Yesterday, the U.S. Government Accounting Office released a report on postal retiree health benefits. The office’s conclusion is as follows:

About 500,000 postal retirees receive retiree health benefits. The Postal Service Retiree Health Benefits Fund pays most of the costs. 

The Postal Service has not made $38.2 billion in required payments to this fund through fiscal year 2017. If it makes no more payments, the Office of Personnel Management projects the fund will be depleted in fiscal year 2030. 

We highlighted several approaches to address this shortfall, such as requiring most eligible retirees to participate in Medicare, increasing cost-sharing, or reducing benefits. 

Congress should consider legislation to put postal retiree health benefits on a more sustainable footing.

Congress had been considering such legislation until the President decided to create his own Postal System Reform Task Force last April. The Task Force report was timely delivered to Congress in early August. Hopefully the President will get the reform ball rolling again in time for the lame duck session of Congress in November.

Mergers and acquisitions tidbits:

• United Healthcare, according to Bloomberg, acquired Genoa Healthcare, a large chain of pharmacies that operate out of mental health and substance use disorder facilities.  
• Healthcare Dive reports that the two largest health systems in Texas — Dallas based Baylor Scott and White on the one hand and Houston based Memorial Hermann Health System on the other — have a sign a letter of intent to merger their companies. ”  Combined, the two would operate 68 hospitals, two health plans and more than 14,000 affiliated physicians” in the Lone Star State. 

If you find yourself scratching your head about the small gap between self plus one and self and family premiums in the FEHBP, please bear in mind that before Congress added the self plus one option self and family premiums were only 2.3 to 2.4 times self only premiums on average. Because of its older demographics, FEHB family sizes have been and remain relatively small. In other words, there really was no need to create the self plus one option (an OPM actuary told me that in 2009), the self plus one choice is there.

Also remember that the full premiums for self and family always are larger than the full premiums for self plus one. However, because OPM calculates the government contribution using a method required by law (enrollment weighted average), the larger government contribution for self and family may cause the enrollee contribution for self and family to be somewhat less than the employee contribution for self plus one for the same plan and same option.

For 2018 the government contribution for self and family increased by 0.7% (seven tenths of one percent) while the government contribution for self plus one increased by 0.3% (three tenths of one percent). This outcome unfortunately compounds the “flip flop” problem. If you did not face this problem for 2018, please check your plan’s 2019 premiums. If you do face this problem for 2019, simply change to self and family during Open Season.

Today is the the last day of the 2018 federal fiscal year and the federal government will be operating on a regular schedule.  Tomorrow is the first day of the U.S. Supreme Court’s October 2019 term. No FEHBA issues currently are pending before that Court.

The House of Representatives completed its pre-midterm election work last week and hit the campaign trail. Specifically, the House joined the Senate in approving the Defense/HHS etc. minibus appropriations bill. That bill which the President signed also provides for continuing appropriations through December 7 for  operations like the FEHBP without enacted FY 2019 appropriations. Here are links to the Federal News Radio bills on the second enacted minibus and the pending final minibus which will address whether federal employees will receive a pay raise next year.

The House also passed by a 393-8 vote the conference report on the opioid crisis response bill (H.R. 6, H. Res. 1099). Here is a link to the American Hospital Association’s site on the conference report.

Countable reports that the Senate will be continuing its work this coming week. Of note is the fact that the Senate plans to consider and approve the opioid crisis response bill this week. A favorable Senate vote would send the bill to the President to be signed into law.

In this regard, here’s a link to an interesting Opioid Institute article on using blockchain technology to help remedy the opioid crisis. On last Monday’s Econtalk podcast, the interviewer Russ Roberts spoke with Rodney Brooks, the Panasonic Professor of Robotics (emeritus) at MIT. Professors Roberts and Brooks discussed among other things Amara’s Law:

Roy Amara was a cofounder of the Institute for the Future, in Palo Alto, the intellectual heart of Silicon Valley. He is best known for his adage now referred to as Amara’s Law:

We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.

The discussion covered technology examples such as GPS (long run stage) and driverless cars (short run stage). Blockchain probably falls into the short term category too.

On the mergers and acquisition front last week, Cigna announced its combined Cigna / Express Scripts executive team and according to Healthcare Dive, Aetna sold its entire Medicare Part D business to Wellcare.

The deal — meant to grease the wheels for approval of the pending CVS-Aetna deal — does not affect individual or group Medicare Advantage plans or Medicare supplement plans or products Aetna said the purchase price of its Medicare Part D business is not material. Aetna’s standalone Medicare Part D members will continue to be covered by Aetna through the rest of the year. The deal is expected to close Dec. 31.

Both deals are expected to close later this year.

