The National Community Pharamacists Association is complaining the prescription benefit manager generic drug pricing schedule known as MAC lists are not keeping pace with rising generic drug costs that the FEHBlog has noted.  NCPA wants at least weekly updates and has pushed CMS to apply that rule to Medicare Part D plans beginning next year. NCPA wants a legislative fix that would apply to the FEHBP. Preferably the PBMs will listen to the pharmacists concerns voluntarily.

The Workgroup for Electronic Date Interchange is expressing concern about the slow pace of provider testing of ICD-10 coding according to Healthcare Informatics    Tempis fugit. A train wreck could be coming.

Modern Healthcare continues to report on public comments submitted on the government’s electronic record interoperability roadmap. 

The Robert Wood Johnson Foundation has released its 2015 U.S. county health rankings. Check out your county. 

Congress will be out of session in the coming week just as it was last week.  Congress resumes its session on April 13. Govexec.com recounts what’s happening with the budget process as it impacts federal employees, the FEHB and other federal retirement programs. The House plan would tie the government contribution to the rate of inflation (CPI-U) which is recently has been lower than the currently used enrollment weighted average, among other changes. The Senate report simply directs the Senate Homeland and Government Affairs Committee to “Improv[e]” the program to “help make it more efficient and affordable for hardworking taxpayers.”  Both resolutions pay deference to the 2010 Bowles-Simpson deficit reduction report which the President requested but largely has ignored. Bowles-Simpson made the following FEHB recommendation:

The Commission recommends transforming the Federal Employees Health Benefits (FEHB) program into a defined contribution premium support plan that offers federal employees a fixed subsidy that grows by no more than GDP plus 1 percent each year. For federal retirees, this subsidy could be used to pay a portion of the Medicare premium. In addition to saving money, this has the added benefit of providing real-world experience with premium support [to use with Medicare].

Note to the Commission (which the FEHBlog first made back in 2010) the FEHBP already is a defined contribution program because the government contribution is capped at 25% of the plan’s actual premium. The enrollee always pays at least 25% of the premium. If the plan’s premium is above the 25% cap then the enrollee’s share is proportionally higher.  GDP plus 1 sounds like a better deal than an unadjusted CPI-U, but it’s clear that Congress wants federal employees to be incented to enroll in lower cost plans (just like the ACA’s Cadillac tax).

Modern Healthcare reports on the trend among health care systems to start their own local insurance plan in order to obtain Medicare and health insurance marketplace dollars directly.  Modern Healthcare also offered an interesting interview with a healthcare executive on this topic. Here’s the quote that grabbed the FEHBlog’s attention — “Insurance “carriers simply do not wish to share [savings} with us. They say, “We love how
you all are providing care, the quality is outstanding and the cost
controls are wonderful. You just keep doing what you’re doing. You’re
making us lots of money. We’ll stay under fee-for-service.” This strikes me as nonsense. Insurers are seeking to bend the cost curve down and in any event are subject to a strict medical loss ratio.

Finally apropos of Friday’s discussion about telemedicine, the Wall Street Journal reports that health care providers in the U.S. are starting to use pre-surgical techniques – common in Europe – that help patients bounce back faster from surgery and lower costs.  Why did this change take so long? Europe also was a decade ahead of us on approving biosimilar drugs.

Following up on Tuesday’s tidbit about telemedicine, the FEHBlog ran across this American Bar Association article describing the legal complications involved with telemedicine. Logically you would think that practicing medicine across state lines would not be a big deal (pneumonia is pneumonia, after all), but laws do interfere with telemedicine.  The article notes that beginning this year, CMS is allowing Medicare to pay for annual wellness visits, psychoanalysis, family psychotherapy, and prolonged
evaluation and management services provided via telemedicine. The CMS policy coupled with the Supreme Court decision discussed in Tuesday’s post may break down some barriers.

Speaking of headaches, ihealthbeat reports on industry group reaction to the Health IT czar’s roadmap to electronic medical record interoperability.  Why EMR interoperability was not built into the meaningful use standards to begin with is a topic for public administration schools to study over the next century. It will be a while before this mess is straightened out.

