Yesterday the President signed an executive order implementing the Congressionally approved federal employee pay increase for the 2020 calendar year. Federal News Network explains why and by how much the pay raise depends on the employee’s work location.

FEHBP Open Season changes take effect on January 1 for annuitant enrollees and the covered family members and on the first day of the first full pay period in January for employed enrollees.  In 2020, that Open Season effective date for employees falls on Sunday January 5. 

The Journal of Accountancy helpfully outlines the federal tax changes made by the final FY 2020 spending bills.

The Society for Human Resource Management discusses the Internal Revenue Services overhauled W-4 form which employees use to calculate tax withholding.

Modern Healthcare discusses the status of surprise billing legislation.

Months of debate on how to protect patients from out-of-network charges at in-network facilities culminated in an eight-day period when a bipartisan, bicameral proposal with White House support came together, but ultimately fell short. Some observers aren’t so sure that a compromise exists anymore.

“Ultimately, the leadership decided that with unresolved disagreements between the committees of jurisdiction, more time was needed and surprise billing would be reserved for the must-past May health extenders vehicle,” a Democratic leadership aide said. 

Here’s a FEHBlog brainstorm exempt bills not eligible below the arbitration threshold from the law’s pricing provisions. See how the law works with larger bills first.

Healthcare Dive discusses the latest legislative activities on this front.

The House Energy and Commerce Committee is expanding its investigation into surprise billing practices by calling on some of the nation’s largest insurers and physician staffing firms to provide information and documents on the practice, lawmakers said Thursday. 

The Senate Health Education Labor and Pensions Committee also is participating in this investigation. Those two committees have been cooperating in the development of the key bipartisan surprise billing proposal, S. 1895.

Health IT Security reports that

An explanatory statement included with the Congressional Appropriations Agreement directs the Office of the National Coordinator to work with private sector initiatives focused on the development of a national strategy to improve patient identification across the healthcare sector.

The appropriations bill left out language that would allow the Department of Health and Human Services to use public funds for the development of a national patient identifier. For the last 20 years, the ban has been included in every appropriations bill, despite language in HIPAA that directs HHS to develop a unique patient identifier.

The FEHBlog recalls that the same provision was included in the FY 2019 appropriations legislation. A national payer identifier would help push interoperability forward.

Tammy Flanagan, writing in Govexec, answered questions related to the five year rule that allows retiring federal employees to carry their coverage into retirement with the full government contribution. Check it out.

Happy Holidays.

Congress is out of town until January 7, 2020. The President has signed into law the final two spending bills and the defense authorization act for fiscal year 2020 whose provisions the FEHBlog has been discussing over the past few weeks.

In an interesting development, according to Forbes, the prescription benefit managers, Express Scripts, which insurer Cigna owns, and Prime Therapeutics which a group of Blue Cross licensees owns, have formed a partnership.

The three-year collaboration is “designed to deliver more affordable care for clients and their members by enhancing pharmacy networks and pharmaceutical manufacturer value.” The collaboration will allow Prime’s member Blue Cross health plans to gain leverage through Express Scripts’ buying clout and large pharmacy network.”

The Wall Street Journal included a heartbreaking healthcare story over the weekend.

When she was in her early 30s, Katy Mathes decided to check her cancer risk. A genetic test showed a mutation on a BRCA gene, which significantly raises a person’s lifetime risk of developing hereditary breast or ovarian cancer. 

Thirteen people in the family got tested—her mother, her sister, cousins and aunts. Eleven had the mutation. Almost all did their testing with Myriad Genetics Inc., which introduced the first BRCA tests in 1996. 

“I treated my test results like the Bible,” said Ms. Mathes, now 37, an elementary-school art teacher in Colorado. “There was no questioning the report.” 

Ms. Mathes, who has one child, decided she would have no more. To reduce her cancer risk, she underwent surgery to remove her ovaries and fallopian tubes. So did her younger sister, their mother and four other relatives. Ms. Mathes and her sister also had double mastectomies. 

