Category Archives: Health Policy

The Justice Department’s New Brief in Texas v. United States

Posted on by • Posted in 2020 Election Issues, ACA, Dept of Justice (DOJ), Health Policy, Texas v. United States • 1 Comment

The Justice Department’s New Brief in Texas v. United States

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Last week, the Fifth Circuit asked the parties to Texas v. United States—the broadside challenge to the constitutionality of the Affordable Care Act—to submit letter briefs on whether anyone had standing to appeal. (Jonathan Adler has offered excellent analysis of that order here.)

Though the briefs won’t all be filed until Friday, the Justice Department submitted its brief this afternoon. In a welcome surprise, I agree with most (but not all) of it. It should lay to rest any of the Fifth Circuit’s qualms that the case is not properly before it.

* * *

In its brief, the Department says that it’s got standing to take the appeal, even if no one else does. “[T]he government remains an appellant in this case and, critically, continues to enforce the Affordable Care Act.” Until it stops enforcing the Act, the red states and the Trump administration are at odds over the constitutionality of its continued implementation. That’s enough for a case or controversy.

Confirming the point is the Supreme Court’s decision in United States v. Windsor, the case in which the Obama administration declined to defend the Defense of Marriage Act. As the Department explains:

[H]ere, as in Windsor, the United States has both appealed that judgment and continued to enforce the statute to the detriment of the plaintiffs pending final judicial resolution of the constitutional question, even though the Executive Branch agrees with the district court’s legal conclusion. In both cases, the government’s refusal to acquiesce to the relief entered against it by the district court suffices to preserve an Article III controversy.

Significantly, the Justice Department now says that it will continue to enforce the ACA “pending a final judicial determination of the constitutionality of the individual mandate as well as the severability of the ACA’s other provisions.” Ongoing enforcement means there’s a live dispute.

I think that’s right. Not only is it consistent with Windsor, but it would avoid a very odd result. If no one could appeal, Judge O’Connor’s decision invalidating the ACA would likely remain in place—even as the Trump administration continued to interpret it as allowing for continued enforcement. But that outcome wouldn’t satisfy the red states, which seek to blow up the ACA altogether. And so the parties would still be at loggerheads, their nominal agreement on the legal questions in the case notwithstanding.

The Department also points out that it’s not in total agreement with Judge O’Connor. In a strange portion of its opening brief, it argued that parts of the ACA that didn’t directly give rise to the plaintiffs’ injuries should be sustained. The Department flagged certain anti-fraud statutes as examples, but it’s not at all clear how far that argument goes. Does it apply to the biosimilar program? Calorie-count labels in chain restaurants? The Medicaid expansion? Regardless, the point holds that the red states and the federal government disagree about how much of the ACA should be invalidated if the individual mandate is unconstitutional. That should be enough for standing.

* * *

Because the federal government itself has standing to appeal, the Justice Department thinks it’s “immaterial” whether the House of Representatives or the blue-state coalition—both of which have intervened in the case—can also take an appeal. For now, I think that’s right.

Nonetheless, the Department offered its views, as the Fifth Circuit asked. As to the House of Representatives, the Department says that the Supreme Court’s decision in Virginia House of Delegates v. Bethune-Hill confirms that the House, as one part of a bicameral legislature, can’t sue to vindicate an injury sustained by Congress as a whole. I think that’s right, as I’ve argued before.

But who cares? Unless the blue states also lack standing, it’s irrelevant. And that’s where I think the Justice Department’s brief goes astray.

The Department says that the blue states also lack standing to appeal because nothing in O’Connor’s decision—which was a declaratory judgment, not an injunction—alters their “tangible legal rights.” In essence, the Department argues that O’Connor’s declaration that the ACA is invalid should be understood to bind only the 19 red states that brought the case, not “nonparties like the [blue] state intervenors.” As such, the blue states don’t have an interest in the case and can’t take an appeal.

That’s wrong, however. Intervention makes you a party to a lawsuit. And you’ve got a right to intervene when disposing of the case in your absence would “impair or impede” your interest in the case.

When the red states filed their complaint, they sought complete invalidation of the ACA—not just invalidation in the 19 red states. Whatever the Fifth Circuit says on appeal could determine (or at least influence) whether the red states get the relief they asked for. Indeed, because an appeals court can affirm “on any grounds supported by the record,” it’d probably be within the Fifth Circuit’s authority to interpret O’Connor’s order to apply outside the 19 red states. It’s risible to say that California is a stranger to litigation that could wipe out the ACA within its borders.

Matters might be different if the red-state plaintiffs had dropped their demand for nationwide relief. But they haven’t. (They did at one point ask O’Connor to enter red-state specific reliefif he was unwilling to grant nationwide relief. But that’s not the same thing as abandoning the claim.) Matters might also be different if district courts were prohibited from granting relief that extended beyond the plaintiffs. Though I’m on record in support of such a prohibition, that’s not the world we live in.

So yes, the blue states have standing to appeal. But it shouldn’t matter. We’ve got a live case or controversy between the red states and the Trump administration over whether it should continue enforcing the ACA. That should end the matter of whether this appeal is properly before the Fifth Circuit.

 

 

 

Democrats have lurched leftward on health benefits for undocumented immigrants

Posted on by • Posted in 2020 Election Issues, Health Policy, Undocumented Immigrants • Leave a comment

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2019/07/01/the-health-202-democrats-have-lurched-leftward-on-health-benefits-for-undocumented-immigrants/5d18b0a61ad2e552a21d51bf/?utm_term=.63e054feab31

President Trump could barely hide his glee when every one of his potential Democratic opponents shot up their hands at Thursday night’s debate when asked whether undocumented immigrants should be included in government health plans.

