Will Medicare Reform be a Republican Obamacare?

By Shailin Thomas

As the health care community waits with bated breath to see what will become of the Affordable Care Act under the Trump administration, Republicans in Congress have set their sites on another health-related initiative that has been on their wish list for years: reforming Medicare. While Trump promised throughout his campaign not to change the fundamental ways in which Medicare works — in part to appeal to older voters, who overwhelming would like the program to stay as it is — shortly after the election, “modernizing Medicare” appeared as a priority on the transition website for the new administration.

The reform many Republicans are pushing for — championed by Speaker of the House Paul Ryan (R-WI) — is privatization along the lines of Medicare Advantage. Instead of providing for full insurance coverage through the government, as traditional Medicare currently does, Ryan’s proposal would have eligible patients purchase insurance from private companies with financial assistance from the government. The theory is that by having private insurers provide coverage, Medicare will capture efficiencies of the private market, while simultaneously offering consumers more choice in the coverage they receive.

After Paul Ryan first unveiled this plan in 2011, the Kaiser Family Foundation released a report detailing the significant fiscal problems with this “modernized” vision of Medicare. According to the Foundation’s analysis, the average out-of-pocket expense for beneficiaries increase from $5,630 under the current system to $12,500. The reason for this increase, according to the Congressional Budget Office, is that providing coverage is actually more expensive for a private insurer than it is for the government.  The proposal faces other economic challenges as well, and ironically, some of them stem from its close resemblance to Obamacare.

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REGISTER NOW (1/23/17)! PFC’s 5th Annual Health Law Year in P/Review

The Fifth Annual Health Law Year in P/Review symposium will feature leading experts discussing major developments during 2016 and what to watch out for in 2017. The discussion at this day-long event will cover hot topics in such areas as health policy under the new administration, regulatory issues in clinical research, law at the end-of-life, patient rights and advocacy, pharmaceutical policy, reproductive health, and public health law.

This year’s Health Law Year in P/Review is sponsored by the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School, Harvard Health Publications at Harvard Medical School, Health Affairs, the Hastings Center, the Program On Regulation, Therapeutics, And Law (PORTAL) in the Division of Pharmacoepidemiology and Pharmacoeconomics at Brigham and Women’s Hospital, and the Center for Bioethics at Harvard Medical School, with support from the Oswald DeN. Cammann Fund. 

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Your Weekly Reminder That FDA Approval and Insurance Coverage Are Often Linked

In recent days, it seems like the din of voices arguing that the FDA should approve pharmaceuticals more speedily and on less evidence has grown louder.  It is a central theme of the 21st Century Cures Act, which the House may vote on today and which I seemingly will never finish blogging about (most recent post here, with links to previous ones).  It is the premise that underlies other legislation recently introduced into Congress.  And it was the topic of a Wall Street Journal opinion piece just last week.  In the view of these critics, sure, the FDA has some role to play in ensuring safety and some basic level of effectiveness.  But the current standard for demonstrating effectiveness is, in their view, much too strict.  Instead, we ought to approve drugs more quickly and allow insurance companies and physicians to decide which products have enough supporting evidence to merit reimbursement.

Here’s the problem: that is not the way we’ve set up the system.  FDA approval is often linked to insurance coverage.  Medicaid must cover essentially all FDA-approved drugs, and Medicare similarly has limited ability to decline to cover FDA-approved drugs.  Even private insurers are generally required to cover at least some prescription drugs, although in some cases this may be on a more limited basis.  Take Exondys, a drug that recently won accelerated approval from the FDA for the treatment of a small number of patients with Duchenne Muscular Dystrophy (I’ve blogged about Exondys here).  Because Exondys was approved based on a surrogate endpoint and not actual evidence of clinical improvement (Exondys’ label actually says that “[a] clinical benefit of Exondys 51 has not been established”), it would seem to be a poster child for these arguments about the FDA.  Allow insurers to cover it or not as they choose, since we don’t yet know if it works.  Yet many insurers are legally required to pay the $300,000 a year on average the company is charging for the drug.

