The Federal News Networks offers a comprehensive report on federal employee pay and benefit now that the partial shutdown is over. Here’s a snip about the FEHBP:

Agencies may give eligible employees more time to enroll or change their enrollment in the Federal Employees Health Benefits Program (FEHBP) due to a qualifying life event that occurred during the government shutdown, OPM said.
“In cases where the effective date would normally be the first day of the first pay period following the day the employing office receives the enrollment request and that follows a pay period during any part of which the employee is in pay status, agencies may assign the effective date as if the employee had submitted the enrollment request immediately following the event,” the memo reads.
Agencies can also use their belated enrollment authority to extend the time that an employee would otherwise have to request or change enrollment, OPM said.
Agencies should adjust federal employees’ retroactive pay to reflect typical deductions and government contributions toward FEHBP. Standard deductions and contributions would apply as if the government shutdown hadn’t occurred.

Kaiser Health News gives an account of the Congressional hearings on prescription drug prices that were held this morning.   Drug Channels takes a contrarian view here.

A bipartisan group of Senators and Representatives has introduced a bill to allow federal employees who are in the National Guard or Military Reserve to enroll in the TRICARE program. Nearly 20 years ago Congress pulled a large contingent of FEHBP enrollees who held military retirements into TRICARE. That move caused some FEHBP premiums to increase and it has cost TRICARE a ton of money according to the Congressional Research Service. The FEHBP is a good program. Leave well enough alone.

Becker’s Hospital Reports points us to the most recent Verizon data breach report which finds that over half of healthcare data breaches in 2018 were caused by insiders. Ouch.

In a bit of good news, AHRQ tells us that

New data released today by the Agency for Healthcare Research and Quality (AHRQ) and Centers for Medicare & Medicaid Services (CMS) show reductions in hospital-acquired conditions such as adverse drug events and healthcare-associated infections helped prevent 20,500 hospital deaths and save $7.7 billion in health care costs from 2014 to 2017.

AHRQ’s preliminary analysis (PDF, 545 KB) estimates that hospital-acquired conditions were reduced by 910,000 from 2014 to 2017. The estimated rate of hospital-acquired conditions dropped 13 percent; from 99 per 1,000 acute care discharges to 86 per 1,000 during the same timeframe.

Finally, check out Forbes columnist Avik Roy’s interesting column on the importance of controlling hospital costs. “The new Democratic House has not talked a lot about tackling high hospital prices, preferring instead to train their fire on prescription drug prices: an important problem, but a smaller one relative to hospital prices.” Mr. Roy offers a solution but the FEHBlog is not sure the solution is feasible, to wit.

At my think tank, the Foundation for Research on Equal Opportunity, I recently put out a detailed plan to tackle the problem of hospital consolidation. Its key feature is to eliminate the ability of local hospital monopolies to charge exploitative prices, by precluding them from charging the privately insured and uninsured more than they charge Medicare. (Hospital monopolies would remain free to charge less.)

I’m glad to report that a new bill, the Hospital Competition Act of 2019, introduced by Indiana Rep. Jim Banks[H.R. 506] , reflects many of these concepts. Members of Congress who want to do more than talk about the high cost of American health care would do well to take a look.

The Office of Management and Budget announced Friday night

Today, the President signed a continuing resolution that brings employees back to work and reopens many government functions. All employees who were on furlough due to the absence of appropriations may now return to work. You should reopen offices in a prompt and orderly manner.

Congress remains in session this week on Capitol Hill. Both the House Oversight and Reform Committee and the Senate Finance Committee will be holding hearings on Tuesday morning, January 29, about reducing prescription drug prices. Last week the Chairman Sen. Charles Grassley and Ranking Member Sen. Ron Wyden of the Senate Finance Committee introduced a bill to “crack down on big pharma games.” The first witness at the Senate hearing is a woman whose child’s insulin-dependent diabetes.

