Although Congress is out of town, the legislative prognosticators remain on the loose. Bloomberg reports that large employers are cautiously optimistic about a successful repeal of the ACA’s 40% excise tax on high cost employer sponsored health coverage. As the FEHBlog has noted and Jonathan Gruber confirmed, the excise tax was created as an alternative to eliminating the tax exclusion for employer contributions to health benefits coverage. This tax exclusion is unavailable to people purchasing individual health insurance coverage and it is cut in half for small business owners in partnerships, S corps, etc. It strikes the FEHBlog that the 50% exclusion should apply to all higher income people which should serve as a pay go for repealing the excise tax. That tax will be a terrible burden on all employers, large and small.

A health care consultant reports in his blog that bipartisan bills are floating around on Capitol Hill that would relieve employers of the ACA’s onerous mandatory reporting on compliance with the employer shared responsibility mandate which takes effect this year.

As an aside, I have given up discussing efforts to delay the ICD-10 coding sustem as the compliance date is only six weeks away, and Congress will have to deal with appropriations when it returns from August recess.. If the ICD-10 coding mandate does create another train wreck, then Congress will step in.

The Altarum Institute reports that

National health spending in June 2015 was 5.7% higher than in June 2014, down from the 8-year high growth rate of 6.7% in the first quarter of 2015. The 5.7% growth rate is still, however, higher than the new Centers for Medicare & Medicaid Services 2014 estimate of 5.5%. The health spending share of gross domestic product was 18.1% in June, barely below the all-time high of 18.2% first recorded in March 2015.

Finally, this Wall Street Journal article caught this FEHBlog’s eye. Startups across the country are trying to replicate the success of Uber in the healthcare field.

Analysts say it’s unclear whether many of the new on-demand services [featuring home visits and tele health services] will reduce costs for those chronically ill patients—or mainly make it more convenient for the healthy and wealthy to get care they could have gone without.

These are not mutually exclusive outcomes.

Following up on the Weekend Update, the FEHBlog calls your attention to this Federal Times article indicating the federal information technology leaders are giving their support to the OPM chief information officer who has been under fire.  The FEHBlog expects that it is not easy to retain experienced information technology personnel in the federal service.

The ACA sets annual limits on out of pocket costs for in-network self only and other than self only coverage. Last year, HHS announced in the 2015 ACA notice of benefit and payment parameters that HHS intends that a self only out of pocket limit be embedded in the other than self only out of pocket limit. Surprisingly, HHS failed to include this change in the rules themselves. Rather than correct the error, the ACA regulators circled the wagons in ACA FAQ XXVII and insisted that group health plans must implement the embedding rule for 2016.  OPM has joined them by imposing the embedding rule on all FEHBP carriers for 2016. (Currently, some FEHB plans offer embedded out of pocket limits and others do not, and choice has been a hallmark of the FEHBP historically.)  Business Insurance reports that last Friday,

Reps. Paul Ryan, R-Wis., chairman of the House Ways and Means Committee; John Kline, R-Minn., chairman of the House Education and Workforce Committee; and Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, asked {HHS Secretary Sylvia Burwell by letter] what statutory authority Obama administration regulators have to set such caps. They also questioned why the policy change was made in the preamble, and not in the regulation itself.
The committee chairmen said they have “become increasingly concerned about agencies’ actions to implement the law that appears to exceed the statutory authority delegated to them by Congress.”
In addition, “While HHS has termed this change to be a ‘clarification,’ the relevant statute is clear — these are two distinct and separate limits,” the lawmakers wrote.
Employer benefits lobbying groups say they welcome congressional questioning of the HHS cost sharing limit.

These benefit mandates, while good hearted, raise premiums and push plans closer to the ACA’s 40% excise tax thresholds.

Speaking of ACA FAQs, the regulators issued number XVIII today. This FAQ highlights the fact that HHS has begun to implement another onerous ACA burden on health plans — uniform quality reporting. This obligation will sit on top of OPM’s own FEHBP quality reporting requirements.

In data breach news, OPM received the Pwnie award for the most epic cybersecurity fail at the Black Hat conference in Las Vegas this weekend according to ZDNet.  Meanwhile, according to Roll Call, House Oversight and Government Reform Committee Chair Jason Chaffetz is calling for the OPM Chief Information Officer’s removal in the wake of serious accusations that the Inspector General made against her on Friday.

