Tag Archives: Medicare Part D

U.S. Prescription Drug Costs Are a Crime

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , • Leave a comment

https://www.bloomberg.com/view/articles/2018-02-27/prescription-drug-costs-in-the-u-s-are-a-crime

 

And just tweaking the system won’t solve the problem.

President Donald Trump has complained that U.S. drug companies are “getting away with murder.” For once the hyperbole is forgivable: It suggests he takes the problem of drug costs seriously and might be willing to do something about it. Unfortunately, his administration’s efforts up to now suggest the opposite.

The White House has proposed tweaks to government health-care programs. Some of these measures are worth trying — they could help at the margin — but tweaks aren’t enough. The underlying problem is drug prices that are indeed murderous: Americans and their insurers often pay many times what people in other developed countries pay for the same medicines. That’s what policy needs to confront.

The administration wants insurers participating in Medicare’s prescription-drug program, for instance, to share more directly with beneficiaries the discounts they arrange with drug companies. Out-of-pocket drug costs for some people on Medicare would be capped, and reimbursement for medicines administered by doctors would be trimmed. In Medicaid, a handful of states would be allowed to decline coverage for certain drugs, increasing their leverage in negotiating discounts.

Such changes could lower drug spending for some Medicare and Medicaid beneficiaries. But they miss the main point by shifting costs within the health-care system rather pressing down on the costs themselves. Unless this changes, the U.S. will continue to be overcharged for its drugs.

The companies often say that high U.S. prices pay for research into new lifesaving products. Leaving aside why U.S. patients should be asked to shoulder that burden for the entire world, the evidence shows that the argument is false: The premium companies collect in the U.S. market is substantially greater than the amount they spend on research and development.

State legislatures have aimed closer to the mark with efforts to expose the math behind price increases. Vermont, Nevada and California have new lawsrequiring that drug companies provide cost breakdowns to justify big price hikes on popular drugs (including, in Nevada’s case, drugs for diabetes). Several other states are considering doing the same.

Even if these laws stand — they’re being challenged in court — transparency gets you only so far. Pushing prices down will take stronger efforts from the federal government to increase competition.

One good way to do that is to speed the uptake of generics. Scott Gottlieb, commissioner of the Food and Drug Administration, has been pressuring drug makers to stop trying to extend the monopolies they’ve been granted (via FDA approval and patents) for brand-name drugs. But only Congress can forbid those practices, and it has yet to act on bipartisan legislation that would do the job. Trump could show he’s serious about lowering drug prices by urging Congress to pass the law.

Another way to boost competition would be to let people and pharmacies import some drugs from other countries with sound pharmaceutical regulation, such as Canada. Almost one in 10 Americans say they already do, despite the official prohibition.

The U.S. should also do what so many other countries do: negotiate. The Centers for Medicare and Medicaid Services ought to use its enormous purchasing power on behalf of the 42 million Americans in the Medicare drug-benefit program, ensuring that prices better reflect the drugs’ actual medical value. Again, for this to happen, Congress would need to change the law. Incredible as this will seem elsewhere in the world, the U.S. government has denied itself permission to apply pharmaceutical cost-benefit analysis and negotiate prices.

Trump is right to deplore the cost of drugs in the U.S. There’s no great mystery about the causes — and no doubt that much bolder measures than the administration has in mind will be needed to bring prices down.

Budget, White Paper Provide Insight Into Trump Administration’s Strategy On Drug Pricing

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , • Leave a comment

https://www.healthaffairs.org/do/10.1377/hblog20180212.852840/full/

During his first year in office, President Donald Trump spoke often about the problem of high drug prices but took no action on the subject. President Trump’s new budget proposal and a newly released white paper from the White House Council of Economic Advisors (CEA) aim to change that by laying out a strategy for action moving forward. These documents are, of course, aspirational, but they do provide a window into the administration’s priorities, and they should be evaluated to consider whether the administration has a possibility of achieving its stated goals.

In this post, I review several of the key elements of those proposals, considering their impact on a range of relevant dimensions. I discuss what’s included in the proposals, and, as importantly, what’s left out.

Medicare Reforms

The bulk of the proposed reforms would act on the Medicare and Medicaid programs. For Medicare, the Trump administration’s proposals are largely targeted at 1) assisting beneficiaries with high out-of-pocket costs and 2) realigning incentives to alter prescribing and reimbursement practices.

First, the administration is advancing a set of proposals to assist Medicare Part D beneficiaries with high out-of-pocket costs. Both the white paper and budget proposal argue that plans should be required to share with beneficiaries at the point-of-sale some amount of the rebates the plan negotiates with drug manufacturers. In November, the Centers for Medicare and Medicaid Services (CMS) already requested public comments on the implementation of this proposal, and it seems as if the budget document’s inclusion of the proposal is evidence that the administration is hoping to move it forward.

