HOW SEN. ORRIN HATCH CHANGED AMERICA’S HEALTH CARE

https://www.healthleadersmedia.com/strategy/how-sen-orrin-hatch-changed-americas-health-care?utm_source=silverpop&utm_medium=email&utm_campaign=ENL_190103_LDR_BRIEFING_resend%20(1)&spMailingID=14894079&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1560203883&spReportId=MTU2MDIwMzg4MwS2

How Sen. Orrin Hatch Changed America's Health Care

Utah’s Orrin Hatch is leaving the Senate, after 42 years. The Republican led bipartisan efforts to provide health care to more kids and AIDS patients. He also thrived on donations from the drug industry.

https://www.npr.org/player/embed/673851375/681125070

Sen. Orrin Hatch, the Utah Republican retiring from 42 years in the Senate as a new generation is sworn in, leaves a long list of achievements in health care. Some were more controversial than others.

Hatch played key roles in shepherding the 1983 Orphan Drug Act to promote drug development for rare diseases, and the 1984 National Organ Transplant Act, which helped create a national transplant registry. And in 1995, when many people with AIDS were still feeling marginalized by society and elected leaders, he testified before the Senate about reauthorizing funding for his Ryan White CARE Act to treat uninsured people who have HIV.

“AIDS does not play favorites,” Hatch told other senators. “It affects rich and poor, adults and children, men and women, rural communities and the inner cities. We know much, but the fear remains.”

Hatch, now 84, co-sponsored a number of bills with Democrats over the years, often with Sen. Ted Kennedy of Massachusetts. The two men were sometimes called “the odd couple,” for their politically mismatched friendship.

In 1997, the two proposed a broad new health safety net for kids —the Children’s Health Insurance Program.

“This is an area the country has made enormous progress on, and it’s something we should all feel proud of — and Senator Hatch should too,” said Joan Alker, executive director of Georgetown University’s Center for Children and Families.

Before CHIP was enacted, the number of uninsured children in America was around 10 million. Today, it’s under half that.

Hatch’s influence on American health care partly came from the sheer number of bills he sponsored — more than any other living lawmaker — and because he was chairman of several powerful Senate committees.

“History was on his side because the Republicans were in charge,” said Dr. David Sundwall, an emeritus professor in public health at the University of Utah and Hatch’s health director in the 1980s.

When Ronald Reagan was elected president in 1981, the Senate became Republican-controlled for the first time in decades. Hatch was appointed chairman of what is now known as the Health, Education, Labor and Pensions Committee. The powerful legislative group has oversight of the Food and Drug Administration, Centers for Disease Control and Prevention and the National Institutes of Health.

“He was virtually catapulted into this chairmanship role,” Sundwall said. “This is astonishing that he had chairmanship of an umbrella committee in his first term in the Senate.”

In 2011, Hatch was appointed to the influential Senate Finance Committee, where he later became chairman. There he helped oversee the national health programs Medicare, Medicaid and CHIP.

Hatch’s growing influence in Congress did not go unnoticed by health care lobbyists. According to the watchdog organization Center for Responsive Politics, in the past 25 years of political campaign funding, Hatch ranks third of all members of Congress for contributions from the pharmaceutical and health sector. (That’s behind Democratic senators who ran for higher office — President Barack Obama and presidential nominee Hillary Clinton).

“Clearly, he was PhRMA’s man on the Hill,” said Dr. Jeremy Greene, referring to the trade group that represents pharmaceutical companies. Green is a professor of the history of medicine at Johns Hopkins University School of Medicine. Though Hatch did work to lower drug prices, Greene said, the senator’s record was mixed on the regulation of drug companies.

For example, an important piece of Hatch’s legislative legacy is the 1984 Hatch-Waxman Act, drafted with then-Rep. Henry Waxman, an influential Democrat from California. While the law promoted the development of cheaper, generic drugs, it also rewarded brand-name drug companies by extending their patents on valuable medicines.

The law did spur sales of cheaper generics, Greene said. But drugmakers soon learned how to exploit the law’s weaknesses.

“The makers of brand-name drugs began to craft larger and larger webs of multiple patents around their drugs,” aiming to preserve their monopolies after the initial patent expired, Greene said.

Other brand-name drugmakers preserved their monopolies by paying makers of generics not to compete.

