Tag Archives: Health Policy

Trump Proposing Billions in Spending Cuts to Congress

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https://www.usnews.com/news/politics/articles/2018-05-07/trump-sending-spending-cuts-of-up-to-15b-to-congress

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The Trump administration is unveiling a multibillion-dollar roster of proposed spending cuts but is leaving this year’s $1.3 trillion catchall spending bill alone.

The cuts wouldn’t have much impact, however, since they come from leftover funding from previous years that wouldn’t be spent anyway.

The White House said it is sending the so-called rescissions package to lawmakers Tuesday. Administration officials, who required anonymity because they weren’t authorized to speak publicly on the matter, said the package proposes killing $15 billion in unused funds. A senior official said about $7 billion would come from the Children’s Health Insurance Program, or CHIP, which provides health care to kids from low-income families, though that official stressed the cuts won’t have a practical impact on the popular program.

The administration is trying to use its authority to prod Congress to “rescind” spending approved years ago, but even if the package is approved it would only have a tiny impact on the government’s budget deficit, which is on track to total more than $800 billion this year. Some of the cuts wouldn’t affect the deficit at all since budget scorekeepers don’t give credit for rescinded money that they don’t think would have ever been spent.

For instance, more than $4 billion in cuts to a loan program designed to boost fuel-efficient, advanced-technology vehicles wouldn’t result in fewer loans since the loans are no longer being made. And $107 million worth of watershed restoration money from the 2013 Superstorm Sandy aid bill is going unused because local governments aren’t stepping up with matching funds. Another $252 million is left over from the 2015 fight against Ebola, which has been declared over.

Still, the cuts, if enacted by Congress, would take spending authority off the table so it couldn’t be tapped by lawmakers for other uses in the future. The catchall spending bill, for instance, contained $7 billion in cuts to CHIP that were used elsewhere to boost other programs.

“This is money that was never going to be spent,” a senior administration official said on a press call ahead of Tuesday’s submission. “The only thing it would be used for is offsets down the line.”

Democrats have supported such cuts in the past, eager to grab easy budget savings to finance new spending. But some Democrats howled over the White House proposal anyway.

“Let’s be honest about what this is: President Trump and Republicans in Congress are looking to tear apart the bipartisan Children’s Health Insurance Program (CHIP), hurting middle-class families and low-income children,” said Senate Minority Leader Chuck Schumer, D-N.Y.

Pressure from party conservatives to increase cuts in a tentative $11 billion proposal contributed to a delay from Monday’s original release date.

The White House and tea party lawmakers upset by the budget-busting “omnibus” bill have rallied around the plan, aiming to show that Republicans are taking on out-of-control spending. The administration says it will propose cuts to the omnibus measure later in the year.

The spending cuts are also a priority for House Majority Leader Kevin McCarthy, R-Calif., who likens them to “giving the bloated federal budget a much-needed spring cleaning.” But while the package may pass the House it faces a more difficult path — and potential procedural roadblocks — in the Senate.

McCarthy wants to succeed soon-to-retire House Speaker Paul Ryan, R-Wis., and some of his allies view the project as a way to improve his standing with fractious GOP conservatives who blocked his path to the speakership in 2015.

The proposal has already had a tortured path even before its unveiling. More pragmatic Republicans, including the senior ranks of the powerful House and Senate Appropriations committees, rebelled against the measure. They argued that it would be breaking a bipartisan budget pact just weeks after it was negotiated. In response, White House budget director Mick Mulvaney cleansed the measure of cuts to the huge omnibus bill.

Last month, Mulvaney told lawmakers the plan could have totaled $25 billion or so. Now he says he’s planning to submit several different packages of spending cuts — and it’s likely they’ll get more conservative with each new proposal.

Either way, the idea faces a challenging path in Congress — particularly the Senate, where a 51-49 GOP majority leaves little room for error even though budget rules permit rescissions measures to advance free of the threat of Democratic filibusters. But the cuts to the popular children’s health insurance program probably could still be filibustered because they are so-called mandatory programs rather than annual appropriations.

 

Medicare Beneficiaries Feel The Pinch When They Can’t Use Drug Coupons

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https://khn.org/news/medicare-beneficiaries-feel-the-pinch-when-they-cant-use-drug-coupons/

This week, I answered a grab bag of questions about drug copay coupons and primary care coverage on the health insurance marketplace.

Q: My doctor wants me to take Repatha for my high cholesterol, but my Medicare drug plan copayment for it is $618 a month. Why can’t I use a $5 drug copay coupon from the manufacturer? If I had commercial insurance, I could. I’m on a fixed income. How is this fair?

The explanation may offer you little comfort. Under the federal anti-kickback law, it’s illegal for drug manufacturers to offer people any type of payment that might persuade them to purchase something that federal health care programs like Medicare and Medicaid might pay for. The coupons can lead to unnecessary Medicare spending by inducing beneficiaries to choose drugs that are expensive.

“The law was intended to prevent fraud, but in this case it also has the effect of prohibiting Part D enrollees from using manufacturer copay coupons … because using the coupon would be steering Medicare’s business toward a particular entity,” said Juliette Cubanski, associate director of the Program on Medicare Policy at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

The coupons typically offer patients with commercial insurance a break on their copayment for brand-name drugs, often reducing their out-of-pocket costs to what they would pay for inexpensive generic drugs. The coupons help make expensive specialty drugs more affordable for patients. They can also increase demand for the drugmaker’s products. If patients choose to use the coupons to buy a higher-cost drug over a generic, the insurer’s cost is likely to be more than what it would otherwise pay.

In addition, consumers should note that the copay cards often have annual maximums that leave patients on the hook for the entire copayment after a certain number of months, said Dr. Joseph Ross, associate professor of medicine and public health at Yale University who has studied copay coupons.

