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May 9, 2016

Washington Health Policy Week in Review Archive b9da1e32-5243-451f-a294-240c45710d1b

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Doctors' Groups Spar Over Proposed Medicare Part B Drug Model

By Kerry Young, CQ Roll Call

May 5, 2016 -- A group with roots in an effort by medical students to help elect Barack Obama president in 2008 is backing the president in one of his last major fights over health policy. The nonprofit Doctors for America is running a grassroots campaign in support of a proposal to alter how Medicare pays for drugs administered in doctors' offices, putting it at odds with much larger medical associations.

Doctors for America has asked its members to send formal comments in support of the proposal regarding drugs covered by Medicare's Part B, the part of the program that covers outpatient care, said Justin Lowenthal, who currently serves as the Maryland state director for the organization. The group is seeking to counter the objections to the Centers for Medicare and Medicaid Services' (CMS) plan from American Medical Association and drugmakers' lobbying groups. 

The two-part drug model unveiled in March calls for a quick change to the reimbursement policy for medicines that cost Medicare about $22 billion a year, while also outlining steps for a potential broader overhaul of how the nation's largest single purchaser of health care pays for drugs. Among the ideas considered are ways to peg reimbursement for drugs to the results delivered for patients, an approach called value-based purchasing.

More than 600 comments about the Part B model have been made public so far on the site, and more likely will be posted in the weeks ahead. Many comments ask CMS to abandon the proposal, which could change how doctors across the country are paid. The plan calls for keeping some doctors in the current model, in which they get paid the reported average sales price for a medicine plus a premium of about 4.3 percent. Other doctors would see the premium shrink to about 0.9 percent but would get a flat fee of $16.80 as well. CMS is accepting comments through May 9. 

Democratic support may decide how far the Obama administration can go. So far, there has not been a full-throated defense of the model from lawmakers in the president's own party. At least four House Democrats agree with Republicans in both chambers who want CMS to drop the Part B drug model. Democrats on the influential Senate Finance Committee released a letter in which they raise concerns about the test program, although they did not call for its withdrawal.

"The Democrats are towing this line between wanting to be for reform in terms of drug prices and the health care system more generally, but also wanting to listen to some of the physician groups and patient groups that are coming to them" with complaints about the Part B model, said Lowenthal, who is pursing both a medical degree and a doctorate at Johns Hopkins University.

Cancer and Arthritis

Any change in the Part B payment system would significantly affect doctors who treat cancer and rheumatoid arthritis, a potentially crippling disease that attacks joints. Drugs used for these fields are commonly given by infusion and injected. Doctors in smaller practices don't get significant discounts on these products, medical groups say. So the proposed Part B payment change would put them "under water," meaning that they would lose money because they pay more than the reported average sales price to acquire drugs, said William Harvey, who is the chair of the committee of government affairs for the American College of Rheumatology.

CMS chief medical officer Patrick Conway on Wednesday said the agency is looking into whether the current design of the Part B model could end up inadvertently cutting off access to drugs for people in rural areas and those seen by doctors in smaller practices. Conway made it clear some weeks ago that CMS expects to make changes to the Part B drug model.

Harvey said that the ACR is waiting to see what revisions Medicare makes before deciding whether to push Congress strongly to act on the matter. Rep. Larry Bucshon, R-Ind., introduced a bill (HR 5122) on April 29 to block the implementation of the Part B model. It so far has four GOP sponsors. Another approach would be to seek to tuck a provision into an appropriations bill to block CMS from progressing with the Part B drug model. Harvey said he sees little chance of either of these approaches working to stop Medicare from launching this test.

"It doesn't appear that the administration is going to withdraw the proposal at this point," Harvey said. "And, even though there's a new bill that's been introduced to stop the proposal, I don't think there is enough bipartisan support in Congress to do that."

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Premium Increases Pose Risk for Democratic Candidates

By Erin Mershon, CQ Roll Call

May 2, 2016 -- Insurance companies are warning of premium increases this fall, which are certain to spark Republican attacks that the health care law doesn't provide affordable coverage. This year, in the midst of an election, Democrats set themselves up for a barrage of complaints.

