Wednesday, January 17, 2018

Midweek update

The House bill that would continue funding the federal government from January 19 through February 16, 2018,  fully fund the Children's Health Insurance Program for six years, and delay the medical device tax for two more years (through 2019), the high-cost employer-sponsored plan excise tax or Cadillac tax also for two more years (through 2021), and the health insurer tax for one more year (through this year). The FEHBlog being a glass half full kind of guy expects this bill to pass.

In a bit of good news, USA Today reports that "Walmart is teaming with a Southern Pines, N.C.. company called DisposeRx, on a solution that consists of a small packet with an FDA-safe chemical blend that, when emptied into a pill bottle with warm water, lets patients dispose of any leftover medications in the trash. The medications — they can be powder, pills, tablets, capsules or liquids — are converted into a non-divertible and biodegradable gel."  Walmart is giving away DisposeRx for free.  More pharmacy chains should follow their lead as a lot of people have excess Oxycontin in their medicine cabinets.

The FEHBlog noted in last year or two the problems with the Federal Employees Long Term Care Insurance Program.  The Wall Street Journal explains today why the entire long term care insurance market in the U.S. is in "financial turmoil."
Almost every insurer in the business badly underestimated how many claims would be filed and how long people would draw payments before dying. People are living and keeping their policies much longer than expected. 
After the financial crisis hit, nine years of ultralow interest rates also left insurers with far lower investment returns than they needed to pay those claims. 
Long-term-care insurers barreled into the business even though their actuaries didn’t have a long record of data to draw on when setting prices. Looking back now, some executives say marketing policies on a “level premium” basis also left insurers with a disastrously slim margin of error.
No bueno.

Monday, January 15, 2018


The FEHBlog finished reading Sam Quinones' 2015 book Dreamland: The True Tale of America's Opiate Epidemic.  The FEHBlog recommends the prize-winning book to those interested in U.S. healthcare.

Reading the book confirmed for me that while the barn door has been closed on the opioid prescription  crisis (which ran from the mid-1990s when the Food and Drug Administration approved Purdue Phama's Oxycontin for marketing until a few years ago when doctors, pharmacists, and state regulators restored sanity) and the large-scale heroin crisis (which depended on the opioid prescription crisis to create new customers), there still is a lot to be done to help people who were harmed during that twenty year period.  The author encourages health plan coverage for multi-disciplinary pain clinics for people suffering from chronic pain (other than cancer patients and mortally ill patients with chronic pain for whom opioid based drugs remain appropriate).

Sunday, January 14, 2018

Weekend update

Happy King Day weekend!  Congress continues its work on Capitol Hill this week following the holiday. Here's a link to the Week in Congress's report on last week's Congressional activities.

The Weekend Wall Street Journal which is the FEHBlog's favorite newspaper published an essay offering "A Cure for Our Fixation on Metrics." The essay was adapted from Prof. Jerry Z. Muller's forthcoming book "The Tyranny of Metrics."  Any reader of the FEHBlog knows that everyone and his brother/sister is trying to measure the quality of healthcare with metrics. Indeed, 65% of an FEHB carrier's plan performance assessment is based on metrics under OPM's recent rule. So the Professor's book is a breath of fresh air to the FEHBlog.

These paragraphs from the essay hit home with the FEHBlog.
The more the object to be measured resembles inanimate matter, the more likely it is to be measurable: that is why measurement is indispensable in the natural sciences and in engineering. When the objects to be measured are influenced by the process of measurement, measurement becomes less reliable. Measurement becomes much less reliable the more its object is human activity, since the objects—people—are self-conscious and are capable of reacting to the process of being measured. The more rewards and punishments are involved, the more people are likely to react in a way that skews the measurement’s validity. * * *
Just because performance measures often have some negative outcomes doesn’t mean that they should be abandoned. They may still be worth using, despite their anticipatable problems. It’s a matter of trade-offs, and that too is a matter of judgment.
With measurement as with everything else, recognizing limits is often the beginning of wisdom. Not all problems are soluble, and even fewer are soluble by metrics. It’s not true, as too many people now believe, that everything can be improved by measurement, or that everything that can be measured can be improved.
If only the healthcare policymakers would take this essay to heart.

Friday, January 12, 2018

TGIF reports that while Congress is making progress on an FY 2018 omnibus appropriations bill, it's likely that Congress will extend the current continuing resolution for a short period of time before it expires next Friday January 19. Reuters tells us that House Ways and Means Committee Chairman Kevin Brady (R TX) hinted that the omnibus bill may repeal the Affordable Care Act's high cost plan excise / Cadillac tax. Let's hope that Congress also provides relief in that bill from the recently restored ACA medical device and health insurer taxes. 