However, like many of the other reforms in the budget proposal and white paper, there are few details proposed. In CMS’s November proposal, the agency modeled a set of scenarios in which insurers pass through 33 percent, 66 percent, 90 percent, or 100 percent of their negotiated rebates. Each scenario comes with a set of advantages for beneficiaries, but also costs for the federal government. That is, CMS anticipated that reducing cost-sharing for particular high-cost beneficiaries would increase premiums for all beneficiaries, and therefore increase CMS’ overall spending through premium subsidies. How much the proposal would increase overall spending depends on the amount of rebates being passed through.

The budget proposal simply says that sponsors must pass through “at least one-third” of total rebates, so it does not provide further clarity on this proposal. However, it states that this proposal will cost the government $42.2 billion over 10 years. That estimate lies between CMS’s November estimates for 33 percent ($27.3 billion in spending) and 66 percent ($55.1 billion in spending), so it is possible that the administration has in mind a pass-through provision at 50 percent or so.

Another proposal aimed at out-of-pocket costs would establish an out-of-pocket maximum for patients who enter the Medicare Part D catastrophic phase. Currently, patients who reach the catastrophic phase of the Part D benefit are responsible for 5 percent of the costs of their prescription drugs, with no upper limit. The budget proposal would reduce their payments to 0 percent, although it is light on the details as to how this would be accomplished. The Henry J. Kaiser Family Foundation estimated that just over one million Part D enrollees have out-of-pocket costs above this threshold, and those patients would likely be the primary beneficiaries of this proposal. At the same time, however, the budget proposes to exclude manufacturer discounts from patient out-of-pocket cost calculations, which would likely slow the rate at which patients move into the catastrophic phase.

Second, the Trump administration proposes a number of changes to drug classification and reimbursement that would both enable plan sponsors to negotiate more effectively and alter prescribing behavior. The budget proposal would change current Part D plan formulary rules, requiring sponsors to cover just one drug per class, rather than two. The proposal also mentions increased use of utilization management tools for the six protected classes of drugs, suggesting that the general coverage requirement for those classes would remain as-is. This proposal is projected to save $5.5 billion over ten years.

More interestingly, both the budget proposal and CEA white paper suggest the possibility of moving a set of Part B drugs (those administered in an outpatient setting) into Part D coverage. Medicare Part B does not presently have a number of the tools that enable Part D plan sponsors to negotiate discounts with drug manufacturers, and Secretary Alex Azar spoke during his confirmation hearing about the need to “take the learnings from Part D and apply them to Part B.” This proposal would accomplish that goal, just through the reverse mechanism: by shifting drugs from Part B into Part D. The budget proposal envisions giving the authority to do this to the Secretary, noting that “[t]he Secretary will exercise this authority when there are savings to be gained from price competition.” As such, it does not provide any particular budgetary impact.

The budget proposes two other changes to Part B reimbursement. At present, when a physician is reimbursed for providing a drug under Part B, she is reimbursed based on the Average Sales Price (ASP) of the drug plus 6 percent. There is widespread concern that this reimbursement system encourages physicians to prescribe and administer more expensive drugs than may be medically necessary. The Obama administration proposed a demonstration project that would have moved from the current ASP+6 percent system to a system of ASP+2.5 percent+a flat fee for prescribing the product. After extensive criticism from a range of stakeholders, the administration shelved the initiative. Now, the administration is proposing to reduce payment rates for new drugs (for which the ASP information is not yet available, and so for which the only price available is the Wholesale Acquisition Cost (WAC)). Instead of paying 106 percent for these new products, the administration would pay 103 percent of the WAC during the period before ASP information has yet to be provided. This proposal is quite narrow in its scope, applying only to new drugs and only during the brief period before ASP information is available; it is therefore unlikely to save much money.

The Trump administration is also proposing to establish an inflation limit for the reimbursement of Part B drugs more generally. Instead of continually updating the ASP+6 percent figure if the ASP increases, this proposal would limit the growth of the reimbursement to the Consumer Price Index for all Urban Consumers. CMS would therefore pay “pay the lesser of (1) the actual ASP +6 percent or (2) the inflation-adjusted ASP +6 percent.” At present, Medicaid is protected from price increases when the Average Manufacturer Price (AMP) for a drug increases faster than inflation. The Department of Health and Human Services Office of Inspector General has proposed that CMS and Congress consider extending this provision to Medicare Part D, but as yet Congress has not moved to do so. This budget proposal can be thought of as proposing a similar constraint on Part B pricing.

Medicaid Reforms

The Medicaid portion of the budget proposal puts forth an idea which is potentially ground-breaking, but which is also potentially a sign of the administration’s recalcitrance to move on drug pricing (depending on the details). Specifically, the administration is proposing “new statutory demonstration authority to allow up to five states more flexibility in negotiating prices with manufacturers, rather than participate in the Medicaid Drug Rebate Program, and to make drug coverage decisions that meet state needs.” The idea is something like this: at present, state Medicaid programs must cover essentially all drugs approved by the U.S. Food and Drug Administration (FDA), which limits their ability to extract discounts. To be sure, Medicaid programs are already entitled by statute to large discounts off of the AMP, and to the inflation clawback as noted above. But many state Medicaid programs are worried that pharmaceutical spending has become an unsustainable part of their budget and are seeking ways to control their costs in this area. This proposal might empower them to do so.

