FEHBlog

Congress returns to work after a long weekend on Tuesday.

OPM continues to update its webpage that discusses the impending expansion of FEHB Program coverage to Indian tribal employers who elect that coverage for their employees. Here is a link to OPM’s helpful quick guide for tribal employers.

Businessweek reports that investors are expecting the Federal Trade Commission to approve the merger between the two large prescription benefit managers, Express Scripts and Medco Health Solutions.

The gap between Medco’s share price and the value of Express Scripts’ cash-and-stock bid narrowed to $4.41 this week, the smallest since the deal was announced in July, according to data compiled by Bloomberg. The transaction, valued at $71.71 a share yesterday, is still offering about a 90 percent annualized premium if it wins the Federal Trade Commission’s approval by the end of a 30-day review period that wraps up in two weeks, enabling the takeover to close as early as March 31, estimates Westchester Capital Management Inc. That’s the highest return among deals in the U.S. and Canada over $5 billion.

Here’s something to do over the weekend. GAO has created a Watchdog podcast on its recent report evaluating research on savings from generic drug use.

Meanwhile “industry insiders” are telling AIS Health that “the potential expense and length of time required to bring biosimilars to market under the [Food and Drug Administration’s] “conservative” regulatory draft guidance [recently mentioned in the FEHBlog] is giving some drug manufacturers pause. According to the AIS article these industry insiders are concerned that the FDA is not taking advantage of the fact that fourteen biosimilar drug applications already have been approved by the European Union. The FEHBlog assumes that the industry insiders are thinking that the FDA should provide a shortcut approval on these drugs.

Ihealthbeat reports that the National Institutes of Health announced on Wednesday the launch of its web-based Genetic Testing Registry.  The Registry, which is still under development, is intended “to serve as a centralized public resource for clinicians, researchers, and consumers to access information about the availability and scientific basis of numerous genetic tests.”

Finally, Business Insurance reports on a new National Business Group on Health survey finding that employers are continuing to ramp up the use of wellness incentives with their employees. “Just under 73% of employers used incentives in 2011 as part of their health improvement programs. The average incentive value was $460, up from $430 in 2010 and $260 in 2009.”

Shocker! Healthcare IT News reports that “A majority of respondents to a new survey from Edifecs, which develops technologies for regulatory compliance and data exchange, says an ICD-10 postponement would do little to improve readiness – but could have significant adverse effects.” Unquestionably delaying the compliance date for some covered entities but not others will increase costs for health plans. What will be the American Medical Association’s next target for disruption?

Speaking of the AMA, the AMA News reports that health insurers are branching out into businesses that don’t have minimum loss ratios / profit ceilings — a trend that the FEHBlog has been following with interest.

Kaiser Health News discusses another trend of interest to the FEHBlog — health insurers are opening retail stores in shopping malls. The stores are “a reaction to the shift from wholesale to retail in insurance sales,” says Paul Ginsburg, president of the Center for Studying Health System Change. “In wholesale sales, employers were the buyers. Now insurers are recognizing that retail will be more important.” Retail has been a sales focus in the FEHBP for over 50 years.  Not surprisingly therefore, Robert Krughoff, Walton Francis, and Robert Ellis have written in the Health Affairs Blog about how health insurers can learn marketing lessons from FEHBP Open Seasons.

Modern Healthcare reports that spurred by OPM’s requirement that FEHB plans offer “blue button” technology to their members, Health Level Seven announced that “by April 2012 it will have a file conversion tool and user’s guide to adapt its Continuity of Care Document message transport specification to the Blue Button format developed by the U.S. Veterans Affairs Department.”

Finally, Drug Store News reports that “The Food and Drug Administration on Tuesday announced it will hold a public hearing on March 22 and 23 to discuss how technology can expand which drug products can be switched from prescription to over-the-counter status.”  The FEHBlog recalls when a public outcry, rather than the manufacturer, pushed the FTC to move the antihistamine Claritin to over the counter status. Over the counter drugs typically are not covered by health plans so conversions can bend the health care cost ruler down.

The House of Representatives and the Senate are back in session this week following the Presidents’ Day recess.

