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CBO scores House-approved AHCA: 5 things to know

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http://www.beckershospitalreview.com/finance/cbo-scores-house-approved-ahca-5-things-to-know.html

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The Congressional Budget Office released its score on the American Health Care Act Wednesday, finding it would reduce the federal deficit significantly but increase the projected number of uninsured Americans by about 82 percent over the next 10 years.

The CBO previously scored the AHCA in March, but that was before changes were made to the bill that ultimately passed the House. The latest projections include the following modifications to the bill:

  • A delay in repealing the increase to the payroll tax
  • State waivers for essential health benefits and community rating rules
  • $8 billion in funding to offset increased premiums for people with preexisting conditions in waiver states
  • $15 billion in funding for the Federal Invisible Risk Sharing Program
  • $15 billion in state funding for maternity care and mental health services

Here are five things to know about the CBO’s findings.

Leaders can’t write a memo to change culture

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http://www.beckershospitalreview.com/hospital-management-administration/scripps-ceo-chris-van-gorder-leaders-can-t-write-a-memo-to-change-culture.html

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When Chris Van Gorder joined San Diego-based Scripps Health as COO in 1999, the health system had 55 days cash on hand, and there was no trust between the administration and clinical staff.

His first day on the job, Mr. Van Gorder attended a meeting at Scripps Memorial Hospital La Jolla (Calif.) with another Scripps executive to resolve a miscommunication surrounding contract renegotiations. Rising tensions between physicians and administrators boiled over at the meeting, which cumulated with the Scripps executive quitting his job on the spot so he could sue the hospital’s chief of staff for slander.

“The physician sitting next to me tapped my shoulder and said, ‘Welcome to Scripps, you’re on,'” says Mr. Van Gorder. “That was the end of my first day.”

Flash forward 18 years and Mr. Van Gorder — promoted to CEO six months after joining Scripps — now runs a $3.1 billion health system that’s been named to Fortune’s top 100 employers in the country 10 years in a row.

Mr. Van Gorder discussed Scripps’ transformation — and the leadership strategies he used to drive these improvements — at the Becker’s Hospital Review 8th Annual Meeting in Chicago.

Earn employees’ trust

Shortly after he took over the CEO role, Mr. Van Gorder met with every board member one-on-one.

“Everyone wanted me to fix everything all at once,” he says. “But I knew I needed to prioritize and first find a way to work with our physicians.”

Mr. Van Gorder says it’s crucial for leaders to ensure proper communication with employees to establish trust and set the groundwork for a culture change. To mend relationships with Scripps’ physicians, he called a meeting with the health system’s elected physician leaders entire to acknowledge the lack of transparency between administrators and staff.

“They had all these demands and expectations they wanted us to meet,” he says. “But they didn’t know we were on the verge of bankruptcy.”

Mr. Van Gorder developed a physician advisory body called the “Physician Leadership Cabinet” to serve as a liaison between the clinical and administrative teams and weigh in on decision-making. Giving physicians more responsibility to manage the health system’s limited resources helped them understand the institution’s financial constraints, thus breaking down the communication wall between them and leadership.

“It’s really easy to say, ‘I want, I want, I want’ when you’re on the outside,” says Mr. Van Gorder. “But when you’re on the inside, you realize how difficult it is to manage scarce resources.”

The Physician Leadership Cabinet has proven successful. Health system leadership has accepted every recommendation from the board in the last 18 years, and every vote except one has been unanimous, according to Mr. Van Gorder.

Drive culture change from the middle up

Once leaders earn staff members’ trust, they should shift their attention to changing the organization’s culture, says Mr. Van Gorder. He believes managers have the most influence on culture, as they manage a majority of the organization’s employees.

“Leaders can’t write a memo to change culture,” he says. “But our frontline employees and middle management can influence culture.”

To develop an umbrella culture for the organization from the middle, Mr. Van Gorder launched the Scripps Leadership Academy — a year-long behind-the-scenes program for managers at the health system. Every program starts with a two-hour Q&A session where Scripps executives talk about how they got to where they are today.

“I was a cop. I worked at Arby’s,” says Mr. Van Gorder. “Most people look at executives and just see the suits. But as soon as you remove the veil of the title away from the individual, they become a human being.”

