Tuesday Tidbits

Yesterday, as the Chicago Tribune reports, Alex Azar was sworn in as Health and Human Services Secretary.

Modern Healthcare tells us that the 3700 physicians out of Medicare in 2017 as compared to 7400 in 2016 and 3500 in 2015. Very little FEHBP coverage is available if you are an annuitant over 65 whose doctor has opted out of Medicare. See Section 9 of your FEHBP brochure.  The Modern Healthcare article lead me to this useful CMS website which tells you whether your doctor has opted out of Medicare.  Opt out doctors are required to have to their Medicare Part B patients sign an opt out agreement.

The New York Times Upshot column has an interesting column with the following lede --

The idea that spending more on preventive care will reduce overall health care spending is widely believed and often promoted as a reason to support reform. It’s thought that too many people with chronic illnesses wait until they are truly ill before seeking care, often in emergency rooms, where it costs more. It should follow then that treating diseases earlier, or screening for them before they become more serious, would wind up saving money in the long run.  Unfortunately, almost none of this is true.

No kidding.

Healthcare Dive reports that Amazon, Berkshire Hathaway, and JP Morgan Chase are forming a not-for-profit company to reduce healthcare costs for their employees and presumably employees from other large employers. Here's a link to their announcement.  The FEHBlog sees this as a quite a display of hubris but yesterday's post illustrates the fact that the FEHBlog can make mistakes.

A mistook

The FEHBlog made a mistake in several posts about the current continuing resolution. He thought that the additional health insurer tax moratorium applies to this year. In fact, this moratorium applies to 2019. So the government will be collecting $14.3 billion from insurers this year which Congress evidently assumes was already baked in the premiums. Here's a link to the IRS guidance on the 2019 moratorium.

Weekend update

Congress is in session this week on Capitol Hill.  The FEHBlog's attention was drawn to a Hill newspaper article headlined "Congress takes the sting out of Obamacare."  In the FEHBlog's view, Congress started to take the sting out of the law by repealing the individual mandate but it has a long way to go still. Way too much stick and not enough carrot in that law.

For example, the FEHBlog pointed out a few weeks ago a December 2017 HHS report on 2016 medical loss ratio ("MLR) results.  The HHS report notes that "In 2016, the average MLR was 92.9 percent in the individual market, 86.1 percent in the small group market, and 90.3 percent in the large group market."  The statutory MLR is 80% for the individual and small group markets and 85% for the large group market which includes the FEHBP. So you would think that the MLR rebates would have been small in 2016, but they totalled hundreds of millions of dollars because those refunds are determined using state-level MLRs for each insurer.

FEHBP insurers are in double jeopardy because they are subject to this state-level MLR and OPM's contract level MLR. It's no wonder that you don't see new carriers joining the FEHBP.  In any event, all MLR penalties / rebates should be based on the insurer's aggregate MLR per market with no state or contract breakdown.

Health Payer Intelligence points out a recent AMA report finding that the ACA reduced consumer out of pocket spending by 11.9% but increased consumer spending on health insurance premiums by 12.1% over the period 2012-2015. There has to be a better, less complex, way. The FEHBlog continues to like his idea of giving all high earners, not just small business owners, a 50% tax exclusion on health insurance premiums. Give all middle income people, not just employees, a full exclusion and repeal the ACA taxes on providers and health plans. The low income people would continue to have ACA subsidies. That would be a good, equitable start.

In prescription drug news, Wired has an interesting report on the state of CRISPR gene editing research.

[Last] week the National Institutes of Health announced it will be awarding $190 million in research grants over the next six years, in part to push gene editing technologies into the mainstream. “The focus of the Somatic Cell Genome Editing program is to dramatically accelerate the translation of these technologies to the clinic for treatment of as many genetic diseases as possible,” NIH Director Francis Collins said in a statement Tuesday. Which could encourage some of the more exotic, experimental delivery systems out in the research world—strategies like Crispr-covered gold beads, yarn-like ball structures called DNA nanoclews, and shape-shifting polymers to get the editor where it needs to go.

Let's go.  Also, the Wall Street Journal yesterday offered a fascinating interview with  economist David Ridley.  Prof. Ridley came up with idea of having the Food and Drug Administrative give drugs that treat rare diseases an express lane pass for a future new drug application. What's more the express lane pass can be sold to another drug manufacturer for "between $67.5 million and $350 million, though the price last year settled in the range of $125 million to $150 million." The applicant must pay a $2.7 million fee to use the express lane. Congress enacted the idea in 2007. At the first the express lane pass was awarded for infectious tropical disease treatments, and in 2012 the initiative was extended to rare pediatric diseases. Last year, the FDA issued "five [passes or more formally expedited review vouchers] for drugs to treat rare pediatric diseases and one for the tropical Chagas parasite, which afflicts more than six million people world-wide." Cool.