“These pay-for-delay deals effectively hinged on a part of the Hatch-Waxman Act,” Greene said.

Hatch also worked closely with the dietary supplement industry. The multibillion-dollar industry specializing in vitamins, minerals, herbs and other “natural” health products, is concentrated in his home state of Utah.

“There was really no place for these natural health products,” said Loren Israelsen, president of the United Natural Products Alliance and a Hatch staffer in the late 1970s.

As the industry grew, there was a debate over how to regulate it: Should it be more like food or like drugs? In 1994, Hatch sponsored the Dietary Supplement Health and Education Act, known as DSHEA, which treats supplements more like food.

“It was necessary to have someone who was a champion who would say, ‘All right, if we need to change the law, what does it look like,’ and ‘Let’s go,'” Israelsen said.

Some legislators and consumer advocacy groups wanted vitamins and other supplements to go through a tight approval process, akin to the testing the Food and Drug Administration requires of drugs. But DSHEA reined in the FDA, determining that supplements do not have to meet the same safety and efficacy standards as prescription drugs.

That legislative clamp on regulation has led to ongoing questions about whether dietary supplements actually work and concerns about how they interact with other medications patients may be taking.

DSHEA was co-sponsored by Democrat Tom Harkin, then a senator from Iowa.

While that kind of bipartisanship defined much of Hatch’s career, it has been less evident in recent years. He was strongly opposed to the Affordable Care Act, and in 2018 called supporters of the heath law among the “stupidest, dumb-ass people” he had ever met. (Hatch later characterized the remark as “a poorly worded joke.”)

In his farewell speech on the Senate floor in December, Hatch lamented the polarization that has overtaken Congress.

“Gridlock is the new norm,” he said. “Like the humidity here, partisanship permeates everything we do.”

 

 

Congratulations on the Promotion. But Did Science Get a Demotion?

Congratulations on the Promotion. But Did Science Get a Demotion?

Image result for conflicts of interest

number of recent news articles have brought renewed attention to financial conflicts of interest in medical science. Physicians and medical administrators had financial links to companies that went undeclared to medical journals even when they were writing on topics in which they clearly had monetary interests.

Most agree such lapses damage the medical and scientific community. But our focus on financial conflicts of interest should not lead us to ignore other conflicts that may be equally or even more important. Such biases need not be explicit, like fraud.

“I believe a more worrisome source of research bias derives from the researchers seeking to fund and publish their work, and advance their academic careers,” said Dr. Jeffrey Flier, a former dean of Harvard Medical School who has written on this topic a number of times.

How might grant funding and career advancement — even the potential for fame — be biasing researchers? How might the desire to protect reputations affect the willingness to accept new information that reverses prior findings?

I’m a full professor at Indiana University School of Medicine. Perhaps the main reason I’ve been promoted to that rank is that I’ve been productive in obtaining large federal grants. Successfully completing each project, then getting that research published in high-profile journals, is what allows me to continue to get more funding.

A National Institutes of Health regulation sets a “significant financial interest” as any amount over $5,000. It’s not hard to imagine that being given thousands of dollars could influence your thinking about research or medicine. But let’s put things in perspective. Many scientists have been awarded millions of dollars in grant funding. This is incredibly valuable not only to them but also to their employers. Journals and grant funders like to see eye-catching work. It would be silly not to think that this might also subtly influence thinking and actions. In my own work, I do my best to remain conscious of these subtle forces and how they may operate, but it’s a continuing battle.

Getting positive results, or successfully completing projects, can sometimes feel like the only way to achieve success in research careers. Just as those drivers can lead people to publish those results, it can also nudge them not to publish null ones.

As a pediatrician, I’ve been acutely aware of concerns that relationships between formula companies and the American Academy of Pediatrics might be influencing policies on feeding infants. But biases can occur even without direct financial contributions.

If an organization has spent decades recommending low-fat diets, it can be hard for that group to acknowledge the potential benefits of a low-carb diet (and vice versa). If a group has been pushing for very low-sodium diets for years, it can be hard for it to acknowledge that this might have been a waste of time, or even worse, bad advice.

 

 

AHA: Medicare underpaid hospitals by $53.9B in 2017

https://www.beckershospitalreview.com/finance/aha-medicare-underpaid-hospitals-by-53-9b-in-2017.html

Image result for underpayment

Medicare underpaid hospitals by $53.9 billion in 2017, and Medicaid underpaid hospitals by $22.9 billion, according to the latest data from the American Hospital Association’s Annual Survey of Hospitals.