The Centers for Medicare and Medicaid Services announced late last week that

On average, Medicare Advantage premiums will decline while plan choices and new benefits increase. In addition, Medicare Advantage enrollment is projected to reach a new all-time high with more than 36 percent of Medicare beneficiaries projected to be enrolled in Medicare Advantage in 2019. This news comes as the agency releases the benefit and premium information for Medicare health and drug plans for the 2019 calendar year.  

The Medicare Advantage open enrollment season runs from October 15 through December 7, 2018.

OPM has posted Wednesday’s press release about 2019 FEHBP and FEDVIP premiums on its website. At the bottom of that press release, you will find links to 2019 premium charts. As a short cut for readers, here’s the links to the FEHBP premiums.

Today, OPM announced the 2019 FEHBP and FEDVIP premium changes which waves the green flag for FEHBP and FEDVIP plans to start communicating about their 2019 benefits and premiums initially on their websites. According to this comprehensive Washington Post story, the average FEHBP enrollee contribution increase is a mere 1.5%, the lowest increase in over 20 years. The government contribution increase is 1.2%. OPM will have it online FEHBP comparison tool ready for 2019 as we get closer to the start of Open Season on November 12, 2018.

Modern Healthcare reports that the Congressional conference committee finished its work on the opioid crisis remedial legislation (H.R. 6) yesterday evening. Of note, the final bill does not include a pharmaceutical manufacturers proposal to partially restore the Medicare Part D donut hole (good outcome) or a healthcare industry proposal to align the unnecessarily complicated substance use disorder privacy law (42 CFR Part 2) with the generally applicable HIPAA Privacy Rule (mystifying outcome).

Healthcare Dive informs us about CVS Health’s plans for its acquisition of Aetna.  For example,

Executives described how they could use its existing services to better serve Aetna’s members. As soon as the deal closes, if it does, CVS believes it will have immediate access to 20% of Aetna’s membership currently using the stores. That matters because CVS believes its pharmacists play a crucial role in shaping a patient’s overall behavior. CVS said many investors underestimate the role of the pharmacist. 

The new, cheaper versions of Gilead’s Epclusa and Harvoni will cost $24,000 for a course of treatment, the Foster City, California-based company said in a statement on Monday. When Harvoni came on the market in 2014, Gilead set a list price of $94,500. Epclusa was approved for sale in 2016, with a price of $74,760.

As the FEHBlog has previously noted, while the original list prices were stunning, curative drugs are taken for a relatively short time frame. Typical blockbuster drugs like statins are taken for years and years. Hopefully more curative drugs for potentially fatal illnesses were be forthcoming and in the meantime the market can figure out a Goldilocks solution.  Easier said than done.  But for now it’s good to see generic level pricing for these drugs.

Health Affairs offers an interesting analysis of the bipartisan surprise bill legislation recently circulated for comment by a group of Senators (as noted in a recent FEHBlog post).

This bipartisan draft legislation marks an important step forward in putting an end to surprise out-of-network medical bills nationwide. As work proceeds on this issue, lawmakers should focus on:

• Determining the appropriate payment rate from the health plan to the provider in these instances, specifically considering a lower rate than the 125 percent of average allowed amounts in a region currently in the draft (and if using any percentile of average allowed or contracted amounts, pegging this calculation to a point in time before passage of the bill, inflated forward);
• Narrowing the protection for all out-of-network services at an in-network facility to those most likely to involve surprise bills; and
• Adding a protection for out-of-network ambulance bills. 

This should be the week that OPM announces the 2019 government contribution toward FEHBP coverage and plans disclose that 2019 enrollee premiums and benefit changes. Woo hoo!

Congress also will be in session on Capitol Hill. Here’s a link to the Week in Congress’s report on last week’s actions on the Hill. The FEHBlog is ecstatic that he found a website that reports on the bills, etc., that Congress is expected to consider this coming week. The Hill newspaper used to have such a weekly report. Today the FEHBlog found it on the Countable website.

The Senate Health Education Labor and Pensions Committee will hold its fourth hearing on reducing health care costs this coming Thursday at 10 am. The subtopic will be improving affordability through innovation. The FEHBlog’s current preferred source for innovative ideas is the Health Payer Intelligence website.

Tomorrow, the U.S. Supreme Court will convene for its so-called super conference in anticipation of opening its October 2019 session next week. The orders from this conference will be released on Thursday.

Earlier this week after the Senate passed HR 6, the opioid crisis relief bill, with an amendment, the FEHBlog understood that a conference report reconciling the House and Senate versions of the bill would be forthcoming this week. Not so fast. Press reports indicate that reconciliation negotiations continue. Modern Healthcare states that “Talks are likely to push into the weekend and possibly until Monday.”

