What the 2018 Midterm Elections Means for Health Care

https://www.healthaffairs.org/do/%2010.1377/hblog20181107.185087/full/?utm_source=Newsletter&utm_medium=email&utm_content=What+the+Midterms+Mean+For+Health+Care%3B+%22Stairway+To+Hell%22+Of+Health+Care+Costs%3B+Patient+Safety+In+Inpatient+Psychiatry&utm_campaign=HAT%3A+11-07-18

Whatever you want to call the 2018 midterm elections – blue wave, rainbow wave, or purple puddle – one thing is clear: Democrats will control the House.

That fundamental shift in the balance of power in Washington will have substantial implications for health care policymaking over the next two years. Based on a variety of signals they have been sending heading into Tuesday, we can make some safe assumptions about where congressional Democrats will focus in the 116th Congress. As importantly, there were a slew of health care-related decisions made at the state level, perhaps most notably four referenda on Medicaid expansion.

In this post, I’ll take a look at which health care issues will come to the fore of the Federal agenda due to the outcome Tuesday, as well as state expansion decisions. And it should of course be noted that, in addition to positive changes Democrats are likely to pursue over the next two years, House control will allow them to block legislation they oppose, notably further GOP efforts to repeal the Affordable Care Act (ACA).

Drug Pricing

Democrats have long signaled they consider pharmaceutical pricing to be one of their highest priorities, even after then-candidate Trump adopted the issue as part of his campaign platform and maintained his focus there through his tenure as President.

While aiming to use the issue to drive a wedge between President Trump and congressional Republicans, who have historically opposed government action to set or influence prices, Democrats will also strive to distinguish themselves by going further on issues like direct government negotiation of Medicare Part D drug reimbursement.

Relevant House committee chairs, perhaps especially likely Oversight and Investigations chair Elijah Cummings (D-MD), will also take a more aggressive tack in investigating manufacturers and other sector stakeholders for pricing increases and other practices. Democratic leaders believe it will be easier to achieve consensus on this issue than on more contentious issues like single payer (more detail below) among their diverse caucus, which will include dozens more members from “purple” districts as well as members on the left flank of the party

Preexisting Condition Protections

If you live in a contested state or district, you have probably seen political ads relating to protecting patients with preexisting conditions. As long as a Republican-supported lawsuit seeking to repeal the ACA continues, Democrats believe they can leverage this issue to demonstrate the importance of the ACA and their broader health care platform.

A three-legged stool serves under current law to protect patients with chronic conditions: (1) the ban on preexisting condition exclusions; (2) guaranteed issue; and (3) community rating. Democrats will likely seek to bolster these protections with measures to shore up the ACA exchange markets. In the same vein, they will likely strive to rescind Trump Administration proposals to expand association-based and short-term health plans, which put patients with higher medical costs at risk by disaggregating the market.

Opioids

Congressional Democrats believe that there were some stones left unturned in this year’s opioid-related legislation, especially regarding funding for many of the programs it authorized. This is a priority for likely Ways & Means Committee Chair Richie Neal (D-MA) and could potentially be a source of bipartisan compromise.

Medicare for All

While this issue could become a bugaboo for old guard party leaders, the Democratic base will likely escalate its calls for action on Medicare for All now that the party has taken the House. Because the details of what various camps intend by this term are still vague (some believe it is tantamount to single payer, others view it as a gap-fill for existing uninsured, etc.), we will likely see a variety of competing proposals arise in the coming two years. Expect less bona fide committee action and more of a public debate aired via the presidential primary season that will kick off about, oh, right now.

Surprise Bills

The drug industry is not the only health care sector that can expect heightened scrutiny of their pricing practices now that Democrats control the people’s chamber. Most notably, the phenomenon of surprise bills (unexpected charges often stemming from a hospital visit) has risen as a salient issue for the public and thus a political winner for the party. Republicans have shown interest in this issue as well, so it could be another source of bipartisanship next year.

Regulatory Oversight

Democrats believe they are scoring well with the public, and certainly their base, every time they take on President Trump. The wide range of aggressive regulation (and deregulation) the Administration has pursued will be thoroughly investigated and challenged by Democratic committee leaders, especially administration efforts to dismantle the ACA and to test the legal bounds of the hospital site neutrality policy enacted in the Bipartisan Budget Act (BBA) of 2015.