And for a clear reason. Extending public benefits to immigrants who are in the United States illegally has long been a fraught issue, even among Democrats. Nine years ago, the Democratic-led Congress banned such immigrants from the Obamacare marketplaces — even if they use their own money to buy a plan — and even the most liberal states have struggled to expand coverage to the undocumented population. Undocumented immigrants are excluded from the Medicare and Medicaid programs, with some exceptions for children and pregnant women.

It’s hardly the first time a Republican has pounced on a Democrat for appearing to support government health benefits to the undocumented. Many will recall the infamous moment in 2009 when Rep. Joe Wilson (R-S.C.) yelled, “You lie!” in the House chamber as President Obama told them health proposals wouldn’t cover undocumented immigrants.

Wilson was wrong — the eventual ACA did indeed exclude undocumented immigrants from health insurance expansions, as Obama had promised. But this is one of several issues on which the 2020 Democratic contenders are now moving quite a bit further leftward as they seek the presidential nomination. They’re certainly far from where the last Democratic presidential nominee — Hillary Clinton — stood on the issue.

In her 2016 health-care platform, Clinton would have allowed undocumented immigrants to buy marketplace plans, one step further than the ACA’s outright ban. But she would have still excluded them from getting the ACA’s income-based subsidies, increasing the likelihood undocumented immigrants still couldn’t find affordable coverage.

Rewind to two decades before that, to when Clinton as first lady was trying to get a health-care revamp passed from her perch at the White House. At the time, the first lady expressed concern that extending benefits to the undocumented could encourage more people to enter the country illegally.

“We do not think the comprehensive health-care benefits should be extended to those who are undocumented workers and illegal aliens,” Clinton told Congress in 1993. “We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.”

The Democrats onstage last Thursday sounded a lot different.

NBC moderator Savannah Guthrie posed this question to them after an extended discussion about the Medicare-for-all and public option plans they are proposing to offer Americans:

“A lot of you have been talking tonight about these government health care plans that you have proposed in one form or another,” Guthrie said. “Raise your hand if your government plan would provide coverage for undocumented immigrants.”

All the candidates — which included the two front-runners, former vice president Joe Biden and Sen. Bernie Sanders (I-Vt.) — raised their hands in response.

But Biden’s stance was notable, considering where mainstream Democrats used to stand on the issue. “You cannot let people who are sick, no matter where they come from, no matter what their status, go uncovered,” Biden said on the stage. “It’s just going to be taken care of, period … it’s the humane thing to do.”

Both Biden and South Bend, Ind., Mayor Pete Buttigieg noted that undocumented immigrants pay Social Security taxes if they have jobs and sales taxes when they purchase goods and services, arguing that’s another reason they should be included in public health-care programs.

“This is not about a handout,” Buttigieg said. “This is an insurance program. And we do ourselves no favors by having 11 million undocumented people in our country be unable to access health care.”

To Buttigieg’s point, there’s considerable evidence that helping people buy health insurance results in less spending in the long run. When hospital emergency departments care for uninsured patients, the hospitals end up passing along the costs to the insured patients, resulting in higher premiums for everyone.

Julian Castro, former HUD secretary under Obama, reiterated his support yesterday for giving health insurance to undocumented immigrants.

“What I’d like to Americans to know, right now, No. 1, undocumented immigrants already pay a lot of taxes,” Castro said on ABC’s “This Week with George Stephanopoulos.” “Secondly, we already pay for the health care of undocumented immigrants. It’s called the emergency room.”

That’s a reason California — home to about one-fifth of the country’s undocumented immigrants — recently passed a budget extending Medicaid to some of the undocumented. But it’s the only state to do so, and it chose the most limited, least-costly option.

Last week, Gov. Gavin Newsom (D) signed a $214.8 billion budget into law that extends California’s Medi-Cal program to undocumented adults ages 19 to 26. That measure also expands on the federal health-care law in a number of ways, reinstating its individual mandate to buy coverage — which Congress repealed a few years ago — and raising the income threshold for getting marketplace subsidies.

But the Medi-Cal expansion is only a shadow of what many state lawmakers wanted. The state’s Senate passed a bill also opening its door to undocumented immigrants over age 65, while the Assembly’s version would have opened it up to everyone. Newsom insisted on expanding coverage only to young adults, a much less expensive option estimated to cover 138,000 undocumented immigrants.

The political obstacles to such a move were evident back in 2010 when Congress was constructing the ACA and barred people in the country illegally from participating in any part of the law.

California took some steps in 2016 toward asking the federal government for permission to let undocumented immigrants buy marketplace coverage but withdrew its request over fears the young Trump administration might use the request to target immigrants for deportation. New York lawmakers have proposed similar legislation, but it hasn’t gained traction.

 

 

 

These are the judges holding Obamacare’s future in their hands

Posted on by • Posted in 2020 Election Issues, ACA, Appellate Court, Health Policy, Lawsuit, Supreme Court • Leave a comment

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2019/07/02/the-health-202-these-are-the-judges-holding-obamacare-s-future-in-their-hands/5d1a5add1ad2e552a21d51e8/?utm_term=.a44fbc001f82

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The future of Obamacare is at stake next week, when the country’s most conservative appeals court will consider whether to uphold a ruling striking down the whole law. But the politically fraught, high-stakes case is at least likely to get a fair hearing by three judges whose names were announced yesterday, legal experts say.

Two of the judges were GOP-appointed; they include Jennifer Walker Elrod, a George W. Bush appointee, and Kurt Damian Engelhardt, an appointee of President Trump. But they’re known for being some of the more measured and thoughtful members of the U.S. Court of Appeals for the 5th Circuit, distinct from other judges who might be more politically inclined.

“There’s no doubt there are a couple firebrand jurists out there … but none of those judges are on this panel,” New Orleans litigator Harry Morse, who has argued before Engelhardt, told me.