I’ll put it another way.  If we lower the FDA’s approval standards and do nothing to coverage requirements, we will all almost certainly end up paying more money for drugs that don’t work.  The pronoun “we” here is important: because an enormous amount of these expenditures will come through Medicare and Medicaid, which are funded by all of us as taxpayers, it costs all of us financially when ineffective or unsafe drugs are approved by the FDA.  Many people who argue for a decrease in FDA standards also believe that we spend too much through Medicare and Medicaid, yet they don’t seem to put these two pieces of the argument together.

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Code Red

By Gregory M. Lipper

“Not Just Obamacare: Medicaid, Medicare Also On GOP’s Chopping Block,” write Jonathan Cohn and Jeffrey Young in The Huffington Post:

Donald Trump and Republican leaders in Congress have made clear they are serious about repealing Obamacare, and doing so quickly. But don’t assume their dismantling of government health insurance programs will stop there.

For about two decades now, Republicans have been talking about radically changing the government’s two largest health insurance programs, Medicaid and Medicare.

Check out the full, detailed article here.

Greg Lipper (@theglipper) is a partner at Clinton Brook & Peed and the former Senior Litigation Counsel at Americans United for Separation of Church and State.

CMS Prohibits Arbitration Clauses in Long-Term Care Facility Contracts

By Wendy S. Salkin

On Wednesday, the Centers for Medicare and Medicaid (CMS)—an agency within the Department of Health and Human Services (HHS)—released a final rule that “will revise the requirements that Long-Term Care facilities [LTCs] must meet to participate in the Medicare and Medicaid programs” (1). (Almost all LTCs receive funds from Medicare or Medicaid.) This is the first time that these requirements have been “comprehensively reviewed and updated since 1991” (6)—that is, in the past 25 years. One of the most striking changes to the regulation is found in §483.65, where CMS “require[es] that facilities must not enter into an agreement for binding arbitration with a resident or their representative until after a dispute arises between the parties” (12) which means that CMS is “prohibiting the use of pre-dispute binding arbitration agreements” (12). Among the reasons provided by CMS for this change is a recognition of the notable power differential between LTCs and their residents:

There is a significant differential in bargaining power between LTC facility residents and LTC facilities. LTC agreements are often made when the would-be resident is physically and possibly mentally impaired, and is encountering such a facility for the first time. In many cases, geographic and financial restrictions severely limit the choices available to a LTC resident and his/her family. LTC facilities are also, in many cases, the resident’s residence. These facilities not only provide skilled nursing care, but also everything else a resident needs. Many of these residents may reside there for a prolonged period of time, some for the rest of their lives. Because of the wide array of services provided and the length of time the resident and his/her family may have interactions with the LTC facility, disputes over medical treatment, personal safety, treatment of residents, and quality of services provided are likely to occur. Given the unique circumstances of LTC facilities, we have concluded that it is unconscionable for LTC facilities to demand, as a condition of admission, that residents or their representatives sign a pre-dispute agreement for binding arbitration that covers any type of disputes between the parties for the duration of the resident’s entire stay, which could be for many years. (402-403)

As The New York Times reported, when the rule was first proposed in July 2015, it was “aimed at improving disclosure.” But, this final version of the rule “went a step further than the draft, cutting off funding to facilities that require arbitration clauses as a condition of admission.”

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UPDATED – Dental Hygiene Practitioners: Why they’re needed in Massachusetts, and why the amendment failed

Special guest post from Kelly Vitzthumoral health policy analyst at Health Care For All, a Massachusetts health policy and consumer advocacy organization. This post has been updated to reflect the non-inclusion of the Dental Hygiene Practitioner amendment in the final version of Massachusetts’ FY 2017 budget.

Former U.S. Surgeon General David Satcher described poor oral health as “a Silent Epidemic.” Oral health diseases are by and large preventable, and yet they are incredibly widespread. Disadvantaged and marginalized populations suffer disproportionately from poor oral health, and children are especially vulnerable. Many low-income individuals and families are priced out of needed care and struggle to find providers who accept Medicaid.