Underpayment occurs when the reimbursement hospitals receive is less than the amount paid for personnel, technology, and other goods and services required to provide care.

In 2017, hospitals received payment of 87 cents for every dollar they spent caring for Medicare and Medicaid patients, according to the AHA.

Access the AHA underpayment by Medicare and Medicaid fact sheet here.

 

How government shutdown is hampering some federal health efforts — 5 takeaways

https://www.beckershospitalreview.com/hospital-management-administration/how-government-shutdown-is-hampering-some-federal-health-efforts-5-takeaways.html?origin=bhre&utm_source=bhre

Related image

Despite a meeting between President Donald Trump and various members of Congress, officials have not come to an agreement to end the partial government shutdown, which began Dec. 22. While the majority of the federal government’s public health efforts are continuing as usual, several agencies, including the FDA, are at a loss for funding as long as the temporary closure is in placeKaiser Health News reports.

Here are five things to know:

1. Congress has already passed five major appropriations bills, which were responsible for funding roughly 75 percent of the federal government, including HHS and the U.S. Department of Veterans Affairs. However, seven bills are still outstanding, including bills funding the Interior, Agriculture and Justice departments, the report states.

2. While the government’s flagship programs, like Medicare, Medicaid and the ACA, are insulated from the effects of the shutdown, other public health agencies are beginning to feel the squeeze from narrowing funding streams. For example, the FDA’s food safety operations are funded through the Department of Agriculture, which has been affected by the shutdown. The FDA’s contingency plan states that in the event of a shutdown, roughly 40 percent of the the agency’s workforce is furloughed.

3. Funding for the Indian Health Service — which is funded by the Department of the Interior — has also not been approved, meaning that the only IHS’ services currently available are those that meet the “immediate needs of the patients, medical staff, and medical facilities,” according to the agency’s contingency plan cited by Kaiser Health News. Many IHS facilities across the country remain open, with staffers reporting to work because they are necessary employees and  “excepted” from the furlough, an agency spokesperson told the publication.

4. The Department of Homeland Security’s Office of Health Affairs has also been scaling back its resources to survey threats posed by infectious diseases, pandemics, and biological and chemical attacks, the report states.

5. Roughly 800,000 federal employees nationwide have been affected by the shutdown and have found themselves in financial uncertainty, a New York City-based New York University professor told CNBC. One IRS employee told CNBC he cannot afford his more than $200 insulin prescription because he doesn’t know when he will begin work again.

 

Older Americans worried about insurance coverage, health costs as they approach retirement

https://www.fiercehealthcare.com/payer/older-americans-worried-about-insurance-coverage-and-health-costs-as-they-approach-retirement?mkt_tok=eyJpIjoiTXpGak0yVmtNamN6TnpkaCIsInQiOiJtQnVtUmFtN0RYbHMzb2hyM1wvXC93N1kwRDJ6RmlNSjg5Q2VsYkFFSTJpZlptKzc2b1ByYTcrVzNxNUtcL3BwVWVIbzJBWThSWmY4ZXpHK1RBUWdWODhqdkxYMXZQRnJtNWV4TWc4aFJqVUdiXC9sWWh0MEdJK2NPckNzVDQ3ZlhoUEgifQ%3D%3D&mrkid=959610&utm_medium=nl&utm_source=internal

A sizable percentage of Americans between the ages of 50 and 64 are worried about their healthcare coverage as they head toward retirement, according to a new poll from the University of Michigan.

Although some of these concerns include things people can’t directly control, such as policy changes, many are focused on maintaining current coverage provided through an employer while reducing personal healthcare expenses.

“The ACA’s insurance coverage expansion was intended, in part, to reduce ‘job lock’ and allow individuals to change or leave their job without concern about becoming uninsured,” the report says. “However, data from this poll suggest that many adults age 50–64 still worry about maintaining employer-sponsored health insurance and keeping a job for that reason.”

About a quarter (27%) of respondents fear they won’t be able to afford their insurance over the next year, and nearly half (45%) expressed little to no confidence in being able to afford their insurance when they retire.

