FEHBlog

The Wall Street Journal had an interesting section yesterday about healthcare innovations. The lead article discussed how the medical profession is incorporating the quality of life improvement goals into treatment plans in order to encourage patient compliance.

The logic is simple. People are more likely to manage their condition
properly when they have more accessible, personal goals, like being able
to do more at work or keep up with their kids, instead of focusing only
on comparatively abstract targets like blood-sugar levels. And that, in
turn, leads to much better health.

The article explains that

The 2010 Affordable Care Act included $3 billion in funding for a new
Patient-Centered Outcomes Research Institute, which will use
quality-of-life measures as part of its evaluation of new treatments.
And in a report issued in January, the Institute of Medicine, an
independent group that advises the government on health policy, called
for a new national action plan to identify programs that help those with
chronic illness and the population as a whole “live well”—reflecting
“the best achievable state of health that encompasses all dimensions of
physical, mental and social well-being.”

The AMA News reports on the ABIM Foundation’s  Choosing Wisely campaign which encourages doctor and patients to make health care decisions based on medical evidence based recommendations. The program is endorsed my the AMA and many other medical associations. Here is a link to the program’s lists of specific, evidence-based
recommendations physicians and patients should discuss when the following types of health issues arise:

• When do you need an EKG or stress test for heart disease? (American Academy of Family Physicians)
• When do you need an imaging test for a headache? (American College of Radiology)
• When do you need antibiotics for sinusitis? (American Academy of Asthma, Allergy and Immunology)
• When do you need antibiotics for sinusitis? (American Academy of Family Physicians)

According to the program’s website, “several more specialty
societies have joined the campaign and will be unveiling their lists of
“Five Things Physicians and Patients Should Question” in fall 2012.” Now that’s a program that could bend the cost curve down.


The AP via Businessweek reports that prescription benefits manager Express Scripts has issued its annual Drug Trend Report. Express Scripts announced that “spending increased 2.7 percent in 2011, the lowest growth recorded in 18 years of measuring the statistic” due to the introduction of generic substitutes for blockbuster drugs like Lipitor. The FEHBlog found very interesting the fact that “diabetes treatments now make up the largest spending category for
prescription drugs [according to Express Scripts]. Diabetes spending per member per year rose 7 percent
to top cholesterol and high blood pressure or heart disease medicines.”

To tie this all together, the Wall Street Journal’s innovation section also discussed a United Healthcare lifestyle program which uses YMCAs to help control diabetes costs for health plans. “The YMCA gets reimbursed by insurance companies and employers for people
who enroll in the yearlong diabetes-prevention course. If class
enrollment goals are reached, and if participants lose 5% to 7% of their
body weight over the year, the Y gets additional payments.” The FEHBlog first heard about this innovative program at the OPM AHIP FEHBP carrier conference last month.

The House and Senate return from their Easter recess this week. Modern Healthcare reports that “members of Congress are already discussing the likelihood that they will
return soon after the polls close [in November] for an extensive lame duck session to
resolve numerous high-profile issues, such as (yet another) looming
Medicare physician reimbursement cut.”

Following up on Thursday’s post about anti-trust issues, the AMA News confirms that

Hospitals are merging or being bought and sold at an increasing rate,
according to recent reports. Data released Feb. 28 by Irving Levin
Associates indicated that 86 hospital merger or acquisition deals were
done in 2011, the highest number in the past decade. Seventy-five
happened in 2010 and 51 occurred in 2009. A report issued March 8 by
Moody’s Investors Service said these trends will continue but did not
predict how many mergers would take place.

The Affordable Care Act establishes the Patient-Centered Outcomes Research Institute [“PCORI”]. Funded by the Patient-Centered Outcomes Research
Trust Fund, the institute will assist patients, clinicians, purchasers
and policy-makers in making informed health decisions by advancing
clinical effectiveness research. The trust fund will be funded in part
by fees paid by issuers of health insurance policies and sponsors of
self-insured health plans [beginning later this year. The fee will be $1 per covered life for the first year and $2 per covered life in subsequent years ending in 2019.

On April 12, 2012, the IRS and the Treasury Department issued proposed regulations
on this fee. The IRS and Treasury request comment on the proposed
regulations by July 16, 2012. Comments may be submitted electronically,
by mail or hand delivered to the IRS. Additionally, a public hearing is
scheduled for August 8, 2012. The preamble to the proposed regulations
provides instructions on how to submit comments and participate in the
public hearing.

The fee is expected to generate $2.6 billion in revenues through 2019.  Here’s the rub reported by LifeHealth Pro

To dispel fears that the “comparative effectiveness research” (CER)
institute will be a care rationing “death panel,” PCORI is supposed to
influence health care solely by publishing its findings and letting
physicians and hospitals decide for themselves how to use the
information. Insurers are not supposed to use PCORI’s work as the basis
for making specific coverage decisions.