The leadership academy strives to show managers how the organization operates and how decisions are made. Each graduating class also works on a change project to improve a specific aspect of the organization. After the academy ends, Mr. Van Gorder challenges the managers — his “agents of culture change” — to take what they learned and demand more from the people they work with.

Maintain regular communication

Leaders must maintain a positive relationship with staff members to sustain the improvements in trust and culture, says Mr. Van Gorder.

He sends out a daily newsletter to Scripps managers and employees who request it, highlighting major news in the healthcare industry, along with organization updates and photos.

“Even if they just read the titles, they’ll start to understand the external factors impacting our organization,” Mr. Van Gorder says. “The more they understand this, the more they’ll accept the changes we’re trying to make in our organization. They’ll see it’s not something forced on them from management — it stems from the changes in healthcare.”

As email is the one way he can connect with Scripps’ 15,000 employees, Mr. Van Gorder freely invites employees and physicians to reach out to him directly if they are not getting the support they need to do their jobs, or even if they want to say hello. He responds the same day to every email he receives — a feat he sees as a basic level of respect.

“One of our values is respect,” he says. “If I’m not responsive to them, I’m not being very respectful.”

BCBS of Georgia to stop covering ED visits it deems unnecessary

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http://www.beckershospitalreview.com/payer-issues/bcbs-of-georgia-to-stop-covering-ed-visits-it-deems-unnecessary.html

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Starting next month, Anthem Blue Cross Blue Shield of Georgia will no longer cover emergency department services it determines are unnecessary for members with individual plans.

The insurer said the policy aims to steer patients with nonemergent symptoms to see a primary care physician, urgent care provider or use its LiveHealth telehealth app to limit costly ED visits. If a BCBS of Georgia policyholder receives care for nonemergent symptoms, a medical director will use the prudent layperson standard to deem whether the service is necessary.

Jeff Fusile, president of BCBS of Georgia, told WABE, “The cost of care’s been going up so much faster than people’s earnings. We have got to find a better way to do some of this stuff, taking some of that unnecessary spending out of the system.”

The policy does not include referrals from a physician to the ED for nonemergent services, nonemergent services provided to children under age 14, instances when an urgent care clinic is more than 15 miles away and when care is administered on Sundays and major holidays.

“We’re not trying to steer people away from the emergency room if they have a serious condition,” Debbie Diamond, director of publications for BCBS of Georgia, told Becker’s Hospital Review. “If a member is having chest pain that they think is a heart attack, they should still go to the emergency department.”

Ms. Diamond said similar policies have been enacted at Anthem-affiliated plans in Missouri, Kentucky and Virginia. Missouri said it would reinforce the program June 1 and Kentucky enacted the policy in 2015.

Donald Palmisano, president of the Medical Association of Georgia, told WABE the policy disproportionately affects the elderly, rural residents and children over the age of 14. He added physicians are concerned the policy places “the patient, who doesn’t have the clinical background, to determine whether their condition is of an emergency nature.”

Drug Rebates Reward Industry Players — And Often Hurt Patients

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http://khn.org/news/drug-rebates-reward-industry-players-and-often-hurt-patients/

Medicare and its beneficiaries aren’t the winners in the behind-the-scenes rebate game played by drugmakers, health insurers and pharmacy benefit managers, according to a paper published Tuesday in JAMA Internal Medicine.

The paper, which dives into the complex and opaque world of Medicare drug price negotiations, finds that rebates may actually drive up the amount Medicare and its beneficiaries pay for drugs — especially for increasingly common high-priced drugs — and it offers some systemic solutions.

“How these rebates and price concessions happen between the manufacturer of the drug and the PBMs [pharmacy benefit managers] and health plans can directly impact patient cost in a big way,” said the paper’s lead author, Stacie Dusetzina of the University of North Carolina-Chapel Hill’s pharmacy school.

The paper’s findings and proposed solutions come as President Donald Trump’s administration, Congress and state lawmakers grapple with ways to control drug prices and overall health spending. Trump’s administration has said it wants to lower drug prices and hinted at mandating rebates in Medicare. Leaders on Capitol Hill have called for Medicare price negotiations.

