Thursday, March 10, 2011

Oh no, not again reports that Rep. Stephen Lynch has reintroduced, as H.R. 979, his bill to more strictly regulate prescription benefit managers operating in the FEHB Program.  From the FEHBlog's perspective, OPM defused the bill in the last Congress by requiring FEHB fee for service plan carriers to contract with the prescription benefit managers ("PBMs") using transparent pricing.  As Rep. Lynch was unable to move this bill beyond the Federal Workforce subcommittee which he chaired in the last Congress, it's unlikely that he will have better luck in this Congress.

Speaking of PBM's, the Chicago Tribune reports that Walgreen's Pharmacy has agreed to sell its PBM retail unit to Catalyst Health Solutions. Walgreen's will be retaining the mail order division of its PBM.  Dow Jones adds
While Walgreen will retain its specialty and mail-order pharmacy facilities, Catalyst will manage those benefits for clients, Blair said. The deal also includes an agreement for Catalyst to provide pharmacy-benefit services for Walgreen's 244,000 active employees plus retirees and dependents, and an agreement to administer the chain's Prescription Savings Club.
Catalyst is growing quickly through acquisitions, having substantially boosted membership in September when it purchased Independence Blue Cross's FutureScripts pharmacy benefits-management businesses for $225 million.
The Walgreen deal will swell Catalyst's membership to 18 million members from 7 million; and annual prescription volume will grow to more than 165 million from 80 million. Those prescriptions account for some 4% of the overall market, according to J.P. Morgan analyst Michael Minchak.
In the sometimes obscure world of drug pricing, Catalyst emphasizes a straightforward business model based on fixed fees, transparent, pass-through drug pricing and localized service.
While Catalyst has won some business from its larger rivals, and retained one of its largest customers in a contract renewal last year, not all of its growth has gone smoothly. For example, it remains unclear whether one of Catalyst's largest clients, the state of Maryland, will renew a multiyear contract set to expire this year; analysts had expected the contract to be decided months ago, and Catalyst CEO [David] Blair last month said the timing was uncertain.
Business Insurance reports about the release of the 16th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care. The survey discussed the impact of Consumer Driven Health Plans or CDHPs which are high deductible plans coupled with health savings accounts or health reimbursement accounts.
Although 53% of employers already had CDHPs in place in 2011, roughly the same percentage as last year, 27% plan to begin offering CDHPs in 2012 according to the survey. In 2002 [before Congress and the IRS gave the green light to CDHPs], just 2% of all employers offered CDHPs.
Employers also are trying to improve CDHP takeup rates by offering employees significant reductions in premium contributions. In 2011, 56% of employers set their employees' CDHP premium contributions at least 20% lower than contributions for their traditional plan, and 26% of employers more than halved employee contributions compared with other plan types.
Employers that added 10% or more employees to their CDHP enrollment in 2010 vs. 2009 held their health care costs nearly flat, while companies that drove greater CDHP adoption rates reduced their costs by nearly $1,000 per employee, the Towers Watson/NBGH research found.
CDHPs exist in the FEHB Program but the FEHB Act's contribution formula does not create any incentive for employees to join those plans.  In Congressional testimony yesterday, OPM Director John Berry explained
For most employees, the Government contribution [toward FEHB coverage] equals the lesser of: a) 72 percent of the overall weighted average; or b) 75 percent of the total premium for the plan an employee selects. The amount the employee pays is the balance. In applying this formula to all plan premiums, the result is a 70% average employer contribution, 30% employee contribution.
The Wall Street Journal featured a story yesterday on the problems that an Affordable Care Act provision is creating for pharmacies, doctors, and consumers. That's the provision which took effect this year limiting health plan and flexible spending account reimbursement of over the counter drugs prescribed by a doctor. In 2003, the Internal Revenue Service interpreted the law to permit health plans and flexible spending accounts to reimburse over the counter drugs. Rather than simply reversing that administrative decision, Congress created this confounding half measure.

Finally, Politico reports that the Justice Department has asked the U.S. Court of Appeals for the 11th Circuit to accelerate its review of Judge Vinson's decision holding the Affordable Care Act unconstitutional. If the Court grants the motion, then according to the article, the Court could hear oral argument on the appeal in the early summer of this year. All signs point to a Supreme Court decision before next year's Presidential election.

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