 The PCORI Executive Director quoted a Board of Governors member as follows:

“Ultimately, we’re going to be listening to a lot of stakeholders but
our true North is going to be … patients and their caregivers … for whom
the consequences of a [health care] decision is the greatest,” he said.
“Help us frame a new way of thinking about how the health care system
ought to operate.”

 Time will tell the PCORI’s value.

Privacy officials for HIPAA covered entities and health plans must read this AIS interview with the HHS Office for Civil Rights Director Leon Rodriguez. OCR is responsible for enforcing the HIPAA Privacy and Security Rules. The article begins with the chilling sentence —  “The $1.5 million settlement that the Office for Civil Rights recently
reached with BlueCross BlueShield of Tennessee heralds a new era of
“monetary enforcement” by the agency, in contrast to its long-standing
approach of what OCR Director Leon Rodriguez termed ‘hand-holding.’” Bear in mind here that BCBST was a crime victim in this situation but that did not stop the government from imposing the sanctions for inadequate security. The times they are a changin.

Modern Healthcare reports “measured enthusiasm” from healthcare providers on the proposed one year long long ICD-10 delay. The AHIMA trade association of techies thinks that it could have been worse. And it could have been worse — HHS could have given a longer delay just to doctors. AHIMA thinks that a longer delay would have encouraged doctors to suspend work on the project.

A federal district court judge heard three hours of oral arguments on Tuesday about the drug store trade association’s motion to keep separate the respective assets of Express Scripts and Medco while their anti-trust action is pending. According to Drug Store News, the judge indicated that she will rule on the preliminary injunction motion and the defendant’s motion to dismiss later. What the FEHBlog finds interesting is that there has been no rush to the courthouse by any State Attorney General to challenge the merger. The fat lady may be warming up.

In other bit of anti-trust news, the U.S. Justice Department’s Anti-trust Division announced Tuesday that it was closing its investigation into Highmark’s affiliation agreement with the six hospital West Penn Allegheny Health System. In November 2011, Highmark announced a $475 million capital infusion into the financially ailing system which has sparked a controversy between Highmark and the competing hospital chain UPMC. The Pittsburgh Post Gazette surveys the reaction here.

Finally CMS announced that 27 accountable care organizations in 18 states have been admitted to the Medicare Shared Savings Program. Modern Healthcare reports that

The first ACOs will include more than 10,000 physicians, 10 hospitals, and 13 smaller physician-led entities and serve an estimated 375,000 beneficiaries. The announcement follows the January launch of the modified Pioneer Model ACOs with 32 healthcare groups. The mix of organization types—just over half are physician-led—was touted by CMS officials.

Of course, the AMA was ecstatic but be careful what you wish for because a lot of physician risk bearing health care organization went under in the 1990s due to bad risk management.

The FEHBlog never ceases to marvel at how HHS can keep its sunny side up. HHS trumpeted today the news that a newly proposed unique national health plan identifier number will save $4.6 billion over the next ten years. While the HHS press release credits the Affordable Care Act for this innovation, in fact this identifier was required by the Health Insurance Portability and Accountability Act (HIPAA) over 15 years ago in 1996.  In the FEHBlog’s view it was a colossal error to consign technology changes to law as HIPAA did.

The anticipated compliance date for this new proposed rule (unless of course the American Medical Association complains (FEHBlog joke) is October 1, 2014 according to the HHS fact sheet. The proposed rule also will create an identifier for healthcare claims clearinghouses and third party administrators and fix a problem with the national healthcare provider identifier.

HHS also announced its proposal for one year delay in the ICD-10 compliance date for all covered entities. The FEHBlog misread the HHS tea leaves to expect a delay only for small medical practices. The newly proposed compliance date also would be October 1, 2014. The FEHBlog cannot yet find any reaction from the AMA which had clamored for a delay. However, Government Health IT reports the stunning fact that according to “the Regulatory Impact Analysis (RIA) of this proposed rule, HHS 
acknowledged that “a 1-year delay of the ICD-10 compliance date * * * would
add 10 to 30 percent to the total cost that these entities [read that as meaning health plans] have already
spent or budgeted for the transition.”

The Baltimore Sun reported on the oral argument presented to a panel of U.S Court of Appeals judges in Boston on Wednesday. At issue was the constitutionality of the Defense of Marriage Act which prohibits the FEHBP from covering same sex spouses. “Gay rights advocates said they were cheered by the tone of the argument.
The three judges asked relatively few questions during the hourlong
argument, but the most skeptical questions were directed to attorney
Paul Clement, * * * who is defending the federal law on behalf of House Republicans.” The FEHBlog agrees with the article’s conclusion that this case is headed to the Supreme Court.