In the JAMA paper, Dusetzina cites the EpiPen as one example. Last year, executives at Mylan, the maker of the EpiPen, said the list price of the drug for life-threatening allergic reactions was $600, but the company earned $274 after rebates and other fees.

That savings, though, isn’t necessarily passed on to patients in Medicare’s system. Instead, the money tends to be swallowed up by health insurers and middlemen like pharmacy benefit managers.

And, even though patients don’t pay list prices for their drugs, those high prices (like $600 for the EpiPen) are used to calculate how much Medicare covers for any individual patient — and sometimes what patients pay out-of-pocket, Dusetzina said.

“We’ve heard over the years that the list price doesn’t really matter, that it’s not the real price,” Dusetzina said. “It matters.”

The way it matters is not easily apparent. Here’s what happens: When a Medicare patient picks up a prescription, what they pay toward it is generally based on that higher list price and not the price after rebates, so the amount the beneficiary pays is scaled upward as a result.

And Medicare uses that high-end list price to calculate how rapidly beneficiaries reach the dreaded doughnut hole, where patients pay a bigger share of the price of the drug after their spending hits $3,700, the 2017 benchmark. Once through the doughnut hole, Medicare picks up the bulk of the drug’s cost.

High list prices drive patients into and out of the doughnut hole faster, raising their out-of-pocket costs and Medicare expenditures.

Dusetzina and co-authors Rena Conti, assistant professor of health policy and economics at the University of Chicago, and Dr. Peter Bach, director of Memorial Sloan Kettering Cancer Center’s Center for Health Policy and Outcomes, propose solutions to this problem.

Bach called the current Medicare system “absolutely devastating for people on high-cost specialty drugs.”

Bach’s drug pricing lab at Memorial Sloan Kettering offers an interactive tool for comparing how dollars shift when using the list price and post-rebate price.

The authors recommend that patients should be charged flat-dollar copays rather than coinsurance charges, which are based on a percentage of the drug’s price. The copays could be tiered, depending on the cost of the drug, the paper suggested.

This solution comes, in part, because the number of Medicare enrollees paying coinsurance for their drug, rather than a flat fee, has increased to 58 percent last year from 35 percent in 2014, the paper notes.

Another tactic would be to address the underlying disconnect between rebate negotiations and savings for Medicare and beneficiaries. The authors suggest that incentives for health insurers need to change to require health plans to pay more of the drugs’ costs after beneficiaries pass through the doughnut hole.

In addition, Dusetzina said, using the post-rebate amount in Medicare’s calculations would allow Medicare beneficiaries to move through the doughnut hole more slowly. That would save both patients and Medicare money.

“It really just stops us from accelerating people through the benefit,” Dusetzina said.

Last month, the Pharmaceutical Research and Manufacturers of America, which represents the pharmaceutical and biotechnology industry, launched a “Share the Savings” advertising campaign calling for public education about how the savings from rebates don’t actually get passed on to commercial insurance patients.

In an email, PhRMA’s Holly Campbell said the group’s commissioned research has found that rebates and discounts have nearly doubled from 2013 to 2015. Campbell said PhRMA believes “insurance companies should share more of the rebates and discounts they receive with patients.”

America’s Health Insurance Plans, which represents the insurance industry, calls the assertion that rebates and other discounts aren’t passed along “absolutely inaccurate” and noted the “true issue” is that drug prices continue to skyrocket “with no clear explanation as to how prices are set.” Insurers pass the savings from rebates on in different ways, including lower monthly premiums and co-pays, said AHIP’s Cathryn Donaldson.

Dusetzina said there is one caveat to the Medicare study: It is unclear how many drugs get a rebate and for how much because there is lack of transparency when it comes to rebates.

The paper’s final suggestion is about transparency. It says that federal regulators should require rebate data to be reported for individual drugs and then use that information to change Medicare’s benefit design in a way that “would lead to savings” for Medicare and its enrollees.

