FEHBlog

The FEHBlog has been buried under legal work this week. Every day, I scan through materials to find items to post on the blog but hey it’s the summertime. Not much. The FEHBlog knows like other wonks that the Congressional Budget Office and the Congressional Joint Committee on Taxation issued updated reports on the budgetary impact of the Affordable Care Act as modified by the Supreme Court decision. However, those reports are in the FEHBlog’s view a mish mosh of data with not much information relevant to the FEHBP except for the increasingly looming and staggeringly large ACA taxes, like the insurer fee (2014) and the high cost health plan tax (2018).

OPM is beginning to gear up for the 2013 federal benefits open season. The open season, which runs this year from November 12, 2012, until Monday December 10, 2012, is the period in which federal and postal enrollees can make FEHBP, FEDVIP, or FedFlex changes without any preexisting condition limitations. On Wednesday, the agency issues a benefits administration letter to federal agencies which discusses things that are new for this years open season, such as the introduction of the ACA’s summary of benefits and coverage (“SBC”):

Plans will provide information in their Open Season materials to their enrollees about where to find their SBC on their website as well as how to obtain a paper copy of the SBC. The plans may also have their SBC available at health fairs.

The AMA News reports on the new insurance summaries and quotes a Consumer Reports executive as follows:

“Consumers feel like when they consume medical care and have insurance, it’s like having a blindfold on,” she said. “They really need help, and this form goes a long way toward helping them.”

If that’s the case, then why don’t health care providers have to provide patients with SBCs explaining billing procedures and the medical benefits networks in which they participate. Confusion is limited to  the insurance side but that’s the ACA’s focus.

HHS announced yesterday a public-private collaboration to fight health care fraud.

The new partnership is designed to share information and best practices in order to improve detection and prevent payment of fraudulent health care billings. Its goal is to reveal and halt scams that cut across a number of public and private payers. 

AHIP comments on the initiative here.

The House and the Senate will be in session this week. The FEHBlog relies on the Hill’s “closer look at
next week” column on its Floor Action site to stay on top of these activities.

The Hill reports that Sen. Tom Coburn (R Okla.) has sent a letter to the OPM Director asking for legal justification to support OPM’s decision to cover seasonal firefighters under the FEHBP with an immediately effective interim final rule and for an assessment of the regulation’s economic impact, its impact on federal worker premiums and the estimated 10-year cost to taxpayers.”  The Senator added that the firefighters are to be commended for their service. Of course, OPM simply complied with the President’s order.

Tomorrow, OPM will issue its annual Federal Register announcement identifying the states that are medically underserved areas for purposes of Section 8902(m)(2) of the FEHB Act. As OPM explains,If you live in a medically underserved area and are enrolled in a fee-for-service plan, “your plan must pay benefits up to its contractual limits, for covered health services provided by any medical practitioner properly licensed under applicable State law. The announcement discloses that “Alaska and Kentucky were designated as a Medically Underserved Area in 2012, but will not be so designated for 2013. South Carolina is being added as a Medically Underserved Area for the 2013 calendar year. (The Monday Federal Register becomes available on the preceding Saturday.)

Modern Healthcare reports that “Twenty-six states had adverse-event reporting systems in 2008 but hospitals reported few adverse events to the state systems, HHS’ inspector general’s office said in a new report (PDF).” The report blames the low rate on failure to identify rather failure to report. Modern Healthcare adds that half of the 2008 reports came from Pennsylvania which requires all adverse events to be reported regardless of severity.

In tomorrow’s Federal Register, OPM will be publishing a proposed rule that, if finalized, will extend FEHB and FEDVIP self and family coverage to the children of a federal employee’s same sex partner conditioned upon sufficient documentation of the relationship as described in the regulation. Such children would be classified as eligible step children. Under current law, taxable income must be imputed to the employee for the fair market value of such coverage. The rule rule requests public assistance with establishing a benchmark for fair market value of the coverage. The comment period will be open for 60 days from tomorrow.

Peace at last! Walgreens and Express Scripts today announced a settlement of their contract dispute effective September 15, 2012. According to the press release, “The companies are not disclosing the terms of the new contract.”
The FEHBlog bets that Walgreens caved because Medco which recently merged into Express Scripts had even more Walgreen’s business that Express Scripts did. Ah, leverage.

