Sunday, October 22, 2017

Weekend update

Both Houses of Congress are in session on Capitol Hill this coming week. The Senate Homeland Security and Governmental Affairs Committee will hold a business meeting on Wednesday October 25 to consider the President's nominations of Dr. Jeff T.H. Pon and Michael Rigas to be OPM Director and OPM Deputy Director respectively. Their nomination hearing were held last week. The rapid follow up is not surprising to the FEHBlog.

A Wall Street Journal columnist Holman W. Jenkins Jr. shredded to pieces a CBS 60 minutes / Washington Post investigation which alleged that Congress at the instigation of wholesale drug distributors had accelerated the opioid crisis by repealing authority held by the Drug Enforcement Agency in 2016.  The FEHBlog had noticed the Post article but he wasn't buying what the Post was selling for the reasons that Mr. Jenkins explicated. Here are a few key points:

  • [A]s the Centers for Disease Control and Prevention has pointed out, prescription opioid deaths remain roughly proportional to prescriptions written. The number of prescriptions, which tripled between 1999 and 2010, has been falling ever since. Today’s surging opioid death rate is due to black-market heroin and fentanyl.
  • A federal survey finds misuse of prescription opioids peaked in 2012 and has returned to 2002 levels. 
  • What we have here is a typical story of bureaucratic angst, promoted by the Post’s lead source, Joseph Rannazzisi, a former DEA official who now works for trial lawyers suing the drug industry.
Rest assured that the FEHBlog strives to avoid sensationalism. 

In other news,
  • Mobihealth News reports that ?As telehealth becomes more prevalent among US healthcare institutions, states are rolling out or modifying their laws to better define regulatory frameworks specifically affecting remote delivery of care. In fact, every state but Connecticut and Massachusetts has made substantive legal changes to how telehealth is delivered in the past year * * *.
  • EHR Health Intelligence reports that "The ability for quality measures to paint an accurate picture of the patient care experience depends on the availability of reliable data, yet the latter remains a persistent challenge for providers participating in value-based care models. Not surprisingly, a lack of health IT interoperability is a major source of frustration." Amen to that. Let's not forget that Congress and the Obama Administration distributed $32 billion to healthcare providers in order to create for a U.S. electronic health system that could have been but is not close to fully interactive. 
  • Reuters reports that "The prices of injectable cancer drugs - even older medicines around since the 1990s - are increasing at a rate far higher than inflation, researchers report in the Journal of Clinical Oncology. The study, led by Dr. Daniel Goldstein of Emory University in Atlanta, looked at 24 injectable cancer drugs approved since 1996 and found the average increase was 25 percent over eight years. After inflation, the average increase was 18 percent." In this regard the FEHBlog notes that the Wall Street Journal last Saturday featured an interesting interview with the Gilead Sciences CEO, John Milligan. 









Friday, October 20, 2017

TGIF

The FEHBlog is poised for another trip out of town so this will be quick.

Dr. Jeff T.H. Pon's confirmation hearing for the OPM Director position went smoothly on Wednesday. The Federal Times report is here. The Homeland Security and Governmental Affairs Committee's chair Sen. Ron Johnson (R Wisc.) warned that he would put a hold on Dr. Pon's nomination (as he did on Beth Cobert's 2015 nomination) if OPM fails to fully cooperate with his request for records explaining OPM's 2013 decision to extend an FEHBP government contribution to members of Congress and their staffs to use in the DC small business marketplace or SHOP.  Dr. Pon advised that OPM is working on the request. Sen. Tom Carper (D. Del.) suggested that he and Sen. Johnson work out a bipartisan compromise to fund an employer contribution for staff healthcare. That makes sense to me. That is what Congress should have done in 2013.

Yesterday, the Senate passed by a 51-49 vote an FY 2018 budget resolution that the Senate expects the House to accept.  The House had passed its own budget resolution that included a reconciliation instruction requiring the House Government Oversight and Governmental Reform Committee to cut $32 billion in spending. The resolution suggested that the Committee look at reforming federal employee pensions and some concern was expressed that the Committee would change the FEHBP government contribution formula. However, as Federal News Radio reports, the Senate budget resolution does not include the reconciliation instruction that has been causing general distress.

The Health Affairs Blog reports on effort in the FEHBlog's home state of Maryland to promote health care transparency. Good luck with that.

