DCMedical News: Tuesday, December 10, 2019
DCMedical News-DCMN
Washington, D.C.
Tuesday, December 10, 2019
DCMedical News is published every day both the House and the Senate are in session. Subscription information below.
Supreme Court Faces PPACA Cost Reduction and Refund Mechanics
The Court today will hear arguments on Maine Community Health Options v. the U.S. The case has been consolidated with Moda Health Plan, Inc. v. United States and Land of Lincoln Mutual Health Insurance Co. v. United States. Four commercial health insurers have sued the government for not making payments under the Patient Protection and Affordable Care Act’s “risk corridors.” The four represent two dozen insurers that lost money covering individuals with preexisting conditions, or who were otherwise uninsurable prior to passage of PPACA.
A Wall Street Journal editorial (here) says the “temporary program was intended to entice insurers to join the ObamaCare exchanges by minimizing their potential losses and giving them time to calibrate premiums and risk pools.” The more profitable insurers were required to pay into the program, resulting in sums that could be paid out to less profitable carriers. As the Journal notes, “Not surprisingly, many insurers underpriced their plans.” The result is that projected payments to insurers exceed corridor contributions by $12 billion.
The Court is addressing questions of clarity in Congressional intent. PPACA never explicitly said the risk corridors had to be budget neutral. Nor were payments guaranteed to insurers by contract. Congress did not explicitly repeal that part of PPACA but did (in a 2015 appropriations bill) forbid HHS from spending discretionary funds for risk-corridor payments. Implied contracts, evidence of the government’s intention to bind itself in a contract, clear indications, end runs around the legislative process, etc., are expected to be central to the Court’s deliberations, as well as that provision of the Constitution that says “no money shall be drawn from the Treasury, but in consequence of appropriations made by law.”
Big Bill Includes Surprise, Drug Cost, 30+ Other Health Measures
Senator Alexander and House Committee leaders proposing a “surprise medical bill” cure (see DCMN 12-9) have released the bill (here, section-by-section analysis) which contains drug price controls and thirty other public health measures. “Surprise” title begins at pg. 9, drug prices at pg. 11.
HOSPITALS, NURSING HOMES AND OTHER HEALTH CARE FACILITIES
MedPAC Examines Hospitals, Finds Prosperity in 2018
In discussion of proposed new payments in 2020 and 2021 for hospitals, MedPAC (the Medicare Payment Advisory Commission) found that total Medicare Fee-For-Service payments rose 3.6% from 2017 to 2018, totaling over $200 billion, with $120 billion of that for inpatient stays, $70 billion for outpatient services, $11 for supplemental payments (medical education, etc.).
The staff presentation (here) found that hospitals have significant excess inpatient capacity, with 63% hospital occupancy rates nationwide, 67% in urban areas, 41% in rural. Inpatient stays per capita in 2018 declined by 1.6%, while outpatient services per capita increased by .7%. The 3.6% increase was driven by price increases and increases in intensity of services, together with those supplemental payments. Differing fates for hospitals: closures shot up to 47 in 2018, more than double the previous year, with openings (8) at a near all-time low. Margins for hospitals were at a near record high, with a 6.1% operating margin, 6.8% total margin, 10.6% cash flow margin, and a for-profit all-payer margin of 11.3%.
The “Medicare margin” of -9.3% was consistent with numbers for 2017 and 2016, but far above the traditional Medicare shortfall of -5%, prevalent 2010 through 2014. Current law will update the Inpatient Prospective Payment System rates by a net of 2.6% next year and 2.8% in 2021.
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE
MACPAC Meets, DSH, Supplemental Payments, Experiments on the Menu
The Medicaid and CHIP Payment and Access Commission meets this Thursday and Friday in Washington (agenda here) to discuss the proposed rule on supplemental payments, including DSH and upper limits; experiments on §1115 demonstrations and on controlling expenditures for high cost drugs. On Friday the group discusses improved participation in the Medicare savings programs, Medicaid’s role in financing maternity care (more than half of the babies born in the country are now paid for through Medicaid), and a “review of a draft chapter on statutorily required analyses of Disproportionate Share Hospital Payment,” a position paper which may be controversial, not yet distributed.
Another subject on the minds of MACPAC will be declining enrollments in Medicaid and CHIP programs (November issue brief, here). Between July 2017 and July 2018 Medicaid enrollment declined for the first time since implementation of the expanded eligibility under the Patient Protection and Affordable Care Act in 18 of the past 24 months, from 74.3 million in July of 2017 to 72.4 million in July of 2019. There was extensive variation by state, with 15 states having increased total enrollment, the largest in Virginia (over 30 percent); the largest decline came in Missouri, 14%.
New York Medicaid Mess Attracts National Attention
The New York Post (here) alleges lax Medicaid oversight and massive fraud as causes of a $4 billion budget hole facing New York Governor Andrew Cuomo, based on a Mercatus study which alleged that 433,000 New York residents had income above the allowed limits, growing 80% in the five years 2012 to 2017, and that improper payments tripled nationwide 2013-2018, reaching $75 billion per year. New York City in particular is a “hot spot” for illegal Medicaid enrollment (here). The Empire Center (here), extending the issue, writes that “NY’s Medicaid mess is a warning against single-payer push.” The Mercatus study is here, press release here.
DRUGS AND DEVICES
KFF Summary on Drug Costs for Medicare Beneficiaries
A Kaiser Family Foundation study (here) notes that “Virtually all of the 2020 presidential candidates support efforts to lower drug prices, and key Congressional committees have marked-up legislation. Many of these proposals would directly affect prescription drug spending under Medicare, which accounts for 30 percent of national retail spending on drugs and nearly $1 out of every $5 in total Medicare spending.” STAT analyzes new Republican drug price bill in the House, here.
READINGS AND REFERENCES
Additional From MedPAC (Medicare Payment Advisory Commission) Meeting December 5 – 6:
Assessing payment adequacy and updating payments: Long-term care hospital services (here);
Assessing payment adequacy and updating payments: Inpatient rehabilitation facility services (here);
Assessing payment adequacy and updating payments: Skilled nursing facilities (here);
Assessing payment adequacy and updating payments: Home health care services (here).
U.S. House of Representatives:
Members at https://www.house.gov/representatives
Committees and Members at https://www.house.gov/committees
U. S. Senate:
Members at https://www.senate.gov/general/contact_information/senators_cfm.
Committees and Members at https://www.senate.gov/committees
House and Senate 2019 Calendar of Regularly Scheduled Sessions, here.
House 2020 Calendar of Regularly Scheduled Sessions, here; Senate schedule subject to Impeachment Debate
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
December 11, 12
January 7, 8, 9, 10, 13, 14, 15, 16, 27, 28
February 4, 5, 6, 7, 10, 11, 12, 13, 25, 26, 27, 28
March 2, 3, 4, 5, 9, 10, 11, 12, 23, 24, 25, 26, 27, 30, 31
Notes to: Fred Hyde, MD, JD, MBA; fredhyde@aol.com.