FEHBlog

One week after OPM announced a 1.8% increase in Federal Employees Health Benefit plan premiums for 2007, the Kaiser Family Foundation and the Health Educational and Reseach Trust released their 2006 Employer Health Benefits Survey, the key findings of which are feaured in a publically available Health Affairs report. The Survey reports that “premiums for employer-sponsored health coverage rose an average 7.7 percent in 2006, less than the 9.2 percent increase recorded in 2005 and the recent peak of 13.9 percent in 2003” The KFF press release and other press accounts note that the 2006 increase, while low compared to other recent years, is more than double the rate of inflation. FEHBP premiums rose 6.6% for 2006, which suggests that the 2007 survey will report significantly lower premium increases.

Other survey findings include the following:

• An estimated 4 percent of covered workers are enrolled in high-deductible plans with a savings option, compared with 60 percent in preferred provider organizations (PPOs), 20 percent in health maintenance organizations, 13 percent in point-of-service plans, and 3 percent in conventional indemnity plans. Among the 2.7 million workers estimated to be enrolled in HSAs or HRAs this year, 1.4 million are in HSA-qualified plans (up from 0.8 million estimated last year) and 1.3 million are in plans with HRAs (statistically unchanged from last year’s 1.6 million estimate).
• About 61 percent of firms nationally offer health benefits to at least some of their workers, statistically unchanged from last year’s offer rate (60 percent). While nearly all large businesses (with at least 200 workers) offer health benefits to their workers, fewer than half of the smallest firms (with three to nine workers) do.
• On average, workers are paying $259 more this year than they did last year toward the cost of family health coverage.Workers at small firms (with three to 199 employees) on average contribute significantly more to their premiums ($3,550 for family coverage) than workers at larger companies ($2,658 for family coverage). On average, workers this year are paying about 16 percent of premiums for single coverage and 27 percent of premiums for family coverage, with their employers paying the rest. That share is essentially unchanged in recent years.
• In 2006, the average in-network PPO deductible for workers facing a deductible reached $473 for single coverage. Average co-payments for drugs across plan types were $11 for generic drugs, $24 for preferred drugs and $38 for non-preferred drugs.
• Few employers have a lot of confidence in strategies to contain rising health-care costs. For example, only 17 percent of small employers and 28 percent of large employers say that they consider disease management programs “very effective” at controlling health-care costs. Employers were less likely to rate other strategies as very effective, including consumer-directed health plans (16 percent of small and 13 percent of large employers), higher employee cost sharing (15 percent of small and 13 percent of large firms), and tighter managed-care networks (9 percent of small and 4 percent of large firms).

The last finding is worth further investigation.

Leslie V. Norwalk has been named Acting Administrator of the Centers for Medicare and Medicaid Services effective October 15, 2006. Ms. Norwalk who currently is Deputy CMS Administrator replaces Dr. Mark McClellan, who recently resigned as CMS Administrator. So a lawyer is replacing a doctor in this very important job.

The presitigious Institute of Medicine released a report yesterday on the “Future of Drug Safety. Action Steps for Congress.” Among the IOM recommendations are two that make perfect sense to me in the wake of the Vioxx and similar flawed drug releases: restrict direct to consumer advertising for the first two years following a new drug release and conduct a follow-up efficacy and safety study five years after the new drug release. The drug manufacturers may not be crazy about the first recommendation because they appear to rely on the blockbuster release approach in order to recoup their investment in new drugs. But an ounce of prevention is worth a pound of cure. The 110th Congress will take up the IOM recommendations next year when Congress must reconsider the user fees that pharmceutical manufacturers pay the FDA for running the new drug approval process.

On Thursday, the IOM released a study on “Rewarding Provider Performance. Aligning Incentives in Medicare.” The report finds that pay for performance programs are one of several tools for improving health care quality in the traditional Medicare program. The report recommends that pay for performance program be used to incent improvements not only the quality of care in a particular health care facility but also the in the coordination of care among health care providers. The report offers guidance for pay for performance programs in all payer settings.