The coupons may discourage patients from considering appropriate lower-cost alternatives, including generics, said Leslie Fried, a senior director at the National Council on Aging.

According to a 2013 analysis co-authored by Ross and published in the New England Journal of Medicine, 62 percent of 374 drug coupons were for brand-name drugs for which there were lower-cost alternatives available.

Q: Last year, my marketplace plan covered five primary care visits at no charge before I paid down my $2,200 deductible. This year, it doesn’t cover any appointments before the deductible, and I had to pay $80 out-of-pocket when I went to the doctor. Is that typical now? It makes me think twice about going.

Under the Affordable Care Act, marketplace plans are required to cover many preventive services, including an annual checkup, without charging consumers anything out-of-pocket. Beyond that, many marketplace plans cover services such as some primary care visits or generic drugs before you reach your deductible.

The likelihood of having a plan that offers some cost sharing for primary care before you reach your deductible (rather than requiring you to pay 100 percent of the cost until you hit that amount) varies significantly depending on whether you’re in a bronze, silver or gold plan, according to a recent analysis by the Robert Wood Johnson Foundation.

In 2018, 77 percent of silver-level plans offered some cost sharing for primary care visits before enrollees had paid off their typical deductible of $3,800, the analysis found. In most cases, that means people owe a copayment or coinsurance charge for each visit until they reach their deductible. A small number of plans offered a limited number of no-cost or low-cost visits first, and then people using more services either had to pay the full charge for each visit or owed cost sharing until the deductible was met.

Bronze plans were much stingier in what they offered for primary care before people reached their deductible, which was $6,400 or higher in half of plans. Only 38 percent of bronze plans offered any primary care coverage before the deductible, and generally patients still had to pay a copayment or coinsurace. A smaller percentage of bronze plans offered limited visits at no cost or low cost before the deductible.

The share of people who chose bronze plans grew from 23 percent in 2017 to 29 percent this year, said Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation. While premiums are typically significantly lower in bronze plans than other “metal”-level plans, it can be worthwhile to check out how plans handle primary care services before the deductible, she said.

 

 

How The Farm Bill Could Erode Part Of The ACA

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https://khn.org/news/how-the-farm-bill-could-erode-part-of-the-aca/

Some Republican lawmakers continue to try to work around the federal health law’s requirements. That strategy can crop up in surprising places. Like the farm bill.

Tucked deep in the House version of the massive bill — amid crop subsidies and food assistance programs — is a provision that supporters say could help provide farmers with cheaper, but likely less comprehensive, health insurance than plans offered through the Affordable Care Act.

It calls for $65 million in loans and grants administered by the Department of Agriculture to help organizations establish agricultural-related “association” type health plans.

But the idea is not without skeptics.

“I don’t know that anyone at the Department of Agriculture, with all due respect, knows a darn thing about starting and maintaining a successful insurance company,” said Sabrina Corlette, a professor and project director at the Georgetown University Health Policy Institute.

Association health plans are offered through organizations whose members usually share a professional, employment, trade or other relationship, although the Trump administration is soon to finalize new rules widely expected to broaden eligibility while loosening the rules on benefits these plans must include.

Under that proposal, association plans would not have to offer coverage across 10 broad “essential” categories of care, including hospitalization, prescription drugs and emergency care. They could also spend less premium revenue on medical care.

Under the farm bill, the secretary of Agriculture could grant up to 10 loans of no more than $15 million each, starting next year, to existing associations whose members are ranchers, farmers or other agribusinesses.

The language is strikingly similar to a bill introduced April 12 by Rep. Jeff Fortenberry (R-Neb.), a supporter of association health plans. He did not respond to calls for comment.

Although the farm bill is usually considered “must-pass” by many lawmakers, it is currently facing pushback because of controversy surrounding other parts of the measure, mainly language that would add additional work requirements to the food stamp program.

Still, the focus on association health plans won’t go away.

The plans — coupled with another Trump administration move to make short-term insurance more widely available — could draw healthier people out of the ACA markets, leaving the pool of beneficiaries with higher percentages of people who need medical care. And that, some say, could drive up premiums for those who remain.

The National Association of Insurance Commissioners, for example, has warned that association plans “threaten the stability of the small group market” and “provide inadequate benefits and insufficient protection to consumers.”

Actuaries have made similar arguments.

Others are concerned about the idea of the government providing funding for such plans.

“We have reams of experience with AHPs that have gone belly up … and the notion that we should put taxpayer money into them is irresponsible,” said Georgetown University’s Corlette.

She was referring to the industry’s mixed track record with plans. Some have served members well, but other plans have been marked by solvency problems that left consumers on the hook with unpaid medical bills or were investigated for providing little or no coverage for such things as chemotherapy or doctor office visits.

It’s not fair to simply focus on the failures, countered attorney Christopher Condeluci, who served as tax and benefits counsel to the Senate Finance Committee and now advises private clients, some of whom are interested in association plans.

“Some AHPs were not successful,” he agreed. “But there’s arguably more examples of AHPs that work. The trouble is everyone focuses on the negative.”

Although the GOP generally supports association plans, using taxpayer funds to help start them could prove problematic for some conservatives in Congress.

Many Republican lawmakers expressed concerns about the use of tens of millions of taxpayer dollars to start insurance co-ops that were part of the ACA, most of which failed.

“The hard-earned tax dollars collected from working Americans, sitting at Treasury right now, are not venture capital, said Rep. Kevin Brady (R-Texas) at a subcommittee hearing in November 2015. Currently, Brady is chairman of the powerful House Ways and Means Committee.

The provision could also be popular in rural areas.

