Medicare Advantage Riding High As New Insurers Flock To Sell To Seniors

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Source: Kaiser Health News

Health care experts widely expected the Affordable Care Act to hobble Medicare Advantage, the government-funded private health plans that millions of seniors have chosen as an alternative to original Medicare.

To pay for expanding coverage to the uninsured, the 2010 law cut billions of dollars in federal payments to the plans. Government budget analysts predicted that would lead to a sharp drop in enrollment as insurers reduced benefits, exited states or left the business altogether.

But the dire projections proved wrong.

Since 2010, enrollment in Medicare Advantage has doubled to more than 20 million enrollees, growing from a quarter of Medicare beneficiaries to more than a third.

“The Affordable Care Act did not kill Medicare Advantage, and the program looks poised to continue to grow quite rapidly,” said Bill Frack, managing director with L.E.K. Consulting, which advises health companies.

And as beneficiaries get set to shop for plans during open enrollment — which runs from Monday through Dec. 7 — they will find a greater choice of insurers.

Fourteen new companies have begun selling Medicare Advantage plans for 2019, several more than a typical year, according to a report out Monday from the Kaiser Family Foundation. (KHN is an editorially independent part of the foundation.)

Overall, Medicare beneficiaries can choose from about 3,700 plans for 2019, or 600 more than this year, according to the federal government’s Centers for Medicare & Medicaid Services.

CMS expects Medicare Advantage enrollment to jump to nearly 23 million people in 2019, a 12 percent increase. Enrollees shopping for new plans this fall will likely find lower or no premiums and improved benefits, CMS officials say.

With about 10,000 baby boomers aging into Medicare range each day, the general view of the insurance industry, said Robert Berenson, a Medicare expert with the nonpartisan Urban Institute, “is that their future is Medicare and it’s crazy not to pursue Medicare enrollees more actively.”

Bright Health, Clover Health and Devoted Health, all for-profit companies, began offering Medicare Advantage plans for 2018 or will do so for 2019.

Mutual of Omaha, a company owned by its policyholders, is also moving into Medicare Advantage for the first time in two decades, providing plans in San Antonio and Cincinnati.

Some nonprofit hospitals are offering Medicare plans for the first time too, such as the BayCare Health system in the Tampa, Fla., area.

While Medicare beneficiaries in most counties have a choice of several plans, enrollment for years had been consolidated into several for-profit companies, primarily UnitedHealthcare, Humana and Aetna, which have accumulated just under half the national enrollment.

These insurance giants are also expanding into new markets for next year. Humana in 2019 will offer its Medicare HMO in 97 new counties in 14 states. UnitedHealthcare is moving into 130 new counties in 13 states, including for the first time Minnesota, its headquarters for the past four decades.

Extra Benefits

Seniors have long been attracted to Advantage plans because they often include benefits not available with government-run Medicare, such as vision and dental coverage. Many private plans save seniors money because their premiums, deductibles and other patient cost sharing are lower than what beneficiaries pay with original Medicare. But there is a trade-off: The private plans usually require seniors to use a restricted network of doctors and hospitals.

The federal government pays the plans to provide coverage for beneficiaries. When drafting the ACA, Democratic lawmakers targeted the Medicare Advantage plans because studies had shown that enrollees in the private plans cost the government 14 percent more than people in the original program.

Medicare plans weathered the billions in funding cuts in part by qualifying for new federal bonus payments available to those that score a “4” or better on a five-notch scale of quality and customer satisfaction.

Health plans also gained extra revenue by identifying illnesses and health risks of members that would entitle the companies to federal “risk-adjustment” payments. That has provided hundreds of billions in extra dollars to Medicare plans, though congressional analysts and federal investigators have raised concerns about insurers exaggerating how sick their members are.

study last year found that those risk adjustments could add more than $200 billion to the cost of Medicare Advantage plans in the next decade, despite no change in enrollees’ health.

