FEHBlog

USA Today reports that a bipartisan group in the Senate and House have introduced a bill that would require drug manufacturers to permit regulators to review price increases of 10% or more.  As the FEHBlog has documented over the years, drug pricing is very complicated.  For example, Medicaid pricing effectively sets a floor for commericial pricing. Rebates also play a significant role in the bottom line to manufacturers.  Consequently, the FEHBlog does not think that this bill if enacted would have much of an impact but because the basic concept is already law for health insurers, the drug manufacturer pricing oversight law may happen.

Govinfosecurity.com reports that beginning next month HHS’s Office for Civil Rights will begin to conduct HIPAA Privacy and Security Rule compliance audits of the business associates of HIPAA covered entities.

Govexec.com reports that federal and postal retirees are about a month away from learning whether they will receive a cost of living adjustment in 2017.

The exact cost-of-living adjustment for next year won’t be known until October 18 when BLS releases the September CPI-W number, the final data point in the equation.
Still it’s not clear yet if retirees will receive a modest boost, or nothing, as was the case for 2016. But things look better now than they did at the same time last year.

2017 FEHB premiums should be announced by the end of this month if history is any guide.

The FEHBlog noticed two articles about the FEHBP — one concerns the self plus one option and the other concerns that Postal reform bill’s FEHB provisions. The FEHBlog’s role is to share information about the FEHBP so he is posting links to the articles even though his does not fully agree with the conclusions in either article.

With respect to self plus one, before this year, the average FEHBP self and family premium was about 2.4 times the average self only premium. If the FEHBlog were king, he would not have added the self plus one option because it had to be squeezed in.  Contrast the FEHBP with FEDVIP which always has had self plus one.  FEDVIP has annual benefit maximums for each individual. In contrast FEHBP has a maximum out of pocket limit for self only and other than self only which once met relieves the individual of in-network cost sharing until the end of that year. In contrast to dental insurance, there is a substantial financial risk associated with providing health insurance coverage.  In sum the FEHBlog never expected the FEHBP self plus one to be two times self only.  There were some outliers for 2016 but give it time for bumps to smooth out somewhat.

With respect to the Postal Service reform article, the Postal Service wants to obtain the full benefit of the Medicare taxes paid for its employees. For that reason, the Postal Service has been pressing for fully FEHBP integration with Medicare.  That’s reasonable particularly in view of the retiree healthcare pre-funding burden that Congress has placed on the Postal Service. The author, who is a recognized FEHBP expert, nevertheless makes some points worth discussing.

OPM Acting Director Beth Cobert announced today that “OPM is happy to announce that the all-new FSAFEDS.com is open for business to serve our current FSAFEDS participants. We’re excited about the new tools and flexibilities that will help you to easily manage your Flexible Spending Accounts.” Best of luck to the new FSA contractor WageWorks.

Also today the Health Subcommittee of the House Ways and Means Committee held a hearing on ways to improve healthcare through technology.  The FEHBlog agrees with the approach but let the private sector lead the way.

The Kaiser Family Foundation released its 18th annual employer health benefits survey.  “The 2016 survey included almost 1,900 interviews with non-federal public and private firms.  Annual premiums for employer-sponsored family health coverage reached $18,142 this year, up 3 percent from last year, with workers on average paying $5,277 towards the cost of their coverage.” A lot of information is available at the provided link.

American Hospital News reports that according to CMS unnecessary hospital readmissions have been dropping. “While hospitals have reduced readmissions by 565,000 since 2010, the [Medicare readmissions control] program has penalized them by $1.9 billion, a new AHA infographic notes.”  And of course where do those additional costs wind up? Being imposed on FEHB and private sector plans.

Drug Channels has an interesting take on the Epipen pricing controversy. Drug Channels observes that “IMS Health has done a great job documenting the growing divergence between gross sales and net sales. As the chart [at the link] shows, manufacturers retain a smaller share of their price increases. In 2015, list prices grew by 12.4%, but net prices after rebates grew by only 2.8%.”  The difference is largely attributable to prescription benefit manager negotiated discounts and rebates.  The rub is there according to Drug Channels.