Meanwhile, 13% of those surveyed postponed medical care within the last year due to cost concerns. Another 15% postponed procedures until they could change their plan the following coverage year—so it would be covered, to incur lower out-of-pocket costs or to see a specific doctor in-network. Additionally, 8% of respondents between the ages of 60 and 64 reported delaying a procedure until they could get Medicare.

Nearly 1 in 5 (19%) said they were keeping a job, delaying retirement or considering delaying retirement to keep their employer-sponsored insurance. With that in mind, 71% of retirees were confident in their ability to afford insurance—a much higher percentage than those who were working (54%) or not working (49%).

Men were more confident than women that they could afford insurance at retirement (61% vs. 50%). Those in “excellent” health were more confident than those in “good” or “fair/poor” health (62% vs. 54% and 42%), as were those with a college degree compared to those without.

Nearly 8 in 10 respondents (79%) said they were very confident in their ability to navigate the health insurance landscape, though about 3 in 10 (29%) indicated little or no confidence that they could determine the out-of-pocket costs associated with a prospective service.

The study indicates Americans are closely watching and responding to challenges to the Affordable Care Act, such as a ruling by a federal judge in Texas striking down the law. Over the weekend, the judge issued a stay on the ruling, saying the healthcare law should remain in effect as appeals weave their way through the courts.

Half of those surveyed said they closely follow news about the ACA, Medicare or Medicaid, and 68% said they are worried about how their coverage may change due to federal policies.

“Regardless of potential federal policy changes, patients and their health care providers should discuss the out-of-pocket costs of health care, such as medical procedures, tests, or medications. Such discussions can help inform decisions about their health insurance options and the timing, choice, and appropriateness of health care services,” it concluded.

 

 

 

The Burgeoning Role Of Venture Capital In Health Care

https://www.healthaffairs.org/do/10.1377/hblog20181218.956406/full/?utm_source=Newsletter&utm_medium=email&utm_content=ACA+Contraceptive+Coverage+Mandate+Litigation%3B+Venture+Capital+In+Health+Care%3B+Telehealth+Evidence%3A+A+Rapid+Review&utm_campaign=HAT&

Image result for healthcare venture capital

The US health care system relies heavily on private markets. While private insurers, provider organizations, and drug and device companies are familiar to many, little is known about the increasing presence of venture capital in today’s delivery system. The growth of venture capital and venture capital -backed, early-stage companies (startups) deserves the attention of patients and policy makers because advancements in medicine are no longer exclusively born from providers within the delivery system and increasingly from innovators outside of it.

While venture capital -backed startups in digital health offer opportunities to affect the cost and quality of care, often by challenging prevailing modes of care delivery, they pose potential risks to patient care and raise important questions for policy makers. To date, however, an analytic framework for understanding the role of venture capital in medicine is lacking. 

A Brief History

Venture capital firms provide funding to startups judged to have potential to disrupt existing industries in exchange for ownership and some control over strategy and operations. Venture capital businesses have recently funded hundreds of startups developing technology-enabled digital health products, including wearable devices, mobile health applications, telemedicine, and personalized medicine tools. Between 2010 and 2017, the value of investments in digital health increased by 858 percent, and the number of financing deals in this sector increased by 412 percent; more than $41.5 billion has been invested in digital health this decade (see Exhibit 1). This growth far exceeds the growth of total venture capital funding (166 percent) and total number of venture capital deals (50 percent) (in all fields) in the overall economy, as well as growth in health care spending (34 percent). In 2017 alone, venture capital firms invested more than $11.5 billion in digital health, from patient-facing devices to provider-facing practice management software to payer-facing data analysis services.

Exhibit 1: Venture Capital Funding For Digital Health Versus US Health Care Spending

Sources: Data are from StartUp Health Insights 2017 Year End Report and the National Health Expenditure (NHE) Accounts Team. Notes: Dollars invested (blue bars) have units of billions. The NHE plot is expressed in trillions (T) of dollars. A deal is a distinct agreement reached between venture capital investors and a startup company, typically including parameters such as the amount of money invested and equity involved in a given startup company. 

Three key elements have likely driven this growth. First, the inability of physicians to consistently monitor patients and persistent challenges with patient adherence have created a need for digital technologies to serve as a mechanism for care delivery. Second, the increasing migration of medical care out of the hospital and fragmentation of care among specialties has increased demand for new forms of patient-to-provider and provider-to-provider communication. Third, expansions in insurance coverage and new payment models that encourage cost control have aligned incentives for technologies that aim to substitute higher-cost services with lower-cost, higher-value services.