Business Insurance offers a gallery of the ten health plan sponsors that took the most cash out of the now depleted Early Retiree Reinsurance Program created by the Affordable Care Act. The big winners are large businesses and state governments. The FEHBP likely dodged a political bullet by being excluded from this program.

NCQA is seeking public comment on proposed changes to its HEDIS measures for 2013.  HEDIS measures are intended to measure health plan quality. The major changes appear to involve the CAPHS member survey associated with the HEDIS measures.  The new measures concern treatment of schizophrenia. The one terminated measure concerns call center abandonment.

Kaiser Health News reports on a new federal government effort to improve patient safety called HENS.

Recent research by the HHS Office of the Inspector General (OIG) and
others has found a much higher rate of harm. A Medicare patient today
has a one-in-seven chance of suffering harm in the hospital, a risk about four-to-seven times greater than in the IOM report.

Moreover, nearly 9 out of 10 incidents are never reported,
the OIG concluded, even including incidents that led to patient deaths.
“If you measure all-cause harm, you find it in about one-third of
patients,” says the University of Utah’s Dr. David Classen, lead author
of a 2011 study that appeared in Health Affairs.

Why aren’t the hospitals and doctors leading this effort on their own?

Earlier this week, a federal judge in San Francisco issued a permanent injunction enjoining the Office of Personnel Management from interfering with the enrollment of Karen Golinski’s sex wife under her self and family FEHB coverage. Ms. Golinski and her wife had married during the period when California permitted same sex marriages. In reaching this conclusion, the judge held the Defense of Marriage Act (“DOMA”) unconstitutional as applied to the case. As you may recall, about one year ago. the Justice Department announced that it would no longer defend DOMA’s constitutionality and since then the House of Representatives (majority side) has been defending the law in court. That “BLAG” has now appealed the decision to the U.S. Court of Appeals for the Ninth Circuit according to the Hill.  The same issue is pending before the U.S. Court of Appeals for the First Circuit in Boston.

The Federal Times reports on OPM’s efforts to contract for at least two multi-state plans that will participate in the Affordable Care Act’s health insurance exchanges beginning in 2014.

Modern Healthcare reports that the healthcare industry generally was pleased with the proposed HHS rule establishing guidance on Stage 2 of the meaningful use requirements that underpin the program subsidizing electronic health records purchased by health care providers. The FEHBlog took note that the requirements ramp up the use of encryption particularly on mobile devices according to Information Week. That’s good advice.

Today the Health and Human Services Department announced start up funding totaling $639 million for seven new CO-OP health plans authorized by the Affordable Care Act.  The CO-OP plans which hopefully will not be the Solyndras of the ACA will be able to offer health plans inside and outside the health insurance exchanges beginning in 2014. Kaiser Health News reports that

Some experts are skeptical that these fledgling health plans can
compete effectively against large, established insurers. They warn of
the difficulties of recruiting experienced insurance executives and of
quickly signing up a large enough and healthy enough membership to make
the plans financially viable. Many nonprofit insurance plans launched
under federal initiatives in the past 40 years went bust or were sold or
converted to for-profit status.

“It’s comforting to say that existing plans are wasteful and are
driving costs up for selfish reasons,” said Peter Kongstvedt, a
Virginia-based health care consultant. “The truth is it’s not easy to
get costs down. It’s hard for me to believe [co-op plans] can be more
efficient and effective.”

Speaking of health care costs, the Standard & Poors healthcare index rose for the most recently reported month December 2011.

Across the board, healthcare costs as measured by annual rates of change went up in the last month of the year. The S&P Healthcare Economic Composite Index indicates that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.28% over the 12-months ending December 2011. This was an increase from the +4.85% annual growth rate posted for November 2011.

As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans increased by 7.11% over the year ending December 2011, moving up from the +6.63% reported for November. Growth rates in Medicare claim costs rose by 2.51%, as measured by the S&P Healthcare Economic Medicare Index, up from the 2.15% reported for November. The broad Hospital and Professional Services Indices annual growth rates also posted increases from their November 2011 rates; they increased 4.99% and 5.34%, respectively, from their December 2010 levels. These are above the +4.69% and +4.76% respective annual rates posted in November 2011.

