The Supreme Court ruled this morning in a 5-4 decision that Section 3 of the Defense of Marriage Act is unconstitutional. Section 3 required that “in determining the meaning of any Act of Congress * * *  the word `spouse’ refers only to a person of the opposite sex who is a husband or a wife.” The FEHB Act, 5 USC § 8901, defines member of the family for self and family coverage purposes to include the enrollee’s spouse. The President has directed federal agencies to comply with the Court’s decision. We await OPM’s guidance. The Washington Post has a helpful discussion about what to expect.

Tomorrow will be the final day of this current U.S. Supreme Court session. The Court is expected to issue its Defense of Marriage Act constitutionality decision. The FEHBlog projects that the Court by a wide margin will strike down the law because the Constitution reserves to the states the right to govern domestic relations, a violation of the Tenth Amendment to the Constitution. We shall see.

The AMA News is dancing a cautious jig over a Supreme Court decision two weeks ago in a doctor’s lawsuit against a health plan. “The U.S. Supreme Court ruled class arbitration can be utilized for doctors’ payment disputes with an insurer when the contract is silent on the issue. A U.S. Supreme Court decision upholding a potent legal tactic for physicians against insurance companies could lead insurers to use more restrictive provisions in contracts with doctors, legal experts said.”  Oooh, the bad insurance companies. Note to bad insurance companies — see footnote 2 of the Court’s opinion and related text to understand why this case is nothing for the AMA to celebrate.

Speaking of the AMA, the AMA News reviews the actions taken at the recent AMA annual meeting here. The FEHBlog noticed in the press that the AMA had voted a resolution deeming obesity to be a disease state. The AMA News reports that “Designating obesity as a disease could lead to greater investments by government and the private sector to develop treatments and ensure that doctors are paid for those services.” (Emphasis added.)  In another guild action, the AMA sought to swat away pharmacists who dare to question a physician’s judgment. The AMA News reports “Delegates voted to adopt policy that says pharmacists who make inappropriate queries to verify a physician’s rationale behind a prescription, diagnosis or treatment plan are interfering with the practice of medicine.”  Finally the AMA News reports that the AMA has not given up on its jihad against implementation of the ICD-10:

Delegates voted to support federal legislation that would require all payers to implement ICD-10 or ICD-11 over two years. The move gives “our members time to get used to the sticker shock” of ICD-10, said Reid B. Blackwelder, MD, president-elect of the American Academy of Family Physicians. Payers during that period “will not be allowed to deny payment based on specificity of ICD-10-11 diagnosis,” but would be required to give doctors feedback for incorrect diagnoses, the policy says. “We should not allow payers to find loopholes to not pay us for services we provide under contract,” said M. Eugene Sherman, MD, an alternate delegate for the American College of Cardiology and a cardiovascular disease specialist from Englewood, Colo.

This is rich. Insurers are spending millions of dollars to implement the ICD-10 in order to adhere to the law, not to deny claims. 


Finally, Politico reports on the status of OPM’s efforts to implement the multi-state plan program. As part of the ACA, OPM is expected to contract for at least one for profit and one non-for-profit carrier ultimately to participate in all of the state exchanges.  

Congress is again in session this week as the Hill’s Floor Watch blog explains. The Supreme Court holds its final session(s) this week before the summer recess. A decision in the Defense of Marriage Act constitutionality case is widely anticipated.

The latest Standard & Poor’s Healthcare Indices report came out late last week.

Eight of the nine S&P Healthcare Economic Indices showed higher annual growth rates for April 2013 compared to March 2013.  Annual growth rates in Medicare costs increased by 1.06% in April, according to the S&P Healthcare Economic Medicare Index, up from a +0.82% rate recorded last month. As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance plans rose by 4.54% in April, marginally up from +4.53% , a recent low reported in March.

Last year, OPM offered seven contracts for dental and three for vision.

This year, OPM will award ten contracts for dental plans to: Aetna, MetLife, United Concordia, GEHA, Blue Cross Blue Shield, Delta Dental, Triple S, Dominion Dental, Humana, and Emblem Health

OPM will award four contracts for vision plans to: Aetna, Blue Cross Blue Shield, VSP, and United Healthcare

FierceHealthPayer reports that United Healthcare is “creating new retail partnerships to make it easier for the consumer to access all aspects of the insurance industry.”  UHC is teaming up with retailers to promote wellness and it’s creating its own stores, including “pop-up” style stores in connection with Medicare and other Open Seasons.