This year, their mother sat them down at the table of their parents’ winter home in Florida. Two weeks earlier, her genetic counselor had called. The lab was no longer sure the variant is a significant problem. 

The article explains how many variables are at play in these genomic tests. Patients should be better educated about the risks of misdiagnosis.  If you have not done so, read Russ Roberts’ interview with Adam Cifu MD about being a medical conservative on the Econtalk podcast. (You can read the interview or listen to it at the link.)

[W]e need to slow down at this point. We need to think about the evidence behind what doctors are offering patients. And we need to consider the cost/benefit of this.

N.B. In addition to being the FEHBlog’s birthday, this is his 2700th post since 2006.

Wow what a week this has been. Congress repealed three Affordable Care Act taxes that raised or promised to raise the cost curve — the medical device tax, the health insurer tax, and the high cost employer plan (or Cadillac) tax.

The FEHBlog has read pieces bemoaning the loss of tax revenue. The only one of these taxes to generate revenue was the health insurer tax which only served to increase health insurance premiums often subsidized by the government. The medical device tax appeared as if it never would be implemented while the Rube Goldbergesque Cadillac tax has been delayed twice If the Cadillac tax had taken effect it would have driven employers out of healthcare, which may have been the ACA’s objective. The Trump Administration has created a life raft for employers in such circumstances by creating individual coverage health reimbursement accounts.

The Fifth Circuit’s decision in Azar v. Texas has ruffled feathers. The FEHBlog dearly hoped that the Supreme Court would strike down the Affordable Care Act in 2012 and then again in 2015. The FEHBlog is not a fan of massive legislation like the ACA that’s enacted by only one party. He thought that if the Supreme Court struck down the law the Republicans who controlled the House at the time would work with the Democrats to create a more sensible law. The Supreme Court did not cooperate and in retrospect that’s OK because the Republicans were not able to repeal and replace the ACA when they controlled the House and the Senate in 2017.  The FEHBlog does not want to see the courts take a pick axe to the ACA. He would like see Congress make changes and that has been happening.

The FEHBlog does not consider the Fifth Circuit’s decision to strike down the individual shared responsibility provision to be a big deal standing alone because the provision had become a nullity since Congress zeroed out the individual shared responsibility penalty at the beginning of this year. As the FEHBlog has pointed out, the FEHBP ran smoothy without a coverage mandate and with a ban on preexisting condition limitations since its inception in 1960. CMS reported today that exchange enrollment has been stable in 2017, 2018, and 2019. Meanwhile the Trump Administration has created new coverage options like the short term plans and it sought to help build exchange enrollment with the individual coverage HRAs.

About a year ago, the FEHBlog was impressed by this academic analysis of the Azar case. The upshot was that removing the individual mandate straightens the constitutionality of the entire law.

The Fifth Circuit’also decided to remand the case to the lower court for reconsideration of the impact of striking the individual mandate on the remainder of the statute. The FEHBlog ran across a 2011 federal court decision from Virgoan holding the ACA’s individual mandate unconstitutional whole preserving the remainder of the statute. That’s the proper outcome here and the FEHBlog is confident that we eventually will get there.

The Senate joined the House of Representatives in passing by wide margins the two final FY 2020 spending bills (HR 1158 and 1865).  The President is expected to sign the bills. Govexec.com discusses the impact of the bills on federal agencies including OPM. Congress is now headed out of town for the holidays.

On the Health and Human Services Department front this week —

• HHS laid out a framework for importing prescription drugs from foreign countries in a proposed rule. 

“The NPRM would allow states and certain other non-federal government entities to submit importation program proposals to the FDA for review and authorization. An importation program could be co-sponsored by a pharmacist, a wholesaler, or another state or non-federal governmental entity. Referred to as Section 804 Importation Programs, these programs would be authorized by the FDA to manage the importation of certain prescription drugs that are approved in Canada and also meet the conditions in an FDA-approved drug application. Eligible prescription drugs would have to be relabeled with the required U.S. labeling prior to importation and undergo testing for authenticity, degradation, and to ensure that the drugs meet established specifications and standards. Notably, these programs would also have to demonstrate significant cost reductions to the American consumer.”