“There’s nothing about these three that strikes me that they’ll be looking for headlines or take a stand on anything other than their fair reading of the law,” he added. “They’re all pretty careful folks.”

A third judge, Carolyn Dineen King, was appointed by former Democratic president Jimmy Carter. She, along with Elrod and Engelhardt, will hear oral arguments on July 9 in the closely watched lawsuit brought by nearly two dozen GOP-led states who are trying to unravel the ACA, even after it survived years of court challenges and repeal attempts in Congress.

It’s a deeply disturbing situation for California and other Democrat-led states defending the health-care law, who fear its consumer protections and insurance expansions could be wiped out in a moment. They’ve stepped up to defend the law because President Trump’s Justice Department is refusing to do so — even though a decision overturning the law would create a logistical and political mess for the administration.

The states, led by Texas, were certainly strategic in where they mounted the challenge. The 5th Circuit — whose 16 active judges include 11 appointed by Republicans — is widely viewed as being more sympathetic to Republican arguments that the ACA must now be struck down because Congress repealed the basis for its constitutionality, the individual mandate to buy coverage.

Because the panels are chosen randomly, it would have been unlikely for the trio hearing next week’s ACA lawsuit to include three or even two judges appointed by Democrats. The Elrod-Engelhardt-King panel is a good reflection of the 5th Circuit’s overall makeup, said Barry Edwards, a lecturer at the University of Central Florida who has written about U.S. appeals courts.

“I’d say the Democratic states were hoping for a better panel, but this is the panel they expected,” Edwards said.

Engelhardt was sent to the 5th Circuit by Trump, who relies heavily on recommendations from the influential Federalist Society. But he was initially made a federal district judge by George W. Bush, indicating he may not be as far to the political right as the judges Trump tends to favor, Edwards told me.

Engelhardt has been on the 5th Circuit for a little more than a year, while Elrod has been on its bench since 2007.

Even those familiar with the 5th Circuit find it hard to predict how the panel will land on last year’s district court ruling striking down the entire ACA, the decision the states are appealing. Its ruling will have bearing on whether the Supreme Court agrees to hear yet another challenge to the ACA, after upholding most of the law in 2012 and then again in 2015.

Edwards guesses the appeals court will upheld the lower-court decision scrapping the health-care law — a scenario in which the Supreme Court would almost certainly take up the case, given how many people the law has touched. But Morse said it’s hard for him to believe the judges would agree to strike down the ACA given how many times it has survived past legal challenges.

“I know it’s two Republican judges and one Democratic judge, but the ACA has been challenged twice in front of the Supreme Court,” Morse said. “The argument being made is the ACA can’t survive without the individual mandate, and Congress has implicitly rejected that.”

Nicholas Bagley, a law professor at the University of Michigan who has watched the case closely, said he’s certain the Supreme Court will hear the case if the 5th Circuit strikes the law. But he doesn’t expect a SCOTUS review if it leaves the law in place.

“If the panel reverses, I’m not at all sure that the Supreme Court will take the case,” Bagley wrote me in an email. “It’s that goofy.”

Last week, before the judges’ names were announced, the appeals court questioned whether the Democratic-led states and the U.S. House have the right to appeal the lower-court decision striking the law. Bagley and some other legal scholars interpreted the request as boding poorly for the law’s future, while others said it was a reasonable request, my Washington Post colleague Yasmeen Abutaleb reported.

 

Trump craves big action on drug prices to take to the campaign trail

Posted on by • Posted in 2020 Election Issues, Food and Drug Administration (FDA), Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, High Drug Prices, Indecision, Leadership Implementation, Out of Pocket Expenses • Leave a comment

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There may be a modest slowdown this year in the growth of drug prices, but it’s nowhere near the seismic shift President Trump has called for. And that seems to be irking the president to no end.

Much of the president’s frustration has been borne by Health and Human Services Secretary Alex Azar, a former drug executive who until very recently pushed back on proposals to allow the importation of lower-cost drugs from Canada and give the government the tools to directly negotiate lower drug prices in the Medicare program, my Washington Post colleagues Yasmeen Abutaleb, Josh Dawsey and Laurie McGinley report.

But now, under intense pressure, Azar has reversed his long-standing opposition to at least one of those ideas: drug importation, an idea typically embraced by Democrats and dismissed by Republicans and the drug industry.

“Inspired by the president’s passion, Secretary Azar has been pushing FDA to go even bigger and broader on importation,” a senior administration official told my colleagues, although the official declined to detail specific policy changes.

It’s been a little more than a year since Trump promised Americans, in a speech from the Rose Garden, he would slash the price of prescription drugs in the United States. In that time, his administration has proposed some bold new regulations that could help move the needle, but only one has so far been finalized — a new requirement that went into effect this month for drugmakers to list prices in television ads.

While Azar has championed a proposal to eliminate the secretive rebates drug manufacturers pay to insurers, opposition to the idea from Domestic Policy Council head Joe Grogan is hamstringing the effort, my colleagues report. Grogan dislikes its estimated $180 billion price tag and doesn’t view the measure as central to the administration’s drug-pricing effort, they write.

There’s another proposal under review at the Office of Management and Budget to tie some Medicare drug prices to those paid by other countries, but it’s opposed by key Senate Republicans and the drug industry.

A senior administration official downplayed talk of tension between Azar and Grogan, saying the two, along with White House legislative affairs director Eric Ueland, speak three times a week about what is happening on Capitol Hill.

And on Monday, the New York Post published a joint op-ed by Azar and Grogan praising a recent executive order from Trump aimed at more transparency around the prices negotiated between hospitals and insurers.

“President Trump has promised a better vision: a health care system that treats you like a person, not a number,” Azar and Grogan write. “He wants to hold providers and Big Pharma accountable to transparency and reasonable prices.”