File this under truth is stranger than fiction. The Sacramento Business Journal reports that “State regulators ordered Anthem Blue Cross on Monday to stop trying to collect millions in reimbursement from providers for medical claims the health plan thinks were overpaid.” According to the article, California state law bars routine insurer overpayment activities beginning one year after the claim payment date, unless the insurer can prove that the provider engaged in misrepresentation or fraud. And under the regulators’ view garden variety double billing is not misrepresentation or fraud. Cost curve — UP!

OPM, acting at the President’s decision issued an interim final rule today to extend FEHB coverage to emergency responders who work for the federal government to fight wildfires during certain times of the year.  OPM overrode its regulation, 5 C.F.R. Sec. 890.102, that generally excludes temporary or seasonal federal employees from FEHB coverage.  The rule is effective immediately. The Washington Post reports that “OPM said the firefighters will be allowed to continue their insurance
coverage when not federally employed, although entirely at their own
expense.” This option will be available under the FEHBA’s temporary continuation of coverage provisions.

The AMA News includes a helpful explanation of how CMS’s recent proposed rule stating its Medicare Part B payment policies for 2013 will affect primary care providers and specialists in this essentially zero sum game. “For instance, the effect of new policies on services that primary care
physicians tend to bill would increase overall pay to family physicians
by 7%. Other changes to services billed by radiation oncologists would
result in overall payments for that specialty dropping by 14%.”  Medicare pricing impacts the FEHB Program in several ways because there is a large cadre of annuitants over age 65 in the program. Also as the FEHBlog has noted health plans increasing are basing their out of network provider pricing on Medicare Part B pricing.

AHIP called the FEHBlog’s attention to an American Journal of Managed Care analysis that “examines perspectives on health plan efforts to use data on the race,
ethnicity, and language of their members to measure such differences and
to develop approaches that improve quality of care.”  Reducing the impact of such cultural disparities on health care is an objective of the Affordable Care Act.

The House and Senate will be in session this week. Recently, the FEHBlog discussed a provision in the new transportation authorization law that authorizes OPM to create a phased-in retirement program for federal employees. The FEHBlog was surprised to read this Federal Times report that OPM does not expect many federal employees to elect this option.

AHIP drew the FEHBlog’s attention to this Robert Wood Johnson study that belabors the obvious (the FEHBlog’s job as a lawyer) — hospital consolidations in a geographic region raise prices paid by insurers. The Boston Globe reports on Massachusetts legislative efforts to rein in the market power of  health care providers “who demand high prices for their services.”  A wise cost accounting expert once explained to the FEHBlog that price and cost are independent constructs. Costs do not necessarily drive prices.

At the OPM FEHBP carrier conference a few months ago, speakers discussed health plan efforts to divert members from hospital emergency rooms to less expensive facilities such as urgent care centers. This AMA News article illustrates the problem – high tech procedures and tests, among other factors, are leading to significant emergency department overcrowding. 85% of the patients have health insurance.

The FEHBlog last month reported on an online campaign by seasonal firefighters to obtain FEHBP coverage. The FEHBlog considered the campaign to be rather quixotic because there are a lot of seasonal or part-time federal employees without FEHBP coverage because they work less for the federal government less than six months per year, for example, seasonal IRS employees and part-time Postal Service employees.  Nevertheless, the Washington Post is reporting that the President after meeting with seasonal firefighters in Denver has ordered OPM to extend FEHBP coverage to those employees this month.  Details to follow from OPM. There are about 8,000 people who fall into this employment category.

Here’s a link to an interesting AMA News article which takes a look at AHIP’s annual institute from a physician’s perspective.

The New York Times reports on how some doctors make extra money by running in an in-office pharmacy.  The doctors are marking up garden variety prescription drugs on direct sales to patients, by passing the health plan’s retail pharmacy networks. Cost curve up.

The House and the Senate resume their sessions this week following the Fourth of July holiday.

The FEHBlog read lengthy healthcare articles this weekend in the Wall Street Journal and the New York Times. The Wall Street Journal article had a sad ending while the New York Times article had a happy ending but both concerned the collosal sums of money that flow through the heathcare system.