Premiums typically increase every year due to a host of factors, including the demographics of the people covered, the rising costs of care and prescription drugs, and how well a company projected its costs the year before. But this year, in addition to all those factors, a big chunk of expected premium increases will come directly from provisions embedded in the 2010 federal health overhaul.

About 4 to 7 percent of any premium increase will be attributable solely to the expiration of protections for insurers through the so-called reinsurance program, according to Cori Uccello, a senior health fellow at the American Academy of Actuaries.

The health law provided the protections, along with help for insurers through two other programs, to minimize risks for insurers participating in a new system through the exchanges created by the law.

The 2017 expiration date for the reinsurance program could put a spotlight on premiums and affordability in the middle of the general election campaign. That would likely ratchet up political pressure on Democrats, who are gunning this year to retake the Senate and expand their footprint in the House. 

Another boon for Republican candidates: the timing of open enrollment for the health marketplaces. The first day of that period, when most exchange customers will finally be able to confirm their actual premium rates for 2017, falls this year on Nov. 1—a week before Election Day. While insurers will finalize rates before then, the information isn't public in many jurisdictions until open enrollment begins.

"It's very bad timing. It's not going to be pretty," said Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason University.

Lightning Rod

Even last summer, when the campaign season had barely begun and no expiring programs were at play, Republicans assaulted Democrats over proposed premium increases, calling them a sign that the federal health law had failed.

"Premiums have been a political lightning rod from the start, and I would expect no less this year," said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation. "Any reports of premium increases will immediately become talking points."

To be sure, health care hasn't been as central to this year's campaigns as in the last election cycle, as a recent Kaiser poll showed. But Bob Blendon, a Harvard public health professor who directs the university's opinion research program, said that won't stop Republicans, especially in local races where health care issues can resonate. 

"In close races in the House and Senate, Republicans are going to try to say there's an advantage for really not having [Democrats] in power, or things could get worse," he said. "The lemon for the Democrats is that the law was called the Affordable Care Act. Republicans will say 'You should have solved that problem.'"

Expiring Protections

The potential rate increases, which will vary widely across the country, are attributable in part to the continued rise in health care costs, such as for prescription drugs. But another factor is the expiration this year of the reinsurance program and another known as the risk corridor program. 

The reinsurance program will have the larger effect on premiums, according to several insurance company representatives and Uccello of the American Academy of Actuaries. The program, which is entirely funded by the private sector, redistributes money from health plans that had few high-cost enrollees to those with more costly consumers than expected. It aimed to stabilize the market for insurers who had little information about the new populations they were signing up to cover.

Uccello cautioned that although the expiration of reinsurance alone would account for a 4 to 7 percent increase in 2017 premiums, the program's payouts to insurers already had been declining for a couple of years.

"It has been already gradually decreasing, which has been putting increases into premiums," she said.

Anthem, Inc., the nation's second largest insurer, projected on an earnings call Wednesday a similar share of premium increases, about 5 to 6 percent, due to the reinsurance program expiration. Blue Cross Blue Shield Association officials also pointed to that program as a major factor in an anticipated increase.

The expiration of the risk corridor program, meanwhile, is unlikely to have such a sizable impact. That program redistributes funds from insurers who spent less than their targeted costs to those who overspent their targets.

But because of a law pushed by Republicans including Sen. Marco Rubio, R-Fla., that program was required to remain budget neutral—which limited the funds available to insurers who suffered losses. Many companies didn't plan for a redistribution when setting their 2016 premiums. Adjustments for that program's phase-out "already happened" in many cases, Uccello said.

Impact on Consumers

Democrats can hope that the expiration of reinsurance will be ameliorated by a change Congress made in last year's budget deal (PL 114-74). Premium rates could be held down somewhat because of a one-year reprieve from the health insurance tax, an excise tax on plans that was expected to bring in $100 billion over 10 years. 

"The one-year suspension of the health insurance tax was an important step, partly because the cost savings go directly to consumers," said Clare Krusing, a spokeswoman for America's Health Insurance Plans (AHIP), which continues to lobby Congress to fully repeal the tax.