Meanwhile, drugmakers have continued hiking prices, albeit a bit more slowly on average. List prices for branded drugs grew 3.3 percent in this year’s first quarter, compared with 6.3 percent in the first quarter of 2018, according to SSR Health pharmaceutical analysts. Bernstein analysts told Politico that drug prices jumped 10.5 percent over the past six months, less than over the same period last year but still four times the rate of inflation.

Trump has frequently referenced some encouraging data from the consumer price index, where the index for prescription drugs fell by 0.6 percent for the 12 months ending in December, according to the Bureau of Labor Statistics. The index also dropped in January, February, March and May — a string of monthly declines not seen since 1973, my Post fact-checking colleagues recently noted.

Yet these data are a far cry from the drastic price reductions Trump would love to tout on the campaign trail as he seeks reelection in 2020.

“By all accounts, drug prices are a fixation for Trump, who frequently sends advisers news clippings and summons them to the White House to rant about the issue,” Yasmeen, Josh and Laurie write. “The guy likes to make money, and he thinks they make too much money,” said one former senior administration official.

A senior administration official told my colleagues there was frustration at a lack of executive branch tools to lower drug prices and that some of Trump’s ideas were ambitious but unworkable.

“Disagreements over how to proceed have created a policy free-for-all as different advisers — and the president himself — pursue what appear to be ad hoc and sometimes dueling approaches,” they write. “Trump entertains proposals usually pushed by progressive Democrats one moment and free-market GOP ideas the next.”

 

Out-of-pocket costs rising even as patients transition to lower-cost care settings

Posted on by • Posted in 2020 Election Issues, Consumerism, Denial Rates, Emergency Care, Health Insurance Coverage Adequacy, Health Policy, Health System, Healthcare Financial Management Association (HFMA), High Deductible Health Plans, High Drug Prices, High Prices, Highly Specialized Drugs, Hospital, Hospital Industry, Out of Pocket Expenses, Primary Care, Rev Cycle Management, Urgent Care • Leave a comment

https://www.healthcarefinancenews.com/news/out-pocket-costs-rising-even-patients-transition-lower-cost-care-settings?mkt_tok=eyJpIjoiWldZeVlXTm1aVEF6TVdKbSIsInQiOiJjbWFzeVA2TGlWZkNkXC9odGxcLzdLczFZSDYxd1hoYW04b0wxY0ljQ25zblpYN1VWc2FMWFFCQWpmc2tCYmE4d1Z3eVdMd2htY3JiSjZ3N2Urek43SHFJbWFsckdRbUNycFJoQjhzZm5VcGpJUUhKUDlBMWF2eGJzRUhmZGFlUUx0In0%3D

Patients saw increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and ED care in 2018.

A new TransUnion Healthcare analysis has found that most patients likely felt a bigger pinch to their wallets as out-of-pocket costs across all settings of care increased in 2018. The new findings were made public yesterday at the 2019 Healthcare Financial Management Association Annual Conference in Orlando.

The analysis reveals that patients experienced annual increases of up to 12% in their out-of-pocket responsibilities for inpatient, outpatient and emergency department care last year.

In 2017, the average inpatient cost was $4,068; the average outpatient cost was $990; and the average emergency department cost was $577.

In 2018, the average inpatient cost was $4,659; the average outpatient cost was $1,109; and the average emergency department cost was $617.

FUELING THE TREND

There are certain factors that are influencing this trend, according to Jonathan Wiik, principal of healthcare strategy at TransUnion Healthcare.

“Patients are becoming more aware that emergency care is expensive and somewhat inefficient,” Wiik said. “No one wants to go to the emergency room unless we have to, because we don’t want to deal with the time there or the expense. They aren’t the best place to get primary or even urgent care.”

Another factor, he said, is that providers realize the emergency department is a care setting of last resort for many. Providers want to make sure that have room in the ED for cases that are real emergencies, so they’re essentially curating their patients, steering patients to the most cost effective settings possible — often primary care, which is the least expensive setting.

Noting that the biggest annual increases were in inpatient and outpatient care, Wiik said that was largely a function of utilization and just a general wariness, in addition to the fact that most EDs have pretty flat contracts. Financial communication with patients is also an issue.

“Most people can’t afford the average out-of-pocket, so providers are really trying to educate patients as early as they can about those costs,” said Wiik. “Emergency care is a really hard place to educate people on finances, let alone collect on them.”

RISING COSTS

The analysis found that, during a hospital visit, patients are likely experiencing cost increases that continue the trend of higher out-of-pocket costs. About 59% of patients in 2018 had an average out-of-pocket expense between $501 and $1,000 during a healthcare visit. This was a dramatic increase from 39% in 2017. Conversely, the number of patients that had an average out- of-pocket expense of $500 or below decreased from 49% in 2017 to 36% in 2018.

And with out-of-pocket costs increasing, the trend toward consumerism is growing as more patients, payers and providers transition to lower cost settings of care.

One example: Inpatient care, traditionally the most expensive healthcare option, has seen a leveling off with the percentage of price estimates remaining at 8% between 2017 and 2018. The percentage of outpatient services estimates, generally about one-quarter of the cost of inpatient services, rose in that same timeframe from 65% to 73%.

“Patients are likely seeing more providers and payers recommending that they take advantage of cost-effective healthcare options, which brings down costs for all parties,” said Wiik. “This is especially important as costs continue to rise in all areas of healthcare, particularly in inpatient, outpatient and emergency department services.”

This is having an impact on providers, payers and patients, he said.

“Let’s pretend Joanna had an MRI in her head, and that ran $3,200. That might have been paid by Blue Cross Blue Shield, and $100 out of Joanna’s pocket. Now Joanna’s paying $300. Most patients don’t look up how much the MRI’s going to be. They just get the bill later and try to figure it out. I think the patient portion of the bill is going to be in the 35, 40% range very soon. What that means is we’re quickly approaching half of the bill coming from the patient and half from the payer. That’s not insurance anymore, that’s a bank account.”