“We think it’s a good idea,” said Rob Robertson, chief administrator for the Nebraska Farm Bureau Federation, whose group is considering sponsoring one.

About half of his members, Robertson said, have a spouse working a non-farm job, mainly for insurance coverage. Of those who buy their own plan, some are facing astronomical premiums and are looking for relief.

“I can’t think of any sector that is affected more by the huge premium increases under Obamacare than farmers and ranchers,” he said.

The farm bill — including the AHP provision — was approved by the House Committee on Agriculture in mid-April, and is currently awaiting floor consideration. Meanwhile, a final rule on the Trump AHP rule, which has drawn more than 900 comments from supporters and opponents, could be issued as early as this summer.

 

 

Trump Says He Got Rid of Obamacare. The I.R.S. Doesn’t Agree.

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At a rally in Michigan a little over a week ago, President Trump assured his supporters that he had kept his promise to abolish the Affordable Care Act — even though Congress had failed to repeal the Obama-era health law.

“Essentially, we are getting rid of Obamacare,” Mr. Trump said, reminding a cheering crowd that the individual mandate that required most people to have health insurance or pay a penalty was scrapped as part of the Republican tax bill he signed into law last year. “Some people would say, essentially, we have gotten rid of it.”

But despite Mr. Trump’s longstanding desire to unwind the signature legislative achievement of his predecessor, many parts of the Affordable Care Act remain in place. And the Trump administration is even enforcing some of its provisions more aggressively than President Barack Obama did — a reality that has enraged business groups and Republicans in Congress who still want the law officially repealed.

While the individual mandate may be dead, the employer mandate — the requirement that many companies offer health insurance to their workers or pay a penalty — is very much alive. Under Mr. Trump, the Internal Revenue Service has been pursuing companies that fail to comply with the mandate and, according to the agency, was sending penalty notices to more than 30,000 businesses around the country.

Business groups are pushing for the I.R.S. to stop enforcing the mandate and House Republicans, who voted to repeal much of the Affordable Care Act a year ago, have proposed legislation to eliminate it. But most Democrats oppose major changes to the law and the Republican leaders in the Senate have shown no interest in tackling health care after last year’s stinging defeat.

The employer mandate requires companies with more than 50 full-time employees to provide health benefits to eligible employees or face fines of more than $2,000 per worker. The Congressional Budget Office predicted that these fines would total $12 billion in 2018.

The I.R.S. is working on settlements with some of the businesses that have had technical issues or paperwork glitches, according to David Kautter, the Treasury Department’s assistant secretary for tax policy and the acting I.R.S. commissioner.

But other companies that have failed to provide insurance will face stiff fines.

“I think it is horribly unfair and unjust,” Representative Jody Hice, a Republican from Georgia who has been a leading voice in the opposition to the employer mandate, said at a hearing where Mr. Kautter testified in April. “What I am asking at this point is for the I.R.S. to continue not to enforce it, as is what took place under the Obama administration,” he said, referring to a reprieve that was granted while businesses and the government sorted out compliance details.

Some lawyers contend that the I.R.S. is on shaky ground in trying to enforce the employer mandate penalties, arguing that the government has not followed proper procedures, like notifying employers that they were in violation of the law.

“The Affordable Care Act and federal regulations clearly state that a health insurance exchange must notify an employer that one or more employees qualified for premium tax credits before the I.R.S. can impose penalties,” said Christopher E. Condeluci, an employee benefits lawyer. “Most of the employers subject to penalties for 2015 never received the notices required under the law.”

E. Neil Trautwein, a vice president of the National Retail Federation, said some penalties resulted from an employer’s failure to check a particular box on a government form indicating that it had offered coverage to eligible employees.

In one case, Mr. Trautwein said, a $20 million penalty was imposed on a restaurant chain because one of its vendors had failed to check the proper box. “The penalty was negotiated down to zero,” Mr. Trautwein said. “It was an inadvertent mistake in filling out a complicated new form.”

John D. Arendshorst, an employee benefits attorney at Varnum, said he has been busy fielding questions from companies that have received proposed assessments from the I.R.S. and said the government has shown a willingness to reduce penalties when appropriate. In one case, a business with about 500 employees received an assessment for $1.9 million. That was ultimately reduced to $20,000 because the penalty was caused by a computer error.

“They were shocked for sure,” Mr. Arendshorst said of the initial penalty letter. “They felt it was a big mistake and it turned out to be.”

Under the Affordable Care Act, the employer mandate was to take effect in 2014. The Obama administration delayed enforcement for an additional year after employers said they needed more time to comply with rules requiring them to report on the coverage they provided to employees. And the Treasury Department needed more time to clarify the requirements. It was not until late last year that the I.R.S. had the capacity to determine which businesses were in violation of the mandate, and the agency is just now sending penalty letters related to the 2015 tax year. Penalty letters for the 2016 and 2017 tax years are expected to follow soon.

Republicans criticized the decision to begin enforcing the mandate as a parting shot by the former I.R.S. commissioner John Koskinen, whom they had previously assailed over the agency’s scrutiny of conservative nonprofit organizations. While Mr. Trump had issued an executive order that called for easing the Affordable Care Act’s regulations, the Treasury Department, which oversees the I.R.S., said it was required to abide by the law and enforce the employer mandate.

Mr. Koskinen pushed back against the idea that he was attempting to punish conservatives by jump-starting enforcement of the employer mandate, and he said that companies had been given plenty of notice that they needed to provide insurance to their employees.

“The I.R.S. does not have the authority not to collect the money,” Mr. Koskinen said in an interview, adding that there was no reason to hold off on penalizing companies. “Delaying wouldn’t accomplish anything except delay.”