On the bright side, Reuters reports on a study concluding the cancer diagnosis rate are dropping for adult men and are steady for adult women and that cancer mortality rates are dropping for all demographic groups, including children.

Yesterday, in the 24th ACA FAQ, the ACA regulators announced that while they do plan to issue a revised final rule on the summaries of benefits and coverage this year, they will hold off on requiring health plans to use new forms until the 2017 open season. In the proposed rule, the ACA regulators indicated the the new forms would be used for the 2016 open season, but the industry pushed back on that proposal.  The FEHBlog is not sure whether consumers actually use the summaries of benefits and coverage but if they do, then hospitals and doctors also should be required to disclose the health plans in which they participate, etc. That would be transparency.

Drug Channels and Reuters have interesting stories about the OptumRx (a unit of UnitedHealthcare) – Catamaran deal discussed in the most recent Weekend Update.  Reuters notes that stock analysts are suggesting that the deal may push Express Scripts and Walgreens into a merger and that if this deal goes through Humana would be the fourth largest PBM.

Ihealthbeat reports that a recent U.S Supreme Court decision exposing a North Carolina board regulating dental practices to antitrust liability could encourage state medical boards to liberalize their approaches to telemedicine. At the OPM AHIP carrier conference, the FEHBlog heard people complain about these state restrictions on telemedicine.  Right now, most of those medical boards generally require telemedicine doctors to be licensed in the state in which the online patient resides.  The Supreme Court decision allowed a restraint of trade lawsuit to proceed against the dental board based on its decision to restrict the practice of teeth whitening to dentists.  Time will tell.

Robert Pear of the New York Times has an interesting article about a provision of the House Medicare Part B doc fix bill that would prohibit states from imposing malpractice liability on doctors based on Medicare quality ratings.  The ingenuity of the FEHBlog’s profession may be unprecedented.  Congress is right not to limit the legal significance of these HEDIS and other quality measures.

Finally, the FEHBlog is very impressed by Aetna’s approach to cybersecurity as discussed in this Wall Street Journal article. Wikipedia informs the FEHBlog that there is an international treaty against hacking (the Budapest Convention) to which the U.S. and its allies are signatories but not the countries flying the pirate flag like Russia, China, North Korea, etc.  The WSJ article confirms that cybersecurity is a national security issue.

The FEHBlog’s family wedding was everything we had hoped for and now it’s back to work just as Congress takes two weeks off. The Week in Congress explains

The Senate and House have agreed to their respective Republican budgets and have adjourned until Monday, April 13th. When they return the process of reconciling the two budgets will begin. Once completed authorization and appropriation bills to authorize and fund all government agencies will begin aiming to result in a completed budget process by September 30, 2015. 

The Senate also will return to complete the Medicare Part B doc fix, and of course there are other matters on the front burners.

Joe Davidson from the Washington Post reports on federal employee union reaction to those budget resolutions.  The lead Washington Post online article this morning is about the skyrocketing cost of Hepatitis C drugs for the Medicare program.  It’s worth reading because it debunks the drug manufacturer’s principal argument in favor of the astronomically high prices for these drugs.  Competition has been bringing down the costs of those drugs this year. Nevertheless the manufacturers set a bad precedent for pricing drugs which have no competition.  

The Wall Street Journal reports this morning (make sure you are sitting down) that UnitedHealth Group, which has the third largest prescription benefit manager (after CVS Health and Express Scripts) is buying the fourth largest PBM Catamaran for $12.8 billion in cash, subject of course to regulatory approvals.  The article notes that

Insurers and employers are bracing for the prices tied to expected new treatments for cancer and other conditions such as elevated cholesterol. Pharmacy-benefit managers are eager to show they have tools to counter those costs on behalf of clients.
If the OptumRx deal with Catamaran is consummated, each of the big-three PBM players would offer a different setup. Express Scripts has the largest volume in the industry. CVS has its own network of pharmacies.
The new OptumRx would pitch the benefits of analysis and data, including the broad array of health information that Optum’s other businesses glean and crunch. “These capabilities can all be combined with the pharmacy side,” said Larry C. Renfro, the chief executive of Optum and vice chairman of UnitedHealth Group.