The opening witness at the Senate Finance Committee hearing will be a woman whose child is an insulin dependent diabetic. Health Payer Intelligence reports that the point of sale price of insulin doubled from 2012-2016 according to a Health Car Cost Institute study. The article notes that

Drug manufacturers are currently taking most of the heat for pricing issues, but insurance companies and pharmacy benefit managers also have a responsibility to control the market – not to mention a financial stake in the matter [a reference to the health plan practice of retaining manufacturer rebates to control plan costs, rather than lower point of sale costs.]

Reuters reports that a new hospital system generic drug manufacturer Civica Rx is poised to roll out 20 products this year in an effort to alleviate hospital shortages.

Modern Healthcare discusses a CVS Health effort to control skyrocketing dialysis costs for patients with end stage renal disease. Health plans must cover these costs for the first 30 months of care before Medicare becomes primary.  CVS’s idea is to shift the site of care from outpatient facilities to the patient’s home.

One potential driver of companies’ apparent enthusiasm for home treatment might be CVS Health’s announcement last [April] that it plans to disrupt kidney care by expanding home dialysis, identifying kidney disease earlier and developing new home hemodialysis technology. CVS hasn’t released many details, but Dr. Harry Jacobson, a nephrologist and co-founder of the investment firm TriStar Health Partners, described it as a “breakthrough.” He declined to share more detail because of a confidentiality agreement with the company. “It’s disruptive and it’s my opinion that it will be a real catalyst for increasing home hemodialysis,” he said. 

The shakin’ paid off. The Congress and the President agreed to reopen the entire federal government for three weeks through February 15 while negotiations over border security continue. The President according to the Wall Street Journal “thanked federal workers for going more than a month without pay and said he would ensure they received back pay ‘very quickly or as soon as possible.’”

The Wall Street Journal further reports that “Senate leaders passed a short-term spending Friday [afternoon] on a voice vote, enabling them to skip the chamber’s time-consuming procedures. The House has said it will move swiftly to consider the bill. It could also approve the bill on a voice vote, provided that no one objects.”   Govexec.com tells us that “Office of Management and Budget Deputy Director for Management {and OPM Director] Margaret Weichert in a memo to agency heads directed them to take steps in anticipation of reopening. Priorities include recalling furloughed employees, ‘restoring pay and benefits for employees,’ and ensuring access to equipment and information technology systems, she said.”

Odds are that the President will sign the short term funding bill today. It’s a good thing that it’s Friday which will allow two days to prepare for reopening.

In legislative news, Employees Benefit News informs us that a bi-partisan group of House members has introduced a bill to repeal the Affordable Care Act’s high cost plan / Cadillac tax (HR 748). Also AHIP tells us about bipartisan Senate bill to repeal the ACA’s senseless health insurer fee. Let’s go.

The Wall Street Journal reports that neither the Republican nor the Democrat crafted bill to end the partial government shutdown received the sixty votes necessary to achieve cloture. The Senate majority and minority leader are discussing compromise which amounts to progress.

Beckers Hospital Review reports that five health systems located in the northeast and central midwest (but not DC surprisingly) are offering furloughed federal employees breaks on cost sharing. Kudos to them.

Kaiser Health News reports that President Trump supports the effort to surprise billings on emergency care. The best idea that the FEHBlog has noticed lately is for hospitals to have their contracted healthcare providers, like emergency medical groups, join the preferred provider networks to which the hospital belongs.

Healthpayer Intelligence informs us that three large payers, Aetna, Anthem, and HCSC, have partnered with IBM and PNC Bank to bring blockchain technology to healthcare.

“The aim is to create an inclusive blockchain network that can benefit multiple members of the healthcare ecosystem in a secure, shared environment,” the companies stated. The goal is to allow the blockchain network to enable healthcare companies to build, share and deploy solutions that drive digital transformation in the industry.”

The first step for the collaboration — dubbed a health utility network — is identifying use cases that demonstrate the usefulness of blockchain for secure health data exchange. Work will then turn to signing up additional members ranging from providers to developers.

Go get ’em.