Here’s the thing: Massachusetts has already submitted an 1115 waiver to CMS along these lines. Massachusetts is seeking 1) to pay for a single drug in each therapeutic class (as noted above, this is a reform the administration is proposing to make to Medicare Part D), and 2) to exclude entirely from coverage drugs “with limited or inadequate evidence of clinical efficacy,” likely to be those approved through the FDA’s accelerated approval process. This budget proposal may be a sign that the administration is interested in approving Massachusetts’ waiver. However, the fact that the budget explicitly calls for new statutory authority to do so suggests that the administration may not think it has the legal authority to approve Massachusetts’ waiver, as is. And given Congress’ inability to act thus far on drug pricing, the administration may be seeking to hide behind Congress’ inaction here.

Yet the call for new statutory authority is puzzling. At present, pharmaceutical coverage is an optional benefit under the Medicaid program. States do not have to cover drugs and therefore are not required to participate in the Medicaid Drug Rebate Program, although all have chosen to do so, and choosing to do so comes with a set of requirements. But it is not clear to me why CMS could not conduct this demonstration at present, under the Center for Medicare and Medicaid Innovation’s (CMMI) existing authority.

A potential clue may lie in the administration’s statement that the demonstration would “exempt prices negotiated under the demonstration from best price reporting.” Having written recently on the topic of the Medicaid best-price rule and innovative contracting for pharmaceuticals, it is not clear to me exactly why this is a sticking point. The Medicaid best price rule entitles Medicaid to the “best price” available for a particular drug for a particular set of providers. The statute contains large carve-outs—for instance, discounts provided to the Department of Veterans Affairs or to Medicare Part D are exempt from the best-price calculation. But it is strange to talk about needing to exempt Medicaid programs from the best-price rule when the best-price rule was intended to benefit Medicaid itself. I imagine that the administration sees the 340B program as a potential concern here, but again it is not obvious why CMMI could not waive the best-price rule as part of its existing authority.

FDA Activities

As I have written here previously, FDA Commissioner Scott Gottlieb has been at the forefront of the Trump administration’s efforts on drug pricing. He has taken a number of actions to promote generic competition, and although it will take some time to observe their benefits, the FDA’s existing legal authority to address drug pricing issues is quite narrowly circumscribed. The CEA white paper and budget proposal largely acknowledge this point, with the white paper lauding the actions the FDA has taken thus far on expediting review of generic drug applications, providing guidance on the development of complex generics, and other similar activities.

President Trump’s budget proposal calls for Congress to give the FDA more power to promote generic competition, by “ensur[ing] that first-to-file generic applicants who have been awarded a 180-day exclusivity period do not unreasonably and indefinitely block subsequent generics from entering the market beyond the exclusivity period.” More specifically, the concern is that first-to-file generic applicants—perhaps those whose initial applications may be rejected—can unduly delay generic entry while they remedy the deficiencies in their application. The administration projects that this reform will save the government $1.8 billion in Medicare savings over 10 years.

Other pieces of legislation have called for reform of the 180-day exclusivity period in different ways. Last year, Democrats in both the House and Senate introduced the Improving Access to Affordable Prescription Drugs Act, which included provisions preventing generic entrants from receiving the statutory 180-day exclusivity benefit if they had engaged in pay-for-delay conduct (Sections 402 and 403). But the idea in the president’s budget proposal may dovetail nicely with the FDA’s efforts to improve first-cycle approval rates for abbreviated new drug application products, as well.

What’s Missing

Perhaps what’s most notable about the budget proposal and the CEA white paper is not what’s included, but rather what is missing. Gone are some of President Trump’s older arguments that Medicare should negotiate drug prices, or that drug importation should be permitted more widely. Some of the more significant cost-saving provisions from President Obama’s budget, like a reform that would have put low-income patients back on Medicaid prices, are also absent.

A key set of missing proposals are those which would directly assist privately insured patients. The budget’s focus on Medicare and Medicaid may well have a positive impact on the more than 100 million Americans enrolled in those programs. But for the roughly half of Americans (closer to 160 million) with employer-sponsored insurance, these reforms will provide no assistance. Growing numbers of Americans with employer-sponsored insurance are enrolled in high-deductible plans, and many of them may face the same affordability concerns that Medicare beneficiaries are facing.

You could imagine proposals that would address the drug pricing problem more broadly, rather than just within the publicly-insured population. The above-mentioned Improving Access to Affordable Prescription Drugs Act would have addressed the problem of drug pricing for a broader segment of the population. As I’ve explained here, the Act would have taxed companies which engage in large, year-over-year list price increases. It would also have capped patient out-of-pocket costs in Affordable Care Act-regulated plans, at $250 per month for an individual or $500 per month for a family.