Because what’s good for the goose is not necessarily good for the gander, the American Hospital Association is asking the Justice Department to take a close look at the Anthem – Cigna merger.  (The AHA is not enthralled with the Aetna – Humana merger either).  The Indiana Business Journal has a detailed story on why the Blue Cross brands create a hurdle for the Anthem – Cigna merger beyond the antitrust regulators.

Modern Healthcare has a good story following up the Medicare readmissions problem discussed in Friday’s post:

Medicare is four years into its drive to cut the number of patients who land back in the hospital within a few weeks of leaving, and only a quarter of more than 3,400 hospitals avoided penalties. The results are contributing to skepticism about the readmissions program and the broader array of metrics used to evaluate healthcare quality. * * *

[W]ith as much as 6% of a hospital’s base operating pay from Medicare expected to be on the line by 2017, health policy and quality and safety researchers, as well as organizations representing hospitals, are urging more scrutiny of metrics used in the government’s quality incentive programs. 

“The whole field is a mess—it’s all over the place,” said Dr. Robert Wachter, interim chair of the department of medicine at the University of California, San Francisco. “We need better science.”

Amen to that. There simply is too much unwarranted government reliance on these quality statistics.  

. . . because the rent is too damn high

Govexec reports that earlier this week, OPM announced premium changes to the enrollee pay-all Federal Employees Long Term Care Insurance Program effective August 1.   Today the Washington Post reported on premium changes to the Federal Employees Group Life Insurance Program.  Fedsmith.com notes that in connection with these premium changes, OPM will be holding a once in a blue moon FEGLI Open Season in the month of September 2015.

On a related note, govexec predicts that Civil Service Retirees System (CSRS) annuitants may see a $55, or 50% jump, in their Medicare Part B premiums for 2016 because of a quirk in federal law, In the 1987, Congress replaced CSRS with Federal Employee Retirement System or FERS. Federal employees at the time of the conversion could stick with CSRS or switch to FERS. Future federal employees were placed in FERS. There is still a large contingent of CSRS annuitants.

FERS is integrated with Social Security while CSRS was not. Under federal law, when low inflation results in no cost of,living adjustment (COLA) for Social Security — which is the case for next year — Social Security retirees are held harmless against Medicare Part B premium increases. The brunt of those increases then falls on Medicare participants without Social Security benefits, to wit, CSRS annuitants. To quote Larry David’s agent on Curb Your Enthusiasm, that’s a big bowl of wrong. It also will thtow a monkey wrench into OPM’s efforts to encourage annuitants to purchase Part B.

You may recall the FEHBlog discussed a smaller contingent of CSRS annuitants — those folks who retired before 1983. That cadre does not have Medicare Part A coverage.  Fee for service plan carriers can reimburse hospitals for those members using Medicare Part A’s prospective payment system but that’s a lot more than paying benefits secondary to Medicare.  CSRS participants who retired after 1982 paid Medicare taxes while employed and receive Medicare Part A coverage.  For more information, click here.

A common thread running through the recent mass murder tragedies in our country is severe mental illness.  As the Senate prepares to close up for the August recess, Modern Healthcare reports that a bipartisan mental health reform bill is emerging from that body. The FEHBlog will keep an eye on that proposed legislation that “has yet to provoke early criticism.”

Over the past ten days, the “Big 5” publicly traded health insurance companies have been reporting second quarter 2015 earnings. Fierce Healthcare tells us that those reports have been better than expected due to, among other factors, a lower benefits utilization trend.

Kaiser Health News reports that the Centers for Medicare and Medicaid Services again will be penalizing half of U.S. hospitals due to bad hospital readmission scores. “Since the fines began [in 2011], national readmission rates have dropped, but roughly one of every five Medicare patients sent to the hospital ends up returning within a month.”  The FEHBlog can’t blame this one on the hospitals because having strong caregiver / family support outside the hospital is key to avoiding re-admissions and that’s not a given.

Drug Channels gives us a preview of 2016 Rx formulary changes at Express Scripts and CVS Caremark, the two biggest prescription benefit managers. OPM has been encouraging carriers to adopt such formularies.

The House of Representatives is now out of session until after Labor Day. The Senate continues to meet for this week and then takes off until next month.  Here is a link to the Week in Congress with a description of last week’s action.

The White House, according to Federal News Radio, has withdrawn the nomination of retired Adm. Earl Gay to be OPM deputy director.  OPM has not had a deputy director for many years.

