FEHBlog

Following up on Wednesday’s posts, the Military Compensation and Retirement Modernization Commission released its final report yesterday afternoon. That report (around p. 104) proposes that TRICARE be replaced with a program similar to the FEHBP and administered by OPM.  However, in contrast to FEHB plans, this new program would be integrated with military treatment facilities.Congress, of course, would have to approve this recommendation by enacting a new law. So you can stand down from Red Alert.

Also All Clear ID has posted the slides from its National Data Privacy Day webinar here. The FEHBlog found them helpful.

Also this week, the GAO released a report concluding that “spending for an episode of care in the private sector varied across metropolitan statistical areas (MSA) for coronary stent placement, laparoscopic appendectomy, and total hip replacement, even after GAO adjusted for geographic differences in the cost of doing business and differences in enrollee demographics and health status.” The report pins the differential on the inpatient hospital bills.

The Food and Drug Administration approved a generic proton pump inhibitor drug that can be substituted for the purple pill / blockbuster drug Nexium to treat GERD / heartburn. This should save health plans a ton of money once the six month generic exclusivity period expires for the first approved generic manufacturer which is an American subsidiary of Teva.

Gallup and Healthways released a discouraging report on obesity rates in the U.S. The obesity rate (Body Mass Index of 30 or more) is up 2 percentage points since 2008 to 27.7%.

Finally, earlier today, the Office of National Coordinator of Health IT (“ONC”) released a draft report of a 10 year plan to achieve full inoperability of electronic medical records according to this iHealthBeat report. The federal government missed a golden opportunity by failing to include interoperability standards in the meaningful use requirements for government subsidized electronic medical records five years ago. ONC outlined the following actions to be achieved by 2017.

Establishing a coordinated governance framework and process for nationwide interoperability based on stakeholder consensus;
Improving technical standards and implementation guidance for sharing data;
Enhancing incentives for achieving interoperability and data sharing goals that are based on a common clinical data set; and
Clarifying privacy and security requirements needed to guarantee secure transmission, access and use of sensitive patient data  

The draft is open for public comment until April 3, 2015.

For over two decades the FEHBlog has been reading about the need to move health insurance from fee for service to quality based payments.  Modern Healthcare today has a helpful article about the progress being made on this front by insurers, employers, and the Centers for Medicare and Medicaid Services. Although progress is being made, making this change is easier said than done because providers understandably don’t have a lot of appetite for taking on risk.

January 28 is National Data Privacy Day in the U.S., Canada, and Europe.  The FEHBlog celebrated by listening to a webinar on the cost of data breaches presented by AllClear ID.  The panelists noted that there has been a sharp drop in the number of laptop thefts causing data breaches as businesses across the board have been switching to encrypted laptops. The top causes now are hackers and staff mistakes (either by the business itself or one of its subcontractors / business associates). The panelists suggested conducting data breach response drills and of course purchasing cyber liability insurance. The FEHBlog will provide a link to the webinar slides when they become available.

The Military Times is reporting that a Congressionally created Military Compensation and Retirement Modernization Commission will submit its recommendations tomorrow. One of the recommendations is to permit TRICARE enrollees (military family members and military retirees) to join the FEHBP. That’s a potentially big change that is worth following.

Congress is in session again this coming week. Here is a link to the actions taken on the Hill last week.

The OPM’s Inspector General’s latest semiannual report to Congress (period ended September 30, 2014) and the agency’s response can be found at this link.

The weekend issue of the Wall Street Journal featured a lengthy interview with CVS Health’s chief executive officer. Mr. Merlo notes that American have most of their health provider contact with local pharmacists.  Health plans should take more advantage of these connections as Mr. Merlo suggests. He also notes that CVS now has 906 MinuteClinics in their retail pharmacies.

A recent internal study of CVS workers who used its walk-in clinics suggested their overall health costs are 8% lower than those with the same age and health status who don’t. A shelf of academic research shows the quality of care at such clinics is the same or sometimes better than the emergency room.

a Mr. Merlo also notes that silver tsunami of 10,000 Baby Boomers  becoming eligible for Medicare every day.

Finally, the Wall Street Journal reports on an amazing new Duke University study.

The scientists involved say that they have created the first lab-grown human skeletal muscles that contract in response to electrical and other stimuli. In other words, the tissue works like regular muscles—but in a dish. Skeletal muscles, such as the biceps, are the ones most of us think of when we use the word “muscle.”