Congress remains in session on Capitol Hill this week.  Last Friday, the health subcommittee of the House Energy and Commerce Committee held a hearing on the topic of mental health parity.  The Hill reports on the hearing here.

Robert Pear wrote in the New York Times this morning about Dartmouth’s decision to withdraw its accountable care organization from the Medicare Advantage program.

An evaluation for the federal government found that Dartmouth’s accountable care organization had reduced Medicare spending on hospital stays, medical procedures, imaging and tests. And it achieved goals for the quality of care. But it was still subject to financial penalties because it did not meet money-saving benchmarks set by federal officials.
“We were cutting costs and saving money and then paying a penalty on top of that,” said Dr. Robert A. Greene, an executive vice president of the Dartmouth-Hitchcock health system. “We would have loved to stay in the federal program, but it was just not sustainable.”

In contrast to the private sector, the Medicare program, whose governing laws resemble the Internal Revenue Code in complexity, is not very nimble. It concerns the FEHBlog that red tape generated by the Affordable Care Act and federal government procurement regulators could create similar difficulties for the FEHBP.  

The New York Times also reported last week on efforts by prescription benefits manager Express Script to control the spiralling costs of anti-inflammatory drugs.

Insurers and employers — who pay the bulk of the cost for drugs — say that a bigger financial shock has come from a largely overlooked source: expensive anti-inflammatory medications like Humira and Enbrel, drugs taken by millions of people for conditions like rheumatoid arthritis. In recent years, the prices of the medications have doubled, making them the costliest drug class in the country by some calculations. 

Now, one of the most powerful forces on the side of drug payers is pushing back. On Thursday, Express Scripts, the nation’s largest drug benefits manager, changed its recommendations to insurers and employers, saying they should cover fewer drugs for many inflammatory conditions. The idea is that the new limits will force drug companies to lower their prices, saving insurers and employers money.

No doubt other PBMs are taking similar steps.

Here’s a link to the Week in Congress’s report on this week’s activities on Capitol Hill.  The Hill reports that the House leadership found a good Republican caucus reception to the idea of passing a continuing resolution until December 9 in order to pass small blocks of appropriations or minibuses in a lame duck session rather than an omnibus. This is in line with the Senate majoritty leadership approach.

In big news for doctors, the CMS Acting Administrator announced yesterday four options for participating in the new Medicare quality improvement program next year without incurring a penalty.  The announcement was well received by the medical associations.

Healthcare Dive reports on an AMA study finding that doctors spend more time with their electronic medical record systems than with their patients. That’s $34 billion in taxpayer money shot down the train on a rush to implement these systems.

Also on the waste front, Fierce Healthcare reports that

• “Hospitals use their chargemasters and a relative lack of price transparency to overcharge for CT scans and other specialty services,” and
• “A study by researchers at the University of California at San Francisco, published in the Journal of Neurosurgery, examined 58 neurosurgeries performed at their own facility. They discovered that nearly $1,000 in medical supplies on average were discarded with every surgical procedure.”

The Hill reports on efforts to get an omnibus appropriations bill done so Congress can get back on the campaign trail. “Senate Republicans are defending 24 seats, and McConnell is in great
danger of being demoted to minority leader in the next Congress. That
has created an incentive to finish work on a funding bill quickly so
that vulnerable senators can return to their home states to campaign.”  The Senate is considering a bill that would fund the government until December 9 while some House members want to fund the government through March in order to avoid a lame duck session.  The House Speaker is meeting with his caucus on Friday.

Federal News Radio and FCW, among others, report on a flurry of reports on the OPM data breach that came out this week. The majority staff of the House Oversight and Government Reform Committee issued a detailed report. The executive summary in particular is worth reading.  The minority staff and the OPM director responded to the majority staff report.

On the business consolidation front —

•     Modern Healthcare reports on an Avalere Health study finding that 

In 2012, about one in seven physician practices were owned by a hospital. In mid-2015, one in four medical practices, or 67,000 practices, were owned by hospitals. 

The report also found that in the same three-year period, physicians employed by hospitals increased by 50%. In 2015, about 140,000 physicians were employed by hospitals or systems, a rise from the 95,000 physicians who were employed by hospitals in 2012. Overall, about 38% of physicians in the U.S. are employed by a hospital or system, according to the report. 