HHS announced last week that the government has expended over $3.1 billion to fund electronic healthcare record systems for hospitals and doctors. Why don’t the providers have any extra cash to handle the ICD-10 upgrade? In this regard, the AMA News reports that doctors are very concerned about the impending April 1, 2010, deadline for use of the ANSI 5010 electronic transaction standards to submit Medicare claims. The 5010 standards are the prerequisite for ICD-10 implementation.

The FEHBlog wraps up this Tuesday with two more ACA tidbits

• Business Insurance reports that the ACA’s early retiree reinsurance fund (initially funded with $5 billion in 2010) has been exhausted.
• CCIIO (great acronym) issued FAQs on the essential health benefits bulletin last week, evidently in response to some of the comments submitted at the end of January. 

Congress is out of session this week of Presidents’ Day.

The healthcare information trade association HIMSS is calling on the Health and Human Services Secretary to maintain the current October 1, 2013, implementation date for the ICD-10 code set. According to the association’s press release,

While HIMSS understands and recognizes that there are providers facing resource challenges to meet the compliance date, the conversion to ICD-10 code sets will affect more positive outcomes for patients. To that end, the Society offers a comprehensive and credible portfolio of ICD-10 related tools, resources, education, and community for health providers. Today, HIMSS and AHIMA will be releasing its “ICD-10 Critical Pathway to Getting Started – 2012 and Beyond.” This readiness tool is designed to help providers, just starting on the ICD-10 conversion effort, to achieve the October 1, 2013 deadline.

The solid point that HIMSS makes is that delaying the ICD-10 code set for some HIPAA covered entities but not for others will increase costs for those covered entities, such as health plans, that will have to employ both the ICD-9 and the ICD-10 code sets.

Earlier this month, the Food and Drug Administration issued “three guidance documents providing the FDA’s current thinking on key scientific
and regulatory factors involved in submitting applications for biosimilar
products to the agency.” Biosimilars are generic versions of specialty biologic drugs that are typically injectable and expensive. The European Union created such a pathway about ten years ago, and there are about a dozen biosimilar drugs on the market there according to the Wall Street Journal. It appears that the FDA will open a pathway here soon as authorized by the Affordable Care Act. The Wall Street Journal article points out that

Many of the knockoffs will be classified as comparable to branded biologics, but not copies that a pharmacist could automatically substitute. As a result, manufacturers expect they will have to do more than sell the therapies based on price, as companies do with traditional generics. They will have to promote biosimilars to doctors, as they do for brand-name drugs.

The essence is not going to be a typical generics business,” said Michael Kamarck, who’s heading Merck’s biosimilars effort. He said the brief history of biosimilars in Europe, where the medicines are approved, showed the need for “actively promoting” the medicines in order to get them used.

The Affordable Care Act created a 12 exclusivity period for biologic drugs. The Obama administration in its recent budget documents has sought to reduce that period to seven years to PhRMA’s dismay.

The Society for Human Resource Management discussed a recent CIGNA study of claims from 1.1 million insureds finding that “When American workers engage in health-smart habits offered in consumer-driven health plans (CDHPs), they reduced their health risks and lowered their total medical costs an average of $9,700 per employee over five years.”

The Washington Post reports that Congress has passed the tax extenders act that allows the payroll tax cut and the Medicare Part B patch to remain in place until the end of this year. It should be a humdinger of a lame duck session following the Presidential election.

OPM has posted its FY 2013 budget justification. This interesting document discusses OPM’s recent accomplishments and its plans for the future. Search for FEHB to find the points about our beloved program.

Speaking of planning, OPM announced three FEHBP related regulatory projects in the recent semi annual regulatory agenda:

As explained on OPM’s website and in the FY 2013 budget justification, OPM, pursuant to the Affordable Care Act, is opening the FEHBP to Indian tribe employers as soon as May 1, 2012.