Target has decided to match Walmart’s price in Tampa – St. Petersburg, Florida, where the $4 generic drug price pilot begins today. CVS and Walgreen’s, drugstore chains which have the most to lose from Walmart’s move, seek to minimize the move claiming that the price cut extends only to a subset of older generics. Here’s the drug list.

Marketwatch reports that analysts do not see the move hurting PBMs or generic drug manufacturers. The Washington Post provides an interesting overview of the move, observing that

Tovar, the Wal-Mart spokesman, said that the $4 price is available to anyone, but that Wal-Mart will try to collect insurance on prescriptions for people with prescription-drug coverage. However, some insurance contracts stipulate that pharmacies will not be paid the full cost of a drug unless customers pay the full co-payment the insurer requires.Tovar said Wal-Mart will still allow insured customers to pay $4 per prescription, even if that is less than the co-payment required and even if that means Wal-Mart will not be paid any money by insurance companies.Mohit Ghose, a spokesman for America’s Health Insurance Plans, which represents providers of insurance of all types, including for prescription-drug coverage, said the typical co-payment for a generic prescription is $5 to $15. He said it is unclear how the Wal-Mart plan will affect insurance coverage.

The Post also had an illuminating report on the government’s regulatory reaction to the e. coli outbreak in packaged spinach.
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The U.S. Centers for Disease Control is now recommending routine HIV tests for all American aged 13 to 64. Of course, HIV is the virus which can lead to AIDS. The American Medical Association has endorsed this action. The CDC believes that catching the virus earlier will improve patient outcomes.

Dr. Robert Kolodner, the Veterans Affairs Department’s chief health care infomatics officer, has been named interim national coordinator of health information technology at the Department of Health and Human Services, succeeding Dr. David Brailer who resigned last May.

The blog has followed the trend of blockbluster prescription drugs that have lost their patent protection, such as Merck’s Zocor and Pfizer’s Zoloft. The leading discount store chain Walmart announced today that

Its pharmacies will make nearly 300 generic drugs available for only $4 per prescription for up to a 30-day supply at commonly prescribed dosages. The program, to be launched on Friday [Sept. 22], will be available to customers and associates of the 65 Wal-Mart, Neighborhood Market and Sam’s Club pharmacies in Tampa Bay, Fla. area, and will be expanded to the entire state in January 2007 [and to as many states as possible next year].

The program is available to all customers, whether insured or uninsured. On average, generic drugs cost consumers $10 to $30 for a month’s supply. The announcement caused drug wholesalers and drugstore company stock prices to fall.

Health care provider price and quality transparency is a major Administration goal and a component of the President’s August 22, 2006, Executive Order. The U.S. Office of Personnel Management which administers the Federal Employees Health Benefits Program has explained its Executive Order implementation approach:

Transparency in pricing. OPM will work with carriers to make available to
FEHBP enrollees information about the cost of services delivered by various
providers. This information will be combined with quality information so that
enrollees can see quality and price information together in single, easy-to-use
sources.

Transparency in quality. OPM will work with carriers to make available
information on the performance of doctors, hospitals and other health care
providers. They will use quality measures that have been developed
collaboratively with the health care sector, to help ensure accuracy and
fairness.

OPM announced this week the FEHB plans which were the first to meet its transparency standards:

Aetna Health Plans, American Postal Workers Union consumer-driven, Av-Med,
Blue Choice for Ohio and Missouri, Blue HMO of Ohio, CaliforniaCare,
CareFirst BlueChoice, Foreign Service Benefit Plan, HealthNet of California,
HMO Health of Ohio, Humana Health Plans, Independent Health, Kaiser for
California, Colorado and Northwest regions, M-Care, Rural Letter Carriers
Health Plan, SuperMed HMO and United Healthcare.

As you know, OPM released 2007 FEHBP, supplemental dental, and supplemental vision premiums yesterday. Many more details about 2007 premiums are now available on OPM’s website – www.opm.gov and www.opm.gov/insure