Eventually, doctors could take cells from a patient, create functioning muscles in the lab and test various drugs to determine which one—and how much of it—would work best for that individual. The research might also help scientists to reduce their reliance on animal testing

Federal News Radio reports that for the second fiscal year in a row the Office of Management and Budget has concluded that no additional sequestration-required budget cuts will occur in FY 2015 which ends on September 30, 2015.  “‘OMB estimates that discretionary appropriations are at the defense cap, while non-Defense appropriations are nearly $3.7 billion below the budget authorizations set in the [Budget Control Act],’ OMB wrote in the report.”  The President’s FY 2016 budget is expected to proposed to bust these caps by 7%.

The FEHBlog has analogized the relationship between health care providers and  health plans to the feuding Hatfields and McCoys.  Modern Healthcare reports that “value based case” likely will not end these “financial spats.”

Experts largely agree that value-based contracting will not be a panacea for healthcare payment spats, and these types of disagreements will persist in a value-based reimbursement setting. What will change will be the sticking points between insurers and providers—issues such as per-member per-month fees and performance measures, for example.

Shocker!

Following up on a couple of items that have interested the FEHBlog —

• The Des Moines Register reports that the State of Iowa will be liquidating the ACA created consumer owned health care cooperative serving Iowa and Nebraska known as CoOppotunity Health.  
• The ProPublica and the New York Times report that CMS’s Open Payments website is error riddled.  

“Amid much anticipation and after a lengthy delay, the government in September unveiled its Open Payments database, saying it would bring transparency to relationships between physicians and the drug and medical device industries. But this openness has been clouded by numerous errors that detract from its usefulness.”

The government and industry expect that the errors will get cleaned up over time. ProPublica discovered the errors in the course of preparing its own database that allows consumers to find out whether their health care professionals received drug company money. Mine didn’t. 

Now that we are past the State of the Union address, the next toll gate in the legislative year is the submission of the President’s FY 2016 budget proposal.  The Hill reports that for the first time since 2010 the President will submit his budget proposal on time — the first Monday in February, which this year is February 2.  From an FEHBP perspective, we also are waiting for two important Congressional actions — resolution of the Homeland Security Department’s appropriations for the current fiscal year (the last remaining FY 2015 appropriations issue, deadline February 28) and resolution of the Medicare Part B physician reimbursement formula (deadline March 31). 

The Washington Post reports on a Blue Cross Blue Shield Association report on prices for hip and knee replacement surgeries. Presumably to no one’s surprise, the report concludes that high prices do not correlate with high quality.  Because the article uses the terms “price” and “cost” rather interchangeably, it is important to understand that price and cost are independent variables.   Prices do not necessarily reflect cost. Prices reflect what the market will bear.

In a similar vein, the Wall Street Journal’s Pharmalot blog reports on a National Bureau of Economic Research study about the high cost of cancer treatment drugs.  The report attributes the high cost of these drugs to several factors, including the facts that health coverage acts as a price support, doctors are used to rising prices and

the effect of the growing 340B Drug Discount program in which drug
makers must offer discounts of up to 50% on all outpatient drugs to
hospitals and clinics that serve indigent populations. Drug makers, they
speculate, may offset the growth in this program by setting higher
prices elsewhere.

“We argue that, under these conditions, manufacturers are able to set
the prices of new products at or slightly above the prices of existing
therapies, giving rise to an upward trend in launch prices,” write the
authors, one of which is Peter Bach,
a physician at Memorial Sloan Kettering Cancer Center in New York, who
has been outspoken about the rising prices for cancer treatments.

Also with respect to medical advances, the New York Times reports that  “A patient who received an artificial heart in August has recovered
sufficiently to return home, the French company that makes the device
said on Monday, signaling a milestone toward the possible
commercialization of the device.”  The patient who received the device was suffering from congestive heart failure.

Happy Martin Luther King Day Weekend! Congress is taking a holiday today but it will be back in session tomorrow to hear the State of the Union address. The Week in Congress reviews last week’s legislative actions up on the Hill.  Govexec.com updates us on the status of postal service reform in the new Congress.