Wednesday, October 18, 2017

Midweek update

Today, OPM issued its annual list of significant changes to the FEHBP and FEDVIP. Here are links to the OPM cover letter and the list of changes. Again, no new carriers have joined the FEHBP. The most important point for enrollees is the following:
Employees in terminating plans (Table 1 [of the list]) or service area reductions with terminating enrollment codes (Table 2) must enroll in a new health plan during Open Season. If they do not enroll in a new plan, they will be enrolled in the Standard Option of the GEHA Benefit Plan (the lowest-cost nationwide plan option for 2018 as determined by OPM). 
New Coverage:  Coverage under an enrollee’s new health plan will be effective the first day of the pay period beginning on or after January 1, 2018; for most employees this will be Sunday, January7,2018.Enrollees will remain covered and receive the 2017 benefits of the old plan until coverage under the new plan becomes effective.
In other big news, the large Blue Cross licensee, Anthem, announced "it is establishing a new pharmacy benefits manager to be named IngenioRx. IngenioRx will begin offering a full suite of PBM solutions starting in 2020, which coincides with the conclusion of the company’s current PBM contract [with Express Scripts]. Anthem's press release further explains that
IngenioRx will serve customers of Anthem affiliated health plans, as well as non-Anthem customers, with a seamless, integrated experience by taking Anthem’s new model to the national marketplace. The IngenioRx pharmacy leadership team combined has more than 100 years of experience in the PBM industry, which will be invaluable in helping to ensure a seamless transition for members. 
Anthem has signed a five-year agreement with CVS Health, for services beginning Jan. 1, 2020. IngenioRx will combine its member and provider engagement initiatives and market leading pricing with CVS’ expertise in point-of-sale engagement, such as member messaging and Minute Clinic. CVS will also provide prescription fulfillment and claims processing services.
Finally, Health IT Analytics reports that  "The distributed ledger methodology known as blockchain is piquing interest in the healthcare industry as organizations search for more secure and trusted strategies for managing big data."  A recent Harvard Business Review article explains:
The technology at the heart of bitcoin and other virtual currencies, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.  * * *  
True blockchain-led transformation of business and government, we believe, is still many years away. That’s because blockchain is not a “disruptive” technology, which can attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly. Blockchain is a foundational technology: It has the potential to create new foundations for our economic and social systems. But while the impact will be enormous, it will take decades for blockchain to seep into our economic and social infrastructure. The process of adoption will be gradual and steady, not sudden, as waves of technological and institutional change gain momentum.
Intriguing.





Tuesday, October 17, 2017

Tuesday Tibits

The FEHBlog looks forward to watching (in the comfort of his office) the confirmation hearing for the President's nominees for OPM Director, Jeff T.H. Pon, and OPM Deputy Director, Michael Rigas.  The hearing begins at 10 am ET.  Roll Call reports that the Senate Homeland Security and Governmental Affairs Committee Chair Sen. Ron Johnson (R Wisc.) plans to ask Messrs. Pon and Rigas about their respective positions on OPM's 2013 decision to provide an FEHBP government contribution to members of Congress and their staff members who were forced out of the FEHBP into the DC small business health insurance exchange or SHOP.

Speaking of nominations, Employee Benefits News reports that the President has nominated Preston Rutledge to be assistant Secretary of Labor for the Employee Benefits Security Administration which administers ERISA, the federal law governing private sector employee benefit plans. Mr. Rutledge Rutledge "currently serves as senior tax and benefits counsel for Senate Finance Committee Chairman Orrin Hatch (R-Utah)." This position also serves an important role in ACA administration. It requires Senate confirmation.

Following up on Sunday's post, the Senate Health Education Labor and Pensions ("HELP") Committee chair Sen. Lamar Alexander (R. Tenn.) had reached a bipartisan agreement with the Committee's ranking minority member Sen. Patty Murphy (D. Wash.) to extend the currently discontinued ACA cost reduction subsidies paid to ACA marketplace insurers for two years and allow States more flexibility in modifying ACA rules. The Hill reports that other Republicans see this initiative as a useful starting point for modifying the ACA. The FEHBlog will keep paying attention to these developments.