For-profit Medicare Advantage insurers made a 5 percent profit margin in 2016 — twice the average of Medicare plans overall, according to the Medicare Payment Advisory Commission, which reports to Congress. That’s slightly better than the health insurance industry’s overall 4 percent margin reported by Standard & Poor’s.

Those profit margins could expand. The Trump administration boosted payments to Medicare Advantage plans by 3.4 percent for 2019, 0.45 percentage points higher than the 2018 increase.

Betsy Seals, chief consulting officer for Gorman Health Group, a Washington company that advises Medicare Advantage plans, said many health plans hesitated to enter that market or expand after President Donald Trump was elected because they weren’t sure the new administration would support the program. But such concerns were erased with the announcement on 2019 reimbursement rates.

“The administration’s support of the Medicare Advantage program is clear,” Seals said. “We have seen the downstream impact of this support with new entrants to the market — a trend we expect to see continue.”

Getting Consumers To Switch

Since the 1960s, Mutual of Omaha has sold Medicare Supplement policies — coverage to help beneficiaries in government-run Medicare pay the portion of costs that program doesn’t pick up. But the company only briefly entered the Medicare Advantage business once — in its home state of Nebraska in the 1990s.

“In the past 10 or 20 years it never seemed quite the right time,” said Amber Rinehart, a senior vice president for the insurer. “The main hindrance was around the political environment and funding for Medicare Advantage.”

Yet after watching Medicare Advantage enrollment soar and government funding increase, the insurer has decided now is the time to act. “We have seen a lot more stability of funding and the political tailwinds are there,” she said.

One challenge for the new insurers will be attracting members from existing companies since beneficiaries tend to stick with the same insurer for many years.

Vivek Garipalli, CEO of Clover Health, said his San Francisco-based company hopes to gain members by offering low-cost plans with a large choice of hospitals and doctors and allowing members to see specialists in its network without prior approval from their primary care doctor. The company is also focused on appealing to blacks and Hispanics who have been less likely to join Medicare Advantage.

“We see a lot of opportunity in markets where there are underserved populations,” Garipalli said.

Clover has received funding from Alphabet Inc., the parent company of Google. Clover sold Medicare plans in New Jersey last year and is expanding for 2019 into El Paso, Texas; Nashville, Tenn.; and Savannah, Ga.

Newton, Mass.-based Devoted Health is moving into Medicare Advantage with plans in South Florida and Central Florida. Minneapolis-based BrightHealth is expanding into several new markets including Phoenix, Nashville, Cincinnati and New York City.

BayCare, based in Clearwater, Fla., is offering a Medicare plan for the first time in 2019.

“We think there is enough market share to be had and we are not afraid to compete,” said Jim Beermann, vice president of insurance strategy for BayCare.

Hospitals are attracted to the Medicare business because it gives them access to more of premium dollars directed to health costs, said Frack of L.E.K. Consulting. “You control more of your destiny,” he added.

DOJ Approves $69B CVS-Aetna Merger with Part D Divestiture

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Source: Fierce Healthcare

The Department of Justice (DOJ) approved a $69 billion CVS-Aetna merger on Wednesday after Aetna agreed to sell off its Part D business.

The Part D divestiture was a condition of the merger’s approval, according to the DOJ. Late last month, Aetna agreed to sell its 2.2 million Part D business to WellCare.

Antitrust regulators said the divestiture would “fully resolve the Department’s competitive concerns.” The DOJ along with attorneys general in five states filed a proposed settlement that approves the deal on the condition that Aetna sell off its Part D plans.

“Today’s settlement resolves competition concerns posed by this transaction and preserves competition in the sale of Medicare Part D prescription drug plans for individuals,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in a statement. “The divestitures required here allow for the creation of an integrated pharmacy and health benefits company that has the potential to generate benefits by improving the quality and lowering the costs of the healthcare services that American consumers can obtain.”

In a complaint filed to U.S. District Court for the District of Columbia, DOJ attorneys argued that without the divestiture, the combined company would cause “anticompetitive effects, including increased prices, inferior customer service, and decreased innovation” in the 22 states where Aetna sells Part D plans. The court must approve the settlement in order for it to move forward.