Though Massachusetts is a leader in health care and health reform, oral health is still often overlooked in state health policy discussions. Though MassHealth – Massachusetts’ Medicaid program – covers 40% of the state’s children, most dentists do not accept it. A shocking proportion of children have untreated oral decay, which affects their ability to eat, learn, and play. A full tenth of the population currently lives in a federally-designated Dental Health Professional Shortage Area (DHPSA), and emergency department visits for preventable dental conditions cost the state millions annually. Continue reading

Zika May Place Burden On Medicaid

Emma Sandoe, 2015-2016 Petrie-Flom Student Fellow

Full post at Health Affairs Blog.

Aedes_Mosquito_300x300Congress is currently debating the level of federal funding that should be made available to fight to reduce the spread of Zika. Administration officials working with local public health agencies on the ground have recently expressed fear that the funding levels are insufficient to prevent the disease from spreading. What is one overlooked concern? State budgets.

Medicaid is jointly funded by states and the federal government and serves as a key financer of health care services if Zika spreads across the country this summer. The Centers for Medicare and Medicaid Services (CMS) recently released a bulletin to state Medicaid Directors outlining how Medicaid funds can be used to both prevent the spread of Zika and treat people infected by the disease and infants born with microcephaly. With Medicaid covering roughly half of the births in America today, the program will finance many pregnancies potentially affected by Zika. […]

Read the full post at the Health Affairs Blog!

How Not to Debate Health Care Reform

Editor’s Note: This post was originally published on May 12 with portions of the essay missing. The corrected text is below.

By Ted Marmor

Presidential campaigns in the United States are not typically fought over competing manifestos, with policy details set out in reasonably clear language. Rather they are disputes among candidates about the state of the country and what values—or aspirational visions—they endorse.  And, for at least a century, most American debates about health care reform have been dominated by ideological slogans, misleading claims about financing, and mystifying labels. Republicans have exemplified the mystification this year, repeatedly mislabeling Obamacare as socialized medicine and falsely claiming it a “takeover of American medicine.”

In fairness, the Democratic primaries have generated their own version of mystification. The two candidates do agree on the goals of universal health insurance. But clarity ends there. The Clinton campaign has emphasized incremental reform possibilities and criticized Senator Sanders’ proposal of Medicare for All as unrealistic. Sanders, by contrast, has offered a compelling conception of a fairer and less expensive version of what Americans want, but no incremental steps to get to it.

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When Global Health Norms Meet Medicaid

Special guest post by Nicholas J. Diamond

Medicaid is currently facing a timely, although largely underappreciated, challenge: rebalancing Medicaid long-term services and supports (LTSS). For context, LTSS refer to a broad range of paid and unpaid medical and personal care assistance for individuals who experience difficulty completing self-care tasks due to aging, chronic illness, or disability. According to 2013 estimates, there are approximately 12 million individuals in the U.S. who rely on LTSS, mostly paid for through Medicaid, with a projected increase to approximately 27 million individuals by 2050.

Medicaid has a historical structural bias toward institutional care, such as nursing homes, as opposed to home and community-based services (HCBS), such as home health aides, personal care, chore services, supported employment, rent and food for live-in caregiver, and nonmedical transportation, among many others. Medicaid LTSS rebalancing, therefore, shifts spending away from institutional settings and toward HCBS, which is less expensive and generally preferred by beneficiaries. States may provide HCBS through a complex panoply of federal statutory authorities, including waiver authorities, which afford states wide latitude in designing programs. As you might imagine, with flexibility comes significant variations in how states provide HCBS, which specific types of HCBS they provide, and whether, for instance, cost containment strategies available under certain authorities negatively impact access to needed services. Continue reading

Prior Authorization Policies for Pediatric ADHD Medication Prescriptions

According to the Centers for Disease Control and Prevention, more than 6.4 million US children 4-17 years old have been diagnosed with attention-deficit/hyperactivity disorder (ADHD). The percentage of US children diagnosed with ADHD has increased by 3-5 percent per year since the 1990s. Relatedly, the percentage of children in this age group taking ADHD medication also has increased by about 7 percent per year from 2007-2008 to 2011-2012.

In response, some state Medicaid programs have implemented policies to manage the use of ADHD medications and guide physicians toward best practices for ADHD treatment in children. These policies include prescription medication prior authorization requirements that restrict approvals to patients above a certain age, or require additional provider involvement before approval for payment is granted.

