1 big thing: Everything will be a fight

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Insurers and hospitals came out swinging yesterday against Democrats’ proposal to let people older than 50 buy into Medicare — a reminder that almost any expansion of public health coverage will provoke a battle with the health care industry.

Between the lines: Politically, an age-restricted Medicare buy-in is about as moderate as it gets for Democrats in the age of “Medicare for All.”

  • It is not a proposal for universal coverage, and it’s a far cry from trying to eliminate private insurance. It would be optional, only a relatively small slice of people would have the option, and they would need to pay a monthly premium.

Yes, but: Being on the more moderate end of the political spectrum does not shield you from a fight.

  • Expanding Medicare would hurt hospitals’ bottom lines, because Medicare pays hospitals less than private insurance does.
  • That’s why the Federation of American Hospitals said yesterday that the idea “would harm more Americans than it would help.”
  • The buy-in plan would primarily compete with employer-based health coverage (that’s what people between 50 and 65 are likely to have). And America’s Health Insurance Plans said the idea “is a slippery slope to government-run health care for every American.”

The bottom line: Any proposal that would compete with (never mind eliminate) private coverage, particularly employer coverage, will meet this kind of resistance.

That’s why Medicaid is the public program Democrats and industry can agree to love. Expanded access to Medicaid has rarely been an alternative to commercial insurance — it’s usually an alternative to being uninsured.

  • The uninsured were the primary beneficiaries of the Affordable Care Act’s Medicaid expansion, and the Medicaid buy-in proposals now popping in the states are aimed at the people who are most likely to be foregoing private ACA coverage because of its cost.

 

 

 

Kamala Harris’ ‘Medicare for all’ would mean massive disruption for healthcare, and the industry is prepared to fight it

https://www.washingtonexaminer.com/policy/healthcare/kamala-harris-medicare-for-all-would-mean-massive-disruption-for-healthcare-and-the-industry-is-prepared-to-fight-it

Image result for Kamala Harris' 'Medicare for all' would mean massive disruption for healthcare, and the industry is prepared to fight it

Democratic presidential contender Sen. Kamala Harris wants to “move on” from the current healthcare system in favor of a plan that would roll everyone in the U.S. onto a government plan known as “Medicare for all,” doing away with private health insurance.

As the California Democrat and others in her party make their case, however, they will face considerable opposition not only in the insurance industry, but across the healthcare sector, which would see massive upheaval from the plan. And polling suggests that the public, roughly half of which relies on private insurance, isn’t quite on board.

Drug companies, insurers, doctors, and hospitals have united in recent months to fight national government healthcare. One healthcare industry group, called the Partnership for America’s Health Care Future, has launched a five-figure digital ad campaign arguing that “Medicare for all” would cause massive disruption, higher taxes, lower quality care, and less choice for patients. It plans to spend six figures bashing “Medicare for all” over the course of 2019.

“Whether it’s called Medicare for all, single payer, or a public option, one-size-fits-all healthcare will mean all Americans have less choice and control over the doctors, treatments, and coverage,” said Lauren Crawford Shaver, the group’s executive director.

Other candidates for the Democratic nomination, such as Sens. Elizabeth Warren of Massachusetts and Kirsten Gillibrand of New York, are, like Harris, co-sponsors of the Medicare for All Act, legislation led by Sen. Bernie Sanders, I-Vt. Although it has “Medicare” in the name, the bill would go much further than current Medicare, which covers adults 65 and older and people with disabilities. It would pay for emergency surgery, prescription drugs, mental healthcare, and eye care without a copay.

Children would be enrolled in the government plan soon after the the bill’s passage, and the rest would be gradually phased in after four years. This would mean that roughly half of the U.S. population, the 177 million people in the U.S. covered by private health insurance mostly through work, would be moved onto a government plan. Employers would pay higher taxes rather than pay for private plans.

In defending the need for a government system, Sanders has blasted insurance companies, saying upon unveiling the bill that they “make billions of dollars in profits and make industry CEOs extremely wealthy.”