Business groups have been lobbying Congress to repeal the employer mandate or to get the I.R.S. to stop enforcing it. They argue that companies did not receive sufficient notice that they needed to comply with a provision of the health law that had not been enforced for seven years.

“The employer mandate always existed to support the individual mandate,” said Jim Klein, president of the American Benefits Council. “There’s no logic or fairness in having an employer mandate in the absence of having an individual mandate.”

Mr. Klein said he would like to see a legislative fix to address the situation.

Mr. Trump himself has added to the confusion over the mandate by repeatedly asserting that the Affordable Care Act had been essentially eliminated because Republicans did away with the individual mandate.

“It’s yet another reason why the employer mandate needs to go,” Representative Kevin Brady of Texas, the Republican chairman of the House Ways and Means Committee, said of the penalties.

 

 

Health Care Is an Investment, and the U.S. Should Start Treating It Like One

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https://hbr.org/2018/04/health-care-is-an-investment-and-the-u-s-should-start-treating-it-like-one

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We invest billions of dollars each year in medicines, new technologies, doctors, and hospitals — all with the goal of improving health, arguably our most prized commodity. Yet, investments in the U.S. health care system woefully underperform relative to those made in health care in other countries. For instance, the U.S. spends nearly 7–10% more of its national income on health care than other similar countries and yet life expectancy at birth remains, on average, two to three years lower.

To be sure, many factors influence health outcomes and the investments the health care system makes are only one input. But a large reason why investments in health care underperform is because we invest so much in services that are clearly low-value — i.e., offer little or no clinical benefit relative to the cost — and likely many more where the returns are gray. Investing limited health care dollars into low-value services crowds out our ability to spend on high-value services. So if we want to see better outcomes, we need to start to think like investors.

Examples of significant investments in low-value care services abound in the U.S. health care system, ranging from expensive imaging for benign medical conditions to routine pre-operative testing before low-risk surgeries like cataract surgery. Some research estimates that 42% of Medicare beneficiaries receive some form of low-value care.

Many factors contribute to our failure to disinvest from low-value services and invest more heavily in high-value services. For one thing, physicians, insurers, and patients often have limited data on the relative value of different health care services. There is an abundance of high-quality comparative effectiveness data for pharmaceuticals, largely because of the drug approval process, but there’s less data on the value of other expensive investments into health, such as doctor visits and hospitalizations. Put differently, there is no equivalent of the Food and Drug Administration for a large chunk of the health care sector, which means evidence on value in these sectors takes long to produce, in part because nobody requires that evidence to be generated. Furthermore, even when we have good evidence that a treatment or service is highly valuable, we frequently underuse it. Many medications for chronic conditions such as heart disease, e.g., statins, are routinely underused.

Physicians and businesses also generate income from performing low-value services. They may even be able to order these services themselves, effectively generating their own business. (For example, a cardiologist who performs and reads nuclear stress tests, which are frequently low value, has the ability to order these studies for his or her patient.) So reducing investments in low-value care services means spending less on doctors, hospitals, and other health care technologies. But, like pharmaceuticals, each of these entities is represented by powerful lobbyists (such as physician and hospital organizations), who will strongly oppose any steps to reduce payments.

Patients also frequently lack the information and ability to evaluate whether or not low value studies should be performed, and to hold their physicians accountable for choosing to provide low-value care. This issue is further complicated by the fact that labeling care as low-value is context dependent — advancing imaging for back pain is often not useful but sometimes it is. And moreover, some physicians may order unnecessary low-value testing because of the perceived threat of liability. Despite significant efforts to make physicians and patients aware of low-value services, we’ve observed little improvement in reigning in use.

Overinvesting in low-value services by physicians, payers, and patients leads to the underinvestment in high-value services. But affordability and timing is another critical issue that stymies investment in high-value care. Many high-value treatments take several years to yield significant health benefits. Because patients regularly change insurers, any individual insurer has less incentive to commit to investing in an expensive, high-value treatment if the return on investment could end up accruing to a competitor. Short-term budget constraints among both public and private insurers, and the fact that re-allocating resources away from low value services takes time, further limit investments in high-value services.

Consider, for example, the debate around the pricing of new Hepatitis C Virus (HCV) therapies. HCV is a chronic infectious disease that affects 3 million or more Americans. If untreated, HCV can cause liver dysfunction, liver failure, cirrhosis, and ultimately death. Until recently, the only available treatments for HCV were complex, multi-drug regimens with severe side effects and only modest efficacy. In the last half decade, however, several new HCV treatments have been developed with cure rates exceeding 90%. These new treatments typically cost $40,000-$50,000 per treatment course, but they have been shown to be cost effective over the long-term, as they can help patients avoid terminal liver disease, which is extremely expensive to treat, and reduce morbidity and mortality due to progressive liver disease.

Many physicians, experts in public health, and, of course, representatives of the pharmaceutical companies which produce these new treatments contend that these drugs should be made available to all patients with HCV who could benefit from them. But both private and public payers have raised objections over the price of these therapies, in large part because the population of patients who require treatment is so large. Payers contendthat they simply cannot afford to cover the cost of these drugs for all patients who are eligible for them and still provide coverage for other health care services that patients use. And state Medicaid agencies and small insurers frequently assert that short-term budget constraints prevent them from paying for costly, high value therapies like those for HCV.

In cases like this, it may be instructive to think about the circumstances through the lens of a portfolio manager who is choosing how to allocate investments. When given the opportunity to invest in an expensive asset, with high potential for significant future returns on investment, an investment manager would not pass it over due to lack of funds, because this capital could likely be acquired at a cost below the asset’s expected return. The manager would reduce holdings in investments with lower expected returns and re-allocate these funds into more promising investments. If the investment were valuable enough, the manager might even find ways to raise additional capital to invest in this asset.