• Drug Channels analyzes a new business arrangement between the Walgreens Pharmacy chain and Prime Therapeutics, a prescription benefit manager owned by 14 non-profit Blue Cross licensees.  

Congress returns to Capitol Hill tomorrow. The current federal fiscal year ends on September 30, and Congress goes out on the campaign trail just about at the same time.  

On Wednesday, the White House announced, according to Federal News Radio, that “Civilian employees will receive an across-the-board raise of 1 percent, with an additional 0.6 percent adjusted in locality pay” next year.

Here are a few quick hits to tide you over the long Labor Day Weekend:

• The Washington Post offered another story in its series on the state of women’s health in America.
• The CDC issued an updated obesity prevalance map for the U.S. and the Robert Wood Johnson Foundation issued another report on childhood obesity in our country.
• Medical Dive has an interesting story about why U.S. hospitals are missing the medical tourism boat and another about common consumer uses of telemedicine according to a new Deloitte report.  

The FEHBlog also was pleased to read that Business Insurance ahs a new owner and his subscription will be restored.  Every penny counts.

Note: As a result of some Blogger goof my last Weekend Update was not timely posted. So now it appears after the Midweek Update but it continues to have fresh info.

Congress remains engaged in its home work period through the Labor Day weekend.

OPM’s once in a blue moon Federal Employees Group Life Insurance Program open season starts on Thursday September 1 and runs through the end of this month.  Although an FEHBP open season change starts a few weeks after the decision is made, FEGLI open season changes won’t take effect until October 1, 2017.  Check FEHB plan websites for non-FEGLI life insurance options available to federal employees. For example. GEHA rolled out a set of ancillary benefit offerings earlier this month.

The Wall Street Journal offers five things to know about U.S. healthcare spending.  In contrast to private sector employers which have been funnelling their employees into high deductible plans with health savings accounts, the FEHBP offers a wide range of PPO, HMO, and other models including these consumer driven plans.  Consequently, a smaller percentage of federal employees participate in the consumer driven plans compared to the private sector.

The Office of Personnel Management (“OPM”) issued two FEHBP-related proposed rules this week.  The FEHBlog discusses the first proposed rule, which concerns extension of FEHB coverage while an employee is on leave without pay, in this Govexec.com article. In short, the proposed rule permits agencies to require LWOP employees to pay as they go for FEHBP coverage except in certain circumstance such as Family and Medical Leave or workers compensation. A friend of the FEHBlog pointed out to him that “The USPS has had a process in place for many years that automatically bills for the employee share of FEHB premiums after an employee has been in LWOP for six pay periods [/ twelve weeks].” That’s a sensible approach.

Today, OPM promulgated proposed rules governing the ACA created program that makes FEHBP coverage available to Native American tribal employers.  OPM rolled out this program a few years ago relying on subregulatory guidance.  A major difference between the federal employee program and the tribal employee program is that

Section 890.1417 [of the proposed rules] states that an FEHB enrollment cannot be continued into retirement from employment with a tribal employer. This is a statutory requirement as the law entitles tribal employers to purchase FEHB for employees but it does not extend that entitlement to permit tribal employers to purchase FEHB for retirees.

The public comments deadline for both proposed rules is Halloween, October 31, 2016.

Earlier this week the Health and Human Services Department issued its proposed 2018 Notice of Benefit and Payment Parameters, a major annual ACA issuance.  Professor Timothy Jost requires two articles in the Health Affairs Blog to discuss it.  If you are glutton for punishment here is a link to the notice which will be published in the Federal Register on September 6.  As noted in CMS’s three page long fact sheet on the notice,

Annual Limitation on Cost Sharing: The maximum annual limitation on [in-network] cost sharing [for group health plans other than high deductible plans with health savings accounts] is the product of the dollar limit for calendar year 2014 ($6,350 for self-only coverage) and the premium adjustment percentage for 2018, rounded down to the next lower $50. We are proposing a maximum annual limitation on cost sharing for 2018 of $7,350 for individual coverage and $14,700 for family coverage.