But healthcare providers, not just insurers, benefit from the current fragmented system, in which insurance is purchased by employers, the government, and individuals. They charge private insurers more to make up for the gap left by patients who are uninsured or are on government programs, which pay less for their services.

If all privately insured individuals were to have Medicare instead, and if it were to pay the same rates it does now, then doctors and hospitals would see big losses caring for patients who moved from private coverage to the government plan. Healthcare providers have said that if taxes don’t go up to pay for the difference, then doctors and hospitals will face pay cuts and layoffs, leading to facility closures and long lines for care.

Hospitals serve as the main employer in many communities. For patients, that would mean losing not only a healthcare plan they might be satisfied with, but also doctors they worked with for years or hospitals they relied on in their communities.

The Medicare for All Act has not been scored by the Congressional Budget Office, but analyses from the Mercatus Center at George Mason University and the left-leaning Urban Institute found it would raise government spending over a decade by $32.6 trillion.

Overall healthcare spending, though, would actually fall by $2 trillion, as private spending on healthcare would collapse. The cut would be achieved, however, through paying 40 percent less to providers than what they were getting from private insurance.

Another obstacle to “Medicare for all” is the fact that the public isn’t fully convinced by the idea of nixing private insurance, a recent poll from the Kaiser Family Foundation shows. Initially, 56 percent of those polled favored the Medicare for All Act, but then when they learned it would do away with private health insurance, the support fell to 37 percent.

Candidates are going to face pushback within their party. House Speaker Nancy Pelosi and other Democratic leaders have not embraced government healthcare, instead pushing for adding funding to Obamacare.

But proponents of allowing the government to have a more extensive role in healthcare point out that waste is prevalent in the current system. Patients receive unnecessary medical care, such as repeated tests or surgeries that either don’t make them healthier or even make them worse.

These proponents agree with Harris that health insurance companies are unnecessary. Wendell Potter, an advocate of a government-financed healthcare system and president of the Business Initiative for Health Policy, said in a statement that polling results show the healthcare industry’s misinformation campaign to spread “fear, uncertainty, and doubt” was effective. He said that commercial health insurance companies don’t have an incentive to lower healthcare costs and make sure patients can access care.

Potter, a former health insurance executive, described how the information campaign worked, saying the goal was to “make people believe that private health insurance companies were a necessary part of the healthcare system, and to scare them into thinking that a ‘Medicare for all’ system was expensive and impractical, and that it would cause a significant drop off in the quality of care.”

 

 

 

 

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.

 

 

 

 

Hospitals sue over Medicare cuts

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The nation’s primary hospital lobbying groups are suing the federal government to stop a new regulation that will cut Medicare payments for routine checkups in doctors’ offices that are owned by hospitals, Axios’ Bob Herman reports.

The big picture: This lawsuit was expected after the Centers for Medicare & Medicaid Services finalized the rule in November.

  • CMS said the policy, which would cut payments by $760 million in 2019, “will control unnecessary volume increases,” but hospitals are arguing the government overstepped its legal authority by “making draconian payment reductions targeting only specific services.”

Why it matters: This suit is another reminder of just how hard any sort of aggressive cost control is.

  • Any number of experts will tell you that hospitals’ acquisitions of doctors’ practices is driving costs upward, and Medicare isn’t even proposing to stop those acquisitions — the rule would only affect less than 1% of Medicare’s outpatient spending.
  • Hospitals very well may lose this lawsuit, of course, but it’s still a reminder of how hard industry will fight any threat to its bottom line.
  • Don’t be surprised to see similar lawsuits from the pharmaceutical industry once the Trump administration finalizes some of its plans to cut drug costs (unless industry can kill them before it gets that far).