In health care, this means at least two things: (1) wrestling with the factors that continue to promote use of low-value services (like lack of information and financial incentives for patients, and inappropriately structured financial incentives for physicians) and (2) recognizing that high-value investments often require large financial outlays today that ultimately reap future benefits.

Aside from reducing the use of low-value services, one potential solution is to identify and develop sources of long-term financing for high-value services. Mortgages exist to spread the costs of a home or a car out over a longer period of time, thereby allowing people to buy a product that they otherwise could not afford. Similar approaches could be used to help finance high-value health care investments that otherwise would be unaffordable.

For both public and private insurers, a long-term view should be feasible. State governments already rely heavily on capital markets to finance infrastructure investments and it’s quite possible that the returns on these investments fall below high-value health care investments like HCV drugs. Private insurers could also access private capital markets and design contracts with other insurers that allow them to partake in some of the long-term benefit of early high-value care when individuals switch between plans. For instance, an insurer that covers HCV therapy for an individual could, in theory, be compensated by future insurers, even Medicare, that treat that patient and benefit from that patient already being cured of HCV.

Ultimately, reducing investments in low-value care will require coordinated action from many actors. Patients and providers need more robust and up-to-date information on the value of different services. Insurers must look hard at the services they cover and discourage utilization of low-value services and encourage use of high-value services, even those that are high cost. Innovators developing new drugs, devices, and procedures should look beyond profits alone and incorporate the need to add value into their investments. And policymakers must create incentives for all of the above to consider value when making decisions about how to invest their health care dollars.

These actions are important because not only does underinvesting in high-value services make them less accessible, it may also make them less available in the future. Many expensive high-value treatments — like HCV therapies, new cancer treatments, and gene therapies — are the product of extensive research and development, which are undertaken because the expected returns are thought to exceed the known costs. A failure to reduce investments in low-value care and reinvest these resources in high-value therapies will reduce incentives to develop future therapies that can deliver significant value to patients.

 

 

 

‘What The Health?’ Medicaid, Privacy And Tom Price’s Return

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https://khn.org/news/podcast-khns-what-the-health-medicaid-privacy-and-tom-prices-return/

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President Donald Trump’s former New York doctor says Trump’s lawyer and private head of security “raided” his office and took the medical files relating to Trump, an act described by White House press secretary Sarah Huckabee Sanders as “standard operating procedure.” Except that’s not how the federal health privacy law is supposed to work.

Meanwhile, Seema Verma, who heads the federal agency in charge of Medicare and Medicaid, met with reporters for a wide-ranging discussion of states’ efforts to remake their Medicaid programs and the administration’s goals of encouraging people to work to help lift them out of poverty.

Plus, Robert Blendon, a professor at Harvard University’s Kennedy School of Government and its T.H. Chan School of Public Health, talks about how health issues fit into the complex politics of the 2018 midterm elections.

This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Joanne Kenen of Politico, Alice Ollstein of Talking Points Memo and Margot Sanger-Katz of The New York Times.

Among the takeaways from this week’s podcast:

  • Five states are seeking permission from federal officials to impose a lifetime limit on Medicaid eligibility. But despite the many changes the Trump administration officials have been making to Medicaid, they have shown no public interest in this yet.
  • Trump is considering regulations that would defund Planned Parenthood from the Title X Family Planning Program. Although anti-abortion groups would applaud such a move, it could backfire on the Republicans in November by energizing a wave of blue voters in the midterm elections.
  • Although former HHS Secretary Tom Price raised eyebrows this week with his comment disparaging the removal of the penalty for not having insurance, that stance is somewhat consistent with the administration’s earlier promise to find new ways to regulate the insurance markets.

Plus, for “extra credit,” the panelists recommend their favorite health stories of the week they think you should read, too.

Evidence keeps mounting that Affordable Care Act’s individual mandate was a success

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Former HHS Secretary Tom Price. Credit: Alex Wong, Getty Images

Former HHS Secretary Tom Price.

Former HHS Secretary Tom Price’s statements and new research from the Commonwealth Fund suggest the ACA brought more young people to insurance pool.

When the Affordable Care Act was initially passed, some thought that many people, high-income men in good health particularly, would be driven from the insurance market and that would indicate a failure on the part of the ACA’s individual mandate. Instead the opposite appears to be true.

What’s more, former Health and Human Services Secretary Tom Price, MD, said publicly this week that when President Trump’s tax bill, which ends the individual mandate in 2019, kicks in insurance prices are going to rise.

Price’s statement comes after the uninsured rate dropped substantially at least when it comes to one studied demographic during the law’s first few years. Among 26-34-year-old men who earned more than 400 percent of the federal poverty level, the uninsured rate dropped from 11.7 percent in 2013 to 7.2 percent in 2015, according to new research by the Commonwealth Fund.

That’s actually greater than the drop in the uninsured rate of older men. Those between 55-64 also saw a reduction, but only from 3.9 to 2.5 percent.

Before the Affordable Care Act was enacted, young and healthy individuals in many states could purchase limited benefit packages at low premiums. The ACA mandated coverage and charged higher premiums to those not covered by federal subsidies.

Young, healthy males shouldered higher costs due to regulations that shifted the brunt of the cost away from disadvantaged groups, such as the poor and the elderly.

At the time of passage, some states had imposed rating rules for insurance coverage that sought to qualify more people for health subsidies, but the researchers found that when the ACA was passed, the percent of uninsured men that didn’t qualify for subsidies dipped at about the same rate in all states, regardless of whether they had enacted those rules.

The positive impact on young, high-earning men was credited by authors to financial penalties and effective marketing, but the Trump administration has cut the ACA marketing budget by $90 million. Just $10 million is now earmarked for that purpose.

