Well, it’s been an interesting news day. According to this Federal News Radio report, Marilyn Tavenner, who has been the administrator of the Centers for Medicare and Medicaid, a very powerful position in U.S. healthcare, announced that she will step down from that position at the end of February. Here principal deputy administrator, Andy Slavitt, will serve as acting administrator beginning in March.  Mr. Slavitt spent many years at UHC’s technology subsidiary Optum.

The CMS administrator position requires Senate approval which should be interesting.  In the same vein, the Wall Street Journal reports on HHS Secretary Sylvia Burwell’s list of legislative initiatives upon which the Administration and the Republican controlled Congress may find common ground.

Speaking of technology, earlier this week the Food and Drug Administration approved Enteromedic’s implantable device called the Maestro Rechargeable System to treat obesity. This AP report explains that the device “uses electrodes implanted in the abdomen to stimulate the vagus nerve, which signals to the brain that the stomach is empty or full. Patients and doctors can adjust the device settings using external controllers.”  Enteromedic’s stock price promptly jumped.

Also on the technology front, Modern Healthcare reports on whether 3-D mammography is cost effective? Evidently it is for younger women with denser breast tissue. It avoids unnecessary call backs for another test.

Reliable Drug Channels reports on the newest benchmarking numbers on retail and specialty pharmacy reimbursement. “[R]etail pharmacies received the highest reimbursements, even as the gap with mail pharmacies has narrowed. The retail reimbursement rate, as measured by the percentage discount from Average Wholesale Price (AWP), has remained surprisingly steady in recent years.”

Finally, Robert Moffitt from the Heritage Foundation and a colleague wrote a study on OPM’s multi state plan program (“MSPP”). The study is interesting reading particularly with respect its analysis of OPM’s key role. The conclusion must have been written before OPM surprisingly announced late last year that it was adding healthcare co-cops to the multi-state program. The failed Iowa co-op was not included in the MSPP.  

Govexec.com offers an interesting interview with the incoming chairman of the House Oversight and Government Reform subcommittee on Government Operations, Rep. Mark Meadows, a Republican from North Carolina. The Committee evidently jostled around its subcommittee structure. Government Operations now has a wide ranging portfolio that includes the federal civil service / FEHB and the Postal Service. The Committee, which is chaired by Rep. Jason Chaffetz (R Utah) also created Health Care, Benefits, and Administrative Rules subcommittee which is chaired by Rep. Jim Jordan, a Republican from Ohio. That subcommittee will focus on Medicare, Medicaid, and Social Security / HHS.

The FEHBlog also ran across a couple of upbeat stories —

• For the past forty years, health care providers in Franklin County, Maine, a rural area, have undertaken a proactive effort to encourage better heart health, e.g., smoking cessation, weight control, blood pressure control, exercise, etc., and by golly a study indicates that the effort paid off in materially lower levels of heart disease and longer lives according to the Medpage report. 
• Fierce Healthcare reports that Massachusetts hospitals, doctors, and health plans are successfully collaborating to lower administrative costs. This is similar to the work that CAQH does on a nationwide basis. Cooperation is good. 

Congress is in session this week. Here’s a link to report on Congress’s work last week.

OPM has been encouraging FEHB plans to cover obesity treatment drugs. Kaiser Health New reports that the FDA approved a new obesity treatment drug last month – the fourth since 2012 — and it describes the lay of the land in terms of health insurance coverage for this drugs generally. The effectiveness jury remains out.

Susan Pisano, a spokesperson for America’s Health Insurance Plans, a trade group, says the variability of insurer coverage of anti-obesity drugs “relates to issues of evidence of effectiveness and evidence of safety.”
In 2012, the U.S. Preventive Services Task Force, a non-partisan group of medical experts who make recommendations about preventive care, declined to recommend prescription drugs for weight loss, noting a lack of long-term safety data, among other things. But its analysis was based on the older drugs orlistat, which is sold over the counter as Alli or in prescription form as Xenical, and metformin, a diabetes drug that has not been approved for weight loss but is sometimes prescribed for that by doctors.
The task force did recommend obesity screening for all adults and children over age 6, however, and recommended patients be referred to intensive diet and behavioral modification interventions.