Business Insurance reported on an important annual study issued by IMS Health on national prescription drug spending. The IMS Health report finds that prescription drug spending increased 3.7% to $320 billion while per capita prescription drug use dropped 1.1% and doctor’s office visits dropped by 4.7%. The AMA News continues to fret about this drop in doctors visits. There was a jump last year in new drug approvals (34) and older drugs shifting to generic status.

The AMA News article discusses a Willis survey of 2300 employers concerning the impact of Affordable Care Act compliance:

While only about a quarter of the responding employers have quantified the cost of compliance within their
health plans, a majority (nearly 56 percent) of those employers said the cumulative cost amounted to
an increase in cost; over 15 percent noted that the cost increase was between two and
five percent, and over 15 percent said that the cost increase was more than five percent.
Employers report that their most significant cost drivers are the provision of adult child coverage
up to age 26 and the removal of the annual/lifetime limits for “essential health benefits.”

Finally USA Today reports this morning that “A new report shows costs vary as much as 700% for some preventive
examinations, and as the federal health care law increases demand for
those procedures, it can mean an increase in premiums if employees don’t
pay attention to those costs.”  Keep your eye on the bouncing ball. Happy Passover!

Well the Federal Trade Commission announced yesterday morning following a 3-1 vote that it would not object to the merger of the two large prescription benefit management firms Express Scripts and Medco Health Solutions. The FTC did not attach any strings to this decision. The merger closed shortly after the announcement according to an Express Scripts press release. 

The opposition remains vociferous as illustrated by this press release from two drug store associations. Bloomberg reports that the federal judge in Pennsylvania has scheduled an April 10 hearing on the motion to undo the merger in a connection with a private anti-trust case. No state attorney generals have filed suit against the merged company yet.

It’s interesting that the press was reporting that the FTC asked the drug store trade associations and consumer groups for suggested strings to attach to the deal, but none were. It appears that Express Scripts and Medco did a very skillful job crafting this deal and the opponents simply overplayed their hand.

Senator Joe Lieberman (I CT) recently announced that he has 21 new Senate co-sponsors for his bill that would open up the FEHBP to same sex domestic partners of federal employees.  A panel of U.S Court of Appeals judges will hear a constitutional challenge to the Defense of Marriage Act tomorrow morning in Boston. The Defense of Marriage Act requires that the word spouse be interpreted to mean a person of the opposite sex whenever the word spouse is used in a federal statute or regulation. The FEHB Act defines family coverage to include the enrollee’s spouse. This issue is likely to reach the U.S. Supreme Court later this year. The DOMA issue is narrower than the Lieberman bill issue because there is only a small but growing number of states that recognize same sex marriage.

OPM’s 2013 call letter encourages FEHB plans to expand their wellness programs. The AMA News and Business Insurance report that wellness programs similarly are popular with state and private sector employers.

Finally, the AMA, now feeling its oats over the HHS announcement of a delay in the ICD-10 implementation date for certain covered entities has joined up with other medical groups to ask CMS to delay other regulatory deadlines so that the providers can focus on their patients.  Let’s not lose sight of the fact that the Affordable Care Act showered the health insurance industry with regulatory deadlines.

The House and the Senate are now in recess for two weeks, and tomorrow is National Employee Benefits Day.

Over the next week we could see the Federal Trade Commission rule on whether or not the proposed merger of two large prescription benefit managers Express Scripts and Medco comply with federal antitrust laws. The parties intelligently included provisions in their deal that would spin off certain businesses in order to satisfy the regulators. Press reports indicate that the FTC asked the parties objecting to the deal if there were other changes that could be made to satisfy them. In other words, the deal may look somewhat different if the FTC rules  in favor of the deal. 

Forbes reports that “the Express Scripts–Medco merger may go through very soon, there is fresh speculation that the Walgreen’s drug store chain may enter into a new deal with Express Scripts” within the next month or two. As noted in the FEHBlog Walgreens and Express Scripts had a contract spat last year that lead Walgreens to stop serving Express Scripts members. (This explains why your local CVS pharmacy has signs reading “Welcome Express Scripts members.” Walgreens lost quite a bit of business as a result of the breakup.

As the FEHBlog has noted several state attorneys general are contemplating a lawsuit if the FTC approves the merger, and drug store trade associations are not leaving anything to chance. The Wall Street Journal reports that the trade associations are seeking a temporary restraining order in federal court against the merger.  The Journal also reports that legal experts predict that the associations will have a very tough row to hoe if the FTC approves the deal.

Happy New Year! OPM kicked off the new FEHBP contracting year yesterday by issuing the annual call letter for benefit and rate proposals at the OPM AHIP FEHBP carrier conference. OPM’s Healthcare and Insurance Director John O’Brien gave the keynote speech. Carriers have until the end of May to submit their benefit and rate proposals for 2013. Mr. O’Brien announced that he expects ten new plans to join the FEHBP for 2013.