The Regulatory Affairs Professional Society reports that many questions were raised but few answers were provided at the Senate HELP Committee hearing today on prescription drug pricing. The FEHBlog found it interesting that the Committee chair Sen. Lamar Alexander asked whether ending the practice of drug rebates would simplify and lower pricing. The representatives of the Pharmaceutical Care Management Association, the prescription benefit manager trade association, and PhARMA, the drug manufacturers trade association, supported the Chair's approach.

Sunday, October 15, 2017

Weekend Update

The FEHBlog continues to enjoy life in Estes Park Colorado which is near the Rocky Mountain National Park. Back to DC tomorrow night.

The House of Representatives is working in the home districts this week while the Senate is in session on Capitol Hill.  On Wednesday at 10 am the Senate Homeland Security and Governmental Affairs Committee will hold a confirmation hearing on the President's nominees for OPM Director, Jeff T.H. Pon, and OPM deputy director, Michael Rigas.  The Senate Health, Education, Labor, and Pensions Committee will hold hearings on prescription drug costs and improving health outcomes on Tuesday and Thursday respectively.  Here's a link to the Week in Congress's report on last week's activities on Capitol Hill.

Following up on last Friday's post, here's a link to Avrik Roy's Forbes article that knowledgeably breaks down the President's recent ACA actions. He concludes
What the White House has done, in effect, is to send the ball back into Congress’ court, where Congress has the authority—and the interest—in appropriating funding for cost-sharing subsidies. They should do so, if they can pair that funding with other reforms that would provide relief to those facing unaffordable Obamacare premiums.
Is this Congress capable of doing that? The jury is out.
The Motley Fool offers a useful article projecting 2018 Medicare Part B premiums that builds on the TGIF post.  Here's the nub:
The Trustees of the Medicare program project that the for 2018 will remain [$134 monthly for Medicare Part B]. That's good news for those who have been paying the base amount. 
However, there are millions of Americans who are paying less than $134 currently for their Part B premiums, and they can expect 2018 premiums to be higher than what they're paying now. The reason for the disparity is the Medicare law's hold harmless provision * * *.

For 2017, Social Security recipients got a small COLA of 0.3%. That allowed Medicare premiums for those protected by the hold harmless rule to rise slightly, but not to the full base amount. The average premium under the hold harmless provision this year was $109 per month. 
Social Security anticipates a much larger cost-of-living increase of between 1.5% and 2% to take effect in 2018. If that turns out to be the case [and it did turn out to be 2%], then many Medicare participants will have to pay the full $134 per month, resulting in a substantial increase.
The article explains that Medicare premium surcharges on higher income folks also will increase. CSRS retirees and new Medicare enrollees are not eligible for the hold harmless provision's protection.

Last Thursday, OPM released the results of the latest federal employee viewpoint survey.  The results were favorable to the government managers. Here's a link to the Federal Time's graphic view of the survey results.

Friday, October 13, 2017

TGIF

The FEHBlog is in lovely Estes Park Colorado with Mrs. FEHBlog for the wedding of our friends' daughter. It's a great place for the FEHBlog to lick his wounds following the Nationals loss to the Cubs last night.

The Social Security Administration announced today that Social Security beneficiaries will receive a 2% cost of living adjustment (COLA) in 2018. This means that all Medicare beneficiaries will be subject to the Part B premium and other cost sharing changes for 2018. Recently, existing FERS annuitants were held harmless against the Medciare increases because there was no Social Security COLA. CSRS annuitants were not protected because their Part B premiums are deducted from the government annuity checks, not Social Security checks. (CSRS annuitants who retired after 1983 are eligible for Medicare Part A but don't receive Social Security benefits.)  Congress made some changes to the hold harmless law last year to soften the blow, but that hold harmless law doesn't kick in for 2018 because a COLA will be paid. Medicare Part B premiums and other Medicare cost sharing will be announced in the next month or so.

The Trump Administration has taken two significant ACA-related actions over the past couple days, but the actions are directed at the individal and small group markets, not the large group market which includes the FEHBP.  Here's a link to yesterday's Executive Order (and a summary thereof) and here's a link to the HHS press release on termination of cost sharing reduction payments to insurers in the individual and small group markets. The Congressional Budget Office issued a report discussing the impact of this action last August.

Today, the IRS announced that beginning with the next tax season (2018 for 2017 returns) it will beging rejecting individual income tax returns that do not state whether or not the taxpayer complied with the ACA's individual mandate.