The FEHBlog is dubious of drug importation proposals.

• HHS also proposed to revise the framework for improving the supply of human organs, particularly kidneys, for transplantation.  That is a worthy objective.

Enclara Healthcare’s focus is on chronic disease management and care coordination for patient populations with complex needs. As such, Humana intends to leverage this partnership in order to expand its care coordination and comprehensive care approach, especially in the areas of hospice care and mail order pharmacy procedure. 

Part of Enclara’s strategy when tackling complicated healthcare needs involves real time data and predictive analytics collected and parsed by advanced technologies. Humana intends to employ this strength to improve its “technology stack” for home healthcare pharmacy services. In particular, Humana mentioned that it will be looking to develop and improve its enhanced mobile medication management and EHR data. 

Beckers Hospital Review reports that the Leapfrog patient safety group has named its top 100 hospitals in the U.S., none of which are located in the FEHBlog’s home state of Maryland. What about yours?

Forbes reports that Anthem, the second largest U.S. health insurer, “has started to use blockchain technology to help patients securely access and share their medical data. The company plans to roll out the feature, which is in pilot testing now, to groups of members in the next few months. All 40 million members will have access to it in the next two to three years, according to company officials.” Groovy,

In closing, two tidbits that caught the FEHBlog’s eye — a New York Times article that diaries the nighttime efforts of an emergency room doctor and a Fortune article projecting 25 ideas that are expected to shape the next decade.  

On December 18, 2019, the U.S. Court of Appeals for the Fifth Circuit issued its opinion in the Texas v. Azar case. Healthcare Dive named this Affordable Care Act unconstitutionality case as the “disruptor” of 2019.

The Fifth Circuit agreed with the U.S. District Court for the Northern District of Texas that Congress’s 2017 decision to zero out the ACA’s individual shared responsibility penalty rendered the individual shared responsibility provision (a/k/a individual mandate), 26 U.S.C. § 5000A, unconstitutional. The Fifth Circuit vacated the lower court’s decision that the remainder of the PPACA was inseverable from the unconstitutional individual shared responsibility provision. The Fifth Circuit remanded the case to the lower court for “more searching inquiry” into the severability issue (p. 59).  The Fifth Circuit explained (p. 60).

It may still be that none of the ACA is severable from the individual mandate, even after this inquiry is concluded. It may be that all of the ACA is severable from the individual mandate. It may also be that some of the ACA is severable from the individual mandate, and some is not.46 But it is no small thing for unelected, life-tenured judges to declare duly enacted legislation passed by the elected representatives of the American people unconstitutional. The rule of law demands a careful, precise explanation of whether the provisions of the ACA are affected by the unconstitutionality of the individual mandate as it exists today.

So the case continues.

The ACA marketplace has been running relatively smoothly without the individual mandate. In the FY 2020 spending bill, Congress is amending the law to protect silver loading that helps with the stability. The Trump administration has finalized the individual coverage HRA rules which will add members to the exchange plans. While the Fifth Circuit remanded the severability issue, the FEHBlog can’t imagine that in the end the outcome will be anything other than preservation of the rest of the statute.

The House of Representatives passed today the two final FY 2020 spending bills (HR 1158 and 1865), which include provisions repealing the three ACA taxes that raise health care costs — the medical device tax, the health insurer tax, and the high cost employer plan, or Cadillac, tax. Sen. Lamar Alexander, the chairman of the Senate Health Education Labor and Pensions Committee, announced that the spending bills also include the following four provisions from his Committee’s bipartisan bill to lower healthcare costs, S. 1895.

• CREATES Act—increase generic drug competition and lower the cost of drugs
• Insulin—two provisions to increase biological drug competition and lower drug costs, including in the insulin market
• Tobacco-21—raise purchasing age of tobacco to 21
• Kay Hagan Tick Act—better protect Americans from diseases transmitted by ticks, mosquitoes and fleas

The Senate is expected to approve the two spending bills later this week and the President is expected to sign the bills into law before the current continuing resolution funding the federal government expires on December 20. This action of course would avoid a federal government shutdown.

