DCMedical News: Thursday, May 2, 2019
DCMedical News-DCMN
Washington, D.C.
Thursday, May 2, 2019
DCMedical News is published every day both the House and the Senate are in session. Subscription information below.
THE BIG STORY IN HEALTH CARE
CBO Publishes Road Map for Single Payer Health Insurance:
The Congressional Budget Office published “Key Design Components and Considerations for Establishing a Single-Payer Health Care System,” here, with discussion of administration, cost containment, covered services, eligibility, payment rates, provider roles and the residual functions of the current system. The various topics all relate to this issue, as posed in the report: “Total national health care spending under a single-payer system might be higher or lower than under the current system depending on the key features of the new system, such as the services covered, the provider payment rates, and patient cost-sharing requirements.”
Publication followed the first Congressional hearing on “Medicare for All.” The Kaiser Family Foundation reported on the hearing (here), before the House Rules Committee whose Chairman, James McGovern, is a supporter. A Budget Committee hearing on the bill is expected soon, and possibly one before the health care legislation authorizing committee, Energy and Commerce.
DOCTORS, NURSES AND OTHER HEALTH PROFESSIONALS
AAMC Study on Physician Supply and Demand, continued: We might be short 23,000 surgeons, as well (here), see also DCMN 4-29 on primary care physician supply and the complete report from the Association of American Medical Colleges (here).
HOSPITALS, NURSING HOMES AND OTHER HEALTH CARE FACILITIES
Readmissions: Insurer Greed or Hospital Incompetence?
The Lakeland, FL Ledger has joined this question (here). The paper reported on Lakeland Regional Health’s suit against Aetna claiming that the company’s refusal to reimburse the hospital for health care services it provides has caused financial damage and constitutes a breach of contract. “Lakeland Regional takes issue at the health insurer’s Readmission Payment Policy, which sets rules for how much it will pay for an individual’s second hospital visit for a medical issue within 30 days.” “Many of the readmissions which have been denied by Aetna are patients who are chronically ill with many comorbidities,” reads Lakeland’s complaint. Aetna’s response to the complaint says “The readmissions policy is designed to prevent a facility, like Lakeland, from failing to provide appropriate and complete care as part of an initial hospital admission . . . If the conditions had been properly treated as part of the initial admission, the second admission would not be necessary.”
MEDICARE, MEDICAID, COMMERCIAL HEALTH INSURANCE
Price Variations, Studied from Claims Data:
The Health Care Cost Containment Institute (with access to commercial health insurance payments by major carriers--originally Aetna, Humana, Kaiser and United--as well as Medicare payment information) reports (here) on variation on prices paid between and within regions. Examples within a region: The median price of a vaginal delivery in Boston-Cambridge-Newton, MA-NH was $8,074 but ranged from $4,701 at the 10th percentile to $15,973 at the 90th percentile, a difference of $11,272. The price of a screening mammogram varied by more than 4-fold in Allentown-Bethlehem-Easton, PA, where the median price is $177.
“It is highly unlikely that these pricing differences are related in any meaningful way to differences in quality or value.” said Niall Brennan, President and CEO of HCCI. “Employers should be outraged that they and their employees may be paying radically different prices based on factors like which provider they go to.” He added, “We’re talking about everyday services, not the latest technology or drug therapy, and not cases with expensive complications. Most Americans would likely find it baffling that negotiated rates can be four to five times more for the exact same service in the same area.” CMS has issued a request for information and proposals to compel disclosure of negotiated prices.
DRUGS & DEVICES
MedPAC on Part B and Part D Drug Policy:
MedPAC Executive Director James Mathews testified (here) before the House Subcommittee on Health, Energy and Commerce Committee on drug policy under Medicare’s Part B (outpatient) and Part D (drug plans) programs. He noted “Across all Medicare sectors, we estimate that spending for drugs and biologics grew from about 20 percent of total Medicare spending in 2007 to 23 percent by 2016.”
Confused by AWP, ASP, WAC and LIS-based pricing? Dr. Mathews’ testimony is an excellent and clear history of the basis for Medicare drug payments to doctors, outpatient clinics and hospitals. “Medicare’s reinsurance (which covers 80 percent of enrollees’ spending in the catastrophic phase of the benefit after rebates) has been the fastest growing component of Part D program spending, with average increases of nearly 17 percent annually between 2007 and 2017.”
Closing the donut hole: “Between 2007 and 2017, the portion of the basic benefit payments paid to plans through capitated direct subsidies fell from 55 percent to 21 percent, while the portion paid through Medicare’s reinsurance grew from 25 percent to 54 percent . . . As a result, taxpayers—not plans—bear an increasing share of the insurance risk for Part D spending.” On the 2018 reduction of the coverage gap, “Because plan sponsors are not liable for much benefit spending in the coverage gap, Part D’s structure may provide a financial advantage to sponsors when they select certain drugs with high prices and large post sale rebates over lower-cost alternatives. The dollar amount of rebates for certain drugs can be larger than a plan sponsor’s liability for the associated benefit spending. For example, during the coverage-gap phase, a plan could increase its net revenue by encouraging use of a brand-name drug that received a rebate of 20 percent because the plan would only be liable for 5 percent of the prescription’s cost. In this sense, Part D’s benefit design may contribute to growth in drug spending. The recent changes to the coverage gap, which further reduced plan sponsors’ liability, heighten those concerns.”
On Part B, “Price growth is the largest driver of Medicare Part B spending growth. Almost two-thirds of the growth in Part B drug spending between 2009 and 2016 was accounted for by price growth. Growth in Medicare’s ASP-based payment rates for individual drugs is driven by manufacturer pricing policies. There is no statutory or regulatory constraint on how much Medicare’s ASP-based payment rate for an individual drug can increase over time.”
The top 10 drugs for spending (and 43% of the Medicare total drug spend) are all biologics (e.g., $1.5 billion in 2017 for Opdivo, $1 billion for Keytruda). Recommendations from MedPAC for restraint in price growth are at pgs. 18-20 of the testimony.
READINGS AND REFERENCES
From the late Uwe Reinhardt (“Priced Out: The Economic and Ethical Costs of American Health Care”): “Yet, while we hold doctors, hospitals, and other providers of health care to strictly egalitarian standards, we routinely signal through our payment systems that, in our eyes, the value of the professional work of doctors, and of hospital staffs varies by the socioeconomic status of the patient . . . legislators literally signal to pediatricians that their professional work is worth three times as much or more when applied to a commercially insured child than it is when applied to a poor child covered by Medicaid.”
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.cfm.
Committees and Members at https://www.senate.gov/committees/membership_assignments.htm.
House and Senate 2019 Calendar of Regularly Scheduled Sessions, here.
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
May publication dates: 7, 8, 9, 10, 14 15, 16, 17, 20, 21, 22, 23
June publication dates: 5, 6, 7, 8, 11, 12, 13, 14, 25, 26, 27, 28
Notes to: Fred Hyde, MD, JD, MBA; fredhyde@aol.com.