Extenders

While it instituted permanent policies for Medicare physician payments and some other oft-renewed ‘extenders’, the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 left a variety of policies in the perennial legislative limbo of needing to be repeatedly extended. While the policies in the Medicare space have dwindled to subterranean, though not necessarily cheap, affairs like the floor on geographic adjustments to physician payments, a slew of Medicaid-related and other policies are up for renewal in 2019.

For example, Medicaid Disproportionate Share Hospital (DSH) payments face a (previously delayed) cliff next year. That and the most expensive extender, ACA-initiated funding for community health centers, alone spring the cost of this package into the high single digit billions at least, driving a need for offsetting payment cuts and creating a vehicle for additional policy priorities.

A likely addition to this discussion will be the fact that Medicare physician payments, per MACRA, are scheduled to flatline for 2020-2025 before beginning to increase again, albeit in divergent ways for doctors participating in the Merit-Based Incentive Payment Program (MIPs – 0.25 percent/year) and Advanced Alternative Payment Models (APMs – 0.75 percent/year). The AMA assuredly noticed this little wrinkle in the celebrated legislation but hundreds of thousands of doctors probably did not.

Medicaid Expansion

Of the variety of state-level health policy decisions voters made on Tuesday, perhaps the most significant related to Medicaid expansion. In there states where Republican leaders have blocked expansion under the ACA – Nebraska, Idaho, and Utah – voters endorsed it via public referenda. Increasing the Medicaid eligibility level in those three states to the ACA standard will bring coverage to approximately 300,000 people.

Notably, voters in Montana rejected a proposal to continue funding the Medicaid expansion the state enacted temporarily in 2015 by an increase to the state’s tobacco tax. Their expansion is now scheduled to lapse in July 2019 if the legislature doesn’t act to maintain it. If they do not act, about 129,000 Montanans will lose Medicaid coverage.

Finally, Democratic gubernatorial wins in Maine, Kansas, and Wisconsin will make Medicaid expansion more likely in those states.

As they say, elections have consequences. While the Republican-controlled Senate and White House can block any Democratic priorities they oppose, the 2018 midterm elections assure a busy two years for health care stakeholders.

 

 

11 headwinds facing hospitals and health systems

https://www.beckershospitalreview.com/hospital-management-administration/11-headwinds-facing-hospitals-and-health-systems.html

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It’s not all bleak and this is part of a larger talk on healthcare as a zero sum game. But here are 11 headwinds facing systems.

1. Pharmaceutical costs particularly non-generic.

2. Payers expanding into providers and combining with providers.

3. Payer market share.

4. Health IT and cybersecurity costs.

5. Labor costs and a labor intensive business.

6. High costs of bricks and mortar.

7. Medicare as a larger percentage of health system revenue and Medicare reimbursement softening now and over time as federal deficits rise.

8. Slowing overall healthcare inflation as hospital costs rise.

9. Siphoning off of better paying commercial patients.

10. Siphoning off of profitable ancillaries.

11. Entry of big technology firms into healthcare.

CMS’ proposed outpatient payment rule for 2019: 10 things to know

https://www.beckershospitalreview.com/finance/cms-proposed-outpatient-payment-rule-for-2019-10-things-to-know.html

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CMS released its 2019 Medicare Outpatient Prospective Payment System proposed rule July 25, which calls for site-neutral payments and would make changes to the 340B program.

Here are 10 things to know about the 2019 proposed rule:

Payment update

1. CMS proposed increasing the OPPS rates by 1.25 percent in 2019. The agency arrived at its proposed rate increase through the following updates: a positive 2.8 percent market basket update, a negative 0.8 percentage point update for a productivity adjustment and a negative 0.75 percentage point adjustment for cuts under the ACA.

Site-neutral payment proposal

2. Under the proposed rule, CMS would make payments for clinic visits site-neutral by reducing the payment rate for hospital outpatient clinic visits provided at off-campus provider-based departments to 40 percent of the OPPS rate. The clinic visit is the most common service billed under the OPPS, and CMS estimates the payment proposal would save the Medicare program and Medicare recipients a combined $760 million in 2019.

3. This change is projected to reduce OPPS payments by 1.2 percent, which would largely offset the 1.25 percent payment rate increase under the proposed rule.