In good news, USA Today reports that the Centers for Disease Control has found “a striking decline in the prevalence of the human papillomavirus” since vaccination begain in 2006. This virus which is sexually transmitted can cause genital warts, cervical cancer, and throat cancer. The CDC recommends that all girls get the vaccine at age 11 or 12 and of course FEHB plans cover that vaccination with no member cost sharing.

Be still the FEHBlog’s heart. The Wall Street Journal is reporting that “U.S. consumers’ health-care costs fell in May for the first time in almost four decades.” Most of the drop is attributable to the upswing in public use of generic drugs.

The U.S. Supreme Court decided yesterday to permit the Federal Trade Commission proceed with its antitrust challenge to so-called pay for delay settlements. The Scotusblog report on the decision is here.  In these cases, the brand name manufacturer pays off a generic drug manufacturer in the event of a patent challenge seeking early generic competition for the brand name drug. The Supreme Court however refused to hold that those settlements are presumptively unlawful  The FTC must prove them to be unlawful under the rule of reason. The Wall Street Journal reports that “The high court’s ruling will probably deter some companies from deals, but not all, Sanford C. Bernstein analyst Ronny Gal said in a note to investors. “The industry is full of smart lawyers who could structure agreements to avoid visible reverse payments while transferring value between companies,” he wrote.”

Business Insurance reports that “Group health care plan costs are expected to increase an average of 5.4% in 2013 and 4.5% in 2014, a slight moderation from prior years as employer actions and health care market developments help hold down those increases, PricewaterhouseCoopers L.L.P. said in an analysis.” The PwC report identifies the following six trend factors:

Four factors deflate medical cost trend in 2014
Care continues to move outside costly settings such as hospitals to more affordable retail clinics and mobile health. Consumers value the convenience, and costs can be as little as one-third of the bill in a traditional healthcare site.
Major employers such as Walmart, Boeing, and Lowe’s now contract directly with big-name health systems for costly, complicated procedures such as heart surgery and spinal fusion. The employers are making the move to “high performance networks” far away from the home office in the belief that even with travel costs, these networks still deliver overall savings.
The federal government’s new readmission penalties take direct aim at waste in the health system, estimated to be as high as 30%. According to government data, hospital readmissions dropped by nearly 70,000 in 2012, and this trend is expected to accelerate through 2014 as hospitals focus on discharge planning, compliance and the continuum of care.
Seventeen percent of employers in PwC’s 2013 Touchstone survey today offer a high deductible health plan as the only option for employees. And more than 44% are considering offering it as the only option. When consumers pay more for their healthcare, they often make more cost-conscious choices.
Two factors inflate medical cost trend in 2014
Until recently, widespread adoption of generic medicines helped dampen overall medical inflation, but the rise of expensive complex biologics will nudge spending trends upward. Approvals of new biologics now outpace traditional therapies, and that pattern will continue in 2014 as research efforts target complex cases such as cancer.
Health industry consolidation has increased more than 50% since 2009—activity that is expected to continue through 2014. Higher prices are sure to follow in some markets. According to a recent report, hospital mergers can lead to price increases of up to 20.3% These price increases are especially acute in markets with one dominant system.

Kaiser Health News reports on a Senate hearing on medical price transparency. “At a Capitol Hill hearing Tuesday, journalist Steven Brill, who examined the issue of the high cost of health care in a much quoted March 2013 Time magazine article, told Senate Finance Committee members that President Barack Obama’s health care law will do very little to lower prices for consumers.” Ouch.

The AMA issued its annual health insurer report card.  This is a one sided perspective but it’s worth examining.

The OPM Inspector General issued his semi-annual report to Congress for the period ended March 31, 2013.  A copy of the report and the OPM management response is available here.

CMS has updated its Medicare coordination of benefits and secondary payer recovery website.

Happy Fathers’ Day. Congress remains in session this week as the Hill’s Floor Action blog details. The Supreme Court may issue some major decisions tomorrow. Following up on Thursday’s post about the Supreme Court’s DNA patent decision, the FEHBlog notes that Quest Diagnostics announced that it is entering the BRAC test market and Myriad Genetics’ stock price sagged in late trading on Thursday and Friday.

