HHS piles on, and more

HHS released today its a final rule under the Affordable Care Act that, according to its press release, allows the government "to fight" unreasonable individual and small group health insurance premium increases beginning in September 2011.  The AHIP President Karen Ignagni commented that

"Focusing on health insurance premiums while ignoring underlying medical cost drivers will not make health care coverage more affordable for families and employers.  The public policy discussion needs to be enlarged to focus on the soaring cost of medical care that threatens our economic competitiveness, our public safety net, and the affordability of health care coverage.

“Health plans are doing their part to restrain health care cost growth by partnering with providers across the country to change payment models to promote and reward safe, high-quality, cost-effective care."

The FEHBlog wonders why there is even a need to perform this review when the Affordable Care Act requires health insurers to refund premiums when they exceed the minimum loss ratio (85% in the group market and 80%) in the individual market beginning this year. The minimum loss ratio rule applies to insured FEHB plans while the premium review rule does not. Of course, the government in the form of OPM negotiates FEHB premiums.

PwC's Health Research Institute released its annual Behind the Numbers report which is projecting that U.S. employers will confront an 8.5% health care cost increase in 2012 as the result of increased consolidation among hospitals and physicians and increase cost shifting from Medicare and Medicaid. The report indicates that employers are mitigating the cost increase by restricting their provider networks to higher quality hospitals and specialists. In that regard, the Wall Street Journal reported that the large health insurer Wellpoint, Inc. "is raising the stakes for reimbursing about 1,500 hospitals across the country, cutting off annual payment increases if they fail to deliver on the big health insurer's definition of quality patient care." Now that's how to bring down the cost curve.

Medco, Inc., a major prescription benefits manager, released its 2011 Drug Trend Report. The report indicates that the cost of cancer drugs, which often are speciality or biologic drugs, is rapidly escalating. The top sellers are diabetes, central nervous system, and diabetes drugs.

Higher generic drug dispensing helped limit prescription drug spending growth to 3.7 percent during 2010, the report also revealed. In 2010, more than 71 percent of the prescription drugs dispensed were for generics. In fact, Medco, during its second quarter earnings reported that the generic dispensing rate had reached a record 73 percent. Generic drugs had a limited inflation rate of 0.5 percent and served as a lever to control overall prescription drug costs during 2010, the report said. Drug utilization during 2010 increased 2.1 percent, which is the highest rate of growth since 2005 when it was 2.7 percent.

As previously noted in the FEHBlog, the FDA has not yet established the legal pathway for putting generic versions of specialty drugs on the market. That pathway, which the Affordable Care Act authorized, cannot come soon enough.