Just to catch up, the Senate is in session this week while the House of Representatives is not. Tomorrow afternoon, the Senate Finance Committee will hold a hearing on Sylvia Mathews Burwell’s nomination to serve as HHS Secretary.

A couple of tidbits on healthcare costs:

• Kaiser Health News reports on a recent Harvard research study concluding that “at least one in four Medicare beneficiaries received one of 26 “low-value” services during 2009, and possibly significantly more.”  The researchers suggested the use of bundled payments for care rather than fee for service would reduce the provision of low value services. The FEHBlog has been hearing about this “solution” for about 20 years. It’s time for the healer to heal him/herself.
• BNA reports on conference discussions about Sovald, the Hepatitis C pill, and other expensive specialty drugs. A research chemist friend told me the other day that Solvadi is a small molecule drug. The article notes that according to a Liverpool University pharmacist Gilead’s drug could be mass produced in large quantities at a cost of no more than $136 per 12 week course.  Here’s a link to Hill’s projections from hepmag.com.  Gilead set the price, according to the BNA article, based on the cost of an avoided liver transplant ($84,000 for a 12 week course of treatment). The FEHBlog recognizes that price and cost are independent variables, but this is highway robbery. 

The FEHBlog missed that weekend update because he was visiting Connecticut. His alma mater UConn invited him to be an alumni reader of the graduates names at one of the three College of Liberal Arts and Sciences graduations on Mothers Day. (Happy belated Mothers Day to all.)  (The FEHBlog had the graduation right before Shabazz Napier’s.)  The FEHBlog read about 300 names using a baseball announcer’s inflection.

Check out the beefeater hat in the picture to the right. Pharrell eat your heart out. When the FEHBlog was announced to the crowd, he doffed his beefeater hat. The FEHBlog also visited family and friends It was fun.

The FEHBlog will get back to serious FEHBlog posts tonight.

The Office of Federal Contract Compliance Programs (“OFFCP”), which is part of the Labor Department, has been on a crusade to impose government contractor affirmative action program requirements on hospitals that serve the TRICARE and FEHB programs. A couple of years ago, Congress tried to rein in OFCCP in a measure intended to protect TRICARE providers. OFCCP could not take no for an answer.

Recently, in reaction to a bill (HR 3633) introduced by Rep. Tim Walberg to complete the job of reining in OFCCP, the Labor Department announced a five year OFCCP enforcement moratorium for TRICARE providers. The purpose of the moratorium is to educate providers about the affirmative action program requirements, which are complex.

As the American Hospital Association has explained  in support of HR 3633, OFFCP’s aggressive enforcement actions against this sector can discourage their participation in the TRICARE and FEHB programs:

The AHA previously explained in testimony to this committee that hospitals can spend hundreds of hours and tens of thousands of dollars simply updating and maintaining the Affirmative Action Plan required by the OFCCP. This time and capital expenditure increases dramatically during audit years, and the OFCCP is conducting compliance reviews with increasing regularity. 

These additional administrative costs divert vital resources from hospitals’ central mission of providing quality patient care. Faced with the risk of these increased burdens, some hospitals may decide to stop providing services to participants in TRICARE or the FEHBP, thus limiting the health care options available to federal employees, service members, and their families. 

AHA is not seeking an exemption from general employment discrimination laws, just these affirmation action program requirements applicable to government contractors and subcontractors. OPM has ruled that hospitals are not FEHBP subcontractors but that fact has not deterred OFCCP.

This week OFCCP issued an enforcement directive  implementing this five year moratorium.  The directive explains that the moratorium extends to healthcare entities that have network contracts with TRICARE or with TRICARE and FEHBP carriers but not FEHBP carriers alone. How equitable. However, health care entities that serve TRICARE also likely serve the FEHBP so it may be a distinction without a difference. Hopefully in the next five years, Congress will enact HR 3633.

The Washington Post reports on Sylvia Mathews Burwell’s first confirmation hearing yesterday. Everything remains on track for her Senate confirmation. The Wall Street Journal lists her top five healthcare related accomplishments here.

Speaking of accomplishments, the Journal also reports that “Researchers [from the Scripps Research Institute in La Jolla, CA]  for the first time created microbes containing artificial DNA, expanding the universal genetic code that guides life. The advance one day could lead to new antibiotics, vaccines and other medical products not possible with today’s bioscience.” Hope springs eternal.