According to Health Payer Intelligence, NCQA has published a list of the top ten performing health plans in 2017 based on the various NCQA metrics.

The FEHBlog has been hearing anecdotally that this year's flu vaccine is less effective than expected. The New York Time's Upshot column explains why you still will benefit from the vaccine.
In 2010, researchers published a meta-analysis of all available flu shot studies. They showed that when a vaccine is considered effective, 1.2 percent of vaccinated people had the flu, while 3.9 percent of unvaccinated people had the flu. That’s an absolute risk reduction of 2.7 percentage points. This means that the number of people who needed to be treated for one person to see the benefit — a concept known as N.N.T. — was 37. Given the millions who are vulnerable to flu and the thousands of deaths each year, this is a big payoff in public health.
In studies in which the flu shot was considered ineffective, 1.1 percent of vaccinated people had the flu compared with  2.4 percent of  unvaccinated people. The absolute risk reduction was 1.3 percentage points, and the N.N.T. was 77.
Let’s say that this year’s flu vaccine is even worse than we think. Maybe the absolute risk reduction will be as low as 1 percentage point, making the N.N.T. 100. That’s still not that bad. Even at an N.N.T. of 100, for every 100 people who get a flu shot, one fewer will get the flu. That’s a pretty low N.N.T. compared with many other treatments that health experts recommend every day. * * *
The negatives of a flu shot are almost nonexistent, and significant side effects are very rare.
NBC News reports that "Cough medications that contain opioids like codeine should never be given by kids, and the medicines will now need to be labeled to make that clear, the Food and Drug Administration said Thursday. They’ll also carry bigger warnings about their dangers to adults, the FDA said."  This reminds me of a passage from Sam Quinone's Dreamland book where he explained that people addicted to opioids use FDA guidance like a roadmap. When the FDA warned on the Oxycodin label that the pill should be crushed, the addicted people who stole the medicine knew to crush it. Of course, the FEHBlog is not opposed to the FDA guidance which should have been issued years ago. The FEHBlog simply wants to point out how complicated this problem is.

Becker's Hospital Review informs us that healthcare now has surpassed manufacturing and retail as the largest employer of any sector in the U.S. economy. "There were 7 million more workers in manufacturing than in healthcare in 2000. In 2007, at the start of the Great Recession, there were 2.4 million more workers in retail than in healthcare. In 2017, the number of workers in healthcare surpassed workers in both manufacturing and retail."  This does not point to a high degree of efficiency in healthcare.

Tuesday, January 09, 2018

Tuesday Tidbits

Politico reports that Alex Azar's confirmation hearing before the Senate Finance Committee today went well today for the HHS Secretary nominee.

Here's a link to journalist/author Sam Quinones' testimony before the Senate Health Education Labor and Pensions Committee today. While I don't necessarily agree with all of his points, the statement provides a valuable perspective on our opioid crisis. The FEHBlog is enjoying his book, Dreamland.

On the cybersecurity front --

  • Health IT Security reports on two cyber problems that can afflict CPUs, like Intel chips, which are known as Meltdown and Spectre. The report illustrates the importance of patching software. Here are two threats with no easy fix. Prevention is the key. 
  • Health Data Management considers a recent healthcare provider settlement of a HIPAA Privacy and Security Rules violation with the HHS Office for Civil Rights in the context of cybersecurity insurance. 
On the healthcare front --
  • The Wall Street Journal reports that drug researchers and manufacturer continue to search for an Alzheimer's Disease cure notwithstanding recent setbacks. 
  • Axios reports on a setback for the Crispr precision gene editing therapy that may be correctable.  
  • The Centers for Medicare and Medicaid Services announced today a voluntary Medicare bundled payments program known as the "Bundled Payments for Care Improvement Advanced (BPCI Advanced)."  CMS explains that "Under traditional fee-for-service payment, Medicare pays providers for each individual service they perform. Under this bundled payment model, participants can earn additional payment if all expenditures for a beneficiary’s episode of care are under a spending target that factors in quality.
  • Fingers crossed for all three initiatives.
Business Insurance (which is back by the way) reports that federal False Claims Act enforcement continues apace under the Trump Administration. 