“There are many, and I’m one of them, who believe that [the tax bill] will harm the pool in the exchange market,” Price said at the World Health Care Congress on Tuesday. “Because you’ll likely have individuals who are younger and healthier not participating in that market, and consequently, that drives up the cost for other folks.”

 

HHS Secretary Alex Azar to Supreme Court: Time to rule on Medicare case that affects $4 billion

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HHS Secretary Alex Azar Credit: Chris Kleponis-Pool, Getty Images

HHS Secretary Alex Azar

Lower court’s decision about disproportionate share hospital payments undermines the ability HHS has to administer Medicare reimbursement, Azar says.

Health and Human Services Secretary Alex Azar asked the U.S. Supreme Court to review an appeals court case won by numerous hospitals over disproportionate share hospital payments.

Azar said the decision affects between $3 and $4 billion in Medicare funding and therefore, the Supreme Court’s review is warranted.

At issue is whether the Centers for Medicare and Medicaid Services needed to go through a notice and comment rulemaking to get stakeholder feedback before deciding on its own to include Medicare Advantage beneficiaries in its calculations for DSH payments.

Medicare pays hospitals for providing inpatient care and gives an additional payment known as disproportionate share hospital adjustment to hospitals that serve a significantly disproportionate number of low-income patients.

The payment is based on two percentages. The first is a Medicare fraction, which is calculated using the number of patient days for patients who are entitled to benefits under Medicare Part A and for supplemental Social Security income benefits.

The second percent includes patient days attributable to patients who are not entitled to benefits under Medicare Part A.

Medicare Advantage, or Medicare Part C, established in 1997, allows individuals to receive benefits under Parts A and B through enrollment in a private MA plan.

Prior to 2004, CMS did not count a hospital’s Medicare Part C patient days when calculating the Medicare fraction used to determine DSH payments. Starting in 2004, CMS made a decision on its own interpretation of a rule and determined Part C patients were entitled to benefits under Medicare Part A within the meaning of Medicare-fraction provisions.

Hospitals challenged CMS’ interpretation done without notice and comment rulemaking. A district court sided with the government, but in 2017 the U.S. Court of Appeals in the District of Columbia ruled with the hospitals.

The appeals court said HHS needed notice and comment rulemaking before providing Medicare Administrative Contractors the payment calculation that is passed on to hospitals.

The decision undermines its ability to administer the annual Medicare reimbursement process in a workable manner, HHS said.

“The D.C. Circuit’s contrary decision would significantly impair HHS’s ability to administer annual Medicare reimbursements through the MACs that act on its behalf,” the Supreme Court filing said. “It would also impose significant costs on the government. Just with respect to the Medicare-fraction issue in this case, the decision below affects between $3 and $4 billion in Medicare funding.”

Solicitor General Noel Francisco filed the petition in April on behalf of Azar, against health systems Allina Health Services, doing business as United Hospital, Unity Hospital and Abbott Northwestern Hospital; Florida Health Sciences Center dba Tampa General Hospital; Montefiore Medical Center; Mount Sinai Medical Center of Florida dba Mount Sinai Medical Center; New York Hospital Medical Center of Queens; New York Methodist Hospital; and New York Presbyterian Hospital and New York Presbyterian Hospital Weill Cornell Medical Center.

 

How A Drug Company Under Pressure For High Prices Ratchets Up Political Activity

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Business looked challenging for Novo Nordisk at the end of 2016. As pressure mounted over the pharma giant’s soaring insulin prices, investors drove its stock down by a third on fears that policymakers would take action, limit prices and hurt profits.

Then things got worse. A Massachusetts law firm sued the company and two other pharma firms on behalf of patients, claiming that high insulin prices of hundreds of dollars a month forced diabetics to starve themselves to minimize their blood sugar while skimping on doses. At least five states began investigating insulin makers and their business partners.

As scrutiny rose, Novo Nordisk engaged in what analysts say is a time-honored response to public criticism. It aggressively ratcheted up spending to spread its influence in Washington and to have a louder say in the debates over drug prices.

The drugmaker’s political action committee spent $405,000 on federal campaign donations and other political outlays last year, more than in 2016 — an election year — and nearly double its allocation for 2015, data compiled by Kaiser Health News show.

“We remain committed to being part of the discussion,” said Tricia Brooks, head of government relations and public affairs for Novo Nordisk, acknowledging scrutiny over insulin prices but saying the company has many other issues to work on with policymakers. “I don’t want us to run away from it and hide or keep our head down and wait for it to roll over.”

Novo Nordisk also spent $3.2 million lobbying Congress and federal agencies in 2017, its biggest-ever investment in directly influencing U.S. policymakers, according to the Center for Responsive Politics.

Part of that surge included summoning more than 400 Novo Nordisk employees to contact lawmakers and their staffs on Capitol Hill, “a huge increase from anything we’ve ever done before,” Brooks said.

Taken together, the increases represent a “major corporate policy shift” for the company and appear to be a classic business response to growing political risk, said Kent Cooper, a former Federal Election Commission official who has tracked political money for decades.

The pharma industry as a whole has behaved similarly, cranking up political contributions and lobbying. Meanwhile, despite much talk about change, Congress and the Trump administration have done little to control drug prices or threaten drug-company profits.

Pharma businesses overall made political donations of $12.1 million last year, down from a $13.6 million election-year surge in 2016 but 9 percent higher than the haul for 2015, according to the KHN analysis. Pharma industry lobbying expenses surpassed $171 million last year, the highest level since 2009, during negotiations over the Affordable Care Act, according to CRP.