Proposed 340B program changes

4. CMS scaled back the 340B drug discount program in 2018, and the agency proposed additional cuts for next year.

5. On Jan. 1, 2018, CMS began paying hospitals 22.5 percent less than the average sales price for drugs purchased through the 340B program. That’s compared to the previous payment rate of average sales price plus 6 percent.

6. Under the proposed rule, CMS would extend the average sales price minus 22.5 percent payment rate to 340B drugs provided at nonexcepted off-campus provider-based departments.

7. CMS also proposed to pay for separately payable biosimilars acquired under the 340B program at the average sales price minus 22.5 percent of the biosimilar’s own ASP, rather than ASP minus 22.5 percent of the reference product’s ASP.

Hospital Outpatient Quality Reporting Program changes

8. For 2019, CMS proposed removing one measure from the Hospital Quality Reporting Program beginning with the 2020 payment determination and removing nine other measures beginning with the 2021 payment determination.

9. “The proposals to remove these measures are consistent with the CMS’ commitment to using a smaller set of more meaningful measures and focusing on patient-centered outcomes measures, while taking into account opportunities to reduce paperwork and reporting burden on providers,” CMS said in the fact sheet for the proposed rule.

Comment period

10. CMS will accept comments on the proposed rule until 5 p.m. EST Sept. 24.

 

CMS terminates Idaho hospital’s Medicare contract

https://www.beckershospitalreview.com/finance/cms-terminates-idaho-hospital-s-medicare-contract-072718.html

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CMS ended its provider agreement with Blackfoot-based Idaho Doctors’ Hospital July 20.

Under rules enacted last September, a healthcare facility must average at least two inpatients per day and an at least two-night average length of stay to be considered an inpatient hospital for Medicare reimbursement. In April, CMS determined Doctors’ Hospital is not primarily engaged in providing care to inpatients and does not meet the new federal requirements for Medicare participation. The agency subsequently sent Doctors’ Hospital a Medicare termination notice.

“To go from being OK just 18 months ago, when we had our last survey, to now being told that we don’t meet the CMS conditions of participation because of new interpretations of the regulations is just difficult to comprehend,” Dave Lowry, administrative manager at Idaho Doctors’ Hospital, told KIFI earlier this month. “Like any business that is regulated by government agencies, we fully expect there to be changes to rules and their interpretations, but this drastic level of change just goes to show how much uncertainty there is in healthcare right now.”

After receiving the termination notice from CMS, Doctors’ Hospital sent letters to all patients affected by the contract termination, a spokesperson told Becker’s Hospital Review.

“We have worked with other area hospitals who provide the same services, and our staff provides this information for any patients who call with questions on where to go for care,” the Doctors’ Hospital spokesperson said.

 

CMS Cut to Outpatient Drugs Will Hit Some 340B Hospitals Hard

http://www.healthleadersmedia.com/finance/cms-cut-outpatient-drugs-will-hit-some-340b-hospitals-hard?spMailingID=12347580&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1281228729&spReportId=MTI4MTIyODcyOQS2#

Image result for 340b drug pricing program

The 340B program is intended to help safety net hospitals, but some others have taken advantage. A lack of transparency and accounting led to deep cuts for all participants.

Hospitals receiving drug discounts will take a big financial hit in January when the federal government sharply reduces the Medicare payment for outpatient drugs, effectively cutting a subsidy that some hospitals use to provide needed medications to those who cannot afford them.

The affected hospitals are bracing for a significant drain on their bottom lines, and some serve the neediest populations. However, some other hospitals have used the program to increase profits rather than to help underserved populations.

The U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services released a final Medicare Outpatient Prospective Payment System (OPPS) ruleNovember 1 that cuts Medicare reimbursement for separately payable outpatient drugs purchased by hospitals under the 340B program, which helps certain hospitals and other healthcare entities pay for covered outpatient drugs. The 340B program requires pharmaceutical companies to sell drugs to these hospitals at a discount, but CMS reimburses the hospitals as if there were no discount.

CMS will cut the reimbursement rate from the current average sales price (ASP) plus 6% to ASP minus 22.5%, starting January 1, 2018.