Let's end this post with a FEHBlog observation. Back in the day, health plan coverage mandates were disfavored. Congress passed an amendment to the FEHB Act in 1997 to preempt the application of state mandates on FEHB plans. You don't hear about mandates anymore. Mandates have morphed into consumer protections, which was a good PR move but the consumer protections are just as costly as mandates. 

Sunday, January 07, 2018

Weekend update

Congress is back in town this week. Last Wednesday, the FEHBlog erroneously posted that the Senate Health Education Labor and Pensions Committee would be holding a confirmation hearing this coming Tuesday on the President's nominee for HHS Secretary Alex Azar. In fact, the Senate Finance Committee is holding that hearing on January 9 at 10 am.

The Senate HELP Committee, which held its confirmation hearing on Mr. Azar last year, is holding a hearing about the opioid crisis on January 9 at 10 am. The Committee's sole witness is author / journalist Sam Quinones who wrote a book about the crisis titled Dreamland. The FEHBlog, who had not been familiar with Mr. Quinones or his book, downloaded it from Amazon (for a quite reasonable price) and found that the book is worth reading.

Last Friday, as Healthcare Dive reports HHS released a draft Trusted Exchange Framework report required by the 21st Century Cure Act that is intended to create a roadmap to electronic health record interoperability. The draft is open to public comment for 60 days. The government should have prepared this framework before shelling out $30 billion on electronic medical record systems. Quel dommage.

NPR reported on Friday that 23% of US hospitals are receiving a 1% haircut on Medicare funding in 2018 because they fell in the last quartile of patient safety measure results. The FEHBlog realizes that most readers understandably will react to this sentence with the thought "Don't cry for me Argentina."  The FEHBlog nevertheless is not a fan of the many, many punitive aspects of the Affordable Care Act. Too many sticks, not enough carrots.

Kaiser Health News tells us about the need for doctors to control over-screening of aged adults for cancer and other diseases.
Doctors should prioritize what they can do to help patients be healthier, said Dr. Louise Walter, chief of geriatrics at the University of California-San Francisco and a geriatrician at the San Francisco VA Medical Center. For many older patients, screening for cancer is not their most pressing need. 
“Instead of spending time and effort on things that are hurtful and never going to help them, why not direct time and energy on things that will help them live longer and better?” Walter asked. 
For example, Walter might tell a patient, “‘Right now, you have really bad heart failure and we need to get that under control,’” Walter said. 
Other key issues for many older people include preventing falls, treating depression and alleviating stress in their caregivers, Walter said. Gross said he urges patients to take steps shown to improve their health, such as getting a flu shot or exercising at least 15 minutes a day. 
“These are things that can help them feel better very quickly,” Walter said. “Screenings can take years to have a benefit, if at all.”

Thursday, January 04, 2018

Thursday Tidbits

Following up on the President's executive order issued following the failure of ACA repeal efforts in Congress last year, the Labor Department today released a proposed rule under ERISA that would permit small employers and sole proprietors to band together in small business health plans that could buy coverage in the large group market.  The rule is open for public comment for sixty days beginning tomorrow. Count the FEHBlog as a small business owner in favor of this change.

The FEHBlog noted yesterday that prescription drug manufacturer continue to issue periodic price increases for their products. The Wall Street Journal puts this benefit cost issue in perspective with an article reporting that
After years of surging U.S. drug prices, the two largest drugstore companies said some pricey prescription medicines are becoming more affordable. 
CVS Health Corp. and Walgreens Boots Alliance Inc.  said Thursday that their pharmacy revenues are taking a hit from an increase in generic alternatives, particularly for some expensive specialty drugs, along with slowing price inflation for name-brand medications. 
“You’re going to see continued dampening going forward as you think about the pipeline of generics coming into the markets,” said CVS finance chief Dave Denton, who didn’t discuss specific products. 
Lower prices will dent the company’s revenue, but ultimately could lead to increased profits because generics generally have a higher margin than name-brand drugs. “The introduction of generics can really dampen the top line but affect the bottom line in a positive way,” Mr. Denton said.
The Department of Health and Human Services recently issued a report on 2016 medical loss ratio results.  The ACA requires that health insurers spend at least 80% of premium dollars (85% in the large group market) on health care and quality costs. Insurers that fall below these thresholds must refund the difference to employers in the large and small group markets and consumers in the individual market. The medical loss ratio is calculated on a market basis per state. Insurers met the thresholds with respect about 95% of consumers in the employer markets and 90% in the individual market.  It's an interesting report. The FEHBlog does think that the medical loss ratio has lead to CVS buying Aetna and not the other way around. Nevertheless, the FEHBlog is encouraged by this American Spectator piece on how the private sector can fix healthcare.

