A Heritage Foundation article features an article by Donald Devine who was the OPM Director in President Reagan’s first term. Mr. Devine was a disruptive influence over the FEHBP. While he was OPM Director, OPM mandated a 12% across the board benefit cut in the FEHBP in order to bring down premiums. The action did cause enrollees to give lower premium plans a shot. The action’s impact on FEHBP premiums was blunted by the fact that contemporaneously Congress began to heavily shift Medicare costs onto commercial health plans like those in the FEHBP. 

As many as one in five children experiences a mental-health issue in a given year. But children must often wait months and travel long distances for an appointment with a specialist. 

Telehealth is not the alpha and the omega of care but breaking the medical service ice is a good thing.

Congress remains in session on Capitol Hill this week. Here’s a link to the Week in Congress’s report on last week’s activities on the Hill.

A front page article on this weekend’s Wall Street Journal questioned the profit levels available to carriers in Medicare Part D’s prescription benefit program.  Generally speaking, price and cost of production are independent variables. Not surprisingly to the FEHBlog at least, the punch line to the article is that the carriers’ pricing actions are legal, e.g., Congress needs to change the pricing methodology in the journalists’ view.  In contrast, OPM zealously controls carrier profit levels in the FEHBP.

The Obama Administration sought to ram value based pricing down the throats of hospitals via mandatory bundled pricing for certain surgical procedures. The Trump Administration rolled back these program, but it has held the door open to reinstating them. Healthcare Dive reports that

The first two years of the mandatory Comprehensive Care for Joint Replacement (CJR) bundled payment model for hip or knee replacement saw a “modest reduction” of 3% in spending for those two procedures, according to a new study in the New England Journal of Medicine. 

Hospitals in the CJR model saw a larger decrease in spending per joint replacement episode than those in the control group. That reduction was caused by a nearly 6% drop in the percentage of episodes in which patients were discharged to post-acute care facilities.  The CJR facilities didn’t see a significant difference in complications or percentage of joint replacement procedures for high-risk patients.

Is the juice worth the squeeze, as they say.

The 116th Congress was convened today. Nancy Pelosi (D Calif) was elected Speaker of the now Democrat run House. The House Oversight and Government Reform Committee which oversees OPM and the FEHBP changed its name to the Oversight and Reform Committee in order to illustrate the fact that its jurisdiction extends to the private sector (which was news to the FEHBlog).  Elijah Cummings (D Md) is the Chairman of that Committee.  Sen. Mitch McConnell (R Ky) remains Senate Majority Leader.

The Wall Street Journal reports today that

Bristol-Myers Squibb Co. agreed to buy rival Celgene Corp. in a deal valued at about $74 billion, combining two leading sellers of cancer drugs and potentially signaling the return of dealmaking to the pharmaceutical industry.  Overall, the merged company will have nine products with more than $1 billion each in annual sales—most notably Celgene’s multiple myeloma drug Revlimid and Bristol’s lung-cancer treatment Opdivo.

In other merger and acquisitions news, Health Payer Intelligence tells us what’s up with CVS Health’s integration with its recent acquisition, Aetna.

The ACA’s health plan funded Patient Centered Outcomes Research Institute issued its 2018 year in review. The ACA’s health plan funding for the PCORI sunsets soon, but the FEHBlog predicts that Congress will renew the funding. Of possible interest to FEHB carriers is a 2018 Annual Meeting. break out session examining the potential of two PCORI funded telehealth studies to change practice and what needs to be done to speed telehealth’s adoption. Get some value out of this puppy!

Modern Healthcare informs us that

The gap between U.S. hospitals’ outpatient and inpatient revenue continued to shrink in 2017 as more patients elect to get care in cheaper outpatient settings, and some believe a flip is inevitable in the coming years. The American Hospital Association’s 2019 Hospital Statistics report showed hospitals’ net outpatient revenue was $472 billion and inpatient revenue totaled nearly $498 billion in 2017, the latest year for which the report covers, creating a ratio of 95%, up from 83% in 2013. * * *

Hospital profits reached $88 billion in 2017, a 12.5% increase over the previous year and a 27% increase from 2013. [Thanks ACA!] Total net revenue reached $1 trillion in 2017, compared with $998 billion in 2016. Expenses in that time were $966 billion, up from $920 billion. The AHA provided Modern Healthcare with an exclusive copy of the report. 