Reading Health to buy five SE Pa. hospitals

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http://www.philly.com/philly/business/reading-health-to-buy-five-se-pa-hospitals-20170530.html

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Reading Health System has agreed to buy five community hospitals in Southeastern Pennsylvania from Community Health Systems Inc. for an undisclosed price, the two parties announced Tuesday.

The hospitals included in the deal, which is expected to close this summer, are: the 169-bed Brandywine Hospital in Coatesville, the 148-bed Chestnut Hill Hospital in Philadelphia, the 63-bed Jennersville Hospital in West Grove, the 151-bed Phoenixville Hospital in Phoenixville, and the 232-bed Pottstown Memorial Medical Center in Pottstown.

In aggregate, the five hospitals had $585 million in operating revenue and a very thin operating margin of $1.4 million in the year ended June 30, 2016, according the Pennsylvania Health Care Cost Containment Council.

The deal represents a significant expansion for Reading, which is anchored by a 695-bed acute-care hospital in the city of Reading. The nonprofit health system had $978.5 million in revenue and a narrow operating margin of $12.2 million in the year ended June 30, 2016. Reading Health has more than 700 beds in all, including 50 beds in a nursing home, which means the Community Health acquisition will more than double Reading’s size in terms of beds.

The acquisition also potentially opens the door to further expansion by Pittsburgh-based health care giant UPMC in Southeastern Pennsylvania. Reading Health and UPMC Health Plan have a joint venture to offer health coverage and related services to individuals as well as employers and their employees in the Reading Health System service area. UPMC already offers Medicare Advantage plans in Southeastern Pennsylvania and has been picked to provide managed Medicaid services in the region starting next year.

Community Health Systems, based in Franklin, Tenn., has been on a selling spree in a bid to pay off debt and improve profitability. In the Philadelphia region, it previously agreed to sell the Memorial Hospital of Salem County to the Prime Healthcare Foundation for $15 million.

 

Trump’s budget forces states into ‘difficult decisions’ about spending for hospitals serving indigent patients

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http://www.journalnow.com/business/business_news/local/trump-s-budget-forces-states-into-difficult-decisions-about-spending/article_15f1eee9-b4aa-5c6b-8132-3d93739682c5.html

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A prominent rating agency, Moody’s Investors Service, said Thursday the proposed Trump administration budget could form an even darker financial cloud over the nation’s not-for-profit health-care systems and state legislatures.

Moody’s said the White House budget, if approved in its current form by Congress, would represent a “credit negative” for both groups.

The White House budget calls for $610 billion in Medicaid cuts over 10 years as well as eliminating $250 billion dedicated to state Medicaid expansion programs.

A projected $834 billion in lower Medicaid spending over 10 years was scored by the Congressional Budget Office if the American Health Care Act (AHCA) is enacted. The bill also would lead to 23 million Americans losing their health insurance by 2026, the office projected.

Moody’s wrote that the White House budget, if enacted, “would pressure state governments to take various actions to balance their budgets, including adjusting Medicaid eligibility rules, increasing their own funding of Medicaid, or cutting payments to hospitals and other providers,” Moody’s said.

“Although the budget would give states limited new flexibility to adjust their Medicaid programs, the measure overall reflects a significant cost shift away from federal funding to states,” Moody’s said. “It would force states to make difficult decisions about safety-net spending for hospitals that serve large numbers of indigent patients.”

The warning comes 10 weeks after Moody’s and S&P Global Ratings cautioned that the proposed AHCA could put increased pressure on health-care systems’ operating revenue and bottom lines.

The ratings groups expressed concern that the ACHA would change funding for Medicaid from an open-ended entitlement to a system based on payments that will be made to the states based on a capped per-capita amount.

The bill passed the U.S. House, but is likely to face significant changes in the U.S. Senate.

Another factor Moody’s cited in the credit negative rating is a White House budget proposal “that forces” states to share the costs of the federal Supplemental Nutrition Assistance Program, also known as food stamps.

The federal government covers all benefit costs of the program, while states pay to administer it. The White House budget proposes to shift 25 percent of the benefit costs to states, totaling $190 billion by fiscal 2027.

“We expect action to vary among states, with some taking more action to limit the loss of insurance coverage or benefit changes,” Moody’s said.