Finally Modern Healthcare reports that
Profits at the more than 4,800 U.S. community hospitals rose 3.8% in 2016, climbing to $76.1 billion, from $73.3 billion a year earlier. The trend follows years of steadily increasing profits.  
Total net revenue reached $979 billion in 2016—including nursing home results—and expenses were $903 billion, according to the 2018 edition of the American Hospital Association's Hospital Statistics report aggregating hospital financial and utilization trends, which was released Thursday. The annual report includes data on all 4,840 registered community hospitals in the U.S.—159 fewer than in 2012.
The AHA data show community hospital profits have risen 15% since 2012, when they were $53.2 billion. 
The ACA imposes no profit limits on community hospitals. The FEHBlog is a fan of profit but not of price controls. 

Wednesday, January 03, 2018

Midweek update reports that on December 22, 2017, Sen. Ron Johnson (R. Wisc.) in his role as Chairman of the Senate's Homeland Security and Government Affairs Committee issues a subpoena to OPM demanding the production documents, including email messages, concerning the development and promulgation of the OPM rule granting a FEHBP level government contribution to members of Congress and their staff who were shifted from the FEHBP to the DC SHOP marketplace. The return date on the subpoena is this coming Friday, January 5, 2018. Sen. Johnson also placed a hold on the President's nominations to the OPM Director, Deputy Director and Inspector General posts to incent OPM cooperation with this long-standing document request.  Hopefully, the subpoena will speed matters along.

In other personnel news,
  • The Hill reports that the Senate Health Education Labor and Pensions Committee will hold a confirmation hearing on the President's nominee for Health and Human Services Secretary Alex Azar next Tuesday, January 9.
  • Former OPM Director Kay Cole James has become president of the Heritage Foundation.  Ms. James was OPM Director during the President George W. Bush's first term. 
  • Prof. Timothy Jost who wrote on the ACA for the Health Affairs blog is retiring
In healthcare cost news, 
  • Reuters reports that "Drugmakers opened the new year by raising U.S. prices on dozens of medicines, but early data showed the increases generally remained within a 10 percent self-imposed limit in response to a backlash from consumers and politicians." That takes some kind of chutzpah considering the fact that the U.S inflation rate currently is 2.2%.
  • Becker's Hospital Review informs us about the status of Anthem's efforts to implement a  payment cuts to charges certain services performed on the same day as visits for separately charged visits for wellness services or other procedures. No good deed, etc. 

Monday, January 01, 2018

Happy New Year

January 1 is the day that federal annuitants switch plans if they made an Open Season change as well as the day of the college playoff bowl games. Federal employees generally make that switch this year on January 7, which is the first day of the first pay period in 2018.  OPM transmits employee premiums every bi-weekly and annuitant premiums monthly.

Congress returns in full force to Capitol Hill on January 8. This week, the House and Senate organize this week for the second session of the current two year long Congress. In the second session, the Senate party break down will be 51 Republicans, 47 Democrats and two Independents who caucus with the Democrats. The House lineup as of December 8 was 239 Republicans, 193 Democrats, and 3 vacancies.

The Hartford Courant featured an interesting article yesterday about CVS Health's CEO Larry Merlo, who started his career as a pharmacist.

Friday, December 29, 2017

Opioid crisis

In an encouraging development, the Wall Street Journal reported today that
Several [New England] states, including Massachusetts and Rhode Island, are on pace to record fewer overdose deaths in 2017, compared with the year before.
This follows years of fast-rising death tolls in the region, which has long been a hot spot for fatal overdoses. State officials say their efforts, ranging from widespread distribution of an overdose-rescue drug to expanded treatment access, are starting to bear fruit. * * *
The Centers for Disease Control and Prevention recently said nationwide opioid deaths rose nearly 28% to 42,249 in 2016. The annual number of U.S. opioid deaths has about doubled since 2010.  * * * 
The New England states aren’t alone in setting new policies to fight the opioid crisis, but they sometimes lead the pack. The National Conference of State Legislatures has noted that Massachusetts was first to pass a law putting very tight limits on opioid prescriptions last year. By August this year, NCSL counted similar laws in 24 states. 


