MedPAC: Overhaul MA payments and streamline CMMI models

Two influential advisory groups sent recommendations to Congress calling for a revamp of how health plans are paid in the lucrative Medicare Advantage program, culling how many models CMS tests and curbing high-cost drug approvals.

By many measures, the MA program has been thriving. Enrollment and participation has continued to grow, and in 2021, MA plans’ bids to provide the Medicare benefit declined to a record low: Just 87% of comparable fee-for-service spending in their markets.

But despite that relative efficiency, MA contracting isn’t saving Medicare moneyactually, in the 35 years Medicare managed care has been active, it’s never resulted in net savings for the cash-strapped program, James Mathews, executive director of the Medicare Payment Advisory Commission, told reporters in a Tuesday briefing.

MedPAC estimates Medicare actually spends 4% more per capita for beneficiaries in MA plans than those in FFS under the existing benchmark policy.

To save money, Medicare could change how the benchmark, the maximum payment amount for plans, is adjusted for geographic variation, MedPAC said.

Under current policy, Medicare pays MA plans more if they cover an area with lower FFS spending, despite most plans bidding below FFS in these areas. At the same time, plans in areas where FFS spending is higher bid at a lower level relative to their benchmark, and wind up getting higher rebates — the difference between the bid and the benchmark — as a result.

“Because the rebate dollars must be used to provide extra benefits, large rebates result in plans offering a disproportionate level of extra benefits,” MedPAC wrote in its annual report to Congress. “Moreover, as MA rebates increase, a smaller share of those rebates is used for cost-sharing and premium reductions — benefits that have more transparent value and provide an affordable alternative to Medigap coverage.”

The group recommended rebalancing the MA benchmark policy to use a relatively equal blend of per-capita FFS spending in a local area and standardized national FFS spending, which would reduce variation in local benchmarks, and use a rebate of at least 75%. Currently, a plan’s rebate depends on its star rating, and ranges from 65% to 70%.

MedPAC also suggested a discount rate of at least 2% to reduce local and national blended spending amounts.

The group’s simulations suggest the changes would have minimal impact on plan participation or MA enrollees, but could lead to savings in Medicare of about 2 percentage points, relative to current policy.

Finding savings in Medicare, even small ones, is integral for the program’s future, policy experts say. The Congressional Budget Office expects the trust fund that finances Medicare’s hospital benefit will become insolvent by 2024, as — despite perennial warnings from watchdogs and budget hawks — lawmakers have kicked the can on the insurance program’s snowballing deficit for years.

Fewer and more targeted alternative payment models

MedPAC also recommended CMS streamline its portfolio of alternative payment models, implementing a smaller and more targeted suite of the temporary demonstrations designed to work together.

CMS is already undergoing a review of the models, meant to inject more value into healthcare payments, following calls from legislators for more oversight in the program. The agency doesn’t have the most stellar track record: Of the 54 models its Center for Medicare and Medicaid Innovation has trialed since it was launched a decade ago, just four have been permanently encoded in Medicare.

New CMMI head Elizabeth Fowler said earlier this month the agency will likely enact more mandatory models to force the shift toward value, as the ongoing review has resulted in more conscious choices about where it should invest.

In its report, MedPAC pointed out many of CMMI’s models generated gross savings for Medicare, before performance bonuses to providers were shelled out. That suggests the models have the power to change provider practice patterns, but their effects are tricky to measure. Many providers are in multiple models at once, and the same beneficiaries can be shared across models, too.

Additionally, some models set up conflicting incentives. Mathews gave the example of accountable care organizations participating in one model to reduce spending on behalf of an assigned population relative to a benchmark, but its provider participants could also be in certain bundled models with incentives to keep the cost of care per episode low — but not reduce the overall number of episodes themselves.

“The risk of these kinds of inconsistent incentives would be minimized again if the models were developed in a manner where they would work together at the outset,” Mathews said. MedPAC doesn’t have guidance on a specific target number of alternative models, but said it should be a smaller and more strategic number.

Curbing high-cost drugs in Medicaid

Another advisory board, on the Medicaid safety-net insurance program, also released its annual report on Tuesday, recommending Congress mitigate the effect of pricey specialty drugs on state Medicaid programs.

High-cost specialty drugs are increasingly driving Medicaid spending and creating financial pressure on states. The Medicaid and CHIP Payment and Access Commission (MACPAC) didn’t recommend Congress change the requirement that Medicaid cover the drugs, but recommended legislators look into increasing the minimum rebate percentage on drugs approved by the Food and Drug Administration through the accelerated approval pathway, until the clinical benefit of the drugs is verified.

The accelerated approval pathway, which can be used for a drug for a serious or life-threatening illness that provides a therapeutic advantage over existing treatments, allows drugs to come to market more quickly. States have aired concerns about paying high list prices for such drugs when they don’t have a verified clinical benefit.

That pathway has faced growing scrutiny in recent days in the wake of the FDA’s high-profile and controversial approval of Biogen’s aducanumab for Alzheimer’s disease.