The FEHBlog has followed the growth of convenient  nurse staffed clinics in pharmacies. The Wall Street Journal today reports on the growth of the next level of convenience — getting in touch with a doctor on a smartphone or tablet. “Three of the companies—Teladoc Inc., MDLIVE Inc. and American Well—hosted 400,000 to 500,000 doctor-patient interactions last year, more than double the number in 2011, according to the American Telemedicine Association, a trade group.”

The FEHBlog nearly fell off his chair yesterday when he was talking with a friend about federally regulated coverage to supplement Medicare colloquially known as Medigap.  Did you know that Medigap plans still can medically underwrite Medicare beneficiaries who seek to enroll after the one time, six month long individual open enrollment period expires? What’s up with that?  No other plan in America can do that under the ACA.

Finally, here’s a list from Fierce Health Payer of ten “must follow” Twitter accounts for health payers.

The investigation revealed that the breach was caused when a physician employed by CU who developed applications for both NYP and CU attempted to deactivate a personally-owned computer server on the network containing NYP patient [electronic protected health information] ePHI.  Because of a lack of technical safeguards, deactivation of the server resulted in ePHI being accessible on internet search engines.  The entities learned of the breach after receiving a complaint by an individual who found the ePHI of the individual’s deceased partner, a former patient of NYP, on the internet.

In addition to the impermissible disclosure of ePHI on the internet, OCR’s investigation found that neither NYP nor CU made efforts prior to the breach to assure that the server was secure and that it contained appropriate software protections.  Moreover, OCR determined that neither entity had conducted an accurate and thorough risk analysis that identified all systems that access NYP ePHI.  As a result, neither entity had developed an adequate risk management plan that addressed the potential threats and hazards to the security of ePHI.  Lastly, NYP failed to implement appropriate policies and procedures for authorizing access to its databases and failed to comply with its own policies on information access management.

The three other tidbits for today are rather counter intuitive:

1.   CMS has indefinitely postponed the end to end ICD-10 testing program that it planned to conduct in July 2014 shortly before the then October 1, 2014 compliance date. Of course that date is now extended to October 1, 2015 The FEHBlog guesses that CMS does not want to do testing unless it’s the eleventh hour. The linked Gov Health IT article makes useful observations.  

2.   Health Affairs published a study on a value based insurance plan design that successfully increase medication adherence. The design did not include a disease management program and only provided mail order drug coverage. Go figure.

3.   The Wall Street Journal reported that

Removing the word “cancer” from the terminology used for many slow-growing lesions in the breast, prostate, lung, skin and other body areas could ease patients’ fears and reduce the inclination of doctors to treat them aggressively, says a panel of experts advising the National Cancer Institute. 

That makes sense to the FEHBlog. Here’s the suprising part —

“People have to get over the concept that early detection saves lives,” said Laura Esserman, the lead author and director of the Carol Franc Buck Breast Care Center at the University of California, San Francisco. That idea, which took hold in the 1980s, presumed that treating cancers early would reduce those found later and cut cancer deaths as a result, Dr. Esserman said. But while there have been large increases in cancers diagnosed early, the drop in cancer deaths has been smaller than expected. That is leading some experts to conclude that many early cancers aren’t life-threatening and others that are deadly are slipping through the cracks.
“Cancer isn’t just one disease, so we shouldn’t treat it as if it is,” Dr. Esserman said.

Here is a San Francisco Chronicle background article on Dr. Esserman:

Dr. Laura Esserman – the breast cancer researcher, surgeon and visionary who runs the breast cancer center at UCSF – recently received the Journal of Women’s Health Award for outstanding achievement. Esserman is three years into a large-scale research program called Athena, focused on expediting and improving treatment by better understanding risk factors and outcomes. Esserman is 56 and has been at UCSF since 1993. She is known for being passionate about her patients and the science around breast cancer, and for her practice of singing to patients before they go under a general anesthetic.

Impressive woman.

This coming week also is Public Service Recognition Week,.which is “time set aside to honor the men and women who serve our nation as federal, state, county, and local government employees.” Here is a link to OPM’s press release.

Kaiser Health News reports on the results of a survey commissioned by the medical society lead Choosing Wisely campaign which the FEHBlog has been following. According to the KHN report,

The [Choosing Wisely] campaign focuses on encouraging conversations between patients and doctors about the suspect treatments it identifies. In the survey, 47 percent of doctors said one patient a week requests something unnecessary. While most doctors believe they are most responsible for interceding, 48 percent said that when facing an insistent patient, they advise against it but still order the test. Another 5 percent said they just order the test.