TGIF

It continues to be a busy week.  As Healthcare Dives reports, the Senate confirmed Alex Azar to be Secretary of the Health and Human Services Department. Meanwhile, the President's nominations to be OPM Director and OPM Deputy Director continue to cool their heels due to Sen. Ron Johnson's hold. The FEHBlog can find no news about the status of those nominations. Mysterious and unfortunate in the FEHBlog's view.

The FEHBlog recalls that about five years ago OPM was pushing a government initiative called Blue Button which would allow you to download your claims history into a spreadsheet. The initiative lost steam according to this government website. Never fear. Apple plans to permit hospitals and other healthcare providers to download your electronic medical record (more likely keys parts of it) into your phone. Becker's Hospital Review discusses the Apple initiative which makes a lot of sense.

On the opioid crisis front, the Federal Trade Commission and HHS's SAMHSA unit released a consumer factsheet yesterday with tips on how get the right help of opioid addiction.  Meanwhile and disturbingly, Beckers Hospital Review reports that

United States residents purchased nearly $800 million worth of fentanyl pills from China over the internet in two years [and delivered by the Postal Service], according to a Senate investigations report released Wednesday. The 104-page bipartisan report produced by the Senate Homeland Security Committee is the result of a yearlong Senate investigation.

Fentanyl is a dangerous synthetic opioid that you can't just pick up at CVS. The report explains that

Commercial shippers like UPS and FedEx are required to provide U.S. Customs and Border Protection with information about the origin and contents of the packages prior to their arrival. However, customs officials do not receive information on all packages shipped through the United States Postal Service. The volume of shipments and the limited information made available from certain foreign postal services make identifying packages containing illicit drugs difficult.

Loopholes as W.C. Fields remarked.  Opioid distribution, e.g., heroin, fentanyl, has returned to being principally a law enforcement issue. The fallout from opioids remains a key concern for providers and payers, in the FEHBlog's view.

OPM releases the call letter for 2019 benefit and rate proposals

The U.S. Office of Personnel Management this morning issued its call letter for 2019 benefit and rate proposals.  The call letter describes the laundry list of initiatives that it wants the FEHB plans to cover in their 2019 benefit and rate proposals due May 31, 2018. The letter jumped the gun a little because it emphasizes on page 5 the potential impact of the ACA's high cost excise or colloquially the Cadillac tax on FEHB plans. Yesterday, Congress delayed the effective date for that tax for two more years. The tax originally was scheduled to take effect this year. Two years ago, Congress delayed the effective date to 2020 and yesterday Congress further delayed the effective date to 2022.

The Cadillac tax is very inequitable to the FEHBP.  The tax assumes the average family size to be 2.7 members but the FEHBP family size is much lower which is why self plus one is popular. Consequently, FEHBP self only premiums tend to already be bumping up the ACA's self only threshold of $10,200 plus adjustment while the self and family and self plus one rates tend to comfortably below the $27,500 other than self only threshold. OPM's call letter does not appreciate this nuance.

Consequently, the FEHBlog thinks that it would be helpful for OPM to issue a draft call letter in January and a final call letter in early March. The Centers for Medicare and Medicaid Services take this approach with the Medicare Advantage program.

One of the other laundry list items in the call letter is immunizations. The FEHBlog's internist told him today that Glaxo Kline has obtained Food and Drug Administration approval for a new shingles vaccine called Shingrix. CNN reports that the government has approved Shringix for adults aged 50 and older, even those like me who had the predecessor shingles vaccine, Zostovax.  Shingrix is two injections two months apart. The FEHBlog's internist suggested waiting a couple months before approach CVS or another pharmacy for the new vaccine.

Speaking of vaccines, the FEHBlog noticed this essay about the flu in last weekend's Wall Street Journal.

Despite medical advances, we are just as vulnerable today to a flu pandemic as we were a century ago. Vaccines in recent years have, on average, reduced the risk of flu illness among those vaccinated by just 40% (less than 30% this year). Current antiviral drugs only slow the virus—we have no reliable way to destroy it.

The author's point was not to discourage people from getting the current flu vaccine. Instead, his point was to place focus on ongoing research to create a universal flu vaccine.  The essayist has some other ideas too.

Also today, the Health Care Cost Institute today came out with a report on health care spending from 2012 to 2016. HCCI maintains a HIPAA de-identified claims warehouse contributed by Aetna, Humana, Kaiser Permanente, and United Healthcare.

“It is time to have a national conversation on the role of price increases in the growth of health care spending,” said Niall Brennan, MPP, president of HCCI. “Despite the progress made in recent years on value-based care, the reality is that working Americans are using less care but paying more for it every year. Rising prices, especially for prescription drugs, surgery, and emergency department visits, have been primary drivers of faster growth in recent years.”