The Senate today joined the House in approving S. 1790, the FY 2020 national defense authorization act, which the President is expected to sign into law. This is the bill that creates a paid parental leave program for federal employees, requires an independent study of the Administration’s plan to dismantle OPM and creates protections for federal employees in the event of another long government shutdown.

Sen. Alexander in his announcement reiterated his support for legislatively resolving the surprise bill issues in the U.S. Health Affairs reports in this regard that

When physicians whom patients do not choose and cannot avoid can bill out of network for care delivered within in-network hospitals, it exposes patients to financial risk and undercuts the functioning of health care markets. Using data for 2015 from a large commercial insurer, we found that at in-network hospitals, 11.8 percent of anesthesiology care, 12.3 percent of care involving a pathologist, 5.6 percent of claims for radiologists, and 11.3 percent of cases involving an assistant surgeon were billed out of network. The ability to bill out of network allows these specialists to negotiate artificially high in-network rates. Out-of-network billing is more prevalent at hospitals in concentrated hospital and insurance markets and at for-profit hospitals. Our estimates show that if these specialists were not able to bill out of network, it would lower physician payments for privately insured patients by 13.4 percent and reduce health care spending for people with employer-sponsored insurance by 3.4 percent (approximately $40 billion annually).

Federal News Network and Govexec.com report that the omnibus spending bill includes the 2.6% across the board pay raise for federal employees plus a 0.5% locality pay increase as proposed by the House of Representatives. President Trump had proposed just the 2.6% increase. The pay increase would take effect on January 1, 2020.

The Hill reports that this bill also would repeal all three of the most controversial ACA taxes — the medical device tax, the health insurer tax, and the high cost plan / Cadillac tax. This is great news for the FEHBP which has been smacked by the health insurer tax and would be greatly disrupted by the Cadillac tax. The bill also would put pressure on Congress to resolve the surprise billing and drug cost issues by May 22 and it would raise from 18 to 21 the age at which young adults can purchase tobacco products.

Jingle bells. The final text of the bill remains under wraps.  The House is expected to vote on the bill tomorrow followed by the Senate. The current continuing resolution expires on Friday December 20.

Congress leaves town this Friday December 20 (and likely earlier if they can get the omnibus appropriations bill done).

The FEHBlog heard one of those pro-surprise billing arbitration commercials on television yesterday. The commercial condemned government price fixing on surprise billers claiming that it would only benefit the evil, greedy health insurers. Baloney.

Federal and state laws are chock a block full of price controls on health care. Most notably here, the Affordable Care Act imposes a minimum medical loss ratio (MLR) on insurers. That MLR in turn limits health insurers profits. What’s wrong then with restricting out of network provider profits? Goose – gander?? The FEHBlog is no fan of government price controls but at least if government is going to place them on on side of the transaction, it makes sense to put them on other side too.

Health Payer Intelligence reports that

America’s Health Insurance Plans (AHIP) submitted a statement to the House Energy and Commerce Committee opposing current single-payer proposals in the United States.

“Americans are facing an escalating crisis of affordability across our health care system. Cost pressures are becoming more intense for all who pay the tab for health care in the United States, whether they be consumers, employers, or governments,” the organization explained. “AHIP and our members believe that the best way to bring down costs is to improve what’s working and fix what’s not, so that everyone has affordable coverage, access to high-quality care, and control over their health care choices.”

Amen to that.

On the prescription benefit manager front —

• Per Fierce Heathcare, Express Scripts has unveiled the first apps to be added to its curated digital health formulary.  The idea behind the formulary, which other PBMs are adopting, is to “make it easier for health insurers [and self funded employers] to vet the tools for their members, especially as the number of solutions available in the market continues to grow.” The list of ESI approved apps may be found here.   
• Healthcare Dive informs us that CVS Health “unveiled a precision medicine program for oncology patients Thursday designed to increase access to broad-panel gene sequencing tests for patients with specific advanced stage cancers.”