 

 

 

HHS set to implement long-delayed 340B final rule in January

https://www.fiercehealthcare.com/finance/hhs-set-to-implement-long-delayed-340b-final-rule-jan-1?mkt_tok=eyJpIjoiTkdKbFptRXdPV1pqTnpJMCIsInQiOiJ2ZjdFZXBBODZKcnQ3R2h2bnJTWHB0cFFcL013WTQrSlljK1A5V1YxUWxreSt2M0ZLUU1qV2ZaaUM4M3J1N3o3RVpJdlJGVlpjb1dNeGExejk3TE00RVVaYTl5NVwvaCt4YVNnTXFmYUliSVBhbTQyaHhQc0x1ZTZlTjRmVnBpWXYxIn0%3D&mrkid=959610

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Editor’s note: This story has been updated to include a response from 340B Health and the American Hospital Association.

HHS is planning an about-face on the long-delayed rule that would set price ceilings and monetary penalties in the 340B program, moving up its start date by several months. 

The Department of Health and Human Services issued a notice (PDF) saying that it intended to finally implement the rule on Jan. 1, cutting off seven months of time from a previously announced July 1 start date.

The rule—which would set price ceilings for drugs and punish pharmaceutical companies that knowingly overcharge 340B hospitals—has been delayed five times by the Trump administration, most recently in June. The final rule was first issued in January 2017. 

The Health Resources and Services Administration (HRSA) said the delays were necessary as it needed more time to implement the rule properly and wanted to fully explore possible alternatives or supplemental regulations.

The most recent delay was fueled in part because HHS has made addressing the rising cost of drugs a key priority, and officials were concerned that implementing the rule could impact actions taken under the “American Patients First” plan.

The start date was moved up to Jan. 1, HRSA said in the notice, because it “determined that the finalization of the 340B ceiling price and civil monetary penalty rule will not interfere with the department’s development of these comprehensive policies.” 

Four national healthcare organizations sued HHS in September over the delays to the final rule. The American Hospital Association (AHA), America’s Essential Hospitals (AEH), the Association of American Medical Colleges (AAMC) and 340B Health all signed on to the suit, which claims that the repeated delays violate the Administrative Procedure Act. 

Since the rule was first proposed in 2015, there has been ample time to notify stakeholders and tweak the plan, the groups argued.

“The department’s proffered rationales for their successive delays have shifted and been inconsistent,” according to the lawsuit. 

340B Health said in a statement emailed to FierceHealthcare that the group is “encouraged” to see HHS responding to the suit.

“These rules were ordered by Congress more than eight years ago based on clear, documented evidence of overcharging by drug companies of 340B hospitals, clinics, and health centers,” interim CEO Maureen Testoni said. “The time for delay is over and now it is time for action.”

AHA echoed the sentiment, saying it hopes HHS “sticks by the commitment” to roll out the rule.

“The rule also requires that HHS make pricing information available online to 340B hospitals and other providers,” General Counsel Melinda Hatton said in a statement. “We strongly encourage HHS to publish that website promptly, which is critical to enforcement of the 340B program, as soon as possible after January 1.”

HHS has also taken aim at the 340B program by significantly slashing its payment rate. In a rule that took effect at the beginning of fiscal year 2018, the Centers for Medicare & Medicaid Services cut the rate from up to 6% above the average sales price for a drug to 22.5% less than the average sales price.

All told, the change will cut $1.6 billion in drug discount payments. AHA, AEH and AAMC are also challenging that policy in court

 

A Little-Known Windfall for Some Hospitals, Now Facing Big Cuts

https://theincidentaleconomist.com/wordpress/a-little-known-windfall-for-some-hospitals-now-facing-big-cuts/

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Most hospitals are nonprofit and justify their exemption from taxation with community service and charity care. But the Trump administration could require some of them to do more to help the poor, and the hospitals that are in the cross-hairs are those benefiting from an obscure drug discount program known as 340B.

The 340B program requires pharmaceutical manufactures to sell drugs at steep discounts to certain hospitals serving larger proportions of low-income and vulnerable people, such as children or cancer patients. The participating hospitals may charge insurers and public programs like Medicare and Medicaid more for those drugs than they paid for them and keep the difference.

