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August 29, 2016

Washington Health Policy Week in Review Archive 4922a37a-0ed0-4db9-af3f-29b2362bd422

Newsletter Article


Rate Increases Would Not Make Obamacare Too Costly, HHS Says

By Erin Mershon, CQ Roll Call

August 24, 2016 -- The Obama administration is pushing back on dire warnings of health insurance premium hikes of more than 20 percent, with a hypothetical analysis showing about three-fourths of customers would pay less than $75 a month even if every plan sold on exchanges were to have a 25 percent boost.

Insurers are proposing rate increases as high as 50 percent in some states, and across the country, the average proposed increase is about 24 percent, according to calculations on the prominent blog Republican critics of the health law have jumped on the proposed hikes as a sign that the exchanges are unsustainable and the coverage is unaffordable.

The analysis released Wednesday by the Department of Health and Human Services' policy wing, the Office of Assistant Secretary for Planning and Evaluation (ASPE), emphasizes the role of tax credits in keeping consumer direct costs down. The law's premium tax credits cover a percentage of premiums, so the subsidies will rise in tandem with premiums. In many cases, consumers facing a particularly steep price increase could also shop around for a different plan. In a hypothetical scenario where every plan saw a 25 percent increase, 73 percent of people would still be able to purchase coverage for less than $900 per year.

Obama administration officials also emphasized in a release that in most states, the proposed rate hikes are still subject to review by regulators and could in fact be lower when they are finalized this fall.

"Headline rate increases do not reflect what consumers actually pay," said Kathryn Martin, the acting assistant secretary for planning and evaluation. "Our study shows that, even in a scenario where all plans saw double digit rate increases, the vast majority of consumers would continue to have affordable options."

Last year, the average premium increase was about 12 percent across all states and plans, according to After premium tax credits and shopping around were taken into account, however, exchange customers saw a premium increase of just 8 percent overall. Those who receive tax credits saw increases of just 4 percent, according to an April report from ASPE.

The Obama administration also emphasized that even with proposed increases, rates on the health law marketplaces are still less than the Congressional Budget Office projected when it first evaluated the 2010 health law.

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Newsletter Article


Medicaid Expansion States Have Lower Premiums, HHS Says

By Erin Mershon, CQ Roll Call

August 25, 2016 -- States that expanded their Medicaid programs as a result of the 2010 health care law are seeing lower premiums in government-run insurance marketplaces, according to a new analysis from the Department of Health and Human Services (HHS).

Premiums appear to be 7 percent lower in the states in which people with low incomes had Medicaid as an option than in those where they did not, HHS said. This is based on an analysis that looked at 2015 data, with controls for differences in demographic characteristics, uninsured rates, health care costs, and some other state policy decisions, HHS said in a release.

Thursday's report represents another clear bid by the Obama administration to encourage more states to expand their Medicaid populations. A 2012 Supreme Court decision made that provision of the health overhaul optional for states. The Obama administration initially had expected Medicaid expansion to draw in more poor people with low incomes in all states, as eligibility requirements were eased. This would have resulted in a healthier customer base for the insurer-run plans in the marketplaces, according to HHS.

"A substantial body of scientific literature confirms a persistent connection between low income and poor health," wrote HHS's policy wing, the Office of the Assistant Secretary for Planning and Evaluation, in its analysis. "Not only are most diseases more common among the poor and near-poor at all ages, but there is evidence that poverty also results in faster progression of diseases, more complications, and poorer survival rates."

The analysis also appears to be a counter to Republican arguments that flaws in the law itself have led to double-digit premium increases in many areas. Most of the states that have chosen not to expand Medicaid are helmed by Republican governors. Keeping premium increases low and increasing affordability remains a primary goal for the Obama administration as it looks to shore up the health insurance exchanges that are central to the 2010 law.

"Today's report identifies yet another group that would gain if all states chose to expand Medicaid: Marketplace consumers, who would see lower premiums," said HHS Secretary Sylvia Mathews Burwell. 

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EpiPen Price Move Not Enough for Lawmakers

By Andrew Siddons, CQ Roll Call

August 25, 2016 -- Mylan N.V.'s bid Thursday to roughly halve the $600 price of its EpiPen injector for some customers failed to pacify congressional critics. Instead, it renewed their calls for a serious look at the root causes of high pharmaceuticals costs, with the Senate Judiciary Committee emerging as a leader in these efforts.

"This step seems like a PR fix more than a real remedy, masking an exorbitant and callous price hike. This baby step should be followed by actual robust action," Sen. Richard Blumenthal, D-Conn., a Judiciary committee member and former state attorney general, said in a statement.

On Wednesday, Blumenthal also joined the leaders of the Judiciary Committee in calling for a look into why the life-saving EpiPen doesn't have more competition in the United States. Chairman Charles E. Grassley, R-Iowa, and Sen. Patrick J. Leahy of Vermont, the ranking Democrat on the panel, along with Blumenthal and two other colleagues, questioned what steps the Food and Drug Administration (FDA) could take to increase competition for EpiPen.

Stumbles by other drugmakers have made it likely Mylan will have the market to itself at until at least 2017 for the convenient prefilled injections of epinephrine. The drug treats the severe allergic reaction known as anaphylaxis.

For now, Mylan Chief Executive Officer Heath Bresch's response to criticism has been to offer a $300 savings card for EpiPen. Bresch is the daughter of Sen. Joe Manchin III, D-W.Va., who on Thursday said he expected Mylan to have a "more comprehensive and formal response" to the allegations from lawmakers.

