Tag Archives: Health Policy

In Washington state, a healthcare repeal lesson learned the hard way

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http://www.latimes.com/politics/la-na-pol-obamacare-washington-state-20170531-story.html

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Republicans in the state of Washington didn’t wait long in the spring of 1995 to fulfill their pledge to roll back a sweeping law expanding health coverage in the state.

Coming off historic electoral gains, the GOP legislators scrapped much of the law while pledging to make health insurance affordable and to free state residents from onerous government mandates.

It didn’t work out that way: The repeal left the state’s insurance market in shambles, sent premiums skyrocketing and drove health insurers from the state. It took nearly five years to repair the damage.

Two decades later, the ill-fated experiment, largely relegated to academic journals, offers a caution to lawmakers at the national level as Republicans in the U.S. Senate race to write a bill to repeal and replace the federal Affordable Care Act.

“It’s much easier to break something,” said Pam MacEwan, who served on a Washington state commission charged with implementing the law in the mid-1990s and now oversees the state insurance market there. “It’s more difficult to put Humpty Dumpty back together again. … And that’s when people get hurt.”

The nonpartisan Congressional Budget Office echoed that warning last week, when it concluded that the healthcare bill passed by the House last month would destabilize insurance markets in a sixth of the country and nearly double the number of people without health insurance over the next decade.

Senate Republican leaders contend that their legislation will be different. “We’re working to lower the costs and give people more personal, individual freedom,” Sen. John Barrasso (R-Wyo.) said last week.

There were similar assurances in the Washington statehouse when legislators there began to pull apart the Washington Health Services Act in the mid-1990s.

 

 

When An Insurer Balks And Treatment Stops

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When An Insurer Balks And Treatment Stops

Gillen Washington, a student at Northern Arizona University, had been getting medication for an immunodeficiency disease since 2011. But when he went to his clinic in November 2014 for the monthly dose, a nurse told him his insurance company had denied it.

Soon after, the plan sent him a letter saying his bloodwork was outdated and didn’t show that the treatment was medically necessary, Washington’s attorney said.

Over the next few months, as Washington appealed the insurance company’s decision, he developed a cough that wouldn’t go away. He moved home to Huntington Beach, Calif., and ended up in the hospital with pneumonia and a collapsed lung.

“It was terrifying,” said Washington, 22. “I have never felt so depressed and so scared in my entire life.”

In 2015, Washington filed a breach of contract lawsuit in Orange County Superior Court against his insurer, Aetna, arguing that the company had improperly denied him the medication. The case is set for trial this month.

From 35,000 to 50,000 people in the U.S. are estimated to be dependent on medications to treat primary immunodeficiency diseases — about 300 rare conditions in which the immune system doesn’t function properly, or at all. The medication, known as immunoglobulin replacement therapy, replaces antibodies that the body doesn’t make. It can cost tens of thousands of dollars each year.

In recent years, patients with these diseases have faced increasing difficulty getting their insurers to approve treatments, according to clinicians and patient advocates. In some cases, insurers interrupt treatments that are already underway. In others, they deny it at the outset. Without medication, patients can get infections or even suffer organ failure.

Aetna, one of the nation’s largest insurers, with a 2016 net income of $2.3 billion, declined to answer questions about Washington’s case, citing the pending litigation. In court documents, attorneys representing the company argued that it didn’t breach its contract with Washington.

In 2014, Aetna denied coverage of the medication that Gillen Washington was taking for an immunodeficiency disease. He was later hospitalized with pneumonia and a collapsed lung. (Courtesy of Gillen Washington)

Dr. Rebecca Buckley, a professor of immunology and pediatrics at Duke University Medical Center, said insurance companies often require patients with immunodeficiency diseases to stop taking their medication and undergo new lab work to demonstrate they still need it. That interruption is a “serious problem” for people with a definitive diagnosis, she said, because the consequences can be so devastating.

“If you stop the treatment, they are going to get sick,” Buckley said. “There are no spontaneous recoveries from any of these genetic defects.”

Buckley acknowledged that some people are put on the medication unnecessarily. But those who definitely have the diseases can’t make antibodies on their own and have no protection without treatment.

The Immune Deficiency Foundation, a national patient advocacy organization, regularly advises patients who receive insurance denials. President and founder Marcia Boyle said the foundation is getting a growing number of calls each year from patients who face treatment delays because of insurance company decisions. Insurers are also more frequently shifting costs to patients by requiring higher copays and coinsurance or using restrictive formularies, she said.

“Some insurers are creating unnecessary roadblocks because of the costly therapy,” she said. “More often than not, when you have someone with a lifelong, preexisting condition that needs very good medical care and expensive therapy, you are going to have issues with access to care and insurance.”