Several advisors to the FDA have resigned over the decision, as it’s unclear if aducanumab actually has a clinical benefit. What aducanumab does have is an estimated price tag of $56,000 a year, which could place severe stress on taxpayer-funded insurance programs like Medicare and Medicaid if widely prescribed.

MEDPAC also recommended an increase in the additional inflationary rebate on drugs that receive approval from the FDA under the accelerated approval pathway if the manufacturer hasn’t completed the postmarketing confirmatory trial after a specified number of years. Once a drug receives traditional approval, the inflationary rebate would revert back to the standard amounts.

The recommendations would only apply to the price Medicaid pays for the drug and doesn’t change the program’s obligation to cover it.

Cartoon – On the Front Lines

Letters: Herd immunity vs. herd mentality; Now that you may have time read  some good legislation; more responses (3/31/20) – The Denver Post

President Biden lays out his sweeping legislative agenda

https://mailchi.mp/097beec6499c/the-weekly-gist-april-30-2021?e=d1e747d2d8

Legislative Agenda

In his first address to a joint session of Congress, delivered on the eve of his 100th day in office, President Biden laid out his vision for two major legislative proposals to follow the $1.9T stimulus package he signed into law last month.

The first, described as an “infrastructure” bill, focuses largely on investing in transportation-related improvements, building projects, and “green” upgrades to the nation’s energy grid, along with a $400B investment in home-based care for the elderly and people with disabilities—which amounts to over 17 percent of the package’s $2.3T price tag.

The second, which he unveiled in Wednesday’s speech, is a $1.8T “families” bill, is largely aimed at expanding childcare subsidies, early childhood education, paid family and medical leave, and educational investments. Included in that package is $200B to extend the temporary subsidies—approved as part of last month’s stimulus law—for those seeking health insurance coverage on the individual marketplaces created by the Affordable Care Act (ACA).

Notably absent from either proposal were two categories of healthcare reform that received much focus and airtime during last year’s election campaign: reducing the cost of prescription drugs and lowering the eligibility age for Medicare to 60 or below. Given the closely divided makeup of the new Congress, and the relatively moderate position staked out by the Biden administration on healthcare issues (with a bias toward bolstering the ACA rather than pursuing sweeping changes), we’re not surprised to see the Medicare expansion go unmentioned. 

But the bipartisan popularity of lowering prescription drug costs seems like a missed opportunity for Biden, who encouraged the Congress to return to it separately, later in the year. We’ll see. For now, with even some Democrats expressing concern about the $4.1T price tag of Biden’s proposals, we would be surprised if all $600B of the healthcare-related spending makes it to the final legislation. In particular, our guess is that some portion of the home-care spending will get traded away in favor of other components of the package. Expect negotiations to be intense.
 

Time to Say Goodbye to Some Insurers’ Waivers for Covid Treatment Fees

Just as other industries are rolling back some consumer-friendly changes made early in the pandemic — think empty middle seats on airplanes — so, too, are health insurers.

Many voluntarily waived  all deductibles, copayments and other costs for insured patients who fell ill with covid-19 and needed hospital care, doctor visits, medications or other treatment.

Setting aside those fees was a good move from a public relations standpoint. The industry got credit for helping customers during tough times. And it had political and financial benefits for insurers, too.

But nothing lasts forever.

Starting at the end of last year — and continuing into the spring — a growing number of insurers are quietly ending those fee waivers for covid treatment on some or all policies.

When it comes to treatment, more and more consumers will find that the normal course of deductibles, copayments and coinsurance will apply,” said Sabrina Corlette, research professor and co-director of the Center on Health Insurance Reforms at Georgetown University.

Even so, “the good news is that vaccinations and most covid tests should still be free,” added Corlette.

That’s because federal law requires insurers to waive costs for covid testing and vaccination.

Guidance issued early in President Joe Biden’s term reinforced that Trump administration rule about waiving cost sharing for testing and said it applies even in situations in which an asymptomatic person wants a test before, say, visiting a relative.

But treatment is different.

Insurers voluntarily waived those costs, so they can decide when to reinstate them.

Indeed, the initial step not to charge treatment fees may have preempted any effort by the federal government to mandate it, said Cynthia Cox, a vice president at KFF and director for its program on the Affordable Care Act.

In a study released in November, researchers found about 88% of people covered by insurance plans — those bought by individuals and some group plans offered by employers — had policies that waived such payments at some point during the pandemic, said Cox, a co-author. But many of those waivers were expected to expire by the end of the year or early this year.

Some did.

Anthem, for example, stopped them at the end of January. UnitedHealth, another of the nation’s largest insurers, began rolling back waivers in the fall, finishing up by the end of March. Deductible-free inpatient treatment for covid through Aetna expired Feb. 28.

A few insurers continue to forgo patient cost sharing in some types of policies. Humana, for example, has left the cost-sharing waiver in place for Medicare Advantage members, but dropped it Jan. 1 for those in job-based group plans.

Not all are making the changes.

For example, Premera Blue Cross in Washington and Sharp Health Plan in California have extended treatment cost waivers through June. Kaiser Permanente said it is keeping its program in place for members diagnosed with covid and has not set an end date. Meanwhile, UPMC in Pittsburgh planned to continue to waive all copayments and deductibles for in-network treatment through April 20.