Strategies For Disruption

The venture capital movement will likely be judged on two factors: whether it improves patient outcomes and experience, and whether it saves money for society. To date, rigorous evidence on the impact of venture capital -backed innovations is scarce. Most deals have occurred in the past few years, and most startup technologies take time to scale and are not implemented with a control group or a design that facilitates easy evaluation. Traditional provider groups may often be too small, hospital operations too rigid, and delivery systems too skeptical for a given digital health innovation to be implemented widely and tested rigorously. Moreover, data on the impact of such technologies on patients and costs may often be held privately akin to trade secrets.

However, some early small-scale randomized controlled studies have suggested potential health benefits (for example, improved glycemic and blood pressure control) of mobile health applications and wearable biosensors. Evidence may grow as startup products are brought closer to market.

Despite the shortage of rigorous public evidence, the strategies of startups to influence use and spending are apparent. Many startups target wellness and prevention among self-insured employers, using smartphones and wearable devices to engage and track patients with the hope of lowering costs through decreasing use. Although this strategy of saving money through helping people become healthier in their daily lives remains largely unproven, hundreds of companies in this space have received substantial amounts of funding. Among the most well-known is Omada Health, which provides proprietary online coaching programs and other digital tools to help prevent diabetes and other chronic diseases. It is considered the nation’s largest federally recognized provider of the Centers for Medicare and Medicaid Services (CMS) Diabetes Prevention Program, having received more than $125 million in venture funding since it was founded in 2011. 

Another segment of startups focus on a separate driver of health care costs—the prices of medical services. These firms are increasingly partnering with employers to steer patients toward lower-cost providers for expensive treatments such as joint replacements. Their path to success—creating savings through price transparency—is also largely unproven, although lowering prices through enhancing competition is a reasonable approach. 

Still other digital health startups focus on improving access to primary care via telehealth, virtual visits, and related mechanisms of accessing care. Some use biometric data (genetics or biosensor data) to facilitate early detection of medical problems. While evidence is sparse, these efforts may lead to increased use and spending. Moreover, there is no guarantee that the startup technologies will be priced below existing substitutes. To the extent that these technologies improve outcomes but at a greater total cost, policy makers and adopters of such innovations may face difficult decisions over access and tradeoffs. 

Points Of Caution 

Given differences among health care and other industries, the success of the digital health boom is far from promised. Medical evidence suggests that changes in practice typically lag behind technological advancements. For evidence-based guidelines, randomized controlled trials remain the gold standard despite their considerable expense and length, which place them out of reach for many startup technologies. In addition to showing efficacy, interventions must convincingly demonstrate that they “do no harm.” 

This culture directly conflicts with the “fail fast, fail hard” reality of venture capital, in which a return on investment is typically sought within several years. Furthermore, the complex clinical workflows of traditional medical practices offer little room for disruption without potentially putting provider satisfaction or patient safety at risk (at least in the short term). In a profession in which institutions move slowly and health is at stake, technological innovations face a higher threshold for acceptance relative to other industries.

Other barriers to adoption include: the difficulty of building successful business models centered on lowering spending in a largely revenue-maximizing system in which providers often lack the incentives to eliminate waste; HIPAA-related privacy rules and restrictions that hinder data sharing across digital platforms; incompatibility between newer cloud-based technologies that startups build and old legacy technologies used by traditional providers; and the lack of billing codes and ways of recognizing provider effort in digital health, which complicates budget or price negotiations. It is perhaps no surprise that 98 percent of digital health startups ultimately fail

Outlook For The Future 

In the first three quarters of 2018, venture capital involvement in health care has further accelerated. The third quarter saw an estimated $4.5 billion in digital health funding—the most of any quarter on record. As this industry grows, policy makers have an important role to play. 

Regulatory guidance is needed to shape the scope and direction of new technologies, with patient safety and societal costs in mind. Venture capital firms and startups often point to a lack of regulatory guidance on what must undergo formal approval. The current Food and Drug Administration (FDA) Digital Health Innovation Plan is a positive step toward defining the path to market for low-risk digital devices and specifying what digital health tools fall outside the FDA’s scope.