Monday Miscellany -- Post Shutdown Edition

Congress ended the partial federal government shutdown today.  The new continuing resolution (H.R. 195) extends federal appropriations for the federal government through February 8, 2018, extends Children's Health Insurance Program funding for six years, and suspends the ACA's health insurer tax for 2018, the ACA's medical device tax for 2018 and 2019, and further delays implementation of the ACA's high cost employer sponsored plan excises tax (a/k/a) Cadillac tax from 2020 to 2022.

Also today, the U.S. Office of Personnel Management released a final rule on removal of family members from FEHB plan coverage. The rule concerns voluntary removal of otherwise eligible members and involuntary removal of ineligible individuals with, of course, appropriate due process. The rule will take effect on February 22, 2018.

Weekend update -- Shutdown edition

Well, the FEHBlog never claimed to be all knowing. Federal appropriations did lapse on Saturday because the Senate was unable to achieve 60 votes in favor of debating (cloture) on the continuing resolution. Here's a link to the Week in Congress's report on last week's activities on Capitol Hill.

Because the FEHBP Act, 5 U.S.C. Sec. 8909, creates a 4% surcharge on premiums and a quarter of that surcharge is available for OPM administrative operations, FEHBP operations at OPM are not funded by federal appropriations. So the FEHBP continues to roll on, notwithstanding the shutdown.

Kaiser Health News reports on how the shutdown affects other health programs, like Medicare.

Beneficiaries will be largely unaffected by a shutdown, especially if it is short. Patients will continue to receive their insurance coverage, and Medicare will continue to process reimbursement payments to medical providers. But those checks could be delayed if the shutdown is prolonged.

The Wall Street Journal adds that "There are two services that won’t be disrupted: the mail and the delivery of Social Security checks."

Federal News Radio reports that the Senate is scheduled to consider a modified continuing resolution funding the federal government through February 8 beginning today at 10 am with a vote scheduled for noon.

TGIF

Yesterday the House of Representatives passed the continuing resolution discussed in last Wednesday's post. The ball is bouncing around the Senate's court. The FEHBP will continue on course even in the unlikely event of a lengthy partial government shutdown. Negotiations are continuing over the weekend according to latest reports.

The Senate Finance Committee voted to advance to the Senate floor the President's nomination of Alex Azar to be Health and Human Services Secretary last Wednesday according to Fierce Healthcare.

Six relevant healthcare organizations including America's Health Insurance Plans and the Blue Cross Blue Shield Association as well as major provider groups, have issued a consensus statement intended to streamline situations in which the health plan requires prior authorization for coverage of a particular service or supply.  According to the Consensus Statement, these health care leaders will work together to:

• Reduce the number of health care professionals subject to prior authorization requirements based on their performance, adherence to evidence-based medical practices, or participation in a value-based agreement with the health insurance provider.
• Regularly review the services and medications that require prior authorization and eliminate requirements for therapies that no longer warrant them.
• Improve channels of communications between health insurance providers, health care professionals, and patients to minimize care delays and ensure clarity on prior authorization requirements, rationale, and changes.
• Protect continuity of care for patients who are on an ongoing, active treatment or a stable treatment regimen when there are changes in coverage, health insurance providers or prior authorization requirements.
• Accelerate industry adoption of national electronic standards for prior authorization and improve transparency of formulary information and coverage restrictions at the point-of-care.

Bravo on the collaborative effort to reduce red tape.

Axios reports that "Four not-for-profit hospital systems that own 10% of U.S. hospitals — Intermountain Healthcare, Ascension, SSM Health and Trinity Health — are banding together to create a new generic drug company. The Department of Veterans Affairs also is helping and has expressed interest as a purchaser."  The FEHBlog noticed a Modern Healthcare article pooh poohing the idea but the FEHBlog applauds these hospitals banded together to try to fix a national problem -- bandit drug manufacturer who hike prices on sole source generic drugs. You have to start somewhere.

In the you can't please 'em all department, Fierce Healthcare reports that

Hospitals that receive top [clinical quality] marks from U.S. News and World Report don't always earn the same praise from patients, according to a new analysis.  

Nearly 63% of 2,700 Yelp reviewers gave the top 20 hospitals in the country, as ranked by U.S. News, a score of between one and three stars out of five, according to a study by Vanguard Communications and Healthcare Process Improvement, a healthcare marketing firm.

On average, the top 20 hospitals earned a 3.2 rating, the analysis found. U.S. News ranked a number of big-name providers in its latest list, with a top five that includes Mayo Clinic, Cleveland Clinic, Johns Hopkins Hospital, Massachusetts General Hospital and UCSF Medical Center. 

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.

Dreamland

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 Pharma'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).

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.

TGIF

Govexec.com 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 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. 

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 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. 

Midweek update

Govexec.com 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. 

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.