More generally, even these proposals which would affect drug companies directly would have a minimal impact on their bottom lines. This set of proposals is largely very friendly to the pharmaceutical industry and is primarily aimed at curtailing patients’ financial burdens and tweaking incentives for stakeholders at the margin.

In this blog post, I have covered just a handful of the many different drug pricing-related proposals included in the new budget proposal and in the CEA white paper. As usual, observers should stay tuned to the actions CMS and the FDA take on this front, as they will show whether the administration is serious about these proposals or is merely posturing.

 

Trump Likes Drug Price Negotiations; His Nominee for Health Secretary Doesn’t

Posted on by • Posted in Uncategorized • Tagged , , , , , , , • Leave a comment

Image result for high drug prices

 Alex M. Azar II, President Trump’s nominee for secretary of health and human services, said Tuesday that he was wary of proposals for the government to negotiate drug prices for Medicare beneficiaries, an idea endorsed by Mr. Trump in the 2016 campaign.

But Mr. Azar said that in some situations, he was willing to look at proposals to negotiate prices for a limited number of medicines.

He made the comments at a Senate confirmation hearing on Tuesday, where he tried to allay the concerns of some Democrats who asserted that he would be biased in favor of pharmaceutical companies because he had worked for a decade as a top executive at Eli Lilly, the company in Indiana that sells drugs for diabetes, erectile dysfunction and schizophrenia, among other conditions.

Mr. Azar’s remarks on drug price negotiations were carefully circumscribed and somewhat ambiguous — an approach that allowed him to get through the hearing largely unscathed.

If Medicare negotiates drug prices, he said, patients might have less access to some medicines because the government would probably establish a list of preferred products.

“For the government to negotiate there, we would have to have a single national formulary that restricted access to all seniors for medicines,” Mr. Azar told the Senate Finance Committee. “I don’t believe we want to go there in restricting patient access.”

At the same time, Mr. Azar said, “it’s worth looking at” proposals to allow price negotiations for drugs in Part B of Medicare. Under this part of the program, patients receive cancer drugs and other medications, often by infusion or injection, in doctor’s offices and hospital outpatient clinics.

Mr. Azar, who worked for six years in the administration of President George W. Bush, is expected to win confirmation, with support from Republicans and perhaps a few Democrats, who view him as a pragmatic problem solver rather than an ideologue. He would take charge of a cabinet department that spends more than a trillion dollars a year providing health insurance to more than 130 million Americans.

Senator Bill Nelson, Democrat of Florida, asked Mr. Azar whether he would support cuts in Medicare, Medicaid or Social Security to offset increases in the federal budget deficit that would be caused by the recently passed tax legislation.

“The president has stated his opposition to cuts to Medicare, Medicaid or Social Security,” Mr. Azar replied. “He said that in the campaign, and I believe he remains steadfast in his views on that. He’s made that commitment. I will live up to that if I’m confirmed.”

But like many Republicans, Mr. Azar said that cuts in the growth of federal benefit programs were not really cuts if federal spending on the programs continued to increase.

Democrats kept returning to the question of drug prices. Mr. Azar said that the expertise he acquired in the pharmaceutical industry would help him rein in drug costs as a federal official.

“Across the board,” he said, “drug prices are too high. Insulin prices are too high. All drug prices are too high in this country.”

Democrats were generally skeptical, based on Lilly’s record during Mr. Azar’s time at the company.

“The price of Lilly’s bone-growth drug Forteo, used to treat osteoporosis, more than doubled on Mr. Azar’s watch,” said Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee. In the same period, Mr. Wyden said, the company more than doubled prices for other drugs including Humalog, used to treat diabetes, and Strattera, for attention deficit hyperactivity disorder.

Mr. Wyden asked Mr. Azar if, as head of Lilly’s operations in the United States, he had ever approved a reduction in the price of a Lilly drug.

Mr. Azar avoided a direct answer and blamed “the system.”

“I don’t know that there is any drug price of a branded product that has ever gone down from any company on any drug in the United States because every incentive in this system is toward higher prices,” Mr. Azar said, adding: “No one company is going to fix that system. That’s why I want to be here working with you.”

Mr. Azar said he saw no need for the government to negotiate prices for drugs covered by Part D of Medicare, which pays for pills and other products that patients can give themselves and purchase from neighborhood drugstores and mail-order pharmacies.

Medicare’s Part D drug benefit is delivered entirely by private companies under contract with the government. These companies and their agents, known as pharmacy benefit managers, negotiate with drug manufacturers, and Mr. Azar said he did not believe the government could get lower prices by negotiating directly with drug companies.

A 2003 law prohibits the Department of Health and Human Services from interfering in negotiations between drug manufacturers and insurers that provide drug coverage under Part D of Medicare. “You would not get better pricing by removing” that prohibition, Mr. Azar said.