Second, a reimbursement framework for digital technologies is needed. Thoughtful debate about their prices and new billing codes should be had in an open forum. Outcomes-based pricing and other value-based approaches that go beyond the fee-for-service standard should be considered.

Most importantly, policy makers and government agencies such as the FDA, CMS, and the National Institutes of Health should study the effects of startups in health care and facilitate research on these products to inform payers and the public of their benefits and drawbacks. In the current climate, little funding has been allocated toward such research. This leaves providers and patients relying almost exclusively on industry-funded studies, at times conducted by the same startup that is selling the product or service. Publicly funded, independent studies of the impact of venture capital-backed products and services on clinical and economic outcomes are needed to establish an evidence base that patients and providers can broadly trust.

 

 

 

Proposed Changes to Medicare Part D Would Benefit Drug Manufacturers More Than Beneficiaries

https://www.commonwealthfund.org/blog/2019/proposed-changes-medicare-part-d-would-benefit-drug-manufacturers-more-beneficiaries?omnicid=EALERT1538445&mid=henrykotula@yahoo.com

senior opens medications

As part of the Bipartisan Budget Act of 2018 (BBA), Congress made changes to the Medicare prescription drug benefit program, or Part D, to lower spending for both beneficiaries and the federal government. Specifically, the BBA increased the size of the discount on brand-name drugs that manufacturers are required to offer beneficiaries who are in the Part D coverage gap, or “donut hole,” from 50 percent to 70 percent. (The donut hole, in which Medicare beneficiaries who have spent over a certain amount on prescription drugs must pay all drug costs out of pocket, was designed to help contain federal costs.) By increasing the size of the manufacturer discount, Congress was able to shrink the share of spending in the donut hole covered by Part D plan sponsors and beneficiaries.

Pharmaceutical manufacturers have continued to put pressure on Congress to make two changes: 1) roll back the discount from manufacturers from 70 percent to 63 percent (and increase Part D plan-sponsor liability) and 2) block an increase in the total amount beneficiaries must spend out of pocket on their prescription drugs before catastrophic coverage kicks in.

According to our analysis, these proposals would financially benefit drug manufacturers more than Medicare beneficiaries: while beneficiaries’ spending in the coverage gap would be slightly reduced, manufacturers’ spending would be reduced far more. Moreover, Medicare spending under Part D would increase to cover the savings to beneficiaries and manufacturers.

Key Definitions Under Part D

Donut Hole: The third phase of Medicare Part D coverage in which beneficiaries pay all drug costs out of pocket.

TrOOP (True Out-of-Pocket) Threshold: The total amount beneficiaries need to spend out of pocket before reaching catastrophic coverage.

Part D Plan Sponsors: Typically insurance companies and pharmacy benefit managers

Part D Coverage Gap Discount: A program established by the ACA that requires drug manufacturers and Part D plan sponsors to give beneficiaries price discounts on brand-name drugs when beneficiaries reach the coverage gap. It also reduces the share of spending that Part D plan sponsors cover.

Original Medicare Part D Design

When the Medicare Part D program was created in 2003, Congress required all Part D plan sponsors — typically insurance companies and pharmacy benefit managers — to establish a standard benefit package with four phases of coverage that beneficiaries move through depending on their drug spending. In the first phase, the federal government covers 100 percent of cost-sharing until beneficiaries reach their deductible. In the second phase, the federal government covers 25 percent of cost-sharing. In the third phase, known as the coverage gap or donut hole, beneficiaries pay all drug costs out of pocket. In the final phase, catastrophic coverage is reached and beneficiaries cover just 5 percent of cost-sharing.

The amount beneficiaries need to spend out of pocket before reaching catastrophic coverage is called the TrOOP (“True Out-of-Pocket) threshold; it was $5,000 in 2018. The TrOOP threshold increases each year to account for growth in Medicare per-beneficiary spending under Part D, which includes prescription drug prices.

Filling the Part D “Donut Hole”

As part of the Affordable Care Act (ACA), Congress included two changes to Part D to help fill the donut hole. First, Congress established the Part D Coverage Gap Discount Program that requires participating drug manufacturers and Part D plan sponsors give beneficiaries price discounts on brand-name drugs when beneficiaries reach the coverage gap. Between 2011 and 2020, this program reduces beneficiary cost-sharing in the gap from 100 percent to 25 percent. The discounts were phased in and scheduled to fill the coverage gap by 2020.