What It All Means

Waivers may result in little savings for people with mild cases of covid that are treated at home. But the savings for patients who fall seriously ill and wind up in the hospital could be substantial.

Emergency room visits and hospitalization are expensive, and many insured patients must pay a portion of those costs through annual deductibles before full coverage kicks in.

Deductibles have been on the rise for years. Single-coverage deductibles for people who work for large employers average $1,418, while those for employees of small firms average $2,295, according to a survey of employers by KFF. (KHN is an editorially independent program of KFF.)

Annual deductibles for Affordable Care Act plans are generally higher, depending on the plan type.

Both kinds of coverage also include copayments, which are flat-dollar amounts, and often coinsurance, which is a percentage of the cost of office visits, hospital stays and prescription drugs.

Ending the waivers for treatment “is a big deal if you get sick,” said Robert Laszewski, an insurance industry consultant in Maryland. “And then you find out you have to pay $5,000 out-of-pocket that your cousin didn’t two months ago.”

Costs and Benefits

Still, those patient fees represent only a slice of the overall cost of caring for a hospitalized patient with covid.

While it helped patients’ cash flow, insurers saw other kinds of benefits.

For one thing, insurers recognized early on that patients — facing stay-at-home orders and other restrictions — were avoiding medical care in droves, driving down what insurers had to fork out for care.

I think they were realizing they would be reporting extraordinarily good profits because they could see utilization dropping like a rock,” said Laszewski. “Doctors, hospitals, restaurants and everyone else were in big trouble. So, it was good politics to waive copays and deductibles.”

Besides generating goodwill, insurers may benefit in another way.

Under the ACA, insurers are required to spend at least 80% of their premium revenue on direct health care, rather than on marketing and administration. (Large group plans must spend 85%.)

By waiving those fees, insurers’ own spending went up a bit, potentially helping offset some share of what are expected to be hefty rebates this summer. That’s because insurers whose spending on direct medical care falls short of the ACA’s threshold must issue rebates by Aug. 1 to the individuals or employers who purchased the plans.

A record $2.5 billion was rebated for policies in effect in 2019, with the average rebate per person coming in at about $219.

Knowing their spending was falling during the pandemic helped fuel decisions to waive patient copayments for treatment, since insurers knew “they would have to give this money back in one form or another because of the rebates,” Cox said.

It’s a mixed bag for consumers.

“If they completely offset the rebates through waiving cost sharing, then it strictly benefits only those with covid who needed significant treatment,” noted Cox. “But, if they issue rebates, there’s more broad distribution.”

Even with that, insurers can expect to send a lot back in rebates this fall.

In a report out this week, KFF estimated that insurers may owe $2.1 billion in rebates for last year’s policies, the second-highest amount issued under the ACA. Under the law, rebate amounts are based on three years of financial data and profits. Final numbers aren’t expected until later in the year.

The rebates “are likely driven in part by suppressed health care utilization during the COVID-19 pandemic,” the report says.

Still, economist Joe Antos at the American Enterprise Institute says waiving the copays and deductibles may boost goodwill in the public eye more than rebates. “It’s a community benefit they could get some credit for,” said Antos, whereas many policyholders who get a small rebate check may just cash it and “it doesn’t have an impact on how they think about anything.”

Private equity rolls up veterinary practices, with predictable results

https://mailchi.mp/da8db2c9bc41/the-weekly-gist-april-23-2021?e=d1e747d2d8

Amazon.com: The Private Equity Playbook: Management's Guide to Working with Private  Equity (9781544513263): Coffey, Adam: Books

Given regulatory barriers and structural differences in practice, private equity firms have been slow to acquire and roll up physician practices and other care assets in other countries in the same way they’ve done here in the US. But according a fascinating piece in the Financial Times, investors have targeted a different healthcare segment, one ripe for the “efficiencies” that roll-ups can bring—small veterinary practices in the UK and Ireland.

British investment firm IVC bought up hundreds of small vet practices across the UK, only to be acquired itself by Swedish firm Evidensia, which is now the largest owner of veterinary care sites, with more than 1,500 across Europe. Vets describe the deals as too good to refuse: one who sold his practice to IVC said “he ‘almost fell off his chair’ on hearing how much it was offering. The vet, who requested anonymity, says IVC mistook his shock for hesitation—and increased its offer.” (Physician executives in the US, take note.) IVC claims that its model provides more flexible options, especially for female veterinarians seeking more work-life balance than offered by the typical “cottage” veterinary practice. 

But consumers have complained of decreased access to care as some local clinics have been shuttered as a result of roll-ups. Meanwhile prices, particularly for pet medications like painkillers or feline insulin, have risen as much as 40 percent—and vets aren’t given leeway to offer the discounts they previously extended to low-income customers. And with IVC attaining significant market share in some communities (for instance, owning 17 of 32 vet practices in Birmingham), questions have arisen about diminished competition and even price fixing. 

The playbook for private equity is consistent across human and animal healthcare: increase leverage, raise prices for care, and slash practice costs, all with little obvious value for consumers. It remains to be seen whether and how consumers will push back—either on behalf of their beloved pets, or for the sake of their own health.