Wednesday, October 11, 2017

Relevant Federal Personnel Actions

Last week, the Senate confirmed the President's nomination of Eric Hargan to be Deputy Secretary of the Department of Health and Human Services per the Hill. The Hill explains that
Hargan, previously a Chicago-based lawyer, served at HHS in the Bush administration. He held various roles within the department, such as deputy general counsel, principal associate deputy secretary and acting deputy secretary. He was part of President Trump’s HHS transition team.
Yesterday, the President named Mr. Hargan as acting HHS Secretary, replacing Donald Wright in that role.

Also yesterday, the President made the following nomination to fill the vacant slot of OPM Inspector General:
John Edward Dupuy of Virginia to be the Inspector General for the Office of Personnel Management. Mr. Dupuy was appointed as deputy inspector general for investigations at the U.S. Department of Energy (DOE) in November 2016, having previously served as the assistant inspector general for investigations at DOE beginning May 2015. Mr. Dupuy has been part of the Office of Inspector General (OIG) community since 1991, and has served in a variety of leadership positions throughout his career. Before DOE, Mr. Dupuy worked in the OIG for both the Department of the Interior and Department of Housing and Urban Development. At those agencies, he held several positions, including special agent and assistant inspector general for investigations. Mr. Dupuy graduated from the University of California Los Angeles with a B.A. in 1987. He served in the United States Army on active duty as a military intelligence officer from 1987 to 1990. Mr. Dupuy later attended Golden Gate University School of Law and the American University Washington College of Law. He is a member of the Virginia and Washington, D.C. bars and has been an adjunct professor at the American University School of Law.
The nomination requires Senate confirmation.

Medicare Update

Thousands of FEHBP members are Medicare eligible. OPM offers a useful website that discusses the relations between the two programs.  This post builds on that information.

The open season for enrollment in Medicare Advantage and Medicare prescription drug plans ("PDP") begins on October 15. Today, the Centers for Medicare and Medicaid Services released the Star ratings for those plans "which comes on the heels of the recent release of [2019 Medicare Advantage and PDP] benefit and premium information."

The Chicago Tribune today projects Medicare Part B premiums for 2018. The article advises that the government will announce Part B premiums and other traditional Medicare cost sharing amounts for 2018 in the next four to six weeks.

U.S. News and World Report ranks the best States in the U.S. for aging. The FEHBlog's state, Maryland, is 28.

Tuesday, October 10, 2017

Tuesday Tidbits

Fedsmith has posted a perspective on 2018 federal health insurance costs. The FEHBlog respectfully disagrees with the Fedsmith article's perspective for the following reasons:

  • Fedsmith's article unfavorably compares FEHBP premium increases to other employer sponsored health plans. However, the article does not consider the FEHBP's unique demographics. The FEHBP's enrollment breaks down to 50% employees and 50% annuitants and the average age of federal employee -- late forties -- is substantially older than the average age of most employer sponsored plans. Demographics have a significant impact on benefit costs.
  • Fedsmith's article states that "KFF noted that premium increases for employer-provided health insurance in private industry were similar to the rise in workers’ wages (2.3%) over the same period.  For Federal employees and retirees, the experience is different as they cannot expect as large a percentage increase in their income as the percentage increase in FEHB premiums."  The percentage comparison drives the FEHBlog batty. Percentage comparisons are only valid when the you are comparing apples to apples.  The employee share of health insurance premiums in total are smaller amounts than salaries or annuities. The percentage comparison is invalid in this situation. 
  • It should not be forgotten that carriers hold the risk on providing this coverage. 
In other news
  • The St Louis Post Dispatch offers an interesting report on the prescription benefit manager Express Scripts which has acquired EviCore Healthcare for $3.6 billion. According to EviCore's website, the company "brings together the broadest range of integrated and innovative intelligent care management solutions delivering intelligent care across the entire healthcare continuum, with a focus on quality healthcare that enables better outcomes for our patients, providers, and plans.​" What's not to like?

  • The federal inspectors general have unveiled a joint website called oversight.gov. Check it out. 



Sunday, October 08, 2017

Weekend update

The House of Representatives will be in session for a shortened week while the Senate will be on a district work break for this week which begins with a federal holiday, Columbus Day. Here's a link to the Week in Congress's report on last week's actions on Capitol Hill.