It's the last Friday of 2017. The FEHBlog is in a reflective mood. Here are some FEHBP-related items that took the FEHBlog by surprise this year:
  • In November, OPM disagreed with the Inspector General's proposal that Congress delegate prescription benefit contracting to the agency. Throughout this decade, the Inspector General has been pushing this idea which aligns with TRICARE's set-up. Meanwhile, Congress and expert panels from time to time have been encouraging the Defense Department to use an FEHB model for TRICARE.  OPM's decision was a pleasant surprise for the FEHBlog who favors the continued use of integrated benefits to control costs. 
  • In March, the House of Representatives' Oversight and Government Reform Committee unanimously approved a postal reform bill (H.R. 756) which would have impacted the FEHBP. The bill had the support of the Postal Service, its labor union, and its customers.  The FEHBlog expected the bill to fly through Congress too, but it went no further than the Committee approval. 
  • The FEHBlog expected new political leadership to be in place at OPM by now.  The Chairman of the Senate Homeland Security and Governmental Affairs Committee, Sen. Ron Johnson (R WI) is refusing to move forward with a necessary Committee vote on President's current nominees for OPM Director, Deputy Director, and Inspector General. Hopefully, this contretemps stemming from actions taken by the past Administration will be resolved soon.  
  • The FEHBlog is astonished that the Affordable Care Act's onerous medical device and health insurer taxes are going back into effect on Monday after being suspended for 2017 (2016 and 2017 for the medical device tax.)  The current suspension occurred as part of an omnibus appropriations bill in 2015.  Congress must pass another omnibus appropriations bill for the current federal fiscal year. We will have to wait and see if history repeats or improves upon itself. 
Stay tuned and warm. 

Thursday, December 28, 2017

HSA Contributions

Kiplinger's Personal Finance offers an interesting angle on making HSA contributions for family members under a self and family high deductible plan. Of course, check with your personal tax advisor.

The Cadillac Tax

A reader requested background on the Affordable Care Act's high-cost employer-sponsored plan excise tax which is colloquially known as the Cadillac tax.

Premiums paid for employer-sponsored health plan coverage are excluded from income and payroll taxation. During the 2008 Presidential campaign, then Sen. Obama strongly criticized Sen. McCain for suggesting that Congress eliminate this exclusion as part of his health care reform plan. (A commentator in Fortune magazine recently suggested that the Republicans revisit Sen. McCain's plan as an alternative to the ACA.)

As Prof. Jonathan Gruber, one of the ACA's architects, explained in the Washington Post in 2009, "The ["Cadillac tax"] assessment proposed in the Senate is not a new tax; it is the elimination of an existing tax break that is provided to exactly these firms [that offer health benefits to their employees." So instead of ending or carving back this tax exclusion, the ACA creates an enormous administrative burden on employers, including OPM, by requiring them to account for the cost of coverage, e.g., employer and employee contributions, health care flexible spending account contributions, employer-sponsored medical clinics, etc. for each employee and retiree and arrange to pay a 40% excise tax on the cost in excess of a $10,200 threshold for self only coverage and $27,500 threshold for other than self only coverage. The thresholds are subject to certain initial adjustments and to small CPI-U (now chained CPI-U) adjustments for years after implementation.

The Cadillac tax originally was scheduled to apply to tax years beginning after December 31, 2017.  In 2015, the IRS began to issue compliance guidance which makes it clear that compliance with this law will require an army of consultants. However,
The Consolidated Appropriations Act, 2016 (Pub. L. 114-113), signed into law on Dec. 18, 2015, delayed the effective date of the excise tax on high cost employer-sponsored health coverage from taxable years beginning after Dec 31, 2017, to taxable years beginning after Dec. 31, 2019.
With any luck, Congress in the consolidated or omnibus appropriations law that Congress must pass for the current federal fiscal year will further delay this tax perhaps to 2026 and extend the expiring suspensions of the ACA's medical device and health insurer tax at least for another year.

If implemented, the Cadillac tax would have a dramatic impact on the FEHBP for a goofy reason.  The other than self-only threshold for the Cadillac tax is 2.7 times its self-only threshold.  The FEHB other than self only premiums typically do not exceed 2.4 times the self-only premiums on average. Consequently, FEHB premiums for self-only coverage currently have a Cadillac tax problem particularly when you take into account additional benefits like the FSA.  Other than self and family premiums currently don't. But OPM or its contractor would have to do the calculation. (OPM would send a tax bill to each affected plan for its share of the assessment.)

There you go, dear reader. With all things ACA, there are unintended adverse consequences because the law is unnecessarily complex.

2018 Pay Tables

Yesterday, the U.S. Office of Personnel Management released the 2018 pay tables and calculators for federal employees.