As a result of this task force recommendation, FEHB and other health plans last year began covering obesity screening in-network without enrollee cost sharing.

Believe it or not the Washington Post offers to send subscribers an email with good news. One of the good news entries today is a story about a new class of antibiotic developed from Maine dirt.

Teixobactin works by targeting the building blocks of the bacterial cell wall. Most antibiotics target proteins inside the cell to disrupt it, but Teixobactin binds to two different lipids that are necessary in cell wall production. So even if one developed resistance, the other could still be targeted. In traditional tests to coax bacteria into mutating resistance to a drug, the researchers just kept being able to kill the bacteria.

The new drug is not likely to be prescribed to patients for four more years but it is hopeful development.

Health Data Management reported on a surgical risk calculator that can be used to chill out anxious patients.  Here is a link to the calculator which is designed for use by doctors.

Govexec.com reports that federal agencies shed nearly 20,0000 jobs in 2014 compared to a loss of 83,000 jobs on 2013. “Non-postal agencies employed at total of 2.12 million people at the end of 2014, while the Postal Service employed just less than 600,000. USPS has begun each year with fewer employees than in the one immediately prior for 15 consecutive years, according to agency figures, but BLS data show the agency actually netted 3,000 jobs in 2014.”

Yippee! Modern Healthcare reports that on Wednesday an Food and Drug Administration Advisory Panel recommended that the agency approve a bio-similar drug for marketing. This was a first in the good old USA.   Amgen’s “Neupogen can run more than $3,000 for 10 injections, and RAND Corp. researcher Andrew Mulcahy estimates [Novartis’s bio-similar] Zarxio could be sold at a 35% discount.”  However, even if the bio-similar drug is approved for marketing, the FDA also must figure out the process for determining whether a pharmacist can interchange the drugs without a physician’s approval as is the case with small molecule generic drugs.

In this regard, Drug Channels has an interesting report estimating how PBM’s profit from the wars between the manufacturers of biologic drugs to treat Hepatitis C — Gilead Sciences and AbbVie. This blogger estimate that these formulary moves, combined with specialty pharmacy dispensing, will allow the PBMs [specifically Express Scripts which is backing AbbVie and CVS which is backing Gilead} to earn as much as $2,600 to $3,100 per patient. The blogger backs up his estimates in the report.

The Health Care Incentives Improvement Institute released its 2014 report on the transparency of healthcare provider quality and the results are not good. The press release concludes “Consumers are flying blind when it comes to selecting hospitals and physicians, and public and private sector purchasers cannot hope to improve the overall quality and affordability of American health care if they don’t find a way to solve this problem. Some states {Washington, Minnesota, and Maine] have and every other state in the Union should follow suit.”

OPM published three proposed FEHBP rules in today’s Federal Register.

The most significant proposed rule pertains to the plan discontinuance process. Currently when a plan drops out of the FEHBP, its enrollees are given an opportunity to switch to a replacement plan. If an annuitant enrollee fails to make an election, the annuitant is auto enrolled in the Blue Cross Standard Option, the plan with the most members.  If an employed enrollee fails to make an election, the employee is out of the FEHBP until the next Open Season. Today’s proposed rule would extend the auto-enrollment protection to all enrollees and it would switch the default plan to the lowest cost nationwide plan selected annually by OPM. The default plan cannot be a high deductible plan or charge membership or association dues. As it stands today, the default plan would be GEHA Standard Option.

The other two rules address FEHBA preemption of state anti-subrogation laws and refining the pricing rules for community rated comprehensive medical rules or HMOs.  The preemption rule seeks to bring closure to an issue that has contested in court.  State anti-subrogation laws in the FEHBlog’s view (and the FEHBlog’s law firm runs a subrogation business) inequitably allow injured persons a double recovery from the health plan and the liable party’s auto insurer.  The FEHBlog is pleased that OPM agrees.

The third rule further rationalizes the pricing methodology used by community rated plans.  The change likely will make FEHBA participation more appealing to plans in states that mandate the use of traditional community rating.

The public comment period on the preemption rule expires on February 6, 2015. The public comment period on the other two rules ends on March 9, 2015.

On a separate note, Govexec.com has a first look on FEHBP related bills being introduced in the 114th Congress which opened for business yesterday.