Second, Congress slowed the annual update to the TrOOP threshold through 2019 by basing the update on the consumer price index (CPI) plus 2 percentage points rather than drug spending growth. The purpose was to give certainty to the size of the donut hole during the phase-in of the manufacturer discount program. Because the CPI has grown far less rapidly than drug prices under Part D, this change has kept the size of the donut hole smaller, enabling beneficiaries to reach the catastrophic benefit sooner than they would have under the original Part D benefit. This also helps manufacturers, who don’t have to offer as many discounts when people are in the coverage gap for a shorter period of time. And once the federal government is covering more costs under catastrophic coverage, manufacturers no longer have to provide discounts at all.

While Congress slowed growth in the TrOOP threshold through 2019, under the ACA, the threshold amount reverts back to the pre-ACA calculation in 2020. When the threshold is based on drug price spending growth again, the amount a beneficiary must spend in the coverage gap will jump from $5,100 to $6,350. (If manufacturer price growth had been at or close to CPI growth in recent years, there would be no increase in 2020.) But if Congress wants to block the spike in the TrOOP amount, it must take action no later than June 2019, the deadline for Part D plans bidding to offer coverage in 2020.

Effect of the Bipartisan Budget Act of 2018 on the Coverage Gap

In February 2018, the BBA made changes to the Part D Coverage Gap Discount Program to help fill the donut hole in 2019 (a year earlier than the ACA provision) by increasing the manufacturer discount for beneficiaries from 50 percent to 70 percent and reducing the share that Part D plan sponsors cover. This change will require manufacturers to offer a larger discount and reduce beneficiaries’ out-of-pocket drug costs in the donut hole. By reducing the share that insurance companies or pharmacy benefit managers are responsible for, Congress intended to lower premiums, which in turn will save the federal government on premiums subsidies.

The Financial Impact of the New Proposals

While Congress established the Part D Coverage Gap Discount Program at the same time it slowed growth in the TrOOP threshold — and both relate to the donut hole — the two policies function independently and need not be conflated in terms of making changes to them in statute.

Moreover, the financial implications of proposals to change these components differ markedly. Beneficiaries spend an average of $1,321 on cost-sharing in the coverage gap today and would spend $1,156 in 2020 — or $165 less — if Congress amends the BBA and blocks the TrOOP increase as proposed by the pharmaceutical industry.

However, manufacturers would save even more under these proposed policies. Brand-name manufacturer discounts in the donut hole would fall from $3,698 per beneficiary today to roughly $2,998 — a reduction of $785 per beneficiary. Part D plan sponsors would spend $555 per beneficiary in the coverage gap or $291 more if both policies were addressed.

Understanding the implications of these proposals beyond their impact on Medicare spending and the federal budget is important. Even if Congress were only to block the increase in the TrOOP threshold — and not undo the increase in manufacturer discounts — beneficiary spending would be slightly lower (as a lower limit on TrOOP spending would enable beneficiaries to get out of the donut hole and into the most generous level of federal coverage more quickly) but manufacturers would still come out far ahead of both Part D plan sponsors and beneficiaries. Given the financial implications of these two policies, Congress may want to consider broader changes to Part D that would lower drug prices, provide more cost savings to beneficiaries, and avoid higher spending under the Medicare program.

 

 

 

Federal judge says HHS overstepped authority in cutting 340B payments

https://www.fiercehealthcare.com/hospitals-health-systems/federal-judge-says-hhs-overstepped-authority-cutting-340b-payments?mkt_tok=eyJpIjoiTnpBNE1HTmtObUl3WVRkayIsInQiOiJFOU1xMDRPMGtzMCtnWXU4MExUVFAzZ3Jrdm5cL2s3S1dMRkVldTRWS2QyNmJZU255UWRIWW14QmtXVkJ2T2VTeGpYTVBvQXZWWW1JVnB0S0crTXV3aFhDS0wrY3NzTmtEYmJEMHdvSG03bGkxS2ZlREdiaWZydFZkbkdlXC9tTHE1In0%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Drug prices

A federal judge has sided with hospitals in the ongoing battle over cuts to 340B drug discount payments, saying the Department of Health and Human Services’ rule slashing money to the program overstepped the agency’s authority.