Pharmaceutical Product Hopping: A Proposed Framework For Antitrust Analysis

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http://healthaffairs.org/blog/2017/06/01/pharmaceutical-product-hopping-a-proposed-framework-for-antitrust-analysis/

Skyrocketing drug prices are in the news. Overnight price increases have riveted the attention of the public, media, and politicians of all stripes. But one reason for high prices has flown under the radar. When drug companies reformulate their product, switching from one version of a drug to another, the price doesn’t dramatically increase. Instead, it stays at a high level for longer than it otherwise would have without the switch. Although more difficult to discern than a price spike, this practice, when undertaken to prevent generic market entry, can result in the unjustified continuation of monopoly pricing, burdening patients, the government, and the health care system as a whole.

Not all reformulations pose competitive concerns. Empirical studies have shown that more than 80 percent can be explained by improvements that are not temporally connected to impending generic entry. But a dangerous subset of such reformulations is undertaken for one, and only one, reason: to delay generic entry. In such cases, reformulation is called “product hopping.”

When generics enter the market, the price can fall dramatically overnight, by as much as 85 percent. For that reason, brand firms have every incentive to delay this moment of reckoning as long as possible. Sure enough, making trivial changes to their drugs has that effect. Every state has a substitution law that requires or allows pharmacists to offer a generic drug when the patient presents a prescription for a brand drug. But such substitution is thwarted if the drug is not the same—in particular, if it is not bioequivalent (able to be absorbed into the body at the same rate) and therapeutically equivalent (having the same active ingredient, form, dosage, strength, and safety and efficacy profile). A minor change to a drug’s formulation can prevent the pharmacist from substituting the generic.

Product hopping raises nuanced issues arising at the intersection of patent law, antitrust law, the federal Hatch-Waxman Act, and state drug product substitution laws. It is even more complex given the uniquely complicated pharmaceutical market, in which the buyer (patient, insurance company) is different from the decision maker (doctor).

Courts applying US antitrust law have struggled to create a robust and defensible legal framework for separating anticompetitive product hops from competitively benign, legitimate product development. In this post, we propose a framework that would help courts defer to legitimate reformulations while targeting anticompetitive switches.

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.

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.

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

hospital bed

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.

GOP leader tempers ObamaCare expectations

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GOP leader tempers ObamaCare expectations

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Senate Majority Leader Mitch McConnell (R-Ky.) is tempering expectations that the Senate will pass an overhaul of the nation’s healthcare system, promising his colleagues a vote but not success.

McConnell in his public comments and private conversations about the ObamaCare repeal-and-replace bill is painting a more sober picture than Speaker Paul Ryan (R-Wis.), who in March guaranteed passage through the House.

McConnell is stopping well short of any grand pronouncement.

He says he will bring a bill to the floor for a vote but is not making any promises whether he will get at least 50 members of the 52-member Senate Republican Conference to back it.

“Mitch has been very clear in our conference, and that is there will be a bill and we will be voting on it,” said Sen. Dean Heller (R-Nev.).

But that’s as far as the GOP leader has been willing to go.

“He hasn’t gone beyond explaining that,” said Heller, who recently met with the special working group that is negotiating the healthcare bill.

McConnell warned in an interview with Reuters that passing healthcare reform will be tougher than tax reform, another of President Trump’s top priorities.

Expectations for repealing major parts of ObamaCare soared after the House passed its bill earlier this month, but McConnell cautions the votes in the Senate aren’t there yet.

What’s more, he’s not sure of the path to success.

“I don’t know how we get to 50 [votes] at the moment. But that’s the goal. And exactly what the composition of that [bill] is I’m not going to speculate about because it serves no purpose,” McConnell told Reuters on Wednesday.

Ryan sounded a much more bullish tone in March.

GOP health bill would raise deductibles, lessen coverage and leave 23 million more uninsured, analysis finds

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http://www.latimes.com/politics/la-na-pol-gop-healthcare-cbo-20170524-story.html

A side-by-side comparison of Obamacare and the GOP’s replacement plan

The Republican healthcare bill that passed the House earlier this month would nearly double the number of people in the U.S. without health insurance over the next decade, according to a new analysis by the nonpartisan Congressional Budget Office.

The much-anticipated report cast a new shadow over the controversial legislation and is expected to complicate Republican efforts to get the bill through the Senate, where it already faces difficult prospects.

According to the budget office, which both parties in Congress look to for estimates on the impact of complex legislation, the bill would cause 23 million fewer people to have health insurance by 2026. Many additional consumers would see skimpier health coverage and higher deductibles, the budget office projected.

The report further undermines claims by President Trump and House Republicans that their campaign to repeal and replace the current healthcare law — often called Obamacare — will protect all Americans’ access to healthcare.

The House bill would be particularly harmful to older, sicker residents of states that waive key consumer protections in the current law, including the ban on insurers charging sick consumers more. The budget office estimates that about one-sixth of the U.S. population live in states that would seek such waivers, which would be allowed under the House bill.