July 30, 2014 SIGN IN | REGISTER

Merritt: Congress Considering Risky Changes to Federal Employees’ Health Benefits

• It would require FEHBP to stop managing drug benefits like a Fortune 500 company and instead operate more like Medicare or Medicaid, which whatever their other virtues, are both on the verge of insolvency because of their inability to control costs. While state Medicaid programs use price controls on prescription drugs, they often bow to political pressure and pay two or three times more than PBMs pay drugstores. Meanwhile, for years Medicare underpaid participating primary care physicians, leading many doctors to drop Medicare patients altogether. Now Congress is forced to remedy the situation with a massive, unbudgeted increase in Medicare physician pay. Ironically, the one part of the Medicare program that is consistently popular and under-budget, is Medicare Part D, which, like FEHBP, relies on sophisticated PBMs, not arbitrary price controls.

• The bill would effectively ban some PBMs from participating in FEHBP. For example, PBMs that are partially owned by chain drugstores would be banned from the program, while PBMs owned by health plans would be forbidden from even making an operating margin. The reason? Not poor performance or consumer angst, but a suspicion among some in Congress that such PBMs might be “conflicted.” This unsubstantiated claim would surely be lost on those satisfied federal employees who are currently served by these PBMs and whose benefits would be disrupted because of this legislation.

Finally, the bill omits perhaps the most important thing of all: as a large purchaser, OPM already has the authority to implement each and every one of the bill’s provisions. OPM routinely demands new PBM contract requirements whenever it is convinced that it will improve FEHBP. For example, it has already required FEHBP carriers to insist that their PBMs meet rigorous transparency and cost-savings standards. Micromanaging FEHBP’s benefit design through legislation would undermine OPM’s flexibility to structure a benefit that reflects enrollees’ ever changing preferences.

The fact that neither OPM nor the federal workers it represents have asked Congress for this legislation should speak volumes.

Mark Merritt is president and CEO of the Pharmaceutical Care Management Association.

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