In a new article published this afternoon in MMWR, CDC researchers compared Medicaid and employer-sponsored insurance (ESI) claims for “psychological services” (the procedure code category that includes behavior therapy) and ADHD medication among children aged 2–5 years receiving clinical care for ADHD.

The article references a newly released LawAtlas map that examines features of state Medicaid prior authorization policies that pertain to pediatric ADHD medication treatment, including applicable ages, medication types, and criteria for approval.

States with Medicaid programs that have a policy that requires prior authorization for ADHD medications prescribed to children younger than 28 years old.

States with Medicaid programs that have a policy that requires prior authorization for ADHD medications prescribed to children younger than 28 years old.

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CPC+: Opportunities and Challenges for Primary Care Transformation

In recent days there has been a lot of action around CMS’ Comprehensive Primary Care Initiative (CPCI). First, the next phase of the program was announced, expanding the program in size and scope. Several days later, an evaluation of the first two years of the initiative was published in the New England Journal of Medicine.

The original CPCI demonstration began in October 2012 and included 502 practices in seven regions (states or smaller areas within states). The regions were determined largely by payer interest, as commercial and state health insurance plans are essential partners in this multi-payer model. The CPCI involves risk-stratified care management fees for participating practices and the possibility of sharing in net savings to Medicare (if any). In turn, the practices must invest in practice redesign around: access and continuity, chronic disease management, risk-stratified care management, patient and caregiver engagement, and care coordination across a patient’s providers, e.g., managing care transitions and ensuring close communication and collaboration.

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What we know about how the structure of Marketplaces and Medicaid expansion affect enrollment

By Emma Sandoe

It is fairly obvious that states that expanded Medicaid saw greater enrollment in Medicaid after the opening of the Health Insurance Marketplaces in October 2013 than states that did not expand. CMS has been releasing monthly reports that indicate just that.

This also corresponds to the reductions in uninsurance. States that expanded Medicaid clearly have seen greater reductions in uninsurance than states that elected not to expand. The US Census Bureau recently posted the maps below in their blog “Research Matters.” Here is a map of the uninsurance reductions:

With the exceptions of states like Massachusetts that have already high levels of Medicaid expansion, it’s clear which states have chosen to expand Medicaid and which ones have not, but if you need the context, here is a map of states that have expanded Medicaid:

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Additional Troubles for Theranos

By Katherine Kwong

The onslaught of bad news for Theranos, the start-up laboratory services company plagued with troubles since last October, continued this week with a new round of reports and press coverage. First, on March 28, the Journal of Clinical Investigation published an article that found that Theranos’ tests tended to produce more irregular results than those of two other laboratory services companies. Then, on March 31, an inspection report by the Centers for Medicare and Medicaid Services was released, revealing numerous problems at Theranos that led to quality control problems, possibly leading to inaccurate test results for patients. The article and report both raise additional questions about Theranos’ claims and long-term viability – a steep letdown from early hype about the company, which promised to revolutionize the laboratory testing industry. The story of Theranos’ troubles highlights how scientific flaws and regulatory mishaps can lead to serious problems for companies seeking to innovate in the health sciences space.

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The Unintended Uninsured: The Affordable Care Act’s Coverage Gap

[Cross posted from the Harvard Law and Policy Review]

By Julian Polaris

This is a golden age for access to healthcare in America. In 2015, over 90% of Americans had health coverage, the highest insurance ratein the 50 years the federal government has collected insurance data. This astonishing progress is due in large part to the Affordable Care Act (ACA): President Obama recently announced that 20 million people are covered thanks to the ACA. The victory is bittersweet, however: had the ACA been implemented as designed, an additional three million people would have insurance today. This is the story of the “coverage gap,” a crack in the ACA created by the Supreme Court and left unrepaired in nineteen states. A crack so wide that three million low-income people have fallen through it.