"I look forward to reviewing their response in detail and working with my colleagues and all interested parties to lower the price of prescription drugs and to continue to improve our health care system," Manchin said in a statement.

Blumenthal dismissed the coupon as a "special break for people who are in particular health plans and have the extra hours in their work day to navigate a bureaucratic labyrinth of discounts." For consumers whose insurance coverage requires a higher out-of-pocket expense, using the coupon from Mylan will save $300 on the $600 they might otherwise spend. Insurers and their customers will still face high prices, though, when coupons are not used.

"Once again, they aren't reducing their price; they are only offering to pay for some patients' copays," said Jeff M. Myers, the president and chief executive of Medicaid Health Plans of America, the trade group for managed care companies. "It's a pricing charade based on cost shifting."

Vicious Cycle

Critics of pharmaceutical pricing practices argue that expenses like this have driven up insurance premiums to the point where many consumers end up on the cheaper but higher-deductible plans requiring them to pay the full cost of an EpiPen. That cost burden is also picked up by taxpayer-funded Medicare and Medicaid.

"The true cost of the drug is costing all of us money, whether or not you have allergies," said Adriane Fugh-Berman, a professor of pharmacology at Georgetown University Medical Center.

The vicious cycle doesn't end there: the more a company spends subsidizing the expense paid directly by the consumer, the more it can raise the list price, according to the Pharmaceutical Care Management Association, which represents the companies who provide drug coverage for healthcare plans.

"To help cover the $4 billion spent annually on copay coupons, manufacturers can simply raise prices," Mark Merritt, the association's president, said in testimony earlier this year during a House hearing on drug prices. "Because insurers and plan sponsors foot this bill, these programs increase premiums."

The coupons also don't necessarily make their way to all the people who would benefit to them. While an EpiPen coupon is available to some via Mylan's website, in many cases people rely on their doctors for the information. Many doctors only get that information from drug company representatives—a practice that many frown upon.

Grassley expressed that concern. "When drug companies offer patient assistance cards, it's usually not clear how many patients benefit," he said in a statement.

Despite all of the bad publicity, Mylan will not likely face any real economic pressure to lower the price of EpiPen for at least another year. That's because the company's injector currently faces no direct competition in the United States. A similar epinephrine auto-injector from Sanofi was recalled in October 2015 over concerns that it wasn't injecting accurate doses. In March 2016, rival generic drug-maker Teva Pharmaceuticals had an application for its EpiPen clone rejected.

Lawmakers on Senate Judiciary pressed the FDA on its efforts to boost competition in this area. "It would be helpful if the FDA could clarify whether any barriers exist to the approval of safe alternative products to the EpiPen," Grassley, Leahy, and other lawmakers wrote Wednesday in a letter to FDA Commissioner Robert M. Califf.

While the Food and Drug Administration's (FDA) standard for generic drugs is to demonstrate that it is equivalent to the original drug, a complicating factor for potential competitors to EpiPen is that they must do more than replicate the drug itself, epinephrine. In this case, for the generic competitor to win approval, it would also need to accurately mimic the delivery device—the pen—and demonstrate that it delivers the drug at the exact same rate and in the exact same way.

"The agency creates a very high bar for satisfying its principles, and we are seeing the consequence of that, in this case, in the form of a perpetual monopoly that really shouldn't exist but for the regulatory barrier," said Scott Gottlieb, a physician and former FDA official who is now a fellow at the American Enterprise Institute. Gottlieb also serves as an adviser and consultant to several drug companies, including GlaxoSmithKline and Vertex Pharmaceuticals.

Even if Sanofi and Teva hadn't run into trouble, it's unclear what affect the products would have had on the current market. According to an FDA analysis, the second generic competitor of a product typically has a price that's around 50 percent of the original. That would mean a $300 EpiPen—which is still three times the price it cost in 2007, when Mylan acquired the product.

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Medicare Says $466 Million Saved in Alternative Pay Programs

By Kerry Young, CQ Roll Call

August 25, 2016 -- Federal officials on Thursday highlighted token Medicare savings as evidence of the success of alternative reimbursement tests, which are meant to lay the groundwork for a broader overhaul of how the nation's single largest purchaser of health care pays for services.

Savings rose to $466 million last year from $411 million the previous year from certain programs meant to tie Medicare payments to judgments about the quality of care, Medicare officials told CQ HealthBeat. These are the combined results of 392 accountable care organizations (ACOs) participating in Medicare's Shared Savings program and the dozen in what's known as the Pioneer Accountable Care model.

Health policy analysts will parse the more detailed ACO results released Thursday, even though the savings represent only a sliver of Medicare's roughly $600 billion in annual spending. These programs are among the most advanced tests done of alternative payment models by the Centers for Medicare and Medicaid Services (CMS). The results seen to date may yield clues about how doctors and other medical professionals and health organizations will fare as Medicare increasingly ties its payments to judgments about the quality of care provided.

"CMS continues to work and partner with providers across the country to improve the way health care is delivered in the United States," said Patrick Conway, the chief medical officer and principal deputy administrator for CMS, in a statement.

The agency is in the midst of creating a new framework for assessing medical care that was mandated by last year's overhaul of Medicare physician payment (PL 114-10). CMS also is working on a new unified payment approach for what's called post-acute care, a roughly $60 billion expense for Medicare to cover services provided to people recovering after strokes and serious illnesses and surgeries.

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