Ucello said that relief could reduce rates by 1 to 3 percent, so that the net impact of the expiration of the reinsurance program and the relief from the tax would still result in pressure pushing rates up.

The Department of Health and Human Services (HHS) is already emphasizing that even double-digit increases won't necessarily translate into premiums that high for most consumers.

Consumers can shop around and switch to lower-cost plans if their rates skyrocket—and many do, according to an administration report on last year's enrollment.

Consumers with income up to four times the federal poverty limit also can get tax credits to lower premiums. Those credits increase when premiums for benchmark plans rise, which can limit the impact on an enrollee's pocketbook.

And of course, the projected premium increases can be checked by state insurance commissioners through rate reviews. The process varies by state, but regulators in many regions can challenge or publicly highlight rates they feel are inappropriate and aren't supported by actuarial projections. The final rates may be lower than originally proposed. In some cases, regulators conversely might raise premiums to ensure that plans can cover all the costs of their customers.

"Marketplace consumers would do well to put little stock in initial rate filings," HHS spokesman Ben Wakana said in a statement. "Last year, the average cost of Marketplace coverage for people getting tax credits went from $102 to $106 per month, a 4% change, despite suggestions of 'double-digit price hikes.'"

Plans are finding their way in a marketplace that is still evolving—and premium prices reflect that uncertainty. UnitedHealth Group, despite higher-than-average premiums for its exchange offerings, suffered strong enough losses to justify a dramatic withdrawal from at least 26 of the 34 marketplaces in which it participated.

Anthem and Cigna were more optimistic about participation, though cautious about profits. Aetna, one of the country's largest exchange participants, is set to announce its earnings Thursday.

"Plans want to be able to offer coverage. They want to provide insurance to their current customers," said AHIP's Krusing. "But when you have a number of factors creating uncertainty, when you are facing limitations in how you can address underlying health care costs, those all impact the cost of coverage for consumers." 

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Medicare Official Defends Limits on Doctor Pay Exemptions

By Kerry Young, CQ Roll Call 

May 3, 2016 -- A top Medicare official said his agency's draft plan for new reimbursement rules for doctors fulfills the direction Congress set last year. But he anticipates strong protests from trade groups that wish to see more physicians qualify for exemptions from requirements in the new system.

"We think our proposal is consistent with the law and congressional direction," Patrick Conway, the chief medical officer for the Centers for Medicare and Medicaid Services (CMS), said at an American Hospital Association meeting on Tuesday, adding that he expects to receive suggestions from industry executives. "I am sure we will get feedback from our colleagues on the Hill as well, and we welcome it."

CMS last week unveiled its draft plan for changing how Medicare pays doctors, fulfilling a mandate in last year's congressional overhaul (PL 114-10). Most physicians are expected to be switched to the new system, known as the merit-based incentive payment system. Doctors in that system must meet a series of quality measures that could raise or cut their Medicare reimbursements by 4 percent in 2019.

The American Medical Association and other doctors' groups are working now to both help CMS shape the rules and prepare their members for the challenges ahead. 

Doctors participating in other CMS test programs that already put some Medicare reimbursement at risk can be exempted from the merit-based requirements under the draft plan. The exempt doctors can win bonus payments and do not have to comply with all of the rules of the new system if they are already meeting agency standards under other programs.

The qualifying programs include the Next Generation Accountable Care Organization (ACO) model and certain tests of care provided to people who have cancer or failing kidneys. The National Association of ACOs, an industry trade group, already has pushed for broader exemptions, saying that CMS only proposes "a very limited number" of alternative payment models.

CMS is seeking comments through June 27 on the proposal.

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New Medicare Pay Rules Threaten Small Practices, Doctors Say

By Kerry Young, CQ Roll Call

May 6, 2016 -- Many doctors fear that they will be forced to seek employment with larger medical groups and hospitals because of a congressionally mandated overhaul of Medicare's pay for physicians, according to initial comments on an agency draft rule.

Many physicians predict the proposed framework will create financial difficulties for those trying to maintain smaller practices, a view supported by Centers for Medicare and Medicaid Services' (CMS) own estimates. 

