DCMedical News: Tuesday, October 18, 2022
DCMedical News is published every day both the House and the Senate are scheduled to be in session.
THE BIG STORY Tuesday, October 18, 2022
Medicare Choices Underway: “Traditional” v. “Medicare Advantage”
Beginning October 15 and lasting until December 7, Medicare beneficiaries will be presented with different types of information to help or persuade them to change Medicare coverage. The Commonwealth Fund (report here, appendix with survey questions here) reports that “More benefits and a limit on out-of-pocket costs are the main reasons older adults gave for selecting Medicare Advantage (MA), while greater selection of providers is cited by those opting for traditional Medicare.”
This dichotomy, in general, leads those over 65 and otherwise eligible who are primarily concerned about cost to choose Medicare Advantage plans, and those seeking to preserve or guarantee future choice of physicians and hospitals to stay with the traditional plan. In turn, this provides an inducement for Medicare Advantage plans to code their claims enthusiastically, to generate the income necessary to provide the promised financial advantages to their enrollees. MedPAC has found, contrary to industry representation, that the MA plans end up costing the government more than traditional Medicare, on the order of 8-12% more, amounts which help those commercial health insurers with MA plans to be highly profitable.
Medicare Choice+ or Part C (now the MA program) began nearly thirty years after the inception of the Medicare program, in an era of privatization initiatives in Congress, following the collapse of the Clinton health insurance programs, and the election of a Republican majority Congress in 1995.
A selection of articles chronicling various of the historical and controversial aspects of the program can be found here, beginning with Robert Pear’s report in The New York Times in 1998 which said “Thirty-eight million Medicare beneficiaries will soon be flooded with information about new health insurance options, and most of them are likely to be thoroughly confused, consumer advocates, members of Congress and Medicare officials say. The new options were created by Congress last year to give beneficiaries a wider variety of choices, like those available to many workers in private industry who receive insurance coverage from their employers.”
Members of Congress were conflicted even then, according to Pear, who reported “Representative Jim McDermott, Democrat of Washington, a psychiatrist, said: ‘I am really worried that when 38 million beneficiaries -- 26 million households - get the new Medicare handbook, confusion will reign. Our casework staff will be inundated with questions just before the November elections.’ Representative Pete Stark of California, the ranking Democrat on the Ways and Means subcommittee on health, said the handbook was ‘a waste of $40 million.’"
The AARP was also skeptical. John C. Rother, director of legislation and public policy at the American Association of Retired Persons, said: "Most beneficiaries will have a hard time sorting through the new choices because of their complexity, and because the Medicare population has very little experience with managed care. It's not what they had when they were working. We can anticipate a high level of confusion." Now AARP’s income is highly dependent on its MA program run with United HealthCare (also chronicled in the article history).
Pear noted, “The new options, most of which will become available late this year, offer the possibility of extra benefits, including prescription drugs and other items not covered by the standard Medicare program, the national health care plan for the elderly. But they may also expose beneficiaries to higher costs and more uncertainty.”
Traditional Medicare allows beneficiaries to go to any doctor, hospital, or other health care provider that accepts Medicare, without the need for prior approval; Medicare Advantage enrollees typically need a referral from their primary care physician as well as plan approval if they want services from specialists, such as oncologists, covered by the plan.
Almost all projections show MA becoming the majority choice. According to the Commonwealth report, “Forty-five percent of Medicare beneficiaries are enrolled in Medicare Advantage plans in 2022, a share that is projected to rise to more than 50 percent by 2025.”
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE
Historic Profitability in U.S. Commercial Health Insurance
Bob Herman at STAT reports that “As UnitedHealth’s earnings report suggests, patients overall have returned to hospitals and doctors, but still not quite as much as expected in some areas. Covid-19 hospitalizations also are much lower now than they were last year and two years ago. But the idea that patient volumes broadly will go back to or exceed pre-pandemic normals (along with the high rates of inflation) has become a built-in excuse to raise premiums and fees for individuals and employers, despite the historic profits.”
United (here) reported Friday the highly profitable (but regulated) insurance business was overshadowed by its own provider business, Optum. “UnitedHealth’s network of outpatient clinics and roughly 60,000 doctors is already more profitable than the company’s larger insurance division, UnitedHealthcare.”
Herman’s prediction for the year: “It [is] almost a certainty that the country’s seven major publicly traded health insurers will finish the year with historic levels of collective profitability.”
DRUGS & DEVICES
Presidential Order: Lower Drug Prices
On October 7th President Joe Biden signed an executive order (here) directing the Department of Health and Human Services to outline new payment models to lower drug prices in Medicare, in 90 days.
CQ reported that “The order follows a September 2021 HHS report sketching out the department’s broader plan on drug prices, including potential CMMI [Center for Medicare and Medicaid Innovation] pilots. In the previous report, HHS said it was considering Part B outpatient drug models that would link payment to a drug’s clinical value and improved patient outcomes, increase cost-sharing aid for low-income patients who use generics and cap payments to clinicians for a particular episode of disease treatment.”
Said CQ, “The time is ripe for CMMI action on drug prices. [The Director] previously indicated that she wouldn’t move on drug pricing demonstrations until Congress had finished its work on the topic — which it did in August when Biden enacted Democrats’ budget reconciliation law (PL 117-169) that requires Medicare to negotiate the prices of certain high-cost drugs directly with manufacturers. That law also requires drugmakers to rebate Medicare when their prices rise faster than inflation and caps patients’ Part D out-of-pocket costs at $2,000 per year and insulin costs at $35 a month.”
AMA Studies Consolidation of Pharmacy Benefit Management Services
The AMA said its analysis (here) is the first to shed light on variations in market shares and competition among PBMs at the state and metropolitan levels.
The analysis presents national and local market insight on five different PBM services performed for insurers: rebate negotiation, retail network management, claim adjudication, formulary management and benefit design, the latter two managed in-house by health insurers (rather than having those services provided by PBMs) 37% of the time.
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
October 19, 20, 21
November 14, 15, 16, 17, 18, 29, 30
December 1, 2, 5, 6, 7, 8, 12, 13, 14, 15
Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org