Happy New Year, FEHBlog readers. Health Payer Intelligence reminds us

“Starting January 1, 2019, hospitals will be required to post their price lists online in an effort to increase price transparency and empower consumers to make informed choices about their care.

The mandate stems from the 2019 inpatient and long-term care hospital prospective payment system (IPPS/LTCH PPS) final rule, released in August, in which CMS included the requirement for hospitals to update their public price lists at least annually.”

The FEHBlog hopes that this new transparency will encourage hospitals to rationalize their list prices.  Health Payer Intelligence wisely observes that

The new rule offers an opportunity for health plans to share educational materials and strategies about how to shop for care, maximize the value of high-deductible plans and health savings accounts (HSAs), and develop better financial management skills. 

Payers who successfully expand their role as a trusted resource for financial information and transparent, open discussion of the cost of care are likely to retain member loyalty in a highly competitive market.

The Wall Street Journal reports on the short and long term health benefits of teatotalling for one month annually as long as you are not a heavy drinker. A British practice of engaging in a Dry January has crossed the pond to the U.S.

In a 2016 issue of BMJ, two experts debated its pros and cons. Ian Hamilton, an associate professor of addiction at the University of York, took the con side.

“I think it would be better if people had regular breaks, not binge breaks,” he says.

He also notes that an abrupt withdrawal from alcohol for excessive drinkers can be life-threatening.

“Over 800 people died of alcohol withdrawal in 2016,” says George Koob, director of the National Institute on Alcohol Abuse and Alcoholism, part of the U.S. government’s National Institutes of Health. “If you’re a heavy drinker, you want to get medical help for detoxification, because it really can kill you.” Seizures or hypothermia are usually what kill people in these situations.

Still, moderate drinkers definitely benefit from consuming fewer calories when they drink less, Dr. Koob says. Alcohol itself is a significant source of calories; it also stimulates the appetite. Studies have found it causes people to eat more and to opt for unhealthy foods. “You tend to graze on chips and not necessarily carrots,” Dr. Koob says.

The FEHBlog who is a moderate drinker plans to give Dry January a shot.

On Friday, the FEHBlog called attention to journalist Sam Quinones’ blog post about the sale of illegal fentanyl on Craigslist in the Los Angeles metro area. The FEHBlog did so because he firmly believes that the appropriate health plan role at this stage of the opioid crisis is to focus on treatment of members suffering from opioid disorders, not policing physician prescription practices. Last Sunday’s New York Times featured an illuminating article on the current controversy among opioid disorder treatment centers — whether or not to supplement talk therapy with medications that take the edge of addiction.

Finally, Tenet Healthcare, a large nationwide healthcare system, announced today that it has entered into a new multiyear network contract with Cigna. Its immediately preceding Cigna contract was scheduled to terminate today.

The new 116th Congress opens on Thursday January 3, 2019, with the Democrats in charge of the House of Representatives and the Republicans in charge of the Senate.

Today, the federal judge hearing the Texas v. United States (a/k/a US v. Azar) case decided “In accordance with Federal Rule of Civil Procedure 54(b), the Court therefore DECLARES that 26 U.S.C. § 5000A(a) [the ACA’s individual shared responsibility [a/k/a individual mandate] provision is UNCONSTITUTIONAL and INSEVERABLE from the remainder of the Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119-1045 (2010).” The Court also stayed his partial final judgment pending appeals. Next stop is the U.S. Court of Appeals for the Fifth Circuit.

On Friday, the Department of Health and Human Services ‘released the “Health Industry Cybersecurity Practices (HICP): Managing Threats and Protecting Patients” publication. The four volume publication, aims to provide voluntary cybersecurity practices to healthcare organizations of all types and sizes, ranging from local clinics to large hospital systems.” Check it out.

One week into the partial federal government shutdown, OPM is highlighting a Furlough Guidance page on its website. It appears that the shutdown will continue for another week.

The FEHBlog is a big fan of primary care doctors. The Wall Street Journal has a front page article today about hospital / health system employed primary care doctors:

Patients are often in the dark about why their doctors referred them to a particular physician or facility. Increasingly, those calls are being driven by pressure [by hospital health system employers] to keep business within a hospital system, even if an outside referral might benefit the patient, according to documents and interviews with doctors, current and former hospital executives and lawyers. 