Per Seeking Alpha

CVS Health (CVS -1.3%) bestows Preferred Status to Gilead Sciences’ (GILD +2.3%) Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir) for the treatment of HCV infection. The pills will be the exclusive treatment option for beneficiaries on CVS’s Medicare, Medicaid and other drug benefit plans. AbbVie’s (ABBV -2.9%) Viekira Pak will be available only via a medical exception or prior authorization. Recently, AbbVie announced a similar deal with Express Scripts.

In any event, Gilead’s loss of its monopoly status is leading to lower pricing on its Hepatitis C drugs, which is good news.

The 114th Congress will convene on Tuesday January 6, 2015.  Unless Congress takes action on Medicare sustainable rate of growth (“SRG”) formula by the end of March, Medicare Part B payments to doctors will drop. Congress extended the ICD-10 coding mandate for at least one year in last winter’s temporary SRG fix, but the FEHBlog doubts that there will be another extension.

It is unfortunate that HHS chose an implementation date that coincides with the federal fiscal year and not the calendar year which is a common transition point for health plans and providers.  We will have to keep an eye on CMS to learn its transition plan, e.g., how long it at all will Medicare accept ICD-9 codes on claims with dates of service on or after October 1, 2015?  The FEHBlog expects that most health plans will follow CMS’s lead. This has the potential to be a claims processing nightmare because while health plans generally are prepared for the conversion, doctor’s offices tend to be behind the curve. It is unfortunate because the conversion will do nothing to enhance the electronic payment of claims which was HIPAA’s goal.

Meanwhile, the Obama administration continues to enforce the ACA in a draconian manner. But its enforcement approach is rather even handed because it seeks to burden both health plans and providers. The New York Times wrote last month about the Administration’s investigation of rather garden variety claims practices as unlawfully discriminatory presumably under PHSA Sec. 1557 which does apply to the FEHBP.  Last week, the IRS announced a new final rule clamping down on the billing practices of non-profit hospitals. The IRS rule does not take effect until 2016.  In both cases, consumer advocacy groups are instigating the enforcement actions.

The WSJ’s Phamalot blog reports on drug pricing trends for 2015. It’s an article worth reading.

Finally, the FEHBlog really enjoys reading the weekend issue of the WSJ and yesterday’s issue did not disappoint. The issue included this op-ed by two experts, one of whom, Stephen R. Quake, invented the molecular telescope. The authors pointed out that in 1816 roughly 200 years ago a French physician invented the current stethoscope, which is a listening device to help doctors hear bodily noises.  The molecular stethoscope is a blood test which identifies alien DNA in the blood. The alien DNA can be a sign of disease. The article explains in pertinent part.

Replacing expensive and dangerous invasive procedures with an
inexpensive and safe blood test is a major medical advance, and a safer
alternative to amniocentesis is only the beginning. Similar invasive
tests—such as biopsies—are beginning to be eliminated in areas ranging
from cancer detection to transplant rejection, potentially increasing
safety and performance while lowering the cost of care.
The
prenatal molecular stethoscope is the first truly widespread clinical
application to result from the human-genome project. The National
Institutes of Health has an opportunity to build on this new knowledge
of “alien” DNA in healthy individuals, and determine whether it may
change their clinical course—the molecular-stethoscope approach.
Meanwhile, whole genome sequencing of the germ-line, or native, DNA from
populations is under way, with seven ongoing world-wide projects, each
sequencing the native DNA from 100,000 or more individuals. It’s
projected that nearly two million people will be sequenced by 2017.

The FEHBlog believes that human genome project will deliver major improvements in health care over time. The improvements may bend the cost curve down. Keep hope alive. 

Earlier this week OPM released a benefit administration letter to agencies concerning the implementation of the new self plus one enrollment type for the FEHBP in 2016. The letter states that “OPM has estimated that approximately 30% of FEHB enrollments [approximately 4 million in total]  are family enrollments with only one family member. Thus, there may be as many as one million changes to the Self Plus One enrollment type.” Wow.

Happy New Year. It makes more sense to title this as the first post of 2015 rather than TGIF because yesterday was a holiday.  The FEHBlog is happy about the NCAA football championship playoffs. Good start to 2015.