“It’s been hot in the health care arena for — how many years now?” said Steven Billet, who teaches lobbying and PAC management at George Washington University. “Anybody in this world now is sitting there thinking, “When I go back to the board next year, I’m going to ask for 15 percent more in my [lobbying and campaign finance] budget. Because this isn’t going away.’”

Like most big corporations, Novo Nordisk runs a political action committee, or PAC, which solicits employee donations and gives the proceeds to political candidates’ campaigns. The company is Danish. Only workers who are U.S. citizens or permanent residents are allowed to support the PAC.

Like many PACs, Novo Nordisk spreads money to both parties, concentrating on powerful committee members and other leaders. Since 2013 it has given $22,500 to House Speaker Paul Ryan, a Republican, and $20,472 to South Carolina’s James Clyburn, a member of the Democratic House leadership.

Brooks gave the PAC $4,370 last year, the data show. Some employees gave as little as $20 or $30.

The firm’s influence-seeking has grown along with its U.S. sales, which went from hundreds of millions of dollars in the early 2000s to some $9 billion last year. Its biggest business is diabetes, including various types of insulin whose list prices have more than doubled in recent years.

The wholesale list price for a vial of Novo Nordisk’s Levemir, a long-acting insulin, went from $144.80 in 2012 to $335.70 in January, when the price rose 4 percent, according to Connecture, a research firm.

Even Alex Azar, a former Eli Lilly executive who became Health and Human Services secretary in January, said in his confirmation hearing that “insulin prices are high, and they’re too high.” Along with Novo Nordisk and Sanofi, Lilly is one of the three big insulin makers under investigation by state attorneys general for price increases that seem suspiciously similar in size and timing.

Sanofi and Lilly both spent more last year on political donations and federal lobbying than Novo Nordisk. Lilly’s political spending was $548,100 for 2017, up 12 percent from 2015, the previous off-election year, the data show. Sanofi’s was $527,200, down from 2015.

But potential insulin price limits threaten Novo Nordisk more than those companies because diabetes-related drugs account for an exceptionally big portion of its business, analysts said. Several proposals under consideration by Congress could lower insulin prices or limit future increases.

One would allow the Medicare program for seniors to negotiate prices for covered drugs, thus lowering the cost.

Other proposals would make it easier for competing, “biosimilar” alternatives to break through the thicket of patents created by sellers of complex drugs such as insulin. Others would bring more transparency, requiring companies to publish and justify price increases.

None of the proposals has made it out of congressional committees. In the face of inaction by Washington, Novo Nordisk’s stock has recovered much of the ground it lost in 2016.

Novo Nordisk rejects suggestions that it coordinated price increases with competitors. So do Sanofi and Lilly.

List prices such as those tracked by Connecture don’t reflect what patients or their insurers ultimately pay, said Novo Nordisk spokesman Ken Inchausti. Growing discounts and rebates substantially reduced the reported list price, he said.

Even including discounts, however, the company’s net profit margin for 2017 was 34 percent, its highest since at least 2000, when it was half that high.

Official filings show Novo Nordisk lobbyists have been weighing in on numerous measures related to drug prices, including proposals to import less expensive drugs from Canada.

The company lobbies Washington on a wide range of issues including diabetes prevention, budget matters, chronic disease and making obesity an accepted medical disease that insurers will pay to prevent, Brooks said.

But last year’s increase in campaign donations and lobbying doesn’t look like business as usual for Novo Nordisk, said Billet, a former AT&T lobbyist who directs GWU’s Legislative Affairs program.

“I’m not surprised,” he said. “They’ve obviously had some issues recently. This is maybe a predictable enough element in their strategy.”

 

As Proton Centers Struggle, A Sign Of A Health Care Bubble?

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The Maryland Proton Treatment Center chose “Survivor” as the theme for its grand opening in 2016, invoking the reality-TV show’s tropical sets with its own Tiki torches, palm trees and thatched booths piled with pineapples and bananas.

It was the perfect motif for a facility dedicated to fighting cancer. Jeff Probst, host of CBS’ “Survivor,” greeted guests via video from a Fiji beach.

But behind the scenes, the $200 million center’s own survival was less than certain. Insurers were hesitating to cover procedures at the Baltimore facility, affiliated with the University of Maryland Medical Center. The private investors who developed the machine had badly overestimated the number of patients it could attract. Bankers would soon be owed repayment of a $170 million loan.

Only two years after it opened, the center is enduring a painful restructuring with investors poised for huge losses. It has never made money, although it has ample cash to finance operations, said Jason Pappas, its acting CEO since November. Last year it lost more than $1 million, he said.

Volume projections were “north” of the current rate of about 85 patients per day, Pappas said. How far north? “Upper Canada,” he said.

For years, health systems rushed enthusiastically into expensive medical technologies such as proton beam centers, robotic surgery devices and laser scalpels — potential cash cows in the one economic sector that was reliably growing. Developers got easy financing to purchase the latest multimillion-dollar machine, confident of generous reimbursement.

There are now 27 proton beam units in the U.S., up from about half a dozen a decade ago. More than 20 more are either under construction or in development.

But now that employers, insurers and government seem determined to curb growth in health care spending and to combat overcharges and wasteful procedures, such bets are less of a sure thing.

The problem is that the rollicking business of new medical machines often ignored or outpaced the science: Little research has shown that proton beam therapy reduces side effects or improves survival for common cancers compared with much cheaper, traditional treatment.

If the dot-com bubble and the housing bubble marked previous decades, something of a medical-equipment bubble may be showing itself now. And proton beam machines could become the first casualty.

“The biggest problem these guys have is extra capacity. They don’t have enough patients to fill the rooms” at many proton centers, said Dr. Peter Johnstone, who was CEO of a proton facility at Indiana University before it closed in 2014 and has published research on the industry. At that operation, he said, “we began to see that simply having a proton center didn’t mean people would come.”