About 87 percent of doctors in solo practice could see reduced Medicare payments because they will fare poorly in metrics judging their performance next year, with about only 13 percent in line for higher pay. The numbers nearly flip for sites employing 100 or more doctors and other providers covered by the Medicare metrics, with 81 percent likely to get a "positive adjustment" in reimbursement, the agency estimated.

CMS is accepting comments on the draft rule, which was unveiled last month, through June 27. Congress required the changes in a law enacted last year (PL 114-10).

The overhaul of physician pay "is essentially taking money from small practices and shifting it to large ones," Randy Robinson of Iowa wrote in a comment to CMS on the rule.

CMS already has received several complaints about the expected impact of the reimbursement plan, known as the merit-based incentive payment system, or MIPS. Terry Burris of Ohio said that the proposed plan "will penalize the solo practitioners of this country, and continue to industrialize the practice of medicine." Wayne Glazier of Massachusetts told CMS in a comment that the proposed system of quality metrics "will force physicians into large hospital systems which will increase costs and ultimately the system will be more expensive, less efficient."

Some doctors said they support the principles behind the rule, including a bid to improve the practice of medicine by tying Medicare payments to quality judgments.

"I have no problem with the concept of being reimbursed based on quality, but it must be done in such a way not to harm small practices," Robinson said. "Remember we do not have large IT departments and the ability to hire expensive consultants to meet government regulations, it's just us. Like many solo physicians, I am my own IT guy and compliance officer."

The CMS officials charged with carrying out the law on the Medicare doctor pay overhaul face a significant challenge, according to John D. Halamka, chief information officer for Harvard's Beth Israel Deaconess Medical Center. Halamka summarized key provisions of the proposal, officially known as a notice of proposed rulemaking, in a Thursday post on his "Life as a Healthcare CIO" blog. The new rules will set metrics for 2017 performance, leaving doctors little time to prepare.

"The folks at CMS are very smart and well meaning, but it's hard for me to imagine implementing the NPRM as written in the timeframes suggested," Halamka wrote.

In his view, the myriad changes in the 962-page proposed rule are "so overwhelmingly complex, that no mere human will be able to understand them." Like several of the doctors who already have offered comments to CMS on the pay rule, Halamka in his blog suggested that the new pay rules will drive further consolidation in medical practice.

"This may sound cynical, but there are probably only two rational choices for clinicians going forward—become a salaried employee delivering clinical care or become a hospital-based clinician exempted from the madness," Halamka wrote.

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Oncology Study Shows Need for Value-Based Prices, Author Says

By Kerry Young, CQ Roll Call

May 2, 2016 -- Prices of cancer drugs often don't fall when similar treatments become available, according to new research unveiled Monday in the journal Health Affairs. The finding could bolster arguments for a controversial Medicare proposal to lower spending for drugs provided in physicians' offices, said the lead author of the study. 

The monthly prices for orally administered cancer drugs rose about 5 percent a year above the rate of inflation, University of Washington researchers said in their paper. This trend isn't abating, although the number of cancer pills being developed by drugmakers is growing, wrote Caroline S. Bennette, a researcher at the University of Washington in Seattle, and her colleagues. New approaches will be needed to reduce spending, according to the researchers.

"Our findings therefore suggest that competition is unlikely to meaningfully rein in the escalating costs of oral anticancer drugs in the near future," they wrote. "Instead, potential policies to address these trends could seek to link reimbursement rates or coverage mandates with a metric of comparative clinical value or benefit."

Officials at the Centers for Medicare and Medicaid Services (CMS) outlined steps for considering such an approach in a draft proposal unveiled last month that would change how the program pays for drugs administered in doctors' offices. Medicare spends more than $20 billion a year for medicines covered through its Part B outpatient program, which covers services provided in doctors' offices such as injections and infusions of chemotherapy.

The research published in Health Affairs focuses on oral treatments, such as the Gleevec pill that can cost about $90,000 a year. The cancer pills would be covered by Medicare's Part D drug plans, since people take them on their own.