“DOJ clearance is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer healthcare experience,” CVS Health President and Chief Executive Officer Larry J. Merlo said in a statement. “We are pleased to have reached an agreement with the DOJ that maintains the strategic benefits and value creation potential of our combination with Aetna. We are now working to complete the remaining state reviews.”

Part D consolidation was the primary issue raised among groups opposing the merger, including the American Medical Association and the California Insurance Commissioner.

Trump Signs New Laws Aimed at Drug Costs and Battles Democrats on Medicare

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Source: New York Times

President Trump signed bipartisan legislation on Wednesday that would free pharmacists to tell consumers when they could actually save money by paying the full cash price for prescription drugs rather than using health insurance with large co-payments, deductibles and other out-of-pocket costs.

The legislation on gag clauses has been praised by lawmakers in both parties, but the signing was nearly eclipsed on Wednesday by a separate health care furor: Mr. Trump asserted in an essay in USA Today that Democrats supporting “Medicare for All” would wreck the program for older Americans, infuriating Democrats who said he was lying to millions of Americans.

“Democrats would gut Medicare with their planned government takeover of American health care,” Mr. Trump said, and he assailed Democrats as “radical socialists.”

The back-and-forth over health care showed how prominent the issue has become in the midterm election campaigns. As the parties were coming together on prescription drug costs and fighting over Medicare, the Senate deadlocked on Wednesday over a Democratic proposal to block the expansion of cheap “short term” health insurance policies that do not have to cover maternity care or pre-existing conditions, a top priority of Mr. Trump’s.

Democrats, hoping to regain control of the Senate, had pushed for the vote to put Republicans on the record as opposing protections for people with pre-existing conditions.

“The Trump administration has expanded junk insurance plans,” said Senator Tammy Baldwin, Democrat of Wisconsin, who led the effort. “These plans are cheap for a reason. They do not have to provide essential health benefits like hospitalization, prescription drugs and maternity care.”

The agreement over ending the gag clauses showed how Congress, despite all the partisan rancor, can still get things done. Pharmacists around the country say they have often been forbidden to share information on drug pricing with customers. The restrictions, they say, have been imposed by companies that manage drug benefits for insurers and employers.

The legislation will “completely end these unjust gag clauses once and for all,” Mr. Trump said.

He signed two bills. One, introduced by Senator Susan Collins, Republican of Maine, bans gag clauses in commercial health insurance, including coverage offered by employers and plans bought by individuals and families on their own.

The other bill, introduced by Senator Debbie Stabenow, Democrat of Michigan, applies to outpatient drug coverage in Medicare, whether provided by the traditional fee-for-service program or by private Medicare Advantage plans.

“Insurance is intended to save consumers money,” Ms. Collins said. “Gag clauses do the opposite. They prevent pharmacists from telling patients how to pay the lowest possible price for their prescription drugs.”

Lawmakers were not so sanguine about the president’s attack on Democrats over Medicare. Senator Bernie Sanders of Vermont, the author of the Medicare for All plan supported by at least 15 Democratic senators and more than 100 House Democrats, said Mr. Trump’s broadside was full of falsehoods.

“Our proposal wouldn’t cut benefits for seniors,” Mr. Sanders said. “In fact, we expand benefits. Millions of seniors today cannot afford the dental care, vision care or hearing aids they desperately need. Our proposal covers them. In addition, Medicare for All would eliminate deductibles and co-pays for seniors and significantly lower the cost of prescription drugs.”

Mr. Trump and members of Congress from both parties have bewailed the high cost of many drugs. But aside from the bills signed Wednesday, Congress has not done much to address the issue this year.

Steven F. Moore, whose family owns Condo Pharmacy in Plattsburgh, N.Y., said the new federal laws would be “a big help.” The restrictions on pharmacists’ ability to discuss prices with patients are “incredibly frustrating,” he said.