A recent Kaiser Family Foundation study indicated that 34% of patients are finding it difficult to pay their deductible before insurance kicks in. In addition to patients being challenged to make payments, the trend is that providers are also feeling the pressure of increased denial rates and write-offs, which is increasing bad debt.

Considering these factors together — increased out-of-pocket expenses, a patient’s challenge to make payment, and increased denial rates — collecting payments from all payers is critical for providers. In order for providers to ensure they receive payment for the patient-care services rendered, it is vital that they implement strategies that maximize reimbursements.

 

 

Medical costs projected to increase 6% by 2020, says PwC

Posted on by • Posted in Biosimilars, Chronic Diseases, Generic Drugs, Health Policy, Health System, High Prices, Hospital, Hospital Industry, Out of Pocket Expenses, Telemedicine, Value-Based Healthcare • Leave a comment

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Utilization is still being dampened by high deductibles and other cost sharing, but at the expense of employee satisfaction.

Medical costs are rising, and by this time next year costs will likely show a modest increase of about 6% over the past two years, according to a new report from PwC, PricewaterhouseCoopers.

After figuring in health plan changes such as increased employee cost sharing and network and benefit changes, PwC’s Health Research Institute, which conducted the study, projects a net growth rate of 5 percent. Even with employers’ actions, market forces likely will still overrun the efforts to quell them.

Prices, not utilization, are continuing to fuel healthcare spending. Utilization is still being dampened by high deductibles and other cost sharing, but at the expense of employee satisfaction with their health plan. In response, employers are inserting themselves more forcefully into the healthcare delivery equation.

WHAT’S THE IMPACT

Beyond market forces, HRI identified three “inflators” that will, influence the medical cost trend.

One is that drug spending will grow faster. Between 2020 and 2027, retail drug spending under private health insurance is projected to increase at a rate of 3 percent to 6 percent a year as the impact of generics on spending plateaus, biosimilars continue to see slow uptake, and costly new therapies enter the market.

Chronic diseases will also be a major issue. Obesity and Type 2 diabetes continue to produce high rates of hypertension and cardiovascular disease. Sixty percent of adults have a chronic disease, with 40 percent managing two or more. For employers, per capita health spending on someone with a complex chronic illness is eight times that of a healthy person.

Lastly, employers are beginning to recognize the importance of helping their employees manage their mental health and wellbeing. Nearly 75 percent of employers offer mental health disease management programs, the report found. Anytime access is expanded, costs will go up in the short term, though it may have the opposite effect long-term.

And speaking of the opposite effect, there are a few “deflators” HRI recognized that will likely slow down the medical cost trend.

HRI predicts that in 2020, more companies will take action to make sure healthcare is accessible to their employees, opening and expanding clinics as a strategy to control the cost trend. Thirty-eight percent of large employers offered a worksite clinic in 2019, up from 27 percent in 2014.

Also, payers are designing plans to encourage members to choose free-standing facilities and in-home care rather than more expensive sites. How those benefits are designed, and how employees perceive the costs, will shape the effectiveness of site of care strategies. Payers and employers are aiming to grow the role of telemedicine as employees grow more comfortable with it, especially if out-of-pocket costs are lower and the quality doesn’t suffer.

WHAT ELSE YOU SHOULD KNOW

The trend has implications for employers, payers, providers and even pharmaceutical and life science companies.

For payers, it becomes important to  benchmark the prices paid commercially against a common reference point such as Medicare. With this information it’s possible to pursue value-based arrangements with high-performing and lower-cost providers, in addition to negotiating better contracted rates on existing fee-for-service arrangements.

For providers, a value line strategy is necessary as employers and consumers look for high quality care for a low cost. Providers armed with a value line strategy are more likely to be included in health plans’ high-performance networks, and are better positioned to directly contract with employers.

Providers should also understand what risk they can take on to guarantee a health outcome, and the cost structure needed to make them profitable in doing so. Providers should understand and manage both the risk inherent in their ability to deliver care and the risk of the population they’re managing — from health status to the social determinants impacting their health — to help them design appropriate clinical interventions and non-clinical support services.

For employers, it becomes imperative to understand their role as the purchaser of healthcare for employees and join the ranks of employer activists, pursuing new solutions to lower costs, improve access and enhance quality. Pharmaceutical and life science companies, meanwhile, should go beyond the basic outcomes-based arrangements currently in place and consider exploring and expanding alternative financing arrangements, such as subscription models for unlimited access to a product for a set period of time, or a mortgage model to finance expensive specialty drugs over time.

THE LARGER TREND

The PwC study loosely mirrors the findings of an October report from the Altarum Center for Value in Health Care, which found prices and spending in healthcare growing steadily, but at a moderate pace.

The country’s healthcare spending habits are at a level nearly double that of similar countries. Spending per capita in the U.S. is more than $9,000, compared to just over $5,000 in other Western nations, and because prices are growing slowly but steadily, spending is doing the same.

 

 

When a hospital wields monopoly power

Posted on by • Posted in Barriors to Entry, Competition, Health Policy, Health System, High Prices, Hospital, Hospital Industry, Market Consolidation, Market Power, Monopoly, Monopoly Behavior, Non-Profit Healthcare Industry, Operating Margin, Operating Performance, Price Transparency, Pricing • Leave a comment

https://www.axios.com/newsletters/axios-vitals-1b40c794-c913-4681-b2ac-7a6e9746718f.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Illustration of a giant health plus on top of a pile of cash, the ground underneath is cracking.