District Judge Rudolph Contreras from the District of Columbia has issued an injunction (PDF) on the final rule, as requested by the American Hospital Association, the Association of American Medical Colleges and America’s Essential Hospitals.

Contreras also denied HHS’ request for the hospital groups’ ongoing litigation against the 340B payment cuts to be dismissed.

The Centers for Medicare & Medicaid Services finalized the payment changes late last year, cutting the rate in 340B from up to 6% more than the average sales price for a drug to 22.5% less than the average sales price of a drug, slashing $1.6 billion in payments.

Hospital groups have warned that the cuts could substantially hurt their bottom lines, especially for providers with large populations of low-income patients. Higher cost for drugs in 340B could also lead to access problems for these patients.

Contreras said in his opinion (PDF) that the payment changes overstepped HHS’ authority.

Because the payment changes affect many drugs—any in the 340B program—and the payment cuts are a significant decrease, the agency bypassed Congress’ power to set those reimbursement rates with the rule, Contreras said.

But simply siding with the hospital groups could prove disruptive, he said, as retroactively adjusting payments and reimbursing hospitals for lost money over the past year would impact budget neutrality, requiring cuts elsewhere to offset the payments. So both parties will have to reconvene to determine the best way forward, Contreras said.

The AHA, AAMC and AEH issued a joint statement praising the ruling.

“America’s 340B hospitals are immeasurably pleased with the ruling that the Department of Health and Human Services unlawfully cut 2018 payment rates for certain outpatient drugs,” the groups said.

“The court’s carefully reasoned decision will allow hospitals and health systems in the 340B Drug Pricing Program to serve their vulnerable patients and communities without being hampered by deep cuts to the program.”

The case marks the groups’ second attempt at a legal challenge of the 340B cuts. A federal court rejected their initial appeal in July. 

An HHS spokesperson said in a statement emailed to FierceHealthcare that the agency is “disappointed” in Contreras’ ruling, but said it looks forward to addressing the judge’s concerns about potential disruption to payments.

“As the court correctly recognized, its judgment has the potential to wreak havoc on the system,” the agency said. “Importantly, it could have the effect of reducing payments for other important services and increasing beneficiary cost-sharing.”

Chip Kahn, president of the Federation of American Hospitals, said Contreras’ ruling puts lowered drug costs, that benefit all hospitals, at risk.

“The DC Federal District Court’s ruling to stop reforms to Medicare payment for drugs acquired under the 340B drug discount program is unfortunate because it undermines HHS efforts to cut drug costs and promote fairer payments,” Kahn said in a statement.

 

 

 

 

Drug Prices Due to Rise in 2019

Image result for Drug Prices Due to Rise in 2019
28 pharmaceutical companies will raise their drug prices next year going back on the price freezes that they instituted this summer after public shaming from Administration officials, according to press reports. 

Allergan, Bayer, Novartis, Amgen, AstraZeneca, Biogen, and GlaxoSmithKline are among the companies who filed disclosures with California earlier this year that they planned to raise prices within at least 60 days, in accordance with the state’s 2017 notification law.

Payers have reported that they anticipate drug price increases about 20 percent higher than previous years with the average price increase for a pharmacy-dispensed drug to be in the high single digits and the increase for physician-administered drugs to be around 3 percent.

Click here for the Reuters report.

 

Senior House Democrats’ New Bill Ramps Up the Medicare Expansion Debate

Image result for Medicare Expansion Bill
Earlier this week, Congresswomen Rosa DeLauro (D-CT) and Jan Schakowsky (D-IL) introduced legislation, the Medicare for America Act, that would greatly expand Medicare coverage while maintaining employer-sponsored health insurance for those who have it and want to keep that coverage, employers would have an option to pay for their employees to be in the new system.

Under the proposal Medicare plan beneficiaries would still be required to pay premiums and insurance deductibles however, those costs would be capped, with premiums set at a maximum of 9.69 percent of the individual’s income. The plans would also be required to cover prescription drugs, dental, vision, and hearing services, as well as long-term supports and services for seniors and Americans with disabilities.

The bill is funded by phasing out the GOP tax cuts put in place last year as well as creating a 5 percent capital gains tax on high income earners, raising Medicare payroll and net investment income taxes, and increasing taxes on goods like tobacco, beer, liquor and sugar-sweetened drinks. Additionally, states would be required to pay into the system.

Click here for the legislation, and here for a summary.