In other news

  • OPM released advice to federal employees on the opioid abuse crisis.  
  • The Society for Human Resource Management discussed the latest IRS guidance on large employer and insurer ACA reporting for calendar year 2017 required to be issued in early 2018.
  • It's worth noting that United Healthcare prevailed last week in a False Claims Act lawsuit in which the federal government alleged that UHC and other insurers had misrepresented Medicare Advantage risk adjustment scores. The FEHBlog noted this lawsuit last year in a post noting that the FEHBlog was glad that the FEHBP did not have complicating factors like risk adjustment. Indeed the House Ways and Means Committee is sponsored a Medicare Red Tape Relief Project.  But all health care payers and providers continue to have their regulatory crosses to bear. 
Last week, the FEHBlog outlined the experience rating financing mechanism used by FEHBP government wide, employee organization and electing HMOs.  The default financing mechanism for FEHB HMOs is known as community rating. While the FEHBA Sec. 8902(i) mentions experience rating, the Act does not discuss community rating at all. Instead, that provision generally states that 
Rates charged under [FEHB] health benefits plans *** shall reasonably and equitably reflect the cost of the benefits provided.
OPM has developed the community rating policy by regulation and contract.  Essentially, community rated FEHB HMOs must price their plans to achieve an 85% medical loss ratio for their FEHBP contract in a contract year (including a three month claim run out period). In contrast, the ACA requires insurers in the large group market to achieve an 85% medical loss ratio market wide over a three year period. Community rated HMOs that fail to reach the 85% threshold must pay the surplus to a penalty fund that is distributed pro-rata among the FEHB community rated plans. OPM indicated in the latest semi-annual regulatory agenda that it plans to propose a new community rating rule in the near future.

Friday, October 06, 2017

TGIF

A nice way to finish the week - a favorable article about our beloved FEHBP in the Washington Post.

The FEHBlog will be attending the Washington Nationals playoff games against the Cubs this evening and late tomorrow afternoon. Hope springs eternal.

Even more 2018 FEHBP rate follow up

This is the time of the year when the FEHBLog receives comments. Because the FEHBlog is a lawyer who represents FEHB plans, he won't comment any particular plans rates. He is willing to explain rate development.

All of the fee for service plans develop their rates based on experience rating. The carrier negotiates the rate with OPM. OPM adds a 4% load to the negotiated rate in accordance with the FEHB Act. The net to carrier premium is paid into a U.S. Treasury account. The carrier can draw down on that account to pay benefits, administrative expenses that the government is willing to reimburse up to an annual ceiling, and a service charge awarded by OPM under their plan performance assessment system.

The financing mechanism causes plans to build reserves when experience, meaning health care costs, is good and lower reserves when experience is bad. OPM requires a minimum level of reserves. Excess reserves can be use to moderate premium changes.

Because the reserves are held in the U.S. Treasury, the government enjoys the investment return on the reserves and if an experience rated carrier drops out of the FEHBP, its surplus plan reserves are distributed pro-rata among the remaining plans in the FEHBP.

HMO participating in the FEHBP can elect to use experience rating or community rating, which requires a separate blog post.

Wednesday, October 04, 2017

2018 FEHBP rates follow up

Here are links to the OPM 2018 rates announcement and the Federal Times, Govexec, and Federal News Radio articles about that announcement.

A reader asked the FEHBlog why the employee / annuitant contribution for self plus one can be higher than the employee / annuitant contribution for self and family coverage. The reader pointed out a particular plan.

The FEHBlog looked at the 2018 rate chart for that plan and as he expected the total premium for self and family coverage is higher than the total premium for self plus one coverage. OPM does not permit the total premium for self plus one coverage to exceed the total premium for self and family.

It's the government contribution that can skew the employee / annuitant contribution. The maximum government contribution toward self plus family coverage ($521 bi-weekly) is $30 higher than the maximum government contribution for self plus one coverage ($491 bi-weekly). If the case of the plan in question there is less than a $30 difference between the total premiums for self plus one and self and family coverage. Hence the flip flop.

In the FEHBlog's view, Congress should not have added a self plus one option to the FEHBP because the average family size (2.3 to 2.4 members) is small. That's why there's generally a small difference in total premiums for the two levels of coverage.  But no one asked the FEHBlog.

2018 FEHBP rates

Here you go.