The clauses force pharmacists to remain silent as, for example, consumers pay $125 under an insurance plan for an influenza drug that would have cost $100 if purchased with cash.

Representative Earl L. Carter, Republican of Georgia, also hailed approval of the legislation.

“As a pharmacist for more than 30 years, there were many times when I was prevented from telling my patients that there was a cheaper option because of a gag clause,” said Mr. Carter, known as Buddy.

Lobbyists for pharmacy benefit managers did not fight the legislation and suggested that gag clauses were dying out.

Mark Merritt, the president and chief executive of the Pharmaceutical Care Management Association, which represents drug benefit managers, said: “We don’t condone the use of gag clauses. It has occurred on rare occasions, but it’s an outlier practice that we oppose.”

Pharmacists tell a different story. They say gag clauses have been common for years. Hugh Chancy, a pharmacist who owns five community drugstores in southern Georgia, said his company had been reprimanded by a pharmacy benefit manager for telling customers when it would be cheaper to pay for medicines without using insurance.

The legislation signed Wednesday also includes a provision to combat agreements between drug makers that stifle competition by delaying the marketing of lower-cost copycat versions of expensive biotechnology medicines. Such biologic medicines account for a rapidly growing share of drug spending.

Under the new law, manufacturers of the original product and the copy, known as a biosimilar, will have to report such agreements to the Federal Trade Commission, which can challenge them as violations of antitrust laws. The agreements are known as pay-for-delay deals because the branded drug company pays a potential competitor to delay entering the market.

“These agreements are great deals for the drug companies, but bad deals for consumers,” said Representative John Sarbanes, Democrat of Maryland. Until now, he said, officials had “no way of knowing how many of these back-room deals occur between manufacturers of biologic and biosimilar drugs — new, cutting-edge drugs that are often extremely expensive.”

On a separate issue, the Senate allowed the Trump administration on Wednesday to move ahead with its plan to promote the sale of “short term” health insurance policies that do not have to provide all the benefits required by the Affordable Care Act.

Under a rule that took effect this month, it will be much easier for insurers to issue and renew such plans. The maximum duration, including any extensions, would be 36 months.

An attempt by Democrats to overturn the rule failed in the Senate on a tie vote of 50 to 50. Ms. Collins was the only Republican who voted for the resolution of disapproval.

Mr. Trump said such short-term policies would be available for “just a fraction of the cost of Obamacare — much less money.”

U.S. to Require Prices on Drug Ads as Pharma Girds for a Fight

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Source: Bloomberg

U.S. health officials want to force pharmaceutical companies to disclose the prices of their products in television advertisements, setting up a clash with drugmakers who see the move as impinging free speech.

Under the proposed rule released on Monday, the Department of Health and Human Services would require drug companies to share in ads the full list prices of any medication that cost more than $35. The move was telegraphed in a White House plan for lowering prescription costs that was put out earlier this year.

Drugmakers have said that disclosing list prices without additional context would be confusing to patients. In anticipation of the administration’s move, the main industry trade group said earlier Monday that companies would put up websites to explain their prices to patients in greater detail.

“It is no coincidence that the industry announced a new initiative today,” Health and Human Services Secretary Alex Azar said in a speech at the National Academy of Medicine. “Placing information on a website is not the same as putting it right in an ad.” Azar had said earlier that the proposal to set up the sites was a “small step in the right direction.”

The industry group, the Pharmaceutical Research and Manufacturers of America, said any U.S. requirement to disclose list prices in advertising could violate the First Amendment because of restrictions on “compelled speech.”

“Putting a list price in isolation in an ad itself is very confusing, misleading and lacks appropriate context,” said Steve Ubl, chief executive officer of the Pharmaceutical Research and Manufacturers of America, during a conference call on Monday.

The pricing requirement was first proposed in May when President Donald Trump released a blueprint to bring down drug prices. Azar, a former Eli Lilly & Co. executive, said that the administration is willing to go further.