Losing patients to competitors is known as “leakage.” Hospitals, in response, use an array of strategies to encourage “keepage” within their systems, which in recent years have expanded their array of services. 

The efforts at “keepage” can mean higher costs for patients and the employers that insure them—health-care services are often more expensive when provided by a hospital. Such price pressure and lack of transparency are helping drive rising costs in the $3.5 trillion U.S. health-care industry, where per capita spending is higher than any other developed nation.

Of course, the Affordable Care Act has lead to a big jump in the number of primary care doctors who are employed by hospitals or health systems that join together hospitals and doctors. Another irony is that the employers are using their federal government funded electronic medical records to track their employed doctors’ referral practices. No bueno.

A few tidbits to wrap up the week:

•  Health Data Management discusses three cybersecurity trends for 2019. 
• Med City News reports that the Justice Department recovered over $2.5 billion based on False Claims Act claims in 2018. It’s the ninth consecutive year that the Justice Department’s False Claims Act recoveries topped $2 billion. The article discusses the recoveries obtained from the healthcare industries. 
• One of the FEHBlog’s most illuminating books of 2018 was journalist Sam Quinones’ Dreamland about the opioid crisis (currently selling on Amazon as a Kindle book for $6.99). I follow Mr. Quinone’s blog. His latest post is an eye opener.  

In Los Angeles, Craigslist has emerged in the last few months as a major new marketplace for illicit fentanyl. The online classified ad service has for several years been a virtual street corner, a place where drugs are sold under lightly veiled pseudonyms: black-tar heroin (“roofing tar”), crystal methamphetamine (“clear sealant”), or generic and most likely counterfeit oxycodone 30 mg pills (“M30”). But fentanyl, the deadliest of them all, is a new arrival, apparently within the last year, and for the moment appears to be for sale on Craigslist only on its Los Angeles site.

As the FEHBlog noted in earlier posts, heroin and fentanyl aren’t available at your local CVS or Walgreen’s pharmacy. Who would have thought Craigslist?

OPM today called interested parties’ attention to its length 2015 shutdown furlough guidance. The benefits discussion is found on pages 15-19.

In relevant litigation news —

• All of the parties in the Texas v. Azar (a/k/a Texas v. United States) case have agreed that the federal district court for the Northern District of Texas should authorize an immediate appeal of the decision declaring the Affordable Care Act unconstitutional to the U.S. Court of Appeals for the 5th Circuit pursuant to 28 USC Sec. 1292(b). If the district court agrees with the parties on this issue, the Court of Appeals then has the discretion to accept or reject this interlocutory appeal. 
• CNBC reports that 

A U.S. federal judge reviewing an agreement between the government and CVS Health allowing it to buy health insurer Aetna has indicated that he will not halt most integration between the two companies.

Congress will return to Capitol Hill later this week in an effort to resolve the FY 2019 appropriations issue that has created a partial government shutdown.  Here’s a link to the Week in Congress’s report on last week’s activities on Capitol Hill. The House passed a tax bill (HR 88) that would extend 2019’s suspension of the ACA’s onerous heath insurer tax beyond 2019 to the end of 2021. The bill would further delay the imposition of Cadillac tax by one year from the end of 2021 to the end of 2022. The ACA taxes anything that moves. It’s unlikely that the Senate do its bit by passing the bill in this Congress. The new Congress begins on January 3, 2019.

As the FEHBlog pointed out, these shutdowns do not materially impact the FEHBP because of OPM’s administration of the Program continues due to a 1% surcharge on FEHBP premiums. Speaking of premiums, OPM continues to make annuity payments during any shutdown. Half of FEHBP premiums are withheld from annuity payments. A 2013 OPM FEHBP carrier letter discusses how a full shutdown affects employee premiums payments. In this partial shutdown many large federal employers including the Defense Department and the Department of Health and Human Services are funded through September 30, 2019, so their employees will continue to work and receive paychecks from which the FEHBP premiums are funded.

If you changed plans in the recent Open Season and you are an annuitant, your new coverage begins on January 1, 2019. If you are an active employee, your new coverage begins on January 6, 2019, which is the first day fo the first pay period in 2019.  In either case, if you are hospitalized on the first day on which you new coverage would begin, coverage under the predecessor plan continues until your are discharged up to 90 days of confinement under OPM’s regulations.

Jingle bells.