NorthBay Healthcare, a not-for-profit hospital system in California, recently gave a candid look into how it operates, telling investors it has used its negotiating clout to extract “very lucrative contracts” from health insurance companies.

Why it matters: This is a living example of the economic theories and research that suggest hospitals will charge whatever they want if they have little or no competition, Axios’ Bob Herman reports.

Details: NorthBay owns two hospitals and several clinics in California’s Solano County. Kaiser Permanente owns the only other full-service hospital in the county, and Sutter Health operates some medical offices. (A NorthBay spokesperson argued the system is “more akin to the David among two Goliaths.“)

Three health insurers have terminated their contracts with NorthBay over the past couple years. During a June 19 call with bondholders, executives explained why this has happened.

“We’ve been able to maintain very lucrative contracts without the competition. And what the payers are saying is, they would like us to be like 90% of the rest of the United States in terms of contract structure.”

— Jim Strong, interim CFO, NorthBay Healthcare

Between the lines: NorthBay’s revenue has increased by 50% over the past few years, from $400 million in 2013 to $600 million in 2018, due in large part to its natural monopoly and oligopoly over hospital services.

  • This is exactly what we should expect to happen when sellers have the upper hand over buyers, economists say.

NorthBay also serves as a cautionary tale for price transparency, the policy fix du jour.

  • “If the health care system is consolidated, consumers don’t have anywhere else to go,” said Sunita Desai, a health economist at NYU. “Even if they see the prices of a given hospital, they’re limited in terms of how much they can ‘shop’ across providers.”

 

 

 

Hospital price transparency push draws industry ire, but effects likely limited

Posted on by • Posted in America's Health Insurance Plans, American Hospital Association (AHA), Federation of American Hospitals, Health Insurance Industry, Health Policy, Health System, Hospital, Medical Group Management Association (MGMA), Out of Pocket Expenses, Paperwork Burden, Physician, Physician Practice Management, President Executive Order, Price Transparency, Transparency • Leave a comment

https://www.healthcaredive.com/news/hospital-price-transparency-push-draws-industry-ire-but-effects-likely-lim/557536/

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Far-reaching rules mandating industry price transparency could mark a major shift, but experts are skeptical the efforts will meaningfully lower prices for patients without a more fundamental system overhaul.

President Donald Trump’s executive order signed Monday directs HHS and other federal departments to begin rulemaking to require hospitals and payers to release information based on their privately negotiated rates. Providers would also have to give patients estimates of their out-of-pocket costs before a procedure.

The moves come amid efforts from the federal government and Congress to push the healthcare industry to address patient anger over high prices, particularly regarding what medical bills they can expect to receive.

Many details must still be worked out as HHS and CMS craft their proposals, but providers and payers were quick to condemn any notion of making negotiated rates public. A legal challenge to the rules is also likely.

Many policy analysts and economists said that while price transparency is good in theory, current evidence shows patients don’t take advantage of pricing information now available, said Ateev Mehrotra, associate policy of healthcare policy and Harvard Medical School.

Patients are wary of going against a doctor’s advice to undergo a certain procedure or test, and to get it done at a certain facility. A difference in price may not be enough to sway them.

Also, the healthcare system has so many moving parts and unique elements that understanding a medical bill and how the price was calculated is daunting, to say the least.

“That complexity hinders the ability of people to effectively shop for care,” Mehrotra told Healthcare Dive “It’s not like going to Amazon and buying a toothbrush or whatever.”

What the order actual does

The executive order has two main directives:

  • Within 60 days, HHS must propose a regulation “to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items and services, in an easy-to-understand, consumer-friendly, and machine-readable format using consensus-based data standards that will meaningfully inform patients’ decision making and allow patients to compare prices across hospitals.”
  • Within 90 days, HHS and the Departments of Labor and Treasury must solicit comment on a proposal “to require healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care.”

The order also outlines smaller steps, including a report from HHS on how the federal government and private companies are impeding quality and price transparency in healthcare and another on measures the White House can take to deter surprise billing.

It also directs federal agencies to increase access to de-identified claims data (an idea strongly favored by policy analysts and researchers) and requires HHS to identify priority databases to be publicly released.

The order requests the Secretary of the Treasury expand coverage options for high-deductible health plans and health savings accounts. It specifically asks the department to explore using HSA funds for direct primary care, an idea Senate HELP Committee Chairman Lamar Alexander, R-Tenn., said he “especially like[d].”

Industry pushes back

The order itself wastes no time in pointing the finger at industry players for current patient frustrations with the system. “Opaque pricing structures may benefit powerful special interest groups, such as large hospital systems and insurance companies, but they generally leave patients and taxpayers worse off than would a more transparent system,” according to the document.

As expected, payer and provider groups slammed any attempt to force them to reveal the rates they negotiate behind closed doors, though they expressed appreciation for the general push toward more transparency.

The American Hospital Association shied away from strong language as details are still being worked out, but did say “publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”

The Federation of American Hospitals took a similar tone in a statement from CEO Chip Kahn. “If implementing regulations take the wrong course, however, it may undercut the way insurers pay for hospital services resulting in higher spending,” he said.

Both hospital groups highlighted more transparency for patient out-of-pocket costs and suggests the onus should be on payers to communicate information on cost-sharing and co-insurance.

Mollie Gelburd, associate director of government affairs at MGMA, which represents physician groups, said doctors don’t want to be in the position of explaining complex insurance terms and rules to a patient.

“While physicians should be encouraged to talk to patients about costs, to unnecessarily have them be doing all this education when they should be doing clinical care, that sort of gets concerning,” she said.

Practices are more concerned about payer provider directories and their accuracy, something not addressed in the executive order. Not having that type of information can be detrimental for a patient seeking care and further regulation in the area could help, Gelburd said.

Regardless, providers will likely view with frustration any regulations that increase their reporting and paperwork burdens, she said.