The FEHBlog has written quite a bit about expensive Hepatitis C drugs.  Last month the Food and Drug Administration approved an Abbvie drug to compete with Gilead’s drugs thereby breaking Gilead’s monopoly. Express Scripts quickly announced an agreement with Abbvie and CVS struck a deal with Gilead. Barron’s reports that several large insurers, Anthem, Aetna, and Humana, have followed CVS’s lead which make sense because at this point Gilead’s drugs have a broader scope of treatment. The good thing is that thanks to Abbvie and Express Scripts, Gilead finally has agreed to price discounts in the U.S.  The latest Gilead drug, Harvoni, is priced at $94,000 per treatment. The timing is perfect too because as of January 1, 2015, FEHB plans and other health plans generally must cover Hepatitis C testing in network without enrollee cost sharing. A cure for Hepatitis C is a tremendous advance in health care, but there’s no such thing as a free lunch.

In the same vein, the Washington Post reported in depth yesterday about ongoing efforts to bring less expensive biogeneric or biosimilar drugs to market. It will be several years before these Hepatitis C drug patents expire thereby opening the door to biosimilars. Nevertheless there are many biologic drugs that are eligible for biogeneric treatment (the EU has been approving biogenerics for over a decade). The FDA needs a biosimilarity protocol so pharmacists routinely can switch brand name biologics to biogenerics.

Well, it’s been an interesting news day. According to this Federal News Radio report, Marilyn Tavenner, who has been the administrator of the Centers for Medicare and Medicaid, a very powerful position in U.S. healthcare, announced that she will step down from that position at the end of February. Here principal deputy administrator, Andy Slavitt, will serve as acting administrator beginning in March.  Mr. Slavitt spent many years at UHC’s technology subsidiary Optum.

The CMS administrator position requires Senate approval which should be interesting.  In the same vein, the Wall Street Journal reports on HHS Secretary Sylvia Burwell’s list of legislative initiatives upon which the Administration and the Republican controlled Congress may find common ground.

Speaking of technology, earlier this week the Food and Drug Administration approved Enteromedic’s implantable device called the Maestro Rechargeable System to treat obesity. This AP report explains that the device “uses electrodes implanted in the abdomen to stimulate the vagus nerve, which signals to the brain that the stomach is empty or full. Patients and doctors can adjust the device settings using external controllers.”  Enteromedic’s stock price promptly jumped.

Also on the technology front, Modern Healthcare reports on whether 3-D mammography is cost effective? Evidently it is for younger women with denser breast tissue. It avoids unnecessary call backs for another test.

Reliable Drug Channels reports on the newest benchmarking numbers on retail and specialty pharmacy reimbursement. “[R]etail pharmacies received the highest reimbursements, even as the gap with mail pharmacies has narrowed. The retail reimbursement rate, as measured by the percentage discount from Average Wholesale Price (AWP), has remained surprisingly steady in recent years.”

Finally, Robert Moffitt from the Heritage Foundation and a colleague wrote a study on OPM’s multi state plan program (“MSPP”). The study is interesting reading particularly with respect its analysis of OPM’s key role. The conclusion must have been written before OPM surprisingly announced late last year that it was adding healthcare co-cops to the multi-state program. The failed Iowa co-op was not included in the MSPP.  

Govexec.com offers an interesting interview with the incoming chairman of the House Oversight and Government Reform subcommittee on Government Operations, Rep. Mark Meadows, a Republican from North Carolina. The Committee evidently jostled around its subcommittee structure. Government Operations now has a wide ranging portfolio that includes the federal civil service / FEHB and the Postal Service. The Committee, which is chaired by Rep. Jason Chaffetz (R Utah) also created Health Care, Benefits, and Administrative Rules subcommittee which is chaired by Rep. Jim Jordan, a Republican from Ohio. That subcommittee will focus on Medicare, Medicaid, and Social Security / HHS.

The FEHBlog also ran across a couple of upbeat stories —

• For the past forty years, health care providers in Franklin County, Maine, a rural area, have undertaken a proactive effort to encourage better heart health, e.g., smoking cessation, weight control, blood pressure control, exercise, etc., and by golly a study indicates that the effort paid off in materially lower levels of heart disease and longer lives according to the Medpage report. 
• Fierce Healthcare reports that Massachusetts hospitals, doctors, and health plans are successfully collaborating to lower administrative costs. This is similar to the work that CAQH does on a nationwide basis. Cooperation is good.