"I'm impressed with the proposal to test new Medicare Part B prescription drug models. I'd be interested to see Congress or CMS potentially encouraging similar evaluations among Medicare Part D plans for anticancer drugs," Bennette said in an email to CQ HealthBeat.  "I think a key part of this would be facilitating indications-based pricing."

CMS has attracted both strong support and fierce dissent for its outpatient drug proposal. Editorials in the Washington Post and New York Times praised Medicare for putting forward the Part B drug model. AARP and 24 other organizations also sent a letter Monday to Health and Human Services Secretary Sylvia Mathews Burwell and Acting CMS Administrator Andy Slavitt supporting the proposal.

Opposing it are many influential Republicans in Congress. Budget Committee Chairman Tom Price, R-Ga.; Rep. John Shimkus, R-Ill.; Rep. Charles Boustany Jr., R-La.; and 239 of their GOP colleagues on Monday sent a letter to Slavitt asking that the agency withdraw this proposal.

The Pharmaceutical Research and Manufacturers of America (PhRMA) and the American Medical Association, plus many medical specialty organizations, also oppose the program.

The CMS proposal calls for a shift in the months ahead in how many doctors are paid for Part B drugs. Some would continue with the current reimbursement of the reported average sales price plus a 4.3 percent premium. Others would get a premium of about 0.9 percent plus a flat fee that might be set at $16.80. A second phase of the Part B drug model calls for implementing the same kinds of value-based purchasing tools that insurers and pharmacy benefit managers already use.

In response to Bennette's paper in Health Affairs, PhRMA noted in a Monday statement that many factors can cause a drug price to fluctuate. The trade group for drugmakers also pointed out that consultant IMS Health has found net prices for brand medicines increased just 2.8 percent in 2015, down from 5.1 percent the prior year, as negotiated discounts and rebates rose sharply.

The University of Washington researchers allowed that getting Food and Drug Administration approval for additional uses for drugs might justify price increases in some cases.  "However, if the supplemental indication offers a smaller benefit for newly indicated patients than those receiving the drug under the original indication, then higher prices across the board are not justified," they wrote.

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Number of Residents Without Regular Doctor Varies by State

By Marissa Evans, CQ Roll Call

May 6, 2016 -- Patients are gaining more access to health insurance under the federal health law, but often haven't found the right provider or been diligent about making appointments to see them, according to a survey by the Centers for Disease Control and Prevention.

Nevada had the most people who did not have a usual place of medical care at 26.7 percent, according to the survey released Thursday. Idaho, Oregon, Texas, and Wyoming rounded out the top five states with the highest rates of people without a usual place to receive medical care. Vermont had the lowest rate of residents without a consistent provider at 2.8 percent of residents. Delaware, Hawaii, Massachusetts, and Wisconsin were also part of the five states with the least number of people without a provider.

"Many factors likely influence rates of health care utilization, and rates may change as the length of time since Affordable Care Act implementation increases," according to the report. "Although it is difficult to determine the complex reasons for differences in state health care utilization rates, these estimates can serve as a baseline for these measures."

Just because patients had a provider does not mean they saw them. The report found that in 2014, 34 percent of patients had not seen or talked to a general doctor in the last year. About 48.1 percent of Montanans did not see their doctor in the previous year. South Dakota, Nevada, New Mexico, and South Carolina residents also were among the least likely to visit a doctor.

The study found Medicaid expansion influenced the number of people who had access to care and used it but the percentage variations were minimal. Under the federal law, states can allow people with incomes up to 138 percent of the federal poverty line to be part of Medicaid. The federal government picks up 100 percent of the cost through 2016. Starting in 2017, states that expanded will have to start chipping in a portion of the cost. States must cover 10 percent of the cost by 2020. Thirty states and the District of Columbia are participating in the expansion.

In 2014, among residents living in states that had not expanded the Medicaid program, 35 percent did not see or talk to a primary care doctor during the year, according to the report, compared to 33 percent of residents in states that had expanded. In addition, 18.2 percent of non-expansion state residents did not have a usual place of care, compared to 16.6 percent of those in states that expanded.

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