HHS formally announced yesterday that it will take steps postpone the October 1, 2013, implementation date for the ICD-10 code sets “for certain health care entities.” HHS did not give details on the length but it did endorse the code set’s use. It looks like HHS will delay the ICD-10 code set for doctor’s offices but not for hospitals or health plans.

HHS also released yesterday for public comment model letters for insurers to use notify enrollees about the results of the minimum loss ratio testing for the prior year.  The letters are available on the CCIIO website.

The Postal Service unveiled a five year business plan that includes seceding from the FEHBP.

The big news tonight is that the House and Senate reportedly are close to a compromise to extend the payroll tax cut and the Medicare patch through the end of this year according to the Washington Post. If so it will be a very good day for the American Medical Association. Earlier today, the Acting Administrator of the Centers for Medicare and Medicaid Services announced that the Administration will reconsider the current timetable for implementing the ICD-10 code set according to this AMA News Report.  The FEHBlog should have known better than to underestimate the AMA’s clout, particularly in an election year.

Speaking of AMA clout, ihealthbeat reports that last week a federal judge in New York City approved a plan to distribute the $350 million that United Healthcare agreed to pay in a settlement with the AMA over the Ingenix usual reasonable and customary fee schedule that insurers used to price out of network claims. It took three years for the doctors to agree on how to split up the money. $50 million went to the lawyers.

Here’s a link to the Office of Personnel Management section of the President”s FY 2013 budget proposal that was released yesterday. The budget includes OPM’s proposal to “streamline” FEHBP prescription benefit contracting, a change that requires Congressional approval.

Business Insurance reports that

The president’s budget proposal for fiscal year 2013 seeks a total of
$364 billion in health care savings over 10 years, which the White House
hopes to achieve by cutting Medicare and Medicaid payments to health
care providers, raising costs on future Medicare beneficiaries and
cracking down on waste and fraud.

Unfortunately, these cuts generally shift costs onto private sector insurers, including FEHB plans.

The Wall Street Journal reports on two health insurer technology initiatives involving “big data”:

UnitedHealth Group
Inc.[‘s Optum unit] plans to launch a new cloud-computing platform aimed at
health-care providers and insurers, one of a growing number of efforts
to allow more sharing of medical data among industry players. * * * Optum plans to take another page from technology firms’ books by opening
up its cloud environment to outside developers, which will be able to
offer “apps” in much the same way they can through Apple Inc.’s well-known app store.

In another move, a group of insurers [lead by Independence Blue Cross] and a health-technology company
said they will buy a digital network that is currently used mostly to
send administrative and financial communications between providers and
health plans. The companies—Highmark Inc., Horizon Blue Cross Blue
Shield of New Jersey, Independence Blue Cross and Lumeris Corp.—plan to
use NaviNet Inc.’s network to help doctors and hospitals integrate
different health data. One goal will be to allow health insurers to more
closely tie doctors’ and hospitals’ reimbursement to quality and cost
measures.

Good luck with these initiatives that have the potential to bend the cost curve down.

Congress is in session this coming week, and the President will be releasing his Administration’s Fiscal Year 2013 budget tomorrow.

Business Week is reporting that the Federal Trade Commission may take action on the Express Scripts – Medco merger next month.

Express Scripts is expected to certify to the
Federal Trade Commission [tomorrow] that it’s finished providing the
necessary information for the antitrust review, said the people, who
declined to be identified because the matter isn’t public. Under
antitrust law, the agency is required to act on a merger request within
30 days of the certification.

The agency’s options then include clearing the
deal, suing to block it or negotiating a settlement. It could also agree
with the company to extend the 30-day period. The company and the
agency aren’t engaged in discussions about a settlement or extension,
the people said. The FTC isn’t expected to decide on the deal until the
beginning of March, one of the people said.

America’s Health Insurance Plans commented in a press release that health plans need more time and flexibility is needed to  implement the summary of benefits and coverage rule that was finalized last week. The National Association of Insurance Commissioners developed the SBC form with individual health insurance in mind.  It would be helpful for HHS to recognize, for example, basic differences between group and individual health insurance and fully insured and self funded arrangements in the forms.