In a similar vein, Healthcare Dive discusses healthcare industry reaction to the use of artificial intelligence. The FEHBLog early this morning listened to Fox Business correspondent Maria Bartiromo interview the IBM CEO Ginni Rometti . Ms. Rometti explained how her company uses AI to help employees identify their best career paths within the company. Healthcare Dive adds that

AI currently holds the most promise in administrative and operational practice, where it has the potential to alleviate the burden of tedious tasks that fuel burnout. One such example is currently in use at Cleveland Clinic, where an AI platform that was initially built for retail is being used to track hospital bed use. The platform is able to identify where processes break down by monitoring resources and patient movements through the OR. 

The Senate is returning to Capitol Hill to consider competing shutdown resolution bills tomorrow.  The Wall Street Journal tracks shutdown stories here. The FEHBlog for what it’s worth thinks the shutdown will end next week, but don’t take that to the bank. The FEHBlog does wonder why Congress does not create a separate unemployment insurance program for federal employees due to these harmful quirks in the federal employment system.

Here are a few tidbits that caught the FEHBlog’s eye over the past couple days:

• The PwC Health Research Institute, per Healthcare Dive, released an upbeat report on 2019 trends in the healthcare industry.  For example, 

“With the average health insurance deductible triple what it was a decade ago, PwC believes 2019 could also be the year for value line products and services — àla the Southwest Airlines approach. Denver-based Ardás Family Medicine and Cityblock Health in New York City are examples of startups that are offering lower-cost delivery models.”

• The American Hospital Association joined by other healthcare organizations offered a proposal to improve interoperability of electronic medical records. Ten years ago, Congress decided to fund electronic medical records to the tune of $34 billion without considering interoperability which was a recognized government priority then as well as now. What a wasted opportunity!

• Becker’s Hospital Review reports that United Healthcare filed an antitrust lawsuit against “over 40” generic drug manufacturers.  The complaint alleges illegal price fixing practices involving 300 generic drugs.

• Reuters reports that Walgreen’s agreed with the Justice Department to settle a civil False Claims Act lawsuit based on Epipen billing practices. The settlement totaled nearly $270 million. Lawfuel provides details on the case here.   

Here’s a link to the Week in Congress’s report on last week’s actions on Capitol Hill. That publication indicates that both Houses of Congress are working from their home districts following Martin Luther King Day tomorrow.

Studies and surveys —

• Healthcare Dive informs us that “Total drug spend per hospital admission increased 18.5% between fiscal years 2015 and 2017, resulting in $1.8 million in additional costs for an average hospital, according to a report sponsored by the American Hospital Associations and fellow hospital organizations. Dive observes that “The report is the latest sortie in the ongoing PR battle between providers and pharmaceutical companies over who exactly is to blame for skyrocketing drug prices in the U.S.” Health plans are caught in the middle between the hospitals and the pharmaceutical manufacturers. 

• Fierce Healthcare reports on a recent study on the extent to which antibiotics are prescribed appropriately in the the U.S. “Researchers found 23.2% to be inappropriate, 35.5% potentially appropriate and only 12.8% appropriate. The remaining 28.5% had no related diagnosis code on which to base any judgment.”  No bueno.  This problem has been a tough nut to crack. 

Regrettably, tomorrow marks the fourth week of the partial government shutdown. OPM updated its furlough guidance earlier this week. Furthermore, Federal News Network reports that

President Donald Trump has signed a new bill into law guaranteeing back pay for federal employees impacted by the partial government shutdown. The Government Employee Fair Treatment Act covers both furloughed and excepted employees. It ensures they’ll receive retroactive pay whenever this shutdown ends — and appears to guarantee back pay during future lapses in appropriations.

On this past hump day, the FEHBlog cautiously commented about the then rocky contract negotiations between CVS Health and Walmart.  Other reported this news like it was a fact that Walmart had dropped out of the CVS retail pharmacy network. Last month, Tenet, the large healthcare system, was asserting that it planned to leave the Cigna network, which it described as “uninsurance.”  Two days later Cigna and Tenet announced a contract. Today, the news broke that CVS and Walmart had agreed to a new contract that keeps Walmart in the CVS retail pharmacy network.  Apparently Chicken Littling the situation to the public is a hot bargaining tactic.