The FEHBlog has been hearing a lot of H&R Block advertisements on the radio about their come talk with us about the ACA event on January 8. If you had FEHBP coverage throughout 2014, you have no tax issue at least as far as the ACA is concerned. For those without “minimum essential coverage,” Federal News Radio points out that the individual shared responsibility mandate penalty increases this year:

For 2014, the fine is the greater of $95 per person or 1 percent of household income above the threshold for filing taxes. It will jump in 2015 to the greater of 2 percent of income or $325. By 2016, the average fine will be about $1,100, based on government figures.

The IRS expects health plans and employers to provide reports to enrollees and the IRS identifying which family members had the required coverage for which months of the year. These reports are knows as IRS Forms 1095-B and 1095-C. The ACA (IRC § 6055 (which the FEHBlog has discussed) requires this information in order to confirm individual taxpayer compliance with the individual mandate as most people still have employer sponsored coverage.

In order to prepared these reports, which must be distributed for the 2015 tax year (in January 2016) health plans have to collect Social Security Numbers for all members. Plans generally have Social Security Numbers for the enrollees and most spouses. Why? Federal law (known as Section 111) requires plans to gather this information in order to coordinate benefits with Medicare.  But they generally don’t have Social Security Numbers for eligible children. The IRS spells out the requirements for this collection process and health plans ignore these requirements at their peril because the ACA imposes enormous penalties on health plans for non-compliance with Section 6055. Fedsmith.com has an article about Blue Cross FEP’s data collection efforts which give you an idea about this mandatory undertaking. Cooperating with plans benefits members because the 1095 forms will be used to support their tax filings next year.

Fedweek has an article about the process for appealing FEHB plan claim disputes to OPM. This worthy process has been around since 1979.  Complete information about the process can be found in your FEHB plan  brochure (Sections 7 and 8). The article concludes “If you are not satisfied with the result of the OPM review, you may be able to challenge the claim in federal or state court, depending on the laws of your state.” Wrong. If you are dissatisfied with OPM’s decision, you must sue OPM in federal court under the Administrative Procedure Act.  State law is irrelevant / preempted.

The FEHBlog trusts that his readers have been enjoying the holiday season. Today is the end of 2014. The new benefit year for federal and postal annuitants begins tomorrow while the new benefit year for federal employees begins with the first day of the first 2015 pay period which appears to be January 12.

ACA-wise, the employer shared responsibility mandate takes effect tomorrow for the federal government and all other employers with 100 or more full time employees. OPM and the Postal Service already have handled this issue by rolling out coverage to employees who work at least 30 hours per week / 120 hours per month. Surprisingly to the FEHBlog, the Labor Department has not listed in the November 2014 unified agenda a rulemaking project for the ACA requirement that employers with 200 or more employees auto-enroll new employees in their health benefit plan.

Also missing from the unified agenda is an anxiously anticipated regulatory project that will provide guidance on the 40% excise tax on high cost health coverage (colloquially known as the Cadillac tax) that takes effect in 2018 — now only three years away. Unless of course Congress repeals it which is not out of the question,

Another major ACA provision this is missing in action is Public Health Service Act § 2717 which required the HHS Secretary to create health care quality improvement standards for group health plans and health insurance issuers within 24 months after enactment – March 23, 2012 — almost three years ago. Once implemented, group health plans and health insurance issuers would be required to annually report their compliance with these standards to plan enrollees and the government.

The new year also means that the ICD-10 coding set compliance data for health plans and health care providers is only 10 months away.  2015 also was anticipated to be the year in which health plans would be required to certify with HHS their compliance with the HIPAA operating rules but that obligation hinges on the issuance of an HHS rule. The unified agenda predicts that this rule will be issued in July 2015 which suggests to the FEHBlog that the certification requirement deadline will be pushed out into 2016. But you never know.

While on the topic of the ACA, the non-profit co-op plans created by the ACA have been in the news lately. The Des Moines Register reports that the Iowa co-op called Coopportunity Health has come under state receivership. Modern Healthcare reports that HHS recently provided $300 million in additional funding to these coops which the FEHBlog has described as the ACA’s Solyndras. The government has provided $2.5 billion in funding to these co-ops.  The spending simply was unnecessary, in the FEHBlog’s view.

Happy New Year to all!