The Wall Street Journal regularly studies the Medicare claims database. It noticed that one patient at Johns Hopkins had consumed $2.1 million in Medicare dollars in 2009. It turns out that the patient was only 41 years old and was eligible for Medicare based on Social Security disability coverage stemming from a serious heart problem. Long story short — the patient received a successful heart transplant in February 2009 but in his weakened state was hit with a savage infection that eventually killed him in December 2009.  In other words the spending was for naught unfortunately. The article focuses on the fact that the patient did not have a binding living will and his parents were unwilling to cut off care until the very end. It turns out that one of his doctors is a proponent of the so-called Medicare “death panels” that became so controversial in 2009 as the Affordable Care Act was being debated. The FEHBlog has a living will. If they make sense and they do, then why don’t the American Medical Association and the American Bar Association team up and offer this service at no additional cost rather than complain that Medicare doesn’t cover it. By the way, the article indicates that the Johns Hopkins doctors did their best to explain the situation to the parents who were grief stricken and unwilling to listen. It does make sense to address these issues before critical care is required.

The New York Times article discusses a topic of interest to the FEHBlog — using the advances in genetic science to help cure disease.  This article discusses a young cancer research physician who was stricken with a virulent form of leukemia.  When it appeared that the end of life was approaching, his fellow researchers decided to put aside their own research for two weeks and do a complete sequencing of their colleague’s genome. As the FEHBlog has noted the cost of this work is coming down but it’s still very expensive.  The article reminds us that cancers are driven by genetic defects and the researchers were able to find the defect that appeared to be fueling the leukemia. It turns out that Pfizer has a very expensive biologic drug that can be used to block that genetic defect. The colleagues pooled their money to buy a short supply of the drug for this off-label use, and lo and behold the drug put the researcher’s leukemia into remission. Pfizer then agreed to supply the doctor with the drug on a compassionate basis. (The health insurer had denied coverage for the experimental off-label use according to the article.)  The FEHBlog has read that a lot of work is being done on making gene sequencing affordable. This certainly was an encouraging article.Read them both.

Speaking of Pfizer, the FEHBlog nearly fell off his chair when he read an AP report that a group of pharmacies has sued Pfizer for conspiring to impede the release of a generic version of its blockbuster cholesterol lowering drug Pfizer.

The lawsuit, filed Thursday by Walgreen Co., the Kroger Co. and three other retailers in U.S. District Court in Trenton, N.J., claims generics should have been available nearly two years earlier, when Lipitor’s original patent expired.

The suit accuses Pfizer of patent fraud as well as “illegal, anti-competitive conduct” with generic drugmaker Ranbaxy Laboratories of India to block other generic drugmakers from selling versions of Lipitor, called atorvastatin calcium, until recently.

The suit also accuses New York-based Pfizer of making deals with companies that manage prescription benefits, giving them big discounts on brand-name Lipitor in exchange for those companies limiting sales of generic versions. Generic pills generally bring pharmacies higher profit margins than brand-name medicines do.

Pfizer intend to “vigorously defend’ its conduct. This lawsuit and follow on actions which are bound to come will be worth watching.

The FEHBlog is surprised that Walgreens and Express Script have not yet kissed and made up.  The Chicago Tribune reports that Walgreens has purchased a chain of 144 pharmacies in the heartland for $438 million dollars. 

Finally, here’s a link to an interesting Washington Post interview with the CEO of CVS’s MinuteClinics. The Wall Street Journal reports that CVS has about 600 of these urgent care centers operating in its stores, while Walgreen’s has more than 350.  The Post article indicates that CVS wants to open 1000 MinuteClinics by 2016 and that 85% of MinuteClinic patients have health insurance coverage.

It has been an odd workweek due to the middle of the week holiday. But today is Friday.

The FEHBlog has been following with interest Aetna’s efforts to curb pricing abuses by out-of-network doctors in New Jersey and California, among other states. Because the medical industry is always willing to take on the evil insurance industry (best defense is a good offense)  the FEHBlog was not surprised to read a Hartford Courant report that earlier this week the Los Angeles and California Medical Associations have sued Aetna for interfering the efforts of patients to see out-of-network doctors.  The FEHBlog wonders how the doctors in Aetna’s network feel about this development.

Happy Fourth of July to all!

