Tuesday, September 20, 2011

Tuesday's Tidbits

The President released his deficit reduction proposals to the Super Committee yesterday. There was one FEHBP related proposal (p. 43) -- one that was first raised in the President's FY 2012 budget
Streamline Federal Employee Health Benefit (FEHB) pharmacy benefit contracting. The Administration is committed to the efficient administration of the FEHB program in order to get the best deal for Federal employees and their families, as well as for taxpayers. The FEHB program pays $40 billion per year for health coverage, and drugs represent about 30 percent of claims expenditures. Under current law, health plans participating in the FEHB program contract with pharmacy benefits managers who negotiate prices with drug manufacturers and pharmacies on behalf of their enrollees. This fragmented purchasing strategy does not take full advantage of the combined purchasing power of the nearly eight million enrollees in the FEHB program. Under the Administration proposal, the Office of Personnel Management would contract directly for pharmacy benefit management services on behalf of all FEHB enrollees and their dependents. This will allow the FEHB program to more efficiently leverage its purchasing power to obtain a better deal for enrollees and taxpayers. This proposal is projected to save $1.6 billion over 10 years.
In the FEHBlog's opinion, the Federal Times misinterprets this proposal to mean that OPM plans to directly contract with drug manufacturers and pharmacies. As the FEHBlog reads the proposal, OPM would contract with one prescription benefits manager similar to the practice in TRICARE which uses Express Scripts. A 2009 GAO report compared the approaches that the FEHB, TRICARE, and Medicare Part D take in contracting for prescription drugs.

The FEHBlog notes that while prescription drug costs represent 30% of the FEHBP's benefit spend, that's a result of the fact that there is a large cadre of FEHB annuitants with Medicare primary coverage. Medicare pays the hospital bills for those enrollees while the FEHBP pays their drug costs. If the FEHB was responsible for those hospital expenses, the FEHBP's drug spend percentage would be more in line with other employer sponsored programs.

Speaking of Express Scripts, Modern Healthcare reports on today's House Judiciary subcommittee hearing on that company's deal to acquire Medco Health Solutions.

Getting back to the President's recommendations, the Administration did offer its approach to helping out the Postal Service. That approach did not adopt the Postmaster General's proposal to withdraw for the FEHBP which is good news for the FEHBP. The Federal Times discusses the Administration's approach here.

Kaiser Health News reports that four major health insurers -- Aetna, Humana, Kaiser Permanente, and United Healthcare -- have agreed to provide their claims data to the brand new Health Care Cost Institute  
The Health Care Cost Institute (HCCI) is a new non-profit research institute and a unique and unprecedented health research partnership. Its mission is to promote independent research and analysis on the causes of rising US health spending, to provide policy makers, consumers, and researchers with better, more transparent information on what is driving health care costs, to help ensure that, over time, the nation is able to get greater value from its health spending.
The Kaiser Health News article adds that

To avoid violating patient privacy laws, anti-trust rules and confidentiality provisions between insurers and providers, the institute will not release data so detailed that anyone could identify specific hospitals, doctors’ groups and, of course, patients. And because it’s insurance data, it doesn’t necessary capture what’s really going on medically for patients to the degree that electronic medical records do, some audience members said.
Still, many of the researchers found the allure of the new data, well, dreamy. “The usefulness of this data is only going to be limited by the imagination,” said Harvey Fineberg, president of the Institute of Medicine. 

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