead to overtreatment.

Congress is on a home work period for two weeks.  Judge Neil Gorsuch was confirmed as a U.S. Supreme Court justice on Friday.  Judge Gorsuch will be sworn in tomorrow.  Here’s a link to the Week in Congress’s report on last week’s activities on Capitol Hill.

The Hill reported that the President has nominated “Neomi Rao, an associate law professor at George Mason University, was nominated to run the White House’s Office of Information and Regulatory Affairs (OIRA).” The appointment requires Senate confirmation. Ms. Rao will play an important role in the President’s administrative reform efforts. GWU Law Professor Jonathan Adler comments in the Washington Post’s Volokh Conspiracy blog that

Trump’s selection of Rao suggests the administration is serious about regulatory reform, not merely reducing high-profile regulatory burdens. The selection of a well-respected administrative law expert further suggests the administration recognizes the need to be attentive to legal constraints on administrative action and that meaningful reforms require more than issuing a few executive orders. 

Healthcare IT News discusses an AHIMA Journal article asking whether HIPAA should be re-evaluated. HIPAA is now over 20 years old. The FEHBlog’s advice would be to repeal the electronic transactions standard and code sets requirements in favor of industry oversight which works in banking and refocus HIPAA on privacy and security which are two appropriate topics for government regulation.