Yesterday, HHS released its proposed 2020 ACA notice of benefit and payment parameters. This notice bears on OPM’s 2020 FEHBP benefit and rate proposal as it provides for the 2020 annual limit on cost sharing.  The proposed rule’s preamble states as follows:

We propose that the 2020 maximum annual limitation on cost sharing would be $8,200 for self-only coverage and $16,400 for other than self-only coverage. This represents an approximately 3.8 percent increase above the 2019 parameters of $7,900 for self-only coverage and $15,800 for other than self-only coverage.

The HHS Fact Sheet adds that

These [Rx cost reduction] proposals [described in the Notice’s preamble] include allowing individual market, small group market, and large group market health insurance issuers to adopt mid-year formulary changes to incentivize greater enrollee use of lower-cost generic drugs; and allowing such issuers and self-insured group health plans to except certain cost-sharing from the maximum out-of-pocket limit if a consumer selects a brand drug when a medically appropriate generic drug is available, and to except drug manufacturer coupons for specific prescription brand drugs that have a generic equivalent from the maximum out-of-pocket limit.

The final rule should be out in the Spring.

CMS reported earlier this week that the agency has completed the process of mailing out new Medicare ID cards to beneficiaries. Historically the Medicare ID cards used the beneficiary’s Social Security Number as the Medicare ID number. The new Medicare ID cards uses an anonymous ID number. Better late than never.  Back in time, FEHB plans also used the Social Security Number as the Plan ID on the ID cards. OPM squelched that many moons ago.

Healthcare Dive identifies watchable 2019 healthcare industry trends for payers and providers.  The number one trend for payers is contentious negotiations and contract disputes with participating providers.

In this regard —

• The Wall Street Journal reports on contentious negotiations between prescription benefit manager CVS Caremark and Walmart.  Walmart could leave the CVS Caremark employer sponsored plan networks but plans to remain in the CVS Caremark Medicare Advantage 

“Walmart is one of the country’s largest retail pharmacy players, offering pharmacies in nearly all of its approximately 4,600 U.S. stores. CVS said it retains a large network of more than 63,000 pharmacies without Walmart, and less than 5% of its members enrolled in affected plans use only Walmart for prescriptions.But the impact could be heavier for the employees of clients in rural areas and the South, where Walmart is a particularly important presence, said Nadina Rosier, who is head of the pharmacy practice at advisory firm Willis Towers Watson. “It truly depends on your vantage point,” she said.  ‘If you’re  a member who works for an employer where Walmart is the dominant player, you’re going to feel the pain.’”

This story will be fast moving.

• On the flip side, Tenet Healthcare, a large nationwide provider, announced deals with payers Anthem and Humana according to Modern Healthcare. 

CNBC reports on a seven year contract between the Walgreen’s pharmacy chain and Microsoft. This announcement follows up on last week’s disclosure of a deal between Walgreen’s and Alphabet’s life sciences unit, Verily. The article suggests that these deals are defensive plays by healthcare providers and technology companies to be positioned to compete against Amazon.
 

Congress remains in session this week on Capitol Hill. Here’s a link to the Week in Congress’s report on last week activities on the Hill as well as a Congressional Budget Office report on the federal deficit.

Modern Healthcare reports on a southern California hospital system that “requir[es] in-hospital physician groups to contract with the same insurance carriers as ” the hospital system does. Angry patients cause hospitals to implement the requirement, which prevents surprise bills for patients. That’s a much more practical solution than passing a bunch of complicated laws.

Last week, the Wall Street Journal reported that

The birthrate in America has been declining, but some places are more fertile than others, according to a new look at federal data that reveals significant variation in fertility rates around the country. Only South Dakota’s and Utah’s fertility rates reached the level needed to sustain the current population.