An HHS Office of Inspector General report released last week finds that the three largest FEHB plans and Medicaid plans pay less than Medicare for laboratory tests. The report finds that

As the largest health insurer in the United States, Medicare has great influence on the actions of other health care insurers. For example, Federal law prohibits State Medicaid program payments that exceed the  Medicare payment amount for lab tests.20 Eighty-three percent  (24 of 29) of responding local FEHB plans and networks reported that  they use the Medicare Medicare Clinical Laboratory Fee Schedule (CLFS) as a basis for establishing their own fee schedules and payment rates.

However, State Medicaid programs and local FEHB plans reported that they consider factors when establishing payment rates for lab tests that  Medicare does not consider. For example, eight Medicaid plans and four  local FEHB plans reported that technological changes (e.g., benchmarking  payment rates for new tests to the actual cost of performing them) are taken into account when establishing payment rates. Thirteen local FEHB plans reported taking into account market considerations, such as competitor information, membership size, and market analysis. Other factors reported by State Medicaid programs and FEHB plans include provider requests to review the adequacy of a payment rate for a certain lab test and legislative and/or budgetary changes. 

Also Medicare in contrast to the FEHB plans and Medicaid does require any member cost sharing for diagnostic tests.  Flexibility is a good thing.

Modern Healthcare reports that the heralded drop in hospital readmissions may be the readmission numbers may be attributable at least in part to the fact that

hospitals increasingly are handling patients on so-called outpatient observation status, which in many cases is indistinguishable from inpatient admission. Since observational-status patients aren’t counted as admissions, they aren’t counted as readmissions if those patients are hospitalized within 30 days. Similarly, if observational patients had been hospitalized within 30 days prior to the observational-status treatment, that treatment wouldn’t be counted as a readmission.

Health plans take note!  Kaiser Health News adds that the readmission penalty programs puts the screws on hospitals serving the neediest communities.

Finally the Baltimore Sun reports that on wellness programs that the Defense Department and the Social Security Administration offer their employees.

The Office of Personnel Management helps guide government agencies in establishing health and fitness initiatives, which include smoking cessation programs, blood pressure screenings, health fairs and exercise classes.  Services are designed by individual agencies. Some provide on-site gyms or access to nearby fitness clubs, while others offer walking groups, weight lifting instruction and fitness assessments that measure a worker’s ability to run a mile or do a push-up.

Q6: Does the recommendation for genetic counseling and evaluation for routine breast cancer susceptibility gene (BRCA) testing include the BRCA test itself?
Yes. HHS believes that the scope of the recommendation includes both genetic counseling and BRCA testing, if appropriate, for a woman as determined by her health care provider.

The Mayo Clinic explains that

The BRCA gene test is offered only to people who are likely to have an inherited mutation, based on personal or family history, or who have specific types of breast cancer. The BRCA gene test isn’t routinely performed on women at average risk of breast and ovarian cancers.
Having a BRCA gene mutation is uncommon. Inherited BRCA gene mutations are responsible for about 5 percent of breast cancers and about 10 to 15 percent of ovarian cancers.

Nevertheless, Myriad was flying the pirate flag. It refused to license the patents and its rack rate for the test was $4000.  This NY Times op-ed contributor went off on Myriad’s pricing strategy after Angelia Jolie recently popularized the test by announcing her results and her course of treatment.

The Supreme Court decision today is expect to cut the price of the BRAC test to under $1000 in the near future. The FEHBlog listened to a telephone conference about the Supreme Court decision this afternoon in which the speaker advised that the BRAC patents which were issued in the late 1990s would have expired sometime next year in any event. Moreover the Wall Street Journal reports that

Via the story from the WSJ’s Brent Kendall and Jess Bravin:  However, the ruling wasn’t a complete loss for Myriad. The court said that DNA molecules synthesized in a laboratory were eligible for patent protection. Myriad’s shares soared after the court’s ruling. The court adopted the position advanced by the Obama administration, which argued that isolated forms of naturally occurring DNA weren’t patentable, but artificial DNA molecules were. Myriad also has patent claims on artificial genes, known as cDNA.

Similarly the conference call speaker made the same point — the Supreme Court invalidated an old patent and kept the door open for more recent patenting techniques.

The AMA News reports that “Researchers say there’s early evidence that patients actively involved in care can mean more spending — and, perhaps, greater health disparities. At least in the hospital setting, a more engaged patient is also a more expensive patient, say researchers from the University of Chicago.” Apparently, informed doctors can bring down spending but patients say “Give me more, I’ve got insurance.”