“I think the efficacy of pricing transparency and reducing healthcare costs, the jury is still out on that,” she said. “But if you have that onerous administrative requirement, that’s certainly going to drive up costs for those practices, especially those smaller practices.”

Payer lobby America’s Health Insurance Plans was quick to voice its opposition to the order.

CEO Matt Eyles said in a statement disclosing privately negotiated rates would “reduce incentives to offer lower rates, creating a floor — not a ceiling — for the prices that hospitals would be willing to accept.” He argued that current tools payers use to inform patients of cost expectations, such as cost calculators, are already offering meaningful help.

AHIP also said the order works against the industry’s efforts to shift to paying for quality instead of quantity. “Requiring price disclosure for thousands of hospital items, services and procedures perpetuates the old days of the American health care system paying for volume over value,” he said. “We know that is a formula for higher costs and worse care for everyone.”

Limited effects

One potential effect of making rates public is that prices would eventually trend toward equalization. That wouldn’t necessarily reduce costs, however, and could actually increase them for some patients. A payer able to negotiate a favorable rate for a specific patient population in a specific geographic area might lose that advantage, for example, Christopher Holt, director of healthcare policy at the conservative leaning American Action Forum, told Healthcare Dive.

John Nicolaou of PA Consulting told Healthcare Dive consumers will need help deciphering whatever information is made available however. Reams of data could offer the average patient little to no insight without payer or third-party tools to analyze and understand the information.

“It starts the process, just publishing that information and just making it available,” he said. “It’s got to be consumable and actionable, and that’s going to take a lot more time.”

The order does require the information being made public be “easy-to-understand” and able to “meaningfully inform patients’ decision making and allow patients to compare prices across hospitals.” That’s far easier said than done, however, Harvard’s Mehrotra said. “We haven’t seen anybody able to put this information in a usable way that patients are able to effectively act upon,” he said.

Holt said patients are also limited in their ability to shop around for healthcare, considering they often have little choice in what insurance company they use. People with employer-based plans typically don’t have the option to switch, and those in the individual market can only do so once a year.

Another aspect to consider is the limited reach of the federal government. CMS can require providers and payers in the Medicare Advantage program, for example, to meet price transparency requirements, but much of the licensing and regulations for payer and providers comes at the state level.

Waiting for details, lawsuits

One of the biggest questions for payers and providers in the wake of Monday’s announcement is how far exactly the rulemaking from HHS will go in mandating transparency. One one end, the requirements could stick close to giving patients information about their expected out-of-pocket costs without revealing the details of payer-provider negotiations. Full transparency, on the other hand, would mean publishing the now-secret negotiated rates for anyone to see.

“I think it’s the start of a much longer process,” Holt said. “It’s going to depend a lot on how much information is going to be required to be divulged and how that’s going to be collected.”

It’s almost certain that as soon as any concrete efforts at implementation are made, lawsuits will follow.

That’s what happened after Ohio passed a price transparency law in 2015 that required providers give patients information on out-of-pocket costs before a procedure — a proposal the executive order also puts forward.

The law still has not been enforced, as it has been caught up in the courts. The Ohio Hospital Association and Ohio State Medical Association sued over the law, arguing it was too vague and could lead to a delay in patient care.

 

The Lessons of Washington State’s Watered Down ‘Public Option’

Posted on by • Posted in 2020 Election Issues, ACA, Health Insurance Industry, Health Policy, Health System, Hospital, Hospital Industry, Medicare Buy-In, Medicare for All, Medicare Rate Setting, Physician, Physician Compensation, Physician Practice Management, Public Option, Public Program With Opt Out, Rate Setting, Single Payer Health System, Single Payer Healthcare System, Universal Healthcare System • Leave a comment

Jay Inslee, the governor of Washington, signing a measure in May that puts the state on track to create the nation’s first “public option” health insurance.

Jay Inslee, the governor of Washington, signing a measure in May that puts the state on track to create the nation’s first “public option” health insurance.

A big health care experiment for Democrats shows how fiercely doctors and hospitals will fight.

For those who dream of universal health care, Washington State looks like a pioneer. As Gov. Jay Inslee pointed out in the first Democratic presidential debate on Wednesday, his state has created the country’s first “public option” — a government-run health plan that would compete with private insurance.

Ten years ago, the idea of a public option was so contentious that Obamacare became law only after the concept was discarded. Now it’s gaining support again, particularly among Democratic candidates like Joe Biden who see it as a more moderate alternative to a Bernie Sanders-style “Medicare for all.”

New Mexico and Colorado are exploring whether they can move faster than Congress and also introduce state-level, public health coverage open to all residents.

But a closer look at the Washington public option signed into law last month, and how it was watered down for passage, is a reminder of why the idea ultimately failed to make it into the Affordable Care Act and gives a preview of the tricky politics of extending the government’s reach into health care.

On one level, the law is a big milestone. It allows the state to regulate some health care prices, a crucial feature of congressional public option and single-payer plans.

But the law also made big compromises that experts say will make it less powerful. To gain enough political support to pass, health care prices were set significantly higher than drafters originally hoped.

“It started out as a very aggressive effort to push down prices to Medicare levels, and ended up something quite a bit more modest,” said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation.

So while Washington is on track to have a public option soon, it may not deliver the steep premium cuts that supporters want. The state estimates that individual market premiums will fall 5 percent to 10 percent when the new public plan begins.

“This bill is important, but it’s also relatively modest,” said David Frockt, the state senator who sponsored the bill. “When I see candidates talking about the public option, I don’t think they’re really grasping the level of opposition they’re going to face.”

During the Affordable Care Act debate, more liberal Democrats hoped a public option would reduce the uninsured rate by offering lower premiums and putting competitive pressure on private plans to do the same. President Obama backed it, saying in 2009 that such a policy would “keep the private sector honest.”