CMS estimates that the change will result in a $1.6 billion reduction in OPPS payments to 340B hospitals for separately payable drugs. The new reimbursement rate was derived from a May 2015 Medicare Payment Advisory Commission (MedPAC) Report to Congress, which estimated that the ASP minus 22.5% rate was the “lower bound of the average discount” on drugs paid under the Medicare OPPS. However,MedPAC’s March 2016 Report to Congress recommended a less drastic reduction in payment to ASP minus 10%. Under that rate, most 340B hospitals could still see a financial benefit from the program.

Instead, the adopted rate will negatively affect all 340B hospitals, says Keely Macmillan, general manager of bundled payments for care improvement with Archway Health, a Boston-based firm that works with providers to manage bundled payments.

Little-known ACA provision could have big impact on hospitals’ bottom lines

http://www.fiercehealthcare.com/finance/finance-affordable-care-act-hospital-reimbursement-medicare?utm_medium=nl&utm_source=internal&mrkid=959610&mkt_tok=eyJpIjoiWmpSaVpqZGxPREF5TlRBMiIsInQiOiJCamZSYmt6YkZzc0FcL2J1NWFyaFBTRHdtT2Rwd3BKbnI0OGQ5RW1jWXhEcklUa2RYcjVOU2JhWEJXTFBuRlJEcnJRWXVXd0ROT0drZmF5WG00dkVYNFY2QmtMWk1BTUFXRmVtcmUwWVhHdnNKejA2dlZBMmhYbGVyVW9EazZtZTUifQ%3D%3D

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Investors should keep a close eye on healthcare, as a little-known element of the Affordable Care Act could leave some hospitals strapped for cash.

The ACA allows Medicare to adjust reimbursements based on workers’ productivity, meaning reimbursement rates decrease as productivity grows in the economy, according to an article from The Wall Street Journal.

The Congressional Budget Office projected (PDF) that this piece of the law would cause reimbursement rates to grow at 2.2% each year between 2012 and 2025, a decrease from 3% growth.

These changes could hurt the bottom line for hospitals. Although the consumer-price index for medical care has been slowing, it has grown by an average of 2.9% over the past five years, according to WSJ. A lengthy window of costs rising faster than reimbursement would widen the gap between revenue and cost.

In general, Medicare already pays less in reimbursement than commercial insurers. The CBO report suggests that if the reimbursement changes stick, the number of hospitals unable to turn a profit could reach 60% by 2025.

WSJ’s analysis did note, however, that this grim outlook did not take into account increased cost efficiency at hospitals. It also noted that the political climate, as the GOP continues to push for a repeal of the ACA, leaves plenty up in the air.

“The good news for investors is that most hospitals aren’t for-profit and few have publicly traded shares,” according to the article. “But the impact of financial pressure still could be significant.”

Also worth considering is the impact that the industry’s ongoing consolidation can have; Tenet Healthcare, for instance, is looking to divest its hospital portfolio.

Post-acute care: Medicare Advantage vs. Traditional Medicare

http://theincidentaleconomist.com/wordpress/post-acute-care-medicare-advantage-vs-traditional-medicare/

From a public spending point of view, post-acute care is particularly problematic. Most of Medicare’s geographic spending variation is due to this type of care. Part of the story is that Medicare pays for post-acute care in several different ways, with different implications for efficiency.

For example, traditional Medicare (TM) — which spends ten percent of its total on post-acute care — pays skilled nursing facilities per diem rates but inpatient rehabilitation facilities a single payment per discharge. Post-acute care is also available through Medicare Advantage (MA), which operates under a global, per-enrollee, payment. Unlike TM, MA plans establish networks, may require prior authorization for post-acute care, and can charge more in cost-sharing for post-acute care than TM does.

These different payment models offer different incentives that may affect who receives care, in what setting, and for how long. In Health Affairs, Peter Huckfeldt, José Escarce, Brendan Rabideau, Pinar Karaca-Mandic, and Neeraj Sood assessed some of the consequences of those incentives. Focusing on hospital discharges for lower extremity joint replacement, stroke, and heart failure patients between January 2011 and June 2013, they examined subsequent admissions to skilled nursing and inpatient rehabilitation facilities, comparing admission rates, lengths of stays, hospital readmission rates, time spent in the community, and mortality for MA and TM enrollees. To do so, they used CMS data on post-acute patient assessments for patients with discharges from hospitals that received disproportionate share or medical education payments from Medicare.