Medicare Advantage Might Have Potential — If Companies Play Fair

By Shailin Thomas

Medicare Advantage was introduced as a mechanism for capturing some of the oft-extolled efficiencies of the private health insurance market. Instead of paying providers for services directly, as in traditional Medicare, the government pays Medicare Advantage insurers a predetermined, risk-adjusted amount of money per patient to cover all medical expenses for the year. The risk adjustment ensures that companies insuring Medicare Advantage patients with chronic diseases — who will likely need more intensive, expensive care — receive additional funds to help cover those costs. For each qualifying condition a patient has, the Medicare Advantage plan receives on average an additional $3000 annually.

While the risk adjustment of Medicare Advantage payments was well intentioned and economically rational, it appears to have opened up an avenue for significant abuse on the part of Medicare Advantage insurers. The Department of Justice recently joined a lawsuit against UnitedHealth, a large provider of Medicare Advantage plans, for allegedly defrauding the government out of hundreds of millions, if not billions, of dollars. The complaint alleges that UnitedHealth “upcoded” its risk-adjustment claims by submitting for conditions patients did not actually have and refusing to correct false claims when it discovered or should have discovered them. In essence, the company allegedly realized it could extract more money out of the government by making the patients it covers appear sicker than they actually are, and took full advantage of that.

Continue reading

Manufacturers Of Biosimilar Drugs Sit Out The ‘Patent Dance’

This new post by Claire Laporte appears on the Health Affairs Blog in a series stemming from the Fifth Annual Health Law Year in P/Review event held at Harvard Law School on Monday, January 23, 2017.

Believe it or not, the Patient Protection and Affordable Care Act (Obamacare, or here, ACA) has intellectual property provisions. In addition to establishing mandates, subsidies and insurance exchanges, the ACA also created a new pathway for the approval of biosimilar drugs, which are akin to generic drugs. That pathway appears in a corner of the ACA that has its own title: the Biologics Price Competition and Innovation Act (BPCIA). The BPCIA is rich with intellectual property (IP) provisions that are now the subject of litigation in the Supreme Court.

Background: Generic Drugs And Biosimilars

Many of us take generic drugs for granted, but we have them only because the Hatch-Waxman Act (1984) provided an abbreviated pathway by which FDA could approve them. Under this pathway, a generic drug could be approved based on the safety and efficacy of the branded drug, plus a showing by the generic that it was essentially identical to the branded drug. This pathway also included provisions by which generic drug manufacturers could challenge the validity of patents protecting the branded drug. […]

Read the full post here.