The New York Times reported yesterday that the White House now is considering low key retaliatory action against China for the OPM data breach. Bloomberg reported last week that

The hackers [“Deep Panda”] who stole data on tens of millions of U.S. insurance holders and government employees in recent months breached another big target at around the same time — United Airlines. United, the world’s second-largest airline, detected an incursion into its computer systems in May or early June, said several people familiar with the probe. According to three of these people, investigators working with the carrier have linked the attack to a group of China-backed hackers they say are behind several other large heists — including the theft of security-clearance records from the U.S. Office of Personnel Management and medical data from health insurer Anthem Inc.

On Friday, the Centers for Medicare and Medicaid Services perhaps in celebration to Medicare’s 50th anniversary, issued a slew of provider pricing rules that take effect on October 1.  The most important from the perspective of the FEHBP is the final rule on Medicare Part A payments to inpatient hospitals.  FEHB plans pay secondary to a boatload of Medicare participating annuitants. FEHBP fee for service plans use the Medicare Part A prospective pricing system to pay claims on annuitants over 65 who don’t have Medicare Part A.  This is a diminishing cadre of federal annuitants who retired before 1984.

Late yesterday, the Internal Revenue Service issued its second lengthy notice (2015-52) containing initial guidance on the ACA’s 40% high cost plan excise tax a/k/a the Cadillac plan tax.  Timothy Jost from Health Affairs kindly prepared a summary of the notice here. A reader provided a link to a Huffington Post article on the tax which points out that

The bottom line is, as structured, this tax will significantly impact most workers, employers, and health plans. Even the Federal Employees Health Benefits Program (FEHB) will be negatively impacted. In a recent study, the FEHBP Blue Cross Blue Shield standard option plan was projected to hit the 40% tax in 2019 for employee-only coverage, and in 2025 for family coverage.

You can find a link to the referenced study on this American Benefits Council webpage.  The burden of administering this tax will fall on all employers.

Last Sunday, the Washington Post editorialized in favor of the 40% tax explaining that the tax is “a crucial reform” because it curbs the income tax exclusion for employer sponsored health benefits that “distorts the economy in multiple ways.”  If Congress wanted to curb that exclusion, then it should have done so directly rather than by creating this fiendishly complex indirect mechanism.  In the Wall Street Journal today, columnist Peggy Noonan perceptively observed

An untold story right now is that everyone was “right” about health care. The Republicans were right that ObamaCare would not and will never work. Democrats—though they haven’t noticed because they’re so busy clinging to and defending ObamaCare—were right that America would support national health care, but not as they devised it. We’ll get out of ObamaCare by expanding Medicare. Most of America, after the trauma of the past five years, won’t mind.

The FEHBlog is not crazy about this prediction about the next stage but you can’t rule it out.

Glen Stettin, a senior Express Scripts executive, said an estimated 70 million Americans have high cholesterol.
He estimates fewer than 10 percent of them should qualify for Praluent, based on restrictions from the Food and Drug Administration, which limited the drug’s use mostly to patients with a hereditary form of high cholesterol and people with cardiovascular disease.
“The big worry for our clients, given the cost of these drugs [$1,120 per 28-day treatment cycle — or about $14,600 per year], is whether they will be used beyond ways they were tested,” Stettin said.
Before getting their prescriptions filled, patients in Express Scripts plans will be asked for documentation of their diagnosis, their cholesterol levels, diet and maximum tolerated statin therapy, Stettin said.

Last Monday was the deadline for the public to submit comments in response to the Center for Medicare and Medicaid Service’s (“CMS”) request for public input on what to do with the HIPAA health plan identifier (“HPID”).  HHS rolled out this identifier and then just before the compliance date last Fall pulled it back as unnecessary for HIPAA transactions.   To get a flavor for the public comments here, are links to comments submitted by the American Hospital Association and the American Benefits Council. Both throw cold water on the HPID but the AHA is perfectly willing to let CMS use the HPID in connection with the HIPAA operating rule certification requirement that the ACA imposes on health plans.  The AMA urges CMS to pull that proposed rule out of the deep freeze.

A few weeks ago, the FEHBlog noted that the AMA and CMS had reached agreement on a rather vague transition plan for implementing the fiendishly complex ICD-10 coding system for electronic claims on October 1, 2015. CMS issued FAQs on that transition plan earlier this week.  The FAQs confirm that FEHB plans and other commercial payers are not obligated to implement the CMS transition plan. The FAQs also provide more details on acceptable transition plan coding for the benefit of Medicare providers. iHealthbeat has a more detailed overview of the FAQs here.

Finally, the FEHBlog noticed today that the OPM Inspector General has posted his most recent semi-annual report to Congress and management’s response on his website. That report is always interesting reading.