In the 2016 campaign and since taking office, Mr. Trump has said that Medicare could save large sums by negotiating directly with drug companies. But drug companies adamantly oppose that idea, and Mr. Trump has not taken steps to translate that into practice.

Asked specifically if Medicare should negotiate drug prices, Mr. Azar said: “In Part D, we do significant negotiation through pharmacy benefit managers that get the best rates of any commercial payers. We don’t do that in Part B, which is where we have physician-administered drugs. We basically pay sales price plus 6 percent or some other number.”

As an alternative, Mr. Azar said he supported proposals to link the pricing of prescription drugs to an assessment of how well they work for patients. Under such arrangements, known as value-based pricing, insurers would pay more for medicines that were highly effective and less for those that did not work well.

Mr. Azar also said he supported an agency created by the Affordable Care Act to test novel ways of delivering and paying for health care. And he said that some of the experiments could require doctors and hospitals to participate. Republicans in Congress have generally opposed mandatory participation.

No Limit: Medicare Part D Enrollees Exposed to High Out-of-Pocket Drug Costs Without a Hard Cap on Spending

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , • Leave a comment

No Limit: Medicare Part D Enrollees Exposed to High Out-of-Pocket Drug Costs Without a Hard Cap on Spending – Issue Brief

Related image

 

Introduction

Prescription drugs play an important role in medical care for 59 million seniors and people with disabilities.  Medicare beneficiaries have access to outpatient prescription drug coverage through the Part D prescription drug benefit, which is administered by private stand-alone prescription drug plans (PDPs) and Medicare Advantage drug plans (MA-PDs). Since the start of the Medicare Part D program in 2006, the drug benefit has helped to lower out-of-pocket drug spending for all enrollees. Beneficiaries in Part D plans with low incomes and modest assets are eligible for additional assistance with plan premiums and cost sharing through the Low-Income Subsidy (LIS) program, reducing out-of-pocket costs even further for this population.

The Centers for Medicare & Medicaid Services (CMS) establishes guidelines that all Part D plans must follow for the design of the drug benefit and the value of coverage that must be offered. Plans are allowed to vary, however, along dimensions that affect beneficiaries’ access to and costs for medications, including which drugs are covered and cost-sharing requirements. The standard Part D benefit in 2017 includes a deductible ($400), followed by 25 percent coinsurance for prescriptions up to an initial coverage limit ($3,700 in total costs), and then a coverage gap where enrollees without low-income subsidies pay a larger share of their drug costs until their out-of-pocket drug spending exceeds a catastrophic coverage threshold ($4,950). The Affordable Care Act (ACA) included a provision to phase out the Part D coverage gap by requiring plans to cover a growing share of total drug costs and providing a manufacturer price discount of 50 percent for brand-name drugs filled in the gap, with the amount of the manufacturer discount counting towards the out-of-pocket threshold that triggers catastrophic coverage. Once enrollees’ drug spending reaches the catastrophic threshold, those without the LIS pay up to 5 percent of their total drug costs; those who qualify for the full low-income subsidy pay nothing for their drugs in this phase of the benefit. Plans typically place drugs that cost over $670 per month on a specialty drug tier, with coinsurance that ranges from 25 percent to 33 percent.

Concern has been rising in recent years about the growing cost burden on Medicare and beneficiaries posed by new, unique, and expensive specialty drugs used to treat a range of diseases. The Medicare Boards of Trusteesand the Medicare Payment Advisory Commission have documented this rising cost burden on the Medicare program, which is reflected in higher Part D program spending overall, as well as higher spending for reinsurance of high-cost Part D enrollees who reach the catastrophic coverage phase of the benefit, where Medicare pays for 80 percent of drug costs. Although Part D provides coverage of catastrophic drug expenses, enrollees who do not receive the LIS are still responsible for up to 5 percent of their drug costs in this phase of the benefit. For very high-priced medications, this relatively small coinsurance rate can translate to a significant amount of out-of-pocket costs for beneficiaries who do not receive low-income subsidies.

This analysis examines the out-of-pocket prescription drug cost burden for Medicare beneficiaries in Part D plans who do not receive low-income subsidies, focusing on those enrollees who have drug costs that exceed the catastrophic coverage threshold. We refer to this group as Part D enrollees with high out-of-pocket drug costs. Although these enrollees do not comprise the entire group of enrollees who have high total drug spending that exceeds the catastrophic coverage threshold, they are exposed to a potentially large cost burden because they do not receive the financial protection of the low-income subsidies. We analyze Medicare prescription drug event claims data for 2015, the most recent year of publicly available Medicare claims data, and trends since 2007, the first full year of the Part D drug benefit. For detail on the data and methods, see the Methodology.