The number of babies born in 2017, around 3.85 million, was the lowest since 1987. In order for the country’s population to essentially replace itself, researchers say that 2,100 babies should be born for every 1,000 women. In 2017, the total fertility rate—an estimate of the total number of children a woman will eventually have in her lifetime—was 1,765 births per 1,000 women, well below what is known as the replacement level.

Hispanic women had the highest fertility rate of the ethnicities studied, and passed the 2,100 births per 1,000 women needed to sustain the population in 29 states. Black women reached that level in 12 states, while white women didn’t reach that level in any state.

Kenneth M. Johnson, senior demographer at the University of New Hampshire who wasn’t involved in the study, said that the data paints a more-nuanced understanding of fertility patterns that can help identify challenges for particular regions, such as potential labor-force shortages and challenges caring for an aging population. Low birthrates could disrupt the economy as the country’s population ages out of the workforce, though researchers say those effects could be offset by factors such as immigration. 

The first full workweek following the holidays has been a busy one for the FEHBlog. The FEHBlog hopes that this partial government shutdown will end soon. Here’s link to an ABC News article on the impact that the shutdown has on furloughed employees from a federal employee benefits perspective.

Regarding the Texas v. U.S decision holding the Affordable Care Act (“ACA”) unconstitutional based on Congress’s decision to zero out the individual mandate as of January 1, 2019, I listened earlier this week a 20 minute long podcast by law professor Richard Epstein.    Professor Epstein believes that the zeroing out of the individual mandate penalty removed a constitution defect in the ACA that the Chief Justice John Roberts had avoided in 2012 by upholding the statute under Congress’s taxing authority. The constitutional defect is that the law required people to purchase a product so that Congress could regulate it. Now that people are buying the product voluntarily the defect  is gone and the ACA stands.

The FEHBlog had not heard this argument before, but he agrees with the Professor. The case is now pending for the U.S. Court of Appeals for the Fifth Circuit based on appeals noticed by the defendant Justice Department (which want the Court to declare unconstitutional a few provisions related to the individual mandate) and the intervening State defendants (who want the Court to declare unconstitutional the zeroing out of the individual mandate because it brought down the law). Professor Epstein’s approach knocks out the appeal while also reversing the district court decision entirely. The 5th Circuit will arrive at its decision later this year.

In other developments, Modern Healthcare reports on the closing days of the JP Morgan healthcare conference.

Baylor Scott & White leaders explained their pending merger with Memorial Hermann will land the system in Houston, one of the fastest-growing areas of Texas. CEO Jim Hinton told Modern Healthcare the added scale will create efficiencies that drive down costs. That’s what happened when his health system was created through a 2013 merger, he said. Since then, Baylor Scott & White has saved about $740 million, 128% of its original goal. “This notion that these mergers always result in higher costs—that may be true for other mergers, but that’s not been our experience, nor is that our intent,” Hinton said.

In the FEHBlog’s opinion that’s a red herring argument. The issue is not whether mergers lower costs (they do), rather the issue is whether they lower prices reflecting lower costs. As the FEHBlog has noted cost and price are independent variables. You can lower costs without lowering prices if the market permits.

Relevant Studies and Predictions–

• Because the FEHBP covers a lot of folks with Medicare coverage, it’s worth taking a look at this Fierce Healthcare article about a three year long study reported in January’s Health Affairs finding that Persistently high-cost Medicare patients tend to be younger, members of racial or ethnic minority groups, dual-eligible Medicaid patients or suffering from end-stage renal disease (ESRD),   
• The January issue of Health Affairs also discusses five key healthcare trends for this year. In the same vein, the American Medical Association reports on how blockchain technology is poised to change the healthcare industry. 
• Revcycle Intelligence discusses a new follow-up study to the landmark 2003 article titled “It’s the Prices, Stupid” which finds not surprisingly that “prices are still the primary reason why healthcare spending in the US more than doubled from 2000 to 2016,”  The article’s discussion of Medicare cost shifting to the private sector illustrates how the medical profession would be killing the golden goose by supporting Medicare for All.