The Towers Perrin actuarial consulting firm issued a report for multi-national employers this week on 2012 global medical trends. The FEHBP does cover people all over the world! The FEHBlog did not notice any surprises in the blurbs about the report which is available at the link.

The AMA News is crowing this week about the growth of physician-led accountable care organizations.  It’s interesting to note (as did AHIP) that

Those working within the ACO model said private payers allowed for
more flexibility. Participants in the Medicare shared savings program
must have a minimum of 5,000 members and meet 33 quality measures in
four domains. Those arranged with private insurers can be designed for
lower numbers and different benchmarks.
For instance, PinnacleHealth System, a nonprofit health system based
in Harrisburg, Pa., announced June 13 the formation of an accountable
care organization with Capital BlueCross. The insurer will provide
resources such as nurses to coordinate care and technology to analyze
where cost savings could be achieved. Pinnacle is looking to establish
more of these arrangements with other insurers in the area and has no
plans to apply to a government program at the moment.
“The government has a very strict formula,” said Chris Markley,
Pinnacle’s senior vice president of strategic services. “Capital
BlueCross is more flexible, and it was a very collaborative process to
set up.”

Ah, the benefits of market flexibility!

Now let’s turn to health care fraud news. The Justice Department reported this week a False Claims Act settlement with Nextcare, an urgent care center owner in several states.  NextCare agreed to pay $10 million and enter into a corporate integrity agreement to settle (without admitting liability) allegations that its centers ordered unnecessary tests and upcoded certain services provided to FEHBP members, among others. The former Nextcare employee who blew the whistle by filing a False Claims Act lawsuit on the federal government’s behalf and her lawyers will received $1.614 million.

The Washington Post reports that the prescription drug manufacture GlaxoSmithKline yesterday agreed to plead guilty to Food and Drug Act violations and pay the federal government $3 billion based on allegations that GlaxoSmithKline encouraged off-label use of its blockbuster antidepressant drugs Paxil and Wellbrutin. When the FDA approves a prescription drug for marketing it labels its approved uses based on the clinical studies. While doctors can prescribe the drug for non-approved uses in the exercise of sound professional judgment, the manufacturers cannot advocate such off label use. In this case, two False Claims Act whistleblowers and former Glaxo employees sued Glaxo for among other things advocating Paxil’s use with children which was an unapproved use. The Post reports that

Starting in 2001, Thorpe [one of the whistleblowers] reported to his district manager, then to
Glaxo’s human resources department and finally to Glaxo’s chief of
global compliance about a number of improper marketing practices. The
compliance chief began an internal investigation, which confirmed
Thorpe’s allegations through various ways including marketing materials
and interviews with Hamrick and other sales representatives, according
to lawyers for the two men.

But the article goes on, Glaxo did nothing and so the whistleblowers sued. Their share of the recovery has not yet been determined. The size of this settlement is staggering and illustrates just how much money flows around in the health care system.

The House and the Senate are taking a recess for the Fourth of July holiday this week.

Before the recess last week, Congress passed a transportation authorization bill (H.R. 4348) that among other things authorizes OPM to implement a phased retirement program for federal employees (Sec. 100121). As the Federal Times explains, the provision, once implemented, will allow employees to ease into retirement over a period of months or even years, while transitioning their workload to younger employees. The new program evidently will not affect FEHB coverage because the FEHBlog sees no reference to the FEHBP in the provision. There will be some interesting bounces of the ball though, e.g., when an over age 65 employee engaged in a phased in retirement be considered retired for purposes of coordination of benefits with Medicare? The required OPM regulations (and perhaps the existing CMS regulations) may help answer that question. This is likely to be a popular program.

The FEHBlog likes to give credit where credit due, and for that reason he suggests reading this Cleveland Plain Dealer article about a Cleveland Clinic effort to better manage the care offered to its chronically ill patients. The facility is pilot testing three different coordinated care models in an effort to settle on one approach to use with a Medicare accountable care organization.  “The three new pilots will expand what Hopkins [one Cleveland Clinic location] has been doing to a much
larger scale, measuring all 33 of the quality metrics outlined in the
ACO regulations, and using larger teams, including newly trained
“chronic-care coordinators,” nurses who will follow medically complex
patients.”