Discussion

In recent years, the high and rising cost of prescription drugs has emerged as a pressing issue for consumers, public programs, and private insurers. As our analysis shows, Medicare beneficiaries who do not receive the additional financial protection provided by low-income subsidies are not insulated from this cost burden and can incur substantial out-of-pocket costs for their medications. We find that one million Medicare beneficiaries in Part D plans who were not receiving low-income subsidies had high out-of-pocket costs in 2015—that is, drug spending above the catastrophic coverage threshold—and their annual out-of-pocket spending averaged over $3,000 in 2015.

Our analysis indicates that out-of-pocket costs above the catastrophic threshold represent a growing concern for people with Medicare, and both MedPAC and Medicare’s actuaries have shown that rising spending for catastrophic coverage has placed greater fiscal pressure on Medicare. Our analysis also shows that the number of Part D enrollees who did not receive low-income subsidies and had out-of-pocket spending above the catastrophic threshold has increased over time. Looking to the future, we would expect to see continued increases in the number of enrollees reaching the catastrophic coverage threshold in 2016 and later years, due in part to the ACA changes to the coverage gap as well as the greater availability and use of high-priced drugs. These trends have cost implications both for beneficiaries and, as the Medicare actuaries have projected, for Medicare.

Part D enrollees with high out-of-pocket costs in 2015 spent an average of $1,215 out of pocket on their prescriptions filled above the catastrophic threshold, or $1.2 billion in the aggregate. In other words, Part D enrollees would have collectively saved $1.2 billion if Part D had a hard cap on out-of-pocket spending, rather than requiring enrollees to pay up to 5 percent coinsurance in the catastrophic coverage phase. Placing a hard cap on out-of-pocket spending under Part D would save money for enrollees, but would increase costs to Medicare and would not address underlying concerns related to high-priced drugs.

While Part D has helped make drugs more affordable for people with Medicare, and the ACA has provided additional relief to enrollees with high drug costs by gradually closing the coverage gap, the absence of an annual out-of-pocket spending limit under Part D exposes enrollees to significant costs—unless their incomes and assets are low enough to qualify for low-income subsidies. Various proposals to reduce drug costs—including allowing the federal government to negotiate prices for Medicare beneficiaries, and allowing Americans to import drugs from Canada and other countries—enjoy broad, bipartisan public support. With a growing number of people on Medicare facing high out-of-pocket drug costs, alleviating this burden remains an issue for federal policymakers to address.

What happens when the federal government eliminates health coverage? Lessons from the past

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , • Leave a comment

http://theconversation.com/what-happens-when-the-federal-government-eliminates-health-coverage-lessons-from-the-past-79989?utm_medium=email&utm_campaign=Latest%20from%20The%20Conversation%20for%20July%201%202017%20-%2077496134&utm_content=Latest%20from%20The%20Conversation%20for%20July%201%202017%20-%2077496134+CID_7e419ab4ae6962d1afd6f9273e9cc417&utm_source=campaign_monitor_us&utm_term=What%20happens%20when%20the%20federal%20government%20eliminates%20health%20coverage%20Lessons%20from%20the%20past

Image result for aca

After much secrecy and no public deliberation, Senate Republicans finalized release their “draft” repeal and replace bill for the Affordable Care Act on June 22. Unquestionably, the released “draft” will not be the final version.

Amendments and a potential, albeit not necessary, conference committee are likely to make some adjustments. However, both the House version – American Health Care Act (AHCA) – and the Senate’s Better Care Reconciliation Act (BCRA) will significantly reduce coverage for millions of Americans and reshape insurance for virtually everyone. The Congressional Budget Office (CBO) is expected to provide final numbers early the week of June 26.

If successful, the repeal and replacement of the Affordable Care Act would be in rare company. Even though the U.S. has been slower than any other Western country to develop a safety net, the U.S. has rarely taken back benefits once they have been bestowed on its citizenry. Indeed, only a small number of significant cases come to mind.

My academic work has analyzed the evolution of the American health care system including those rare instances. I believe historical precedents can provide insights for the current debate.

Providing help to mothers and infants

The first major federal grant program for health purposes was also the first one to quickly be eliminated. The program was authorized under the Sheppard-Towner Maternity and Infancy Protection Act of 1921. It provided the equivalent of US$20 million a year in today’s dollars to states in order to pay for the needs of women and young children.

Sheppard-Towner, which provided funding to improve health care services for mothers and infants, was enacted after a long debate in Congress amid accusations of socialism and promiscuity. Interestingly enough, the act may have passed only due to pressure from newly voting-eligible women.

Jeanette Rankin, the original sponsor of the Shepard-Towner Act and the first woman elected to Congress, pictured in 1970. John Duricka/AP

Overall, the program was responsible for more than 3 million home visits, close to 200,000 child health conferences and more than 22 million pieces of health education literature distributed. It also helped to establish 3,000 permanent health clinics serving 700,000 expectant mothers and more than 4 million babies.