The ACA, as originally passed, aimed to increase access to health coverage in two main ways. First, the Act expanded Medicaid, the public health plan for people with low income. Previously, most states had limited Medicaid eligibility to specific groups like children and pregnant women. The ACA enlarged and standardized the Medicaid program to cover all people who earn up to 138% of the federal poverty level (FPL). The federal government picks up 90% of the cost of healthcare services for newly eligible beneficiaries, whereas costs in traditional Medicaid are split closer to 50-50.

Second, the ACA established the health insurance “exchanges,” portals in each state where consumers can shop for standardized plans that aren’t tied to a particular employer. Federal tax credits are available to subsidize exchange coverage for those earning 100 to 400% of the FPL. Continue reading

Medicare’s Coming Battle Over Drug Reimbursement

By Zack Buck

Following months of news coverage highlighting how American drug prices are “out of control,” the Centers for Medicare and Medicaid Services (CMS) seems to have been spurred into action. Last week, CMS proposed a new reimbursement regime for drugs paid for by Medicare Part B (drugs administered on an outpatient basis).

Addressing the concerns that the existing reimbursement formula may encourage physicians to rely on more expensive drugs, the proposal calls for testing new payment models designed to save money. The most striking of these changes calls for altering the “average sales price plus 6 percent” reimbursement formula (the amount Medicare pays doctors to reimburse them for drugs) to a formula which would pay doctors the average sales price plus 2.5 percent, plus a fee of $16.80 per drug per day. Further, the proposal also calls for testing indications-based and reference pricing. If implemented, all of these tools would be likely to produce cost savings for Medicare Part B, which spends $20 billion annually on drugs.

According to the New York Times, the proposal “touched off a tempest,” as physicians, politicians, and drug manufacturers criticized  the proposed changes. The American Society of Clinical Oncologists decried the “heavy-handed” government intervention that would adversely affect seniors’ quality of care. Senator Orrin G. Hatch (R-UT) implied that the change would allow “unelected bureaucrats” to usurp medical judgment, with negative effects on access to care. And a statement from the Pharmaceutical Research and Manufacturers of America (PhRMA) noted that the proposal “puts Medicare patients who rely on these medicines at risk.”

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The Economics Of Paying For Value

This new post by Nancy Beaulieu, Michael Chernew, Soren Kristensen, and Meredith Rosenthal appears on the Health Affairs Blog as part of a series stemming from the Fourth Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 29, 2016.

The notion that the American health care system should transition from paying for volume to paying for value has become nearly ubiquitous. There is a broad consensus that health care providers should be paid more if they deliver higher value care (i.e. care that results in substantial health gains per dollar spent).

These beliefs have led to a proliferation of value-based payment programs in both public and private sectors. For example, at the beginning of 2015, Sylvia Burwell announced the federal government’s commitment to tie 90 percent of fee-for-service Medicare payments to quality or value measures by 2018. In January of 2015, a newly formed alliance of health care providers, insurers, and employers called the Health Care Transformation Task Force committed to shifting 75 percent of their business to contracts that provide incentives for quality and efficiency by 2020.

The details of existing value or quality-based payment programs vary enormously and without regard to any conceptual framework. For example, they vary in the size of incentives and the measures used. They also vary in whether quality payments are contingent on financial savings and whether the value-based payment model is budget neutral. Even the term value is inconsistently defined. […]

Read the full post here.

Medicaid Expansion Through Section 1115 Waivers: Evaluating The Tradeoffs

This new post by Rachel Sachs appears on the Health Affairs Blog as part of a series stemming from the Fourth Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 29, 2016.

Nearly six years after the passage of the Affordable Care Act (ACA), health law and policy experts continue to painstakingly track the progress of the Act’s Medicaid expansion. The original intention of the ACA was to expand Medicaid in every state, leading to gains in coverage by all individuals below a certain income.

However, the Supreme Court’s 2012 ruling in National Federation of Independent Business v. Sebelius(NFIB) invalidated the original expansion as unconstitutionally coercive, effectively making the Medicaid expansion voluntary for states. As of this blog post, just 32 states including DC have expanded Medicaid pursuant to the ACA.