The FEHBlog’s oldest daughter’s wedding occurs in New York City tomorrow and the welcome dinner is tonight so the FEHBlog will be brief. The House did pass the bipartisan sustainable rate of growth repeal and replace bill on Wednesday, but the Senate went on Passover / Easter break (watch out Daytona Beach!) before taking up the bill.  Modern Healthcare reports that the Senate should pass the bill when soon after it returns on April 13.

Both the House and the Senate have passed budget resolutions.  According to govexec.com, both resolutions suggest that Congress will be paying some attention to the FEHBP in appropriations bills this year beyond the traditional appropriations provisions (no full CAS coverage, abortion coverage restriction, contraception coverage mandate). The budget resolutions set Congressional goals and policies, but are not laws themselves. The House and the Senate will reconcile their budgets and adopt a unified budget resolution next month.

The bipartisan sustainable rate of growth repeal and replace bill appears to be percolating right along in Congress according to this Hill article. The Hill also reports that the President is willing to sign the bill.

Fierce Healthcare reports from the World Health  Care Congress about how insurers are trying to improve member engagement. Here’s a catchy idea:

Engage providers. The average consumer would much rather talk to the doctor than the insurance company, the executives said. Edelson [from United Healthcare] took the point one step further: Consumers would rather talk to nurses or office staff. Offer training and support to anyone in a physician office who interacts with members so they can address questions about consumers’ insurance plans or at the very least point members in the right direction.

Fierce Healthpayer reports from a recent AHIP conference about how insurers are building member trust in their big data practices.

The obstacle of protecting big data lingers. “We’re not quite there yet,” said Jim Routh, chief information security officer of Aetna. “Right now, we have the encryption capability to encrypt certain fields that are searchable. Where we’re headed is total search based on encrypted data. Hopefully, technology is almost there for searching on encrypted data.”

In the meantime, insurer are focusing on guarding against phishing attacks and patrolling inside their firewalls as experts have suggested.

CAQH CORE is seeking to whip up use of its handy electronic transaction tools.

Average adoption rates of fully electronic transactions varied widely, from a high of 92 percent for claim submission to a low of 7 percent for prior authorization. About half of all claim payments and remittance advice transactions remain manual. Health plans continued to process about 1 billion transactions manually, and healthcare providers handled over 2.4 billion.

The potential for significant cost savings is due to the large volume of transactions, as well as the dramatic cost difference between manual and electronic transactions. For health plans, costs for each manual transaction averaged $2 for the six transactions studied, while electronic transaction costs ranged from only 5 to 10 cents. Healthcare providers’ estimated costs averaged more than $5 for manual versus $1.60 per electronic transaction.

Good luck to them.

Congress is in session again this week.  Here’s a The Week in Congress link to a look at last week’s efforts.

On Thursday. a bipartisan bill to replace Medicare’s sustainable rate of growth formula was introduced,  as reported in Healthcare Finance News. Congress needs to approve this bill or another stopgap measure before April 1 in order to avoid a 21.2% cut in Medicare Part B reimbursement to doctors.  Modern Healthcare discusses six “things” that could kill the bill.  This will be a complex piece of legislation that is bound to reverberate on the FEHBP.  Ihealthbeat reports that the bill includes several significant health information technology provisions, including provisions to address the interoperability problem.

On Thursday, March 24, at 11:30 M ET the HITRUST Alliance is holding a webinar on its new framework for deidentifying protected health information.  That’s a good idea.

The second day of the OPM AHIP FEHBP carrier conference was held on Friday morning.

The keynote speaker was Dr. Julian Harris, the healthcare director for the Office of Management and Budget. He is the White House lead on the ACA, Medicare, Medicaid, and the FEHBP, among other federal government healthcare programs.  He provided an overview of the Administration’s triple aim programs.

OPM then provided an in depth explanation of its new plan performance assessment program.  The implementing regulation will be published soon. OPM reviewed a draft carrier letter that will be finalized next month.