The program continued until 1929, when Congress, under pressure from the American Medical Association, the Catholic Church and the Daughters of the American Revolution, terminated the program. Without federal support, a majority of states either eliminated the programs or only provided nominal funding. Fortunately for America’s children and mothers, the Social Security Amendment of 1935 reestablished much of the original funding and expanded it over time.

Helping America’s farmers during the New Deal

America’s next major program confronted a similar fate. To address the challenges of rural America during the Great Depression, the federal government developed a variety of insurance and health care programs that offered extensive and comprehensive services to millions of farm workers, migrants and farmers.

Grandmother and sick baby of a migratory family in Arizona. These types of families were targeted for help by the Farm Security Administration. NARA/ Dorothea Lange

Some of these programs provided subsidies to farmers to form more than 1,200 insurance cooperatives nationwide. At times, the federal government’s Farm Security Administaton (FSA) provided extensive services directly to migrant farm workers through medical assistance on agricultural trains, mobile and roving clinics, migratory labor camps that included health centers staffed with qualified providers, full-service hospitals and Agricultural Workers Health Associations (AWHA).

In all cases, services were generally comprehensive and included ordinary medical care, emergency surgery and hospitalization, maternal and infant care, prescription drugs and dental care.

Although these services were accepted during wartime, the American Medical Association and the Farm Bureau opposed them, which ultimately led to their demise shortly after World War II. Millions of farmers lost their insurance.

Medicaid in the 1980s

Perhaps the most indicative expectations on what will happen in case congressional Republicans are able to pass their proposal hails from the Medicaid program itself.

In the early 1980s, Medicaid underwent a series of cuts and reductions leading to the first contracting in the program’s history. These involved both a reduction in federal funding and in eligibility, and an increase in state flexibility to run the program, as do the Republican proposals in Congress.

The cuts pale in comparison to those currently proposed by both the Senate and House. Nonetheless, the results was the first slowing of the Medicaid growth rate. However, this came at a steep cost for many Americans in the form of a significant reduction in enrollment, benefits and access even during a recessionary period.

Protecting America’s seniors

The 1980s also saw the creation and quick demise of another health care program. The Medicare Catastrophic Coverage Act of 1988 sought to fill in the gaps of the original Medicare program for America’s seniors. Specifically, it sought to provide them with protection from major medical costs and offer them a prescription drug benefit for the first time.

Similarly to the Affordable Care Act, the law had a redistributive foundation by requiring richer seniors to contribute more than poorer individuals. Also, similarly to the Affordable Care Act, it phased in benefits over a period of time.

Congress, confronted by affluent seniors who would have shouldered much of the financial burden of the program, quickly repealed much of the law before its provisions came into effect.

A Republican President, George W. Bush, was responsible for extending prescription drug benefits to seniors under Medicare Part D.Jason Reed/Reuters

It took more than a decade to provide America’s seniors with a prescription drug benefit through Medicare Part D, while only limited steps have been taken to protect seniors from major medical losses.

A serious setback looming?

While a latecomer, the United States has inched closer to the development of a comprehensive welfare state when it comes to health care. While the development has been incomplete, health benefits, once granted, have rarely been revoked except in those few cases described above.

The consequences of those rare cases are nonetheless instructive. States were unable to continue the program without federal support or offer a valid replacement. Indeed, the programs quickly faded away. With them, millions of Americans lost access to health care.

In all three previous cases, the federal government eventually renewed its financial support. However, at times it took time for a replacement program to emerge.

The current changes proposed by congressional Republicans, particularly to the Medicaid program, are tremendously more consequential than anything we have previously experienced.

Indeed, in scale and extent, the proposed changes are unprecedented and would significantly roll back, likely for the foreseeable future, America’s safety net.

Building A System That Works: The Future Of Health Care

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , , , • Leave a comment

http://healthaffairs.org/blog/2016/12/12/building-a-system-that-works-the-future-of-health-care/?utm_source=RealClearHealth+Morning+Scan&utm_campaign=4e312288c8-EMAIL_CAMPAIGN_2016_12_12&utm_medium=email&utm_term=0_b4baf6b587-4e312288c8-84752421

Blog_Burwell2

Nearly a century after Theodore Roosevelt’s Bull Moose Party first called for health insurance reform, the United States has made major advances in access, quality, and affordability.

In the six years since President Obama signed the Affordable Care Act (ACA) into law, 20 million more people have health insurance, and, for the first time in our history, more than nine out of every 10 Americans are insured. Growth in both premiums for employer coverage and overall Medicare spending has also slowed. The Centers for Medicare and Medicaid Services’ Actuaries now project that we are on track to spend $2.6 trillion less over the ACA’s first decade than was projected without the ACA back in 2010.

Even with this slow down, any increase in costs can be challenging for businesses monitoring expenses or families working through their budgets. That’s why stakeholders nationwide have been coming together to reshape the future of health care. Using new advancements in data, medicine, and the tools and resources provided by the Affordable Care Act, institutions across the country are building a health care system that works better for all Americans.