The FEHBlog is back from the Outer Banks after a relaxing week in the sun.  Here’s a picture of the FEHBlog with his family and friends before leaving the rental this morning.  The FEHBlog is on the left, front row, wearing the Nationals hat. If you are looking closely at the picture and scratching your head, the FEHBlog and Mrs. FEHBlog built their family through Korean adoption.  

Congress is in session on Capitol Hill for one more week. Here is a link to last week’s developments as reported by the Week in Congress.

It’s also noteworthy that on Friday, the interim OPM Director Beth Cobert published her first Director’s Blog entry which concerns the data breach.

Also on Friday, the Food and Drug Administration approved for marketing the first PCSK9 inhibitor, a new blockbuster specialty (meaning expensive) drug which is expected to be an advance over statins. The Washington Post explains

[B}ecause PCSK9 drugs are so new, there are no definitive answers yet about whether their cholesterol-lowering effects actually will translate into fewer heart attacks, strokes and other heart problems. Over the next couple years, studies already underway should begin to give a clearer picture about such long-term outcomes.

For now, that lack of data is partly why the FDA approved Praluent — developed through a partnership between drug companies Sanofi and Regeneron — only for a limited set of patients. The agency said the drug could be used for people with heterozygous familial hypercholesterolemia, an inherited disorder that can severely elevate LDL levels [bad cholesterol], as well as for patients who have had heart attacks and other serious cardiovascular problems and still cannot reach target LDL levels through the use of statins. 

Later in the summer, the FDA is expected to approve a second PCSK9 drug developed by Amgen; that drug already was approved by European regulators earlier this week. Global pharmaceutical giant Pfizer has yet another PCSK9 drug in the pipeline. 

U.S. News and World Report issued its 2015 list of best hospitals last week. While the FEHBlog is getting weary of these ranking, he did sit up and take notice when he saw that the U.S. News ranks hospitals by category of illness treated which is interesting.

This morning’s big news is the announcement of Anthem’s acquisition of Cigna for cash and Anthem stock.

The total per share consideration equates to approximately $188.00 for each Cigna share based on Anthem’s closing share price on May 28, 2015, valuing the transaction at $54.2 billion on an enterprise basis.

The Wall Street Journal reports this morning that if regulators bless the Anthem – Cigna and Aetna-Humana transactions, United Healthcare would continue to be the revenue leader at $154 billion annually while Aetna and Aetna would enjoy revenues around $115 billion annually. Anthem would be the health plan membership leader, which suggests that Aetna and UHC derive more revenues for businesses outside traditional health insurance – an option that the ACA has encouraged by capping health insurer revenues as Forbes reported earlier this week.

Joseph Swedish, Anthem’s CEO, will be the Board chairman and CEO in the combined company, and David Cordani, Cigna’s CEO, will be the President and Chief Operating Officer.  Mr. Cordani informed Cigna customers today that

In the coming months, we are committed to delivering the same high-quality service that you have come to expect from us. Cigna will remain separate and independent until closing, and we will continue on our present, positive path until the government reviews are complete and the combination is approved. We expect the transaction to be completed in the second half of 2016. 

Cigna, in contrast to Anthem, Aetna, and Humana, is not an FEHBP carrier but it does participate in the FEHB Program as a medical network provider to several employee organization plans.

In other more mundane news, Govexec informed us that OPM has released a report grading federal agencies on their employee wellness efforts. The grades are based on a CDC survey instrument.  According to the OPM report

291 worksites, from 36 different Federal agencies, participated in the WC assessment.  The average score across participating worksites was 61.5 percent (176 out of 286 possible points).  Individual worksite scores ranged from 28 to a perfect score of 286.  On average, agencies scored the highest in addressing vaccine-preventable diseases, occupational health and safety, and tobacco-free living.  Agencies have the most room for improvement in the areas of nutrition, lactation support, and organizational supports. 

The high-impact wellness strategies that agencies use the most are:
Influenza (flu) vaccinations at the worksite (84 percent)
One or more functioning automated external defibrillator in place (82 percent)
A written policy banning tobacco use at the worksie (79 percent)
A private space (other than a restroom) to express breast milk (77 percent)
Stress management programs (75 percent)
An on-site exercise faciliy (70 percent)

Finally, MedCity News reports that a major telehealth provider American Well is “getting ready to launch telehealth “exchanges,” where patients can search for physicians able to provide immediate online consultations or in-office visits on short notice. Physicians also will be able to make themselves available whenever they have a free time slot. ” Now that could be potentially useful but disruptive technology.