Not surprisingly, few of the doctors agree with health policy analysts who believe that the financial rewards that come from extra procedures are a major reason why they are ordered. Only 5 percent of physicians said they are influenced by the presence of new technology in their offices. Just 5 percent believe the fee-for-service-system of payment, where physicians are paid for each thing they do rather than a lump sum for keeping a patient healthy, plays a role.

It’s difficult for health plans to control these costs which add up.

Then you read the Washington Post’s story today about the expensive Hepatitis C drugs. The article notes that

Sovaldi costs $84,000 for a 12-week treatment, although some patients will need to take the drugs for 24 weeks. Olysio is about $66,000 for a 12-week treatment but is approved for fewer types of patients. Other drugs must often be used with the two new products, adding to the cost.
In the United States, drugmakers set prices based on development costs, as well as on what the market will bear, with companies demanding higher returns for products that have little or no competition. Until they lose patent protection, brand-name drugs in the United States often are able to garner the highest prices in the world. Prices generally fall sharply once generic rivals hit the market.
The drugmakers defend the pricing, saying the drugs are curative and can prevent the need for other costly care, such as liver transplants. “Gilead believes the price of Sovaldi is fair based on the value it represents to a larger number of patients,” Gilead spokeswoman Michele Rest said.

Is this the same way that penicillin was priced?

At the recent OPM AHIP FEHBP carrier conference, speakers stressed the importance of considering community health values to the performance of the health care system. In that regard, the Commonwealth Fund last week issued  the results from a scorecard of state health plan performance over the period 2007-2012.

It’s the FEHBlog’s first merry month of May post.

The Centers for Medicare and Medicaid Services informally has disclosed the October 1, 2015, will be the ICD-10 coding set compliance date according to ihealthbeat.  CMS made this announcement in the preamble to the proposed Medicare inpatient hospital pricing rule for FY 2015. According to the CMS press release on that rule:

CMS projects that the payment rate update to general acute care hospitals will be 1.3 percent in FY 2015

Hospital Readmissions Reduction Program.  The maximum reduction in payments under the Hospital Readmissions Reduction program will increase from 2 to 3 percent as required by law.  For FY 2015, CMS proposes to assess hospitals’ readmissions penalties using five readmissions measures endorsed by the National Quality Forum (NQF). Already, CMS estimates that hospital readmissions in Medicare declined by a total of 150,000 from January 2012 through December 2013.

Hospital-Acquired Condition Reduction Program.  CMS proposes to implement the Affordable Care Act’s Hospital Acquired Condition (HAC) Reduction Program.  Beginning in FY 2015, hospitals scoring in the top quartile for the rate of HACs (i.e. those with the poorest performance) will have their Medicare inpatient payments reduced by one percent.  This new program builds on the progress in this area achieved through the existing HAC program, which is currently saving approximately $25 million annually by reducing Medicare payments when certain conditions that are reasonably preventable are acquired in the hospital.

The rule also describes how hospitals can comply with the Affordable Care Act’s requirements to disclose charges for their services online or in response to a request, supporting price transparency for patients and the public.

Following up on Sunday’s post, the House did pass HR 4414, the expatriate plan clarification bill yesterday. Although it was a bipartisan measure, the Hill reports that White House is not thrilled with the bill. This may be another measure that’s taken up in the lame duck session following the November mid-term elections.

Business Insurance is reporting this afternoon that

Health spending during the first quarter [of 2014] was on pace to increase by $43.3 billion in 2014, according to the first best guess from the Bureau of Economic Analysis. That would mean a 9.9% rise in consumer spending for hospitals, nursing homes, physician visits and other healthcare services — much higher than the spike economists and federal actuaries projected would come as millions gained insurance through the Patient Protection and Affordable Care Act. 

The first-quarter health spending is an increase of 2.4% at a quarterly rate from the prior quarter and is up 5.4% from the same quarter a year ago. The gross domestic product figures do not include spending for healthcare goods, such as pharmaceuticals or medical equipment. Overall economic growth during the first quarter was down sharply at 0.1% for the quarter, which the BEA said was a result of exports and weak private investment in inventory. Healthcare contributed 1.1% to the growth in overall gross domestic product, the largest contribution of any service industry.

