DCMedical News: Wednesday, July 24, 2019
DCMedical News-DCMN
Washington, D.C.
Wednesday, July 24, 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
Big Drug Bill
Senators Chuck Grassley (Chairman) and Ron Wyden (Ranking Democrat) of the Finance Committee unveiled their package of drug pricing reforms (here). The proposal would limit pharmaceutical price increases under Medicare, cap out-of-pocket expenses for Medicare beneficiaries (see story below, under Drugs & Devices), and otherwise reform the government’s prescription drug benefits, without (according to the sponsors) directly impacting other consumer drug prices. An estimated $85 billion in Medicare and $15 billion in Medicaid expenditures would be saved over a decade by the bill, in addition to reducing premiums for beneficiaries of Medicare’s Part D benefit and limiting out-of-pocket spending by those beneficiaries. The bill also implements a “value-based system” for gene therapies under Medicaid and increases the maximum rebates allowed under Medicaid.
Bipartisan Budget Act of 2019
The arrangement by congressional leaders and the administration to implement a two-year spending limit/debt ceiling suspension now has a Congressional Budget Office estimate (here). In the health field, mandatory sequestration of Medicare expenditures would be extended through fiscal year 2029. According to the CBO, “Compared to current law, the Medicare provision would increase spending for most Medicare benefits by about 2 percent for April through September 2027, reduce spending by 2 percent October 2027 through March 2029, then reduce spending by 4 percent for April through September 2029.” The outlay reduction for 2019 to 2029 will approximate $62 billion in estimated budget authority and $39 billion in estimated outlays.
HOSPITALS, NURSING HOMES AND OTHER HEALTH CARE FACILITIES
Bundled Payments: Post-Acute Care as the Piggy Bank for “Savings”
Grabowski and colleagues report (here) that post-acute care has become the “piggy bank” for savings in Medicare alternative payment model experiments. The writers identify the “savings” in bundled, accountable care organization, and other alternative payment models (APMs) as coming at the expense of those who are not involved in the bundling, primarily skilled nursing facilities and other providers of post-acute care.
Reduction in spending took place in alternative payment system experiments, according to these authors, not by reducing physician fees or utilization of physician services, nor by reducing hospital fees or utilization of hospital services, nor by “coordinating care” more effectively. Rather, the reduction came at the expense of those who were not in the room, namely the skilled nursing and other post-acute care providers to whom referrals (during the experimental period) were made less frequently. One evaluation of the Bundled Payments for Care Improvement initiative (BPCI, footnote 3 in this paper) found that “for eight of the nine clinical conditions for which significant savings were generated between 2011 and 2016, most spending reductions were the result of decreased spending on institutional post-acute care.” The writers point out that “in their zeal to avoid institutional post-acute care, hospitals may begin to send home patients who need institutional rehabilitation.” They note also that, as with hospitals, “many SNFs rely on higher margins from treating Medicare patients to make up for losses on Medicaid patients.” Finally, there is the question of “additional strain on their families,” that is, the families of patients who are the uninformed participants in the alternative payment experiments.
Joynt Maddox and colleagues studying participation of hospitals in such experiments publish (here) a summary of hospital characteristics associated with “dropping out” of APM-BPCI experiments. “Hospitals that dropped out were more often for profit, smaller, and located in areas with a lower supply of skilled nursing and inpatient rehabilitation facilities compared with hospitals that remained in the program.” [Italics added.]
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE
Medicaid Work Requirements in New Hampshire Face the Same Skeptical Judge
D.C. Circuit Court Judge James Boasberg will shortly decide if New Hampshire can start enforcing a 100 hour per month requirement of work or service for Medicaid beneficiaries. Previously, Judge Boasberg (here) ruled against two other states’ work-for-Medicaid requirements. A theme in Judge Boasberg’s previous decision is asking whether the Department of Health and Human Services considered the loss of coverage in its approval of the waivers. For example, Arkansas’ Medicaid program has dropped approximately 17,000 enrollees, and Kentucky’s never went into effect.
DRUGS AND DEVICES
Capping Senior Spending Under Finance Committee Bill
Restructuring of Part B and Part D Medicare pharmaceutical benefits (see above, “Big Story”) would also cap spending by Medicare beneficiaries. Under Part D, where Medicare pays 80% of the cost when a patient’s drug spending exceeds the catastrophic threshold, the committee proposal would reduce the federal share to 20% by 2024. Medicare beneficiaries would have an out-of-pocket spending limit, $3,100 annually. For amounts over that the portion not paid by Medicare would be covered by private insurers who administer the Part D plans, and by drug manufacturers, who will pay 60% and 20%, respectively. A stated purpose of the provision is to “discourage the use of high cost drugs and price increases by drug makers.”
READINGS AND REFERENCES
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
July publication dates: 25, 26
August publications dates: None
September publication dates: 9, 10, 11, 12, 17, 18, 19, 20, 23, 24, 25, 26, 27
Notes to: Fred Hyde, MD, JD, MBA; fredhyde@aol.com.