Most of the states that have expanded Medicaid thus far have done so through the standard procedure, following the statutory guidelines set forth by the ACA and the Centers for Medicare & Medicaid Services (CMS) and incorporating the newly eligible enrollees into their existing programs as a new beneficiary group. But some states have successfully negotiated customized expansions with CMS through the use of the Section 1115 waiver process, seeking to expand Medicaid only on their terms. […]

Read the full post here.

What is the IMD Exclusion that everyone is talking about?

By Emma Sandoe

A less covered provision of Medicaid law that has been in existence since the establishment of the program in 1965 and has been making some news over the past several months, the IMD exclusion is a provision that restricts Medicaid payments for certain institutions, potentially reducing the access to available services for low-income individuals with mental illnesses. If you haven’t been hearing everyone talking about it… well, I guess you talk with fewer health policy nerds than I do.

What is the IMD exclusion?

According to the good people at the National Alliance on Mental Illness (NAMI), the IMD exclusion can be defined as: Institutions for Mental Disease (IMDs) are inpatient facilities of more than 16 beds whose patient roster is more than 51% people with severe mental illness. Federal Medicaid matching payments are prohibited for IMDs with a population between the ages of 22 and 64. IMDs for persons under age 22 or over age 64 are permitted, at state option, to draw federal Medicaid matching funds.

Why does Medicaid have this provision?

This is because when Medicaid first started, states were responsible for the care of people with severe mental illness. States cared for many people with mental illnesses in a custodial setting; essentially states often were providing people a place to sleep but no mental health services. When drafting the Medicaid bill, the federal government did not want to supplant this existing state program with federal Medicaid funding. Additionally, while President Johnson was notorious for not spending a large amount of time on the cost of Medicare, the addition of these services would add $1.8 billion to the Medicaid budget, nearly doubling the first year price tag.

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NHPC 2016: Provider Engagement Can Unify Diverse Payment Reform Efforts

By Cornelia Hall, Master of Public Policy Candidate, Harvard Kennedy School, Class of 2017

This is the first entry in a three-part series on the AcademyHealth National Health Policy Conference, held in Washington, DC, on February 1-2, 2016. 

At AcademyHealth’s 2016 National Health Policy Conference earlier this month, payment reform was a pervasive theme.  Its prominence was not surprising.  Indeed, in early 2015, HHS Secretary Sylvia Burwell announced the agency’s goal to have 30% of traditional, fee-for-service Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% by the end of 2018.  As the current sea change in health care moves the system towards these goals, the conference’s panelists explored various aspects of the transition to value-based payment. Speakers who discussed the issue included leaders in government, clinical practice, and private insurance.  They sent an overarching message that payment reform efforts will continue to take a variety of forms — on parallel tracks with cross-cutting themes — rather than a single approach.  Representatives from provider organizations particularly stressed the necessary groundwork for these efforts to be effective.

The Center for Medicare and Medicaid Innovation (CMMI) under the federal Centers for Medicare & Medicaid Services (CMS) is operating dozens of payment- and quality-focused models and demonstrations across the country.  The breadth of payment models and their varying degrees of success represent different approaches to health care reform, such as population- and episode-based payment.  On his panel, CMMI Deputy Director Dr. Rahul Rajkumar noted that this breadth is designed to appeal to diverse providers that differ in type and readiness for payment reform.  Indeed, a health care system that has operated for decades with multiple payers, little care coordination, fragmented use of technology, and inconsistent definitions of quality care is undergoing monumental transformation.  The transition from fee-for-service to value-based payment thus involves some experimentation to identify the most effective approach. Continue reading

Update: Another Wave of ICD Settlements

By Zack Buck

There has been an update to a story I recently blogged about here.

As announced by the Department of Justice (DOJ) on Wednesday, another 51 hospitals have settled allegations that the hospitals placed implantable cardioverter defibrillators (ICDs) in the chests of patients without complying with Medicare’s mandatory waiting periods.  These 51 settlements amount to $23 million, meaning that the DOJ’s ICD review has now has resulted in settlements with more than 500 hospitals totaling more than $280 million.

According to the DOJ, this is the final stage of the investigation, concluding an initiative that has highlighted the tension that exists between fraud enforcement, medical necessity, and reimbursement standards (recent articles here, here, and here).