Health Affairs Blog previewed a Health Care Cost Institute study of employer sponsored heath plan costs over the period 2007 through 2016.

The authors found that total enrollee spending (not including premiums) on health care goods and services increased by 44 percent over the decade—from $3,752 to $5,394 per person—which was an average annual increase of 4.1 per cent. They also observed that growth rates slowed after 2009 but increased between 2014 and 2016.

The study also found that enrollee out of pocket spending kept pace with total spending, up 43% over the same period.

Forbes reports on Mercer consulting’s preliminary projection  that large employer health plan costs will rise 4.1% next year and Avalere consulting’s projection that ACA exchange plan premiums will increase 3.1% in 2019. Plansponsor.com digs into some employer sponsored plan trends identified in the Mercer report.

Becker’s Hospital News summarizes a fascinating, detailed Wall Street Journal story about how big health systems use their leverage to create exclusive contracts with various payers, thereby impairing competition. According to the Journal,

Dominant hospital systems use an array of secret contract terms to protect their turf and block efforts to curb health-care costs. As part of these deals, hospitals can demand insurers include them in every plan and discourage use of less-expensive rivals. Other terms allow hospitals to mask prices from consumers, limit audits of claims, add extra fees and block efforts to exclude health-care providers based on quality or cost.

The Wall Street Journal has identified dozens of contracts with terms that limit how insurers design plans, involving operators such as Johns Hopkins Medicine in Maryland, the 10-hospital OhioHealth system and Aurora Health Care, a major system in the Milwaukee market. National hospital operator HCA Healthcare Inc. also has restrictions in insurer contracts in certain markets.

 No bueno.

Today, the Surgeon General spotlighted government efforts to alleviate the opioid crisis.

The federal government has been working with key stakeholders to address this problem and is seeing real progress. This week, HHS disbursed more than $1 billion in opioid-specific funding for states, which includes State Opioid Response grant programs administered by SAMHSA to support a comprehensive array of prevention, treatment, and recovery services. Additional funding from the Health Resources and Services Administration (HRSA) went to community health centers to increase access to substance abuse disorder and mental health services, to increase  the number of professionals and paraprofessionals who are trained to deliver integrated behavioral health and primary care services as part of health care teams in HRSA-supported health centers as well as to rural grantees to increase services and develop plans to implement evidence-based opioid use disorder prevention, treatment and recovery interventions.  There are signs that efforts to stem the opioid crisis are having success, with the use of medication-assisted treatment growing significantly and the number of Americans initiating heroin use dropping significantly from 2016 to 2017.

Bueno.

Earlier this week, the Centers for Medicare and Medicaid Services announced “a proposed rule to relieve burden on healthcare providers by removing unnecessary, obsolete or excessively burdensome Medicare compliance requirements for healthcare facilities. Collectively, these updates would save healthcare providers an estimated $1.12 billion annually. Taking into account policies across rules finalized in 2017 and 2018 as well as this and other proposed rules, savings are estimated at $5.2 billion.”  The FEHBlog is a big fan of deregulation and would be pleased to see OPM catch the deregulation bug.

Congress is on course to wrap up its work on Capitol Hill before the end of September.

Fortune reports that yesterday the Senate by a 99-1 vote has joined the House in a passing a bill (H.R. 6, as amended) responding to the opioid crisis. Congressional leaders expect to release a consolidated bill on Friday which will be enacted early next week. On a related note, Opioid Watch tells us about a recent government report finding that

The number of new heroin users fell by more than half in 2017, according to the latest national drug survey, which was unveiled Friday. “One of the most important findings,” said SAMHSA chief Elinore McCance-Katz in announcing the results in a webcast, “is the very steep decline in new users of heroin from 2016.” New initiates to that drug dropped from 170,000 to 81,000.

Progress finally.

Per Federal News Radio, the Senate today approved a minibus appropriations conference report bill for defense, health, and education functions (H.R. 6157), by a 93-7 vote. The bill also includes a continuing mop-up appropriation measure to keep the government fully funded at least until December 7, 2018. Meanwhile the House and Senate conferees continue to work on the treasury and general government minibus which includes OPM and FEHB appropriations.

In other Capitol Hill news:

• Fierce Healthcare reports that the Senate passed a bill (S. 2554) yesterday by a 98-2 vote that “would stop contracts between pharmacy benefit managers and pharmacies from barring pharmacists from informing patients when they might pay less for a prescription out of their own pocket than if they used their insurance.”
• The Hill reports that a bipartisan group of powerful Senators has released a discussion draft of a bill to protect consumers against surprise bills in emergency care situations, e.g, the hospital is in-network but the contracted emergency care physicians group is out-of-network.