The it was time for the FEHBlog to speak.  The FEHBlog greatly appreciated the opportunity to speak on challenges facing carriers over the next three to five years.  The FEHBlog focused on the 40% excise tax on employer sponsored health care coverage a/k/a the Cadillac tax.  FEHB premiums, healthcare flexible spending account contributions, employer or pretax contributions to health savings accounts, certain employee assistance program costs, and certain medical clinic costs count toward the excise tax thresholds of $10,200 for self only coverage and $27,500 for self and family coverage. Costs in excess of those thresholds which are subject to certain one time and annual adjustments will be taxes at a 40% rate beginning in 2018, less than three years away.

All group health plans need to at least begin planning for the tax now.  It’s possible that the tax may be repealed before 2018 but it’s would be foolhardy to count on repeal. The key is that the tax’s other than self only threshold is 2.7 times the self only threshold. Plans need to harmonize their premium structure with this ratio. The IRS indicated in the February excise tax guidance that employers can apply an enrollment weighted average of self only and self and family premiums toward the tax’s other than self only threshold.

Also it also is very important from a tax planning perspective for employers beginning in 2018 to replace healthcare flexible spending accounts with limited scope dental and vision flexible spending accounts and to stop making pre-tax contributions to employee health savings accounts. It must be recalled that the Congress which passed the ACA was no fan of flexible spending accounts or health savings accounts. (The FEHBlog is a fan of HSAs and now has one. )

The FEHBlog also spoke about how the problem of lack of interoperability in electronic medical records affects the new plan performance measurement system and the risk of data breaches.

Following the FEHBlog’s talk (which was only 20 minutes long) OPM discussed the excise tax with carriers. It was a productive exchange. At the closing, OPM announced that a new data breach carrier letter is in the offing.

Govexec and Federal News Radio report on the first day of the FEHBP carrier conference. The articles focus on the addition of a new self plus one enrollment type for 2016.  OPM also has created its own self plus one website which is full of Qs and As.  A counterintuitive aspect of this change is that the plan enrollment codes for self plus one will end in 3 and 6.  Self only and self and family will retain the 1 and 2 enrollment codes respectively.  Information technology system issues forced OPM to adopt this approach. The automated enrollment system will be programmed to remind users about the availability of self plus one if the user only enrolls one family member.  OPM will create a special limited enrollment period in early 2016 for employees on premium conversion who missed the self plus one boat during Open Season. Annuitants who are not eligible for premium conversion have the right to reduce their coverage from self and family to self plus one mid-year in any event.

OPM will be encouraging annuitants to pick up Medicare Part B when they first become eligible for that program. Doing so avoids a late enrollment penalty. Tom Bernatavitz, Aetna’s FEHB plans president, explained to the audience that in the 1990s FEHB HMOs offered enrollee cost sharing so low that OPM discourage Medicare Part B enrollment.  In the next decade, enrollee cost sharing increased but annuitant members without Medicare Part would have to pay a late enrollment penalty. As a result just north of 50% of Medicare eligible annuitants enrolled in FEHB HMOs have Medicare Part B. In contrast 79% of Medicare eligible annuitants in FEHB fee for service plans have Medicare Part B. But that number is dropping because 70% of annuitants who can pick up Medicare Part B without a penalty do so. OPM emphasized that Medicare Part B enrollment is a good deal for annuitants, and plans should communicate that message and make appropriate benefit design changes. That’s a good idea.

A couple of PBM speakers (CVS and Express Scripts) explained that while the number of combined Starbucks and McDonalds outlets in the U.S. total 25,000, there are 68,000 retail pharmacy locations in the U.S. The speakers encourage to audience — consistent with OPM’s call letter — to consider more limited, high quality pharmacy networks. They also explained that the benefit of a managed formulary is the ability to exclude ineffective drugs, drugs with worse side effects than competitors,  and drugs for which manufacturers offer co-pay card in order to undercut the competition.  The speakers emphasized that their independent formulary committees are tasked with the objective to include all of the safe and effective drugs that patients need. Some of those drugs have no competition. Others do. For the drugs with competition, the PBM business people can negotiate deeper rebates for placement on the formulary. The PBMs have formulary exception processes for plan members.  This makes sense to the FEHBlog.

Day 2 is tomorrow.