Sometimes occupying as much space as a Walmart store and costing enough money to build a dozen elementary schools, the facilities zap cancer with beams of subatomic proton particles instead of conventional radiation. The treatment, which can cost $48,000 or more, affects surrounding tissue less than traditional radiation does because its beams stop at a tumor rather than passing through. But evidence is sparse that this matters.

And so, except in cases of childhood cancer or tumors near sensitive organs such as eyes, commercial insurers have largely balked at paying for proton therapy.

“Something that gets you the same clinical outcomes at a higher price is called inefficient,” said Dr. Ezekiel Emanuel, a health policy professor at the University of Pennsylvania and a longtime critic of the proton-center boom. “If investors have tried to make money off the inefficiency, I don’t think we should be upset that they’re losing money on it.”

Investors backing a surge of new facilities starting in 2009 counted on insurers approving proton therapy not just for children, but also for common adult tumors, especially prostate cancer. In many cases, nonprofit health systems such as Maryland’s partnered with for-profit investors seeking high returns.

Companies marketed proton machines under the assumption that advertising, doctors and insurers would ensure steady business involving patients with a wide variety of cancers. But the dollars haven’t flowed in as expected.

Indiana University’s center became the first proton-therapy facility to close following the investment boom, in 2014. An abandoned proton project in Dallas is in bankruptcy court.

California Protons, formerly associated with Scripps Health in San Diego, landed in bankruptcy last year.

A number of others, including Maryland’s, have missed financial targets or are hemorrhaging money, according to industry analysts, financial documents and interviews with executives.

  • The Hampton University Proton Therapy Institute in Virginia has lost money for at least five years in a row, recording an operating loss of $3 million in its most recent fiscal year, financial statements show.
  • The Provision CARES Proton Therapy Center in Knoxville, Tenn., lost $1.7 million last year on revenue of $23 million — $5 million below its revenue target. The center is meeting its debt obligations, said Tom Welch, its president.
  • Centers operated by privately held ProCure in Somerset, N.J., and Oklahoma City have defaulted on debt, according to Loop Capital, an investment bank working on deals for new proton facilities.
  • A facility associated with the Seattle Cancer Care Alliance, a consortium of hospitals, lost $19 million in fiscal 2015 before restructuring its debt, documents show. Patient volume is growing but executives “continue to be disappointed in the slower-than-expected acceptance of proton therapy treatment” by insurers, said Annika Andrews, CEO of SCCA Proton Therapy.
  • A center near Chicago lost tens of millions of dollars before restructuring its finances in a 2013 sale to hospitals now affiliated with Northwestern Medicine, documents filed with state regulators show. The facility is “meeting our budget expectations,” said a Northwestern spokesman.

Representatives from ProCure and the facilities in San Diego and Hampton did not respond to repeated requests for interviews.

“In any industry that’s really an emerging industry, you often have people who enter the business with over-exuberant expectations,” said Scott Warwick, executive director of the National Association for Proton Therapy. “I think maybe that’s what went on with some of the centers. They thought the technology would grow faster than it has.”

In the absence of evidence showing protons produce better outcomes for prostate, lung or breast cancer, “commercial insurers are just not reimbursing” for these more common tumors, said Brandon Henry, a medical device analyst for RBC Capital Markets.

The most expensive type of traditional, cancer-fighting radiation — intensity modulated radiation therapy — costs around $20,000 per treatment, while others cost far less. The government’s Medicare program for seniors covers proton treatment more often than private insurers but is insufficient by itself to recoup the massive investment, analysts said.

The rebellion by private insurers “is very, very good” and may signal the health system “is finally figuring out how to say no to low-value procedures,” said Amitabh Chandra, a Harvard health policy professor who has called proton facilities unaffordable “Death Stars.”

Proton centers are fighting back, enlisting patients, legislators and nonprofits to push for reimbursement. Oklahoma has passed and Virginia has considered legislation to effectively require insurers to cover proton therapy in more cases.

An entire day at the 2017 National Proton Conference in Orlando was dedicated to tips on getting paid, including a session titled “Strategies for Engaging Health Insurance on Proton Therapy Coverage.”

Proton facilities tell patients the therapy is appropriate for many kinds of cancer, never mentioning the cost and guiding them through complicated appeals to reverse coverage denials. The Alliance for Proton Therapy Access, an industry group, has online software for generating letters to the editor demanding coverage.

In hopes of navigating a difficult market, many new centers are smaller — with one or two treatment rooms — and not as expensive as the previous generation of units, which typically have four or five rooms, like the Baltimore facility, and cost $200 million or more.

Location is also critical. Treatment requires near-daily visits for more than a month, which may explain why larger centers such as Maryland’s never attracted the out-of-town business they needed.

To make the finances work, hospitals are combining forces. The first proton beam center in New York City is under construction, a joint project of Memorial Sloan Kettering, Mount Sinai and Montefiore Health System.

Smaller facilities, which can cost less than $50 million, should be able to keep their rooms full in many major metro areas, said Prakash Ramani, a senior vice president at Loop Capital, which is helping develop such projects in Alabama, Florida and elsewhere.

Maryland’s center hopes to break even by year’s end, executives said. That will involve refinancing, converting to nonprofit, inflicting losses on investors and issuing municipal bonds.

But plans call for four centers soon to be open in the D.C. area.

“It’s a real arms race,” said Johnstone, the former proton-center CEO, who has co-authored papers on proton-therapy economics. He is now vice chair of radiation oncology at Moffitt Cancer Center in Tampa, which doesn’t have a proton center. “What places need now are patients — a huge supply of patients.”