Wow. These preliminary results are subject to change as more data.

OPM is concerned about reducing hospital readmissions.  AHRQ just released a statistical brief on 2011 hospital readmissions. The report discloses that for privately insured patients aged 16 to 64,

Maintenance chemotherapy accounted for the largest share of readmissions (4.2 percent) among privately insured patients; however, it should be noted that these were most likely planned readmissions for cancer treatment. Mood disorders resulted in 19,600 readmissions (3.2 percent of privately insured readmissions).

Health care complications among the privately insured resulted in 49,700 readmissions and $844 million in costs. These conditions included complications of surgical procedures or medical care, complications of a device or graft, and septicemia.

The average readmission rate for these 10 high-volume conditions among the privately insured was 15.9 per 100 admissions. Readmission rates among these conditions ranged from 8.7 for coronary atherosclerosis to 64.4 for maintenance chemotherapy. 

In comparison the average readmission rate for 10 high volume conditions was 19.6 per 100 for the Medicare population and 20.0 for the Medicaid population.

Yeah! The Wizards won! And Congress returns to Washington this week. According to the Hill’s Floor Watch blog, attention will turn to FY 2015 appropriations bills:

The budget deal struck last December eased the process for appropriators since it established a top-line spending figure of $1.014 trillion for 2015. Both Republicans and Democrats are more optimistic that they can pass most if not all 12 appropriations bills for the first time in years.

The Hill also reports that on Tuesday, “The House will reconsider a [bipartisan] bill [H.R. 4414] that failed to pass before the recess under suspension of the rules, which requires a two-thirds majority. The measure, HR 4414, would exempt expatriates’ health plans from having to comply with ObamaCare regulations. It will be taken up this time under a rule requiring only a simple majority.”  There are thousands for federal employees working abroad and passage of this bill would make their lives simpler.

Ihealthbest reports that last Wednesday a CMS official told an AHIMA group that announcement of a new ICD-10 deadline is imminent but declined to give any more details like the proposed date which can be no sooner than October 1, 2015. Government Health IT provided background on the ICD-11 now under development.

The Washington Post had an article today about the actuarial problems facing plans in the ACA exchanges which will have to make 2015 benefit and rate proposals in late May or June. FEHB plan carriers face a similar problem as their 2015 benefit and rate proposals are due on May 31 but their Open Season ended last December and this past March.

Spending on hepatitis C already had been on the rise * * * due to the 2011 introduction of two drugs that added about $50,000 in costs per patient. The drugs, known as protease inhibitors and sold by Merck & Co. and Vertex Pharmaceuticals Inc. generally improved cure rates to a range of 66% to 79% for people with the most common type of hepatitis C, from 40% to 45% for older drugs.

Sovaldi [manufactured by Gilead – price $84,000 for a course of treatment], when added to two older drugs, can shorten treatment duration to as little as 12 weeks from 48 weeks for the older drugs, while improving cure rates to about 90% for the most common type of hepatitis C. Olysio [manufactured by Johnson & Johnson — $66,000 for a course of treatment], which is typically given for 12 weeks combined with at least 24 weeks of the two older drugs, has shown a cure rate of about 80% for the most common type of the disease.

Note that the cost per patient for a course is treatment is $134,000 for Sovaldi and $116,000 for Olysio because the new drugs must be taken in combination wth the somewhat older drugs.  Paradoxically, the Federal Bureau of Prisons gets a 44% discount on these drugs from a VA program which is not available to state prison bureaus. The FEHBlog’s dad jokingly told him that the proper pricing policy is to stick the knife in the customer’s back and twist it two times and then turn it back a half turn to reach a fair price. These drug companies take this joke literally.

The Drug Channels blog writes about the Drug Store News rundown of the top fifty chain pharmacies in the U.S. Drug Channels also notes some differences between DNS’s list and their list, e.g., DNS does not include the country’s thrid largest dispensing pharmacy which is Express Script’s mail order pharmacy. Of course the number 1 pharmacy chain on DNS’s list CVS owns the other major prescription benefit manager.

Kaiser Health News writes about the manner in which doctors are becoming more aggressive in collecting bills from their patients. It’s always interesting to look at the other side of the coin. The FEHBlog does miss the AMA News.

Finally, CIGNA this week released its eighth annual experience study on its consumer driven plans. CIGNA is finding that these plans do bend the cost curve down.