The Mercer consulting firm released a study finding that employers are now recognizing that the Affordable Care Act will be increasing their employee health plan expenses more than they first expected. “In 2011, 25% of survey respondents expected the law would have little or no impact on cost (adding less than 1%). In 2013, only 9% expect to get off so easily. And now 19% of respondents expect cost to rise significantly (by 5% or more), compared to just 15% in 2011.”  Of course, until late last year, most employers were unaware of the transitional reinsurnance fee of $63 per head that the ACA will impose on all health plans, including FEHB plans, next year.

Consumer groups are feeling their oats understandably. Kaiser Health News reports that women’s advocacy groups have charged large self-insured employers (not FEHB plans) with sex discrimination allegedly prohibited by ACA Section 1557 by refusing maternity benefits to employees’ daughters. That provision reported prohibits discrimination in any health program or activity that receives federal financial assistance, such as research grants. All of the employers are educational or research institutions. The complaint was submitted to HHS Office for Civil Rights. The employers are content that the law continues to allow them the discretion to exclude this coverage. A California based consumer group is suing major health plans for requiring members to use mail order pharmacies. The group reported reached a favorable settlement with a major insurer on behalf of a group of members with HIV/AIDS.

Cost curve up as usual.

In business news, Catamaran, a PBM that is not Express Scripts or CVS Caremark, announced a 10 year strategic deal with Cigna.  Catamaran had been the PBM for Healthspring, a business that Cigna recently acquired. Catamaran also released its downloadable drug trend report.

Congress remains in session this coming week according to the Hill. “[A]t some point in the week, the Senate will swear in a new senator: current New Jersey Attorney General Jeff Chiesa (R), who will temporarily fill the seat of Sen. Frank Lautenberg (D)” until a special election in October.  The Hill also reports that experts believe that the sequester will survive into the next federal fiscal year.  The Federal Times reports that OPM is planning on offering about 300 employees buyout and early retirements.

Monday mornings in June are a special time for the FEHBlog because it’s fun to watch the live blog on the Scotusblog report the new U.S. Supreme Court opinions. Last week the FEHBlog was pleasantly surprised by a Supreme Court decision in a state law preemption case involving the Federal Employees Life Insurance Act (FEGLIA), Hillman v. Maretta. The Supreme Court still has not released its decision in the Defense of Marriage Act constitutionality case which could impact the FEHBA.

Health Data Management reports that the Equal Employment Opportunity Commission has filed its first lawsuits to enforce the 2008 genetic information anti-discrimination act and has settled one of the already. This law prohibits discrimination in health plan coverage and employment based on genetic information such as family medical histories and genetic tests. These lawsuits were brought against employers.  

The Federal Times reports that yesterday OPM issued a proposed rule implementing a phased retirement program recently authorized by Congress. In phased retirement, the phased annuitant would continue to work 50% of the time and keep on earning proportionate pension credits. The article explains that

Phased retirees would still get health benefits under the Federal
Employee Health Benefits Program, and would still be enrolled in the
Federal Employees’ Group Life Insurance program, and would be considered
as full-time employees. That means that employees’ agencies would pay
the full-time share of their FEHBP premiums, and FEGLI benefit coverage
amounts would be based on the full-time salary for their positions.

This means that if the phased annuitant is over age 65, the FEHB plan coverage will remain primary to Medicare coverage until the phased annuitant decides to fully retire. The public comment deadline is August 5, 2013.

OPM has been encouraging plans to adopt patient centered medical homes. Carefirst announced today that

In the second-year (2012) of one of the nation’s earliest, large-scale Patient-Centered Medical Home (PCMH) programs, health care costs for 1 million CareFirst BlueCross BlueShield (CareFirst) members covered by the effort were $98 million less than the company projected. The results represent a savings of 2.7 percent on the total projected 2012 health care costs for PCMH-covered members and improve upon the 1.5 percent savings against projected costs registered by the program in 2011.

Mazaal tov.  On a related note, the benefits consulting firm Aon Hewitt released the results of an employer survey today finding that

Thirty-one percent of employers said they decrease or increase health care vendor compensation based on specific performance targets, and another 44 percent are considering doing so in the next three-to-five years. Additionally, while just 14 percent of employers currently use integrated delivery models, including patient-centered medical homes, to improve primary care effectiveness, another 61 percent plan to do so in the next few years.

Finally, in a long awaited development, the Internal Revenue Service has released a version of the Form 720 that health plans and health insurers can use to pay the PCORI fee. Here is a link to the Form and to the related Instructions. The payment date for calendar year plans is July 31. The fee in 2012 was $1 per covered bellybutton, and it’s $2 this year.