Mr. O’Brien also discussed the new minimum loss ratio based pricing methodology for community rated FEHB plans (except for those using traditional community rating). This methodology replaces the similarly sized subscriber group or SSSG methodology that has been in use for decades. OPM issued a final rule implementing this change, which was tested for the current plan year. The rule, which will be published in the Federal Register on Monday is available here.

Earlier this week, the FEHBlog noticed press reports that the Federal Trade Commission might issue a decision approving the Express Scripts Medco merger (with changes) by today. The order has not been forthcoming. The news, however, evidently did provoke trade associations of drug stores to bring their own anti-trust lawsuit against the two PBMs in a federal court located in Pittsburgh PA. The Legal Newsline reports that “A coalition of public interest groups and leading competition advocates are calling on state attorneys general to block [this proposed merger.”

Federal News Radio, among other sources, reports on the House Federal Workforce Subcommittee hearing concerning the Postal Service’s plan to withdraw from the FEHBP.  The hearing was held yesterday  morning. The report describes the lawmaker’s reaction as skeptical. The FEHBlog suggest reading Walton Francis’s testimony before the Committee which places the issue in perspective and explains the skepticism.

Last year, a federal employee sued OPM in federal court to force the agency to cover her same sex spouse. OPM had declined the request based on the Defense of Marriage Act. The federal court which sits in San Francisco (which is not a crack because the Judge is a George W. Bush appointee) held that the Defense of Marriage Act is unconstitutional as applied to this case. The Court ordered OPM to grant the federal employee’s request. Although the case has been appealed to the Ninth Circuit, no party sought to stay this order, and the Washington Post reported yesterday that OPM appropriately has complied with the order. The U.S. Court of Appeals for the First Circuit, which sits in Boston, will consider the same issue in arguments to be made before the entire court (rather than a three judge panel) on April 4.

The Federal Trade Commission did release its consumer privacy framework on Monday. “The final report calls on companies handling consumer data to implement recommendations for protecting privacy, including:

• Privacy by Design – companies should build
  in consumers’ privacy protections at every stage in developing their
  products. These include reasonable security for consumer data, limited
  collection and retention of such data, and reasonable procedures to
  promote data accuracy;
• Simplified Choice for Businesses and Consumers
  – companies should give consumers the option to decide what information
  is shared about them, and with whom. This should include a
  Do-Not-Track mechanism that would provide a simple, easy way for
  consumers to control the tracking of their online activities.
• Greater Transparency – companies should
  disclose details about their collection and use of consumers’
  information, and provide consumers access to the data collected about
  them.”

Closer to home, Fierce Health IT reports that the mega-rule implementing the 2009 HITECH Act’s changes to the HIPAA Privacy and Security Rules applicable to FEHB plans, other health plans, health care providers, healthcare clearinghouses, and their business associates has been sent to the U.S. Office of Management and Budget for its final review before the rule is published in the Federal Register.

[The rule] combines four separate rulemakings: the changes to HIPAA’s privacy and
security rules mandated by the HITECH Act; the new enforcement
requirements and higher penalty requirements; the final regulations of
HITECH’s breach notification rule; and changes to HIPAA to incorporate
the Genetic Information Nondiscrimination Act (GINA). OCR also will
release guidance to help entities implement the changes, including an
updated business associate agreement.

The House and Senate will be session this week. The Federal Workforce subcommittee of the House Oversight and Government Reform Committee will hold a hearing on Tuesday morning at 10 am about whether a stand alone Postal Service health plan would solve the Postal Service’s financial crisis. The witnesses will be the Postmaster General and Walton Francis, an expert on the FEHBP.

On Thursday and Friday of this week, OPM and AHIP will hold the annual FEHBP carrier conference. OPM traditionally makes the call letter for 2013 benefit and rate proposals public at this conference. The FEHBlog will be in attendance.

Of course, the U.S. Supreme Court will hold three days of arguments this week on the constitutionality of the Affordable Care Act.  The FEHBlog gave up on predicting Supreme Court decisions about five years ago. The Court is expected to issue its decision in late June.

Modern Healthcare reports that the Federal Trade Commission will issue a privacy framework tomorrow at 11 am. “A key issue in the report could be the FTC’s position on the role of
consent in the sharing or trading of an individual’s personally
identifiable information.”

Cardiology Today reports on the Food and Drug Administration’s hearings last week about ways to expand the definition of over the counter drugs.   Pharmacists argued that greater pharmacist involvement would facilitate the expansion. The AMA was not so sure. Interestingly,

[One] idea generated included an algorithm available through a store kiosk or
the Internet that would allow consumers to find out whether a specific
medication would be right for them. The algorithm would include
questions about sex, age and chronic disease history and provide
information about the medication that would help consumers with
self-diagnosis.