“We will go beyond the four corners of the blueprint if we need to,” he said. “Any ideas that could bring down costs while respecting innovation and patient choice are on the table.”

Drugmakers have argued that disclosing list prices in ads could be misleading because of rebates and insurance co-pays that can affect how much of their own money people actually spend. Critics of the industry say list prices are relevant because many Americans have co-insurance and high-deductible plans that force them to shoulder a significant portion of a drug’s price.

Drug Industry Pledges More Price Transparency in Ads, Stops Short of Full Disclosure

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Source: The Hill

Prescription drug advertisements on television will soon direct patients to more information about the cost of the drugs under new principles agreed to by members of the largest drug industry trade group.

But the move by the Pharmaceutical Research and Manufacturers of America (PhRMA) stops short of directly disclosing the actual list prices for drugs in the ads, a policy favored by the Trump administration.

Drug companies have faced increasing pressure for a lack of transparency about the cost of medicines, and PhRMA President Steven Ubl on Monday acknowledged that the industry has a responsibility to educate patients while speaking on a press call on the announcement.

“The President challenged us to provide this information, policymakers on a bipartisan basis have … and you’ll see robust action in the coming months,” Ubl said.

Every television ad from a PhRMA member that mentions a prescription drug by name will include a voiceover or text telling patients to go to a company-sponsored website where they can find information including the list price, as well as a range of potential out-of-pocket costs and potential patient assistance.

“We think this kind of transparency is needed across the health-care system,” Ubl said.

PhRMA later clarified that companies won’t arbitrarily determine the list prices they disclose on their websites.

A spokeswoman told The Hill that the “list price” refers to the “wholesale acquisition cost,” the industry-standard publicly reported price. A given product may have different list prices depending on the dosage, and companies will have to determine how to report a list price if this is the case, she said.

The announcement from PhRMA appears to be an effort to pre-empt a potential new regulation from the Trump administration that would require companies to disclose list prices in direct-to-consumer advertising.

Health and Human Services Secretary Alex Azar is making a speech Monday afternoon that will reportedly focus on the issue, and the administration has been teasing a major policy announcement.

Ubl said putting list prices directly into advertisements is misleading and doesn’t give patients the context they need to make informed decisions. It could also discourage patients from seeking medical treatment because a high list price might make them think they will pay more than they really will.

The list price is set by the manufacturer and impacts how much the drug costs for pharmacies and patients, but it is rarely the final price that patients will pay.

According to Ubl, the list price doesn’t include rebates negotiated by insurance companies or pharmacy benefit managers. Deductibles also play a major role — a patient with high deductible insurance will pay more.

“We want patients to have more cost information and support using direct-to-consumer advertising,” Ubl said, but “just including list prices is not sufficient and would be misleading.”

In a statement, Azar said the move is a “small step in the right direction” but said the administration’s drug pricing goals will not be voluntary.

“The drug industry remains resistant to providing real transparency around their prices, including the sky-high list prices that many patients pay,” Azar said. “So while the pharmaceutical industry’s action today is a small step in the right direction, we will go further and continue to implement the President’s blueprint to deliver new transparency and put American patients first.”

The agreement will take effect on April 15, but Ubl said that companies might start making information available sooner. PhRMA is comprised of 33 companies.

However, PhRMA can’t tell companies how to present the information, and every company has a different definition of “list price,” which Ubl acknowledged might make it difficult for patients to compare between companies.

In Public, Lawmakers Scold Drug Distributors. Come Campaign Season They Accept Their Cash Willingly

Source: Stat

In this election season, lawmakers are taking on drug distributors with abandon, and many seem to relish the role.

“I just want you to feel shame,” one member of Congress said in May to five executives of major drug wholesalers, which are accused of worsening the opioid crisis by dumping thousands of addictive painkillers into small towns.

“Enough is enough,” said another. “We expect you to do more.”

If blanketing Capitol Hill with cash counts as “doing more,” the distributors are fulfilling their mandate.

In