“Material reductions of insurance coverage would be credit negative for not-for-profit hospitals because they would increase their bad debt and uncompensated care costs.”

In the most recent quarterly reports for the Triad’s three main health-care systems, each reported an increase in bad debt.

According to the American Hospital Association, bad debt is defined as services for which hospitals anticipate, but do not receive, payment from patients who have the financial means to pay.

Wake Forest Baptist Medical Center reported that through the first three quarters of fiscal 2016-17, it had $166.1 million in bad debt, compared with $38.2 million the year before.

States Where Single-Payer Health Care Could Work (If It Could Work Anywhere)

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https://www.bloomberg.com/view/articles/2017-05-30/states-where-single-payer-health-care-could-work-if-it-could-work-anywhere

Single-payer health care is the dream that just won’t die.

Eight years ago, when President Barack Obama came into office, there were folks on the left who hoped that somehow, his campaign concept of health-care-reform-by-mandate-and-subsidy could be transformed into a single-payer system like Britain’s or Canada’s. When it became clear that this wasn’t going to happen, they latched onto the idea of a “public option” that could, by out-awesoming all the private insurers, function as a backdoor route into a unified government system.

The public option vanished from the final bill, but the dream did not die. In 2014, as Obamacare finally rolled out, Vermont proposed building its own single-payer system, and hearts went a-flutter at the thought that plucky Vermont might show the rest of us how it’s done.

I predicted at the time that the plan would be too expensive, and therefore never go into effect. Eventually Vermont’s government confessed that it was too expensive, and would not go into effect. Vermont was not done with us, however, and in 2016, Vermont Senator Bernie Sanders kind-of-almost-came-close to winning the Democratic nomination on the slogan of “Medicare for All.” He lost to Hillary Clinton, and she lost to a candidate whose platform turns out to look more like “Medicaid for None.”

Hope springs eternal, however, and so do single-player plans. Their last run at the federal government having failed (along with a referendum in Colorado that voters rejected four to one), advocates are back at work in state legislatures. California and New York are both considering plans at the moment, and not just in the “Hmm, interesting. What’s for lunch?” sense. Say what you want about single-payer advocates, but say this too: You can’t stop them with much less than a Howitzer.

Of their plans, there are a few things to say. The first, and most obvious, is that none of them have solved the main obstacle to enacting single payer in the U.S.: the price tag.

California’s New Single-Payer Proposal Embraces Some Costly Old Ways

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http://khn.org/news/californias-new-single-payer-proposal-embraces-some-costly-old-ways/

Three of the dirtiest words in health care are “fee for service.”

For years, U.S. officials have sought to move Medicare away from paying doctors and hospitals for each task they perform, a costly approach that rewards the quantity of care over quality. State Medicaid programs and private insurers are pursuing similar changes.

Yet the $400 billion single-payer proposal that’s advancing in the California legislature would restore fee-for-service to its once-dominant perch in California.

A state Senate analysis released last week warned that fee-for-service and other provisions in the legislation would “strongly limit the state’s ability to control costs.” Cost containment will be key in persuading lawmakers and the public to support the increased taxes that would be necessary to finance this ambitious, universal health care system for 39 million Californians.

Several health experts expressed skepticism about the bill’s prospects in its current form.

“Single-payer has its pros and cons, but if it’s built on the foundation of fee-for-service it will be a disaster,” said Stephen Shortell, dean emeritus of the School of Public Health at the University of California-Berkeley. “It would be a huge step backwards in delivering health care.”

Paul Ginsburg, a health economist and professor at the University of Southern California, agreed and said the legislation reads like something out of the 1960s in terms of how it wants to reimburse providers.

“There’s broad consensus we ought to go from volume to value. This bill ignores all the signs pointing to progress and advocates a system that failed,” he said.

Backers of the Healthy California proposal are pushing for a vote in the Senate by Friday so the legislation can go to the state Assembly and remain in play for this year’s session.

The authors say that their single-payer proposal won’t rely entirely on old-fashioned fee-for-service and that there’s plenty of time for the bill to be amended. According to the authors, some of the criticism in the legislative analysis reflects a misreading of the bill: It would, they say, include some use of managed care.