Well that’s the FEHBlog gets for crowing about his prescience in anticipating no partial government shutdown with the continuing resolution extended into the new Congress. Now because the House passed a bill funding the border wall and disaster relief along with the predicted extension, a partial shutdown is likely because the Senate needs 60 votes to pass the House bill. The important consideration is that while OPM is one of the agencies funded under the continuing resolution, OPM’s work on the FEHB Program is funded by a 1% surcharge on FEHBP premiums, not on appropriations. Consequently, the FEHB Program will keep chugging along notwithstanding any partial shutdown. And so will the FEHBlog.

The Cigna / Express Scripts merger closed yesterday as scheduled.

“Today’s closing represents a major milestone in Cigna’s drive to transform our health care system for our customers, clients, partners and communities. Together, we are establishing a blueprint for personalized, whole person health care, further enhancing our ability to put the customer at the center of all we do by creating a flexible, open and connected model that improves affordability, choice and predictability. By approaching each individual as a whole person – body and mind as one – we are empowering and supporting customers to take control of their total health and well-being,” said David M. Cordani, President and Chief Executive Officer of Cigna. “As a combined company, we are also going deeper into our local communities to help close gaps in care, and our $200 million investment will be a key driver of transforming health care at the societal and local levels.”

Good luck to the new venture.

Joseph Antos, James C. Capretta, and Walton Francis write for the American Enterprise Institute suggest that to control taxpayer spending federal and postal retirees should get their health coverage through Medicare or FEHBP rather than a combination of the two.  Their suggestion if implemented would sink the FEHBP. Currently early retirees (pre age 65) are covered under the FEHBP. Medicare shifts costs on the cost of caring for active and early retirees. At age 65 retirees are covered under FEHB and Medicare. Basically Medicare covers the hospital care; FEHBP covers the prescription drug care, and the two programs split other outpatient care. The Medicare prime retirees subsidize the early retirees and older active employees. Without this subsidy (either by keeping the older retirees entirely in FEHBP or kicking them entirely into Medicare, FEHB premiums would skyrocket due to the aging demographics of the active employees and early retirees. Jingle bells.

A few other tidbits —

• HHS provides an update on its new Health Sector Cybersecurity Coordination Center.
• Becker’s Hospital Review discusses a final HHS rule overhauling Medicare’s accountable care organization program. 
• The same publication also provides a handy list on recent development in the healthcare information technology arena. 
• Fierce Healthcare updates us on the judicial proceedings concerning the CVS Health / Aetna merger. 
• Healthcare Payer Intelligence reports that HHS is formally bringing down the curtain on its effort to add a health plan identifier to the set of HIPAA standard identifiers. The time would have been better spent on a patient identifier. 

Healthcare Dive reports that Cigna’s acquisition of prescription benefits manager Express Scripts is expect to close tomorrow.  In contrast to the CVS Health acquisition of Aetna, this closing is not subject to review by a federal court. The  Justice Department triggered federal court review of the CVS Health / Aetna deal by filing a lawsuit concerning the merger in order to ensure that Aetna sold off its Medicare Part D business. In retrospect that looks like overkill.

In other mergers and acquisitions news, the Wall Street Journal reports that

[Drug manufacturers] Pfizer Inc. and GlaxoSmithKline PLC plan to combine their consumer health-care units and eventually spin off the joint venture, creating the world’s largest seller of drugstore staples like Advil and Sensodyne toothpaste. The deal, announced Wednesday, will free up both companies to concentrate on prescription medicines, which tend to be more profitable if also higher risk.

The Federal News Network brings us up to date on resolution of FY 2019 appropriations.

As the Senate plans to consider a continuing resolution later on Wednesday that would avoid a partial government shutdown at the end of the week, federal employees are still wondering whether they’ll get a raise in 2019. The prospects, at least for now, are grim.

Senate Majority Leader Mitch McConnell (R-Ky.) filed the continuing resolution, which funds the remaining agencies that still lack a full-year 2019 budget, through Feb. 8. The continuing resolution doesn’t include a proposed 1.9 percent pay raise for civilian employees in 2019, though a few Senate Democrats have said they’ll push for a budget anomaly in the CR that would adjust pay for civilian employees

Time will tell.

The FEHBlog noticed that OPM has posted on its website the OPM Inspector General’s semi-annual report to Congress for the period ended September 30, 2018, and OPM’s management response to that report.