This work has gone on steadily for years — through political turmoil and challenges in the courts. Yet through each challenge, these reforms have endured.

They must continue to endure. The 20 million Americans who gained coverage cannot lose it again. The more than 129 million people with pre-existing conditions do not want to go back to a time when insurers could discriminate against them, or block them from coverage. Eleven million Medicare Part D beneficiaries cannot afford to lose the $2,000 they have each saved, on average, from the law’s work to begin closing the “donut hole.” The American people do not want to turn back our nation’s progress. Improvements need to be made, but they need to build on progress and not take us backwards in terms of access (the number of insured), affordability (costs to individuals, businesses, and taxpayers), and quality (the benefits that are being provided).

As the Obama Administration comes to a close, this piece lays out my vision for the future of health care. I share the steps we have taken to change how we pay for health care, incentivize coordination, and unlock health care data. This is the path forward—a system where innovative actors are putting the patient at the center—and, despite differences in health care, I firmly believe it is a vision on which we can all agree.

Medicare shouldn’t pay more for drugs when others pay less

Posted on by • Posted in Uncategorized • Tagged , , , , , • Leave a comment

https://www.statnews.com/2016/10/18/medicare-drug-prices/?_hsenc=p2ANqtz–zfLIsv2nEEzVlLISqrp28lPm5ANNScP2_qYXJZI-DenazQvHTSROulTck5xdVsR5KMAzBoOaUWrYMEPSR1ZxAyLybMQ&_hsmi=36101369

Hillary Clinton and Donald Trump don’t see eye-to-eye on much. But they do agree that drug costs are spiraling out of control at the public’s expense. Both the Democratic and the Republican candidates for president have said that Medicare should be able to negotiate drug prices, something that currently isn’t allowed by law. Letting Medicare do that — which the Department of Veterans Affairs and other countries have been doing for years — has the potential to transform health care.

Most developed nations, including Canada and the United Kingdom, negotiate with pharmaceutical companies to determine how much they will pay for medications. In the US, health care is covered by many different payers, with Medicare being the largest by far. The federal government never gave Medicare the power to negotiate drug prices. Instead, that’s done by the many private insurers that manage Medicare drug plans.

Giving Medicare the power to negotiate drug prices would immediately save billions of dollars. The implications would also reach far beyond the 37 million Americans covered by the Medicare drug benefit (Part D), because commercial insurers often follow Medicare’s lead.

 

 

Presidential election: 4 things managed care should watch

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , , • Leave a comment

http://managedhealthcareexecutive.modernmedicine.com/managed-healthcare-executive/news/presidential-election-4-things-managed-care-should-watch?GUID=A13E56ED-9529-4BD1-98E9-318F5373C18F&rememberme=1&ts=24082016

As the 2016 presidential election approaches, analysts and experts are advising healthcare executives to watch and monitor certain issues, such as pharmaceutical spending and healthcare reform, which will surely impact the health insurance industry. Here’s a look at what they recommend keeping a close eye on in particular.

Fraud Concerns Emerge As Compounding Drug Sales Skyrocket

Posted on by • Posted in Uncategorized • Tagged , , , , , , • Leave a comment

http://khn.org/news/fraud-concerns-emerge-as-compounding-drug-sales-skyrocket/?utm_campaign=KHN%3A+Daily+Health+Policy+Report&utm_source=hs_email&utm_medium=email&utm_content=31763903&_hsenc=p2ANqtz–PhnRVqf1RHh-WdXHoa-6YIFwbpAP91jYtikc1hViYnou3e1JAym3sE42hOTDnYQVJsB-bnamM0o8kX8UBXNumXh190w&_hsmi=31763903

Mortar pharmacy

Government spending on “compounded” drugs that are handmade by retail pharmacists has skyrocketed, drawing the attention of federal investigators who are raising fraud and overbilling concerns.

Spending on these medications in Medicare’s Part D program, for example, rose 56 percent last year, with some of the costliest products, including topical pain creams, priced at hundreds or thousands of dollars per tube. The federal workers’ compensation program has also seen a recent spike in spending.

The spending jump, along with a sharp increase in the number of patients getting the compounded drugs “may indicate an emerging fraud trend,” said Miriam Anderson, who helped oversee a June report on the Medicare spending by the inspector general’s office at the Department of Health and Human Services.

Some of the prescriptions may not have been medically necessary — or even dispensed at all, notes the report, which also details recent fraud cases brought by U.S. attorneys in several states.

Medicare has funding through 2028, trustees say, 2 years less than earlier thought

Posted on by • Posted in Uncategorized • Tagged , , , , , , , , , , , , • Leave a comment

http://www.healthcarefinancenews.com/news/medicare-has-funding-through-2028-trustees-say-2-years-less-earlier-thought

However, Medicare Trustees said the 2028 date is 11 years longer than they projected in 2009 before the passage of the Affordable Care Act.