The public option came under fierce attack from the health care industry. Private health plans in particular did not look forward to competing against a new public insurer that offered lower rates, and fought against a government-run plan that they said “would significantly disrupt the coverage that people currently rely on.” The policy narrowly fell out of the health care law but never left the policy debate.

Congressional Democrats have started to revisit the idea in the past year, with health care as a top policy issue in the 2018 midterm elections.

“During the midterm elections, Medicare for all was gaining a lot of traction,” said Eileen Cody, the Washington state legislator who introduced the first version of the public option bill. “After the election, we had to decide, what do we want to do about it?”

Ms. Cody introduced a bill in January to create a public option that would pay hospitals and doctors the same prices as Medicare does, which is also how many congressional public option proposals would set fees. The Washington State Health Benefit Exchange, the marketplace that manages individual Affordable Care Act plans, estimates that private plans currently pay 174 percent of Medicare fees, making the proposed rates a steep payment cut.

“I felt that capping the rates was very important,” Ms. Cody said.“If we didn’t start somewhere, then the rates were going to keep going up.”

Doctors and hospitals in Washington lobbied against the rate regulation, arguing that they rely on private insurers’ higher payment rates to keep their doors open while still accepting patients from Medicaid, the public plan that covers lower-income Americans and generally pays lower rates.

“Politically, we were trying to be in every conversation,” says Jennifer Hanscom, executive director of the Washington State Medical Association, which lobbies on behalf of doctors. “We were trying to be in the room, saying rate setting doesn’t work for us — let’s consider some other options. As soon as it was put in the bill, that’s where our opposition started to solidify.”

Legislators were in a policy bind. The whole point of the public option was to reduce premiums by cutting health care prices. But if they cut the prices too much, they risked a revolt. Doctors and hospitals could snub the new plan, declining to participate in the network.

“The whole debate was about the rate mechanism,” said Mr. Frockt, the state senator. “With the original bill, with Medicare rates, there was strong opposition from all quarters. The insurers, the hospitals, the doctors, everybody.”

Mr. Frockt and his colleagues ultimately raised the fees for the public option up to 160 percent of Medicare rates.

“I don’t think the bill would have passed at Medicare rates,” Mr. Frockt said. “I think having the Medicare-plus rates was crucial to getting the final few votes.”

Other elements of the Washington State plan could further weaken the public option. Instead of starting an insurance company from scratch, the state decided to contract with private insurers to run the day-to-day operations of the new plan.

“It would have cost the state hundreds of millions of dollars just to operate the plan,” said Jason McGill, who recently served as a senior health policy adviser to Mr. Inslee. He noted that insurers were required to maintain large financial reserves, to ensure they don’t go bankrupt if a few patients have especially costly medical bills.

“Why would we do that when there are already insurers that do that? It just didn’t make financial sense. It may one day, and we’ll stay on top of this, but we’re not willing to totally mothball the health care system quite yet.”

Hospitals and doctors will also get to decide whether to participate in the new plan, which pays lower prices than private competitors. The state decided to make participation voluntary, although state officials say they will consider revisiting that if they’re unable to build a strong network of health care providers.

Most federal versions of the public option would give patients access to Medicare’s expansive network of doctors and hospitals.

Although Mr. Frockt is proud of the new bill, he’s also measured in describing how it will affect his state’s residents. After going through the process of passing the country’s first public option, he’s cautious in his expectations for what a future president and Democratic Congress might be able to achieve. But he does have a clearer sense of what the debate will be like, and where it will focus.

“This is a core debate in the Democratic Party: Do we build on the current system, or do we move to a universal system and how do we get there?” he said. “I think the rate-setting issue is going to be vital. It’s what this is all about.”

 

 

How much does Medicare spend on prescription drugs?

Posted on by • Posted in 2020 Election Issues, Center for Medicare and Medicaid Services (CMS), Health Policy, Medicare, Medicare Part D, Out of Pocket Expenses • Leave a comment

https://usafacts.org/reports/facts-in-focus/medicare-part-d-prescription-drug-cost?utm_source=EM&utm_medium=email&utm_campaign=medicaredive

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As of 2017, the government now spends more on prescription drugs than private insurers or individuals out-of-pocket. Medicare payments alone account for 30% of the $333 billion spent on prescription drugs. In 2005, Medicare was responsible for just 2% of prescription spending.

Medicare’s expanding role at the pharmacy came with the 2006 creation of Medicare Part D, a program that offers supplemental prescription drug coverage plans to Medicare enrollees. The federal government tracks all claims paid for through Medicare Part D.

Sifting through the data allows one to see how spending on drug brands and drug types has changed for Medicare.

The graphs below show how spending has changed. Spending per claim, or simply the cost of a prescription, have gone up in drugs used for cancer treatments or diabetes. Meanwhile, prescription costs have gone down for blood pressure drugs, even as total claims for those drugs go up.

During 2017, Medicare Part D beneficiaries took out 1.4 billion prescription drug claims on 2,878 different brands of prescription drugs. The total spend, before rebates and discounts kick in, was $152 billion.

All those figures are up from 2013, when Medicare prescription drug spending stood at $102 billion on 1.2 billion claims on 2,294 different drugs. Between 2013 and 2017, prescription drug spending increased 15%, claims increased 18% and spending per claim increased 29% from $81.02 per claim to $104.56 per claim

The Centers for Medicare & Medicaid Services documents drug spending for three programs: Medicare Part B (drugs administered by health professionals), Medicare Part D (prescription drugs patients generally administer themselves) and Medicaid (prescription drugs).

The interactive graphic below shows Part D total spending (combining out-of-pocket costs with Medicare payments) and claims from 2013 to 2017.