By one estimate, the program saved hospitals $6 billion in 2015 alone. The original intent of the program, enacted in 1992, was for hospitals to use the revenue to provide more low-income patients a broader range of services.

Many institutions that serve mostly low-income and uninsured populations say they need the program. “Most nonprofit hospitals have very slim profit margins, and they’ve come to rely on this revenue,” said Melinda Buntin, chairwoman of the Department of Health Policy at Vanderbilt School of Medicine. A hospital lobbying group said that for some rural hospitals, the funding cut “could actually be the difference between staying open and closing.”

But there is concern that 340B has come to include hospitals that don’t need the extra help and are not using its windfall as originally intended.

The program has grown considerably, most recently as a result of an expansion included in the Affordable Care Act. As of 2004, about 200 hospitals benefited from the 340B program; by 2015, over 1,000 were participating. The program now encompasses 40 percent of all hospitals and an even larger number of hospital-affiliated clinics and pharmacies.

It might seem odd to give discounts on drugs to help hospitals offer care to low-income patients. How can we be sure they’ll use the money for that?

An increasing number of hospitals are not.

A study published in JAMA Internal Medicine found that the early participating hospitals were more likely to be located in poor communities with higher levels of uninsured people, to spend more of their budget on uncompensated care, and to offer more low-profit services than hospitals that started participating later.

“The 340B program may produce the results intended at some hospitals,” said Sayeh Nikpay, an assistant professor at Vanderbilt University and a co-author on the study. “But as the program grew, it benefited many hospitals with less need for assistance in serving low-income populations.”

Other research corroborates that hospitals aren’t using the 340B program as intendedA study in The New England Journal of Medicine was unable to find any evidence that profits from 340B have led to more access to care for low-income patients, or reductions in mortality rates among them. Another study in Health Affairs found that 340B hospitals have increasingly expanded into more affluent communities with higher rates of insurance.

The 340B program may have also inadvertently raised costs — for example, by encouraging care in 340B-eligible hospitals that could have been provided less expensively elsewhere. A study in Health Services Research found that hospital participation in 340B is associated with a shift of cancer care from lower-cost physician offices to higher-cost hospital settings.

The program may also encourage providers to use more expensive drugs. The more hospitals can charge insurers and public programs for a drug — relative to how much they have to pay for it under the program — the greater the revenue they receive. They also receive more revenue when the drugs are prescribed more often.

In January, Medicare lowered the prices it pays for 340B drugs by 27 percent. Although this move chips away at how much hospitals can benefit financially, it does little to address how much insurers and individuals pay for prescription drugs or the value they obtain from them. In addition, the move does nothing to increase hospital spending that could help the poor.

It may even harm some health care organizations, leading to lower-quality care at those institutions that are helping the poor. Studies have shown that, by and large, when hospitals lose financial resources, they make cuts that could harm some patients.

This can happen if cuts lead to reductions in workers who perform important clinical functions. A study in Health Services Research found that hospitals cut nursing staff in response to Medicare payment cuts in the late 1990s. Heart attack mortality rates improved less at hospitals that had larger cuts.

Another response to reduced revenue is cuts to specific services, which would harm patients who rely on them. A study by economists from Northwestern’s Kellogg School of Management found that some hospitals that endured financial setbacks during the Great Recession cut less profitable services like trauma centers and alcohol- and drug-treatment facilities.

Another study looked at a 1998 California law that required hospitals to comply with seismic safety standards — imposing a large cost on those institutions, without providing additional funding. Hospitals that were hit harder financially by this law were more likely to close; government hospitals responded by reducing charity care.

Hospitals could absorb cuts without harming care if they could become more productive — by doing more with less. Historically, there is very little evidence they have been able to do that.

Two powerful lobbies are now battling each other, with the pharmaceutical industry arguing that 340B has grown well beyond its original intent. Hospital lobbying groups are fighting back and also squaring off against the government, suing over the planned federal cuts.

Those are big clashes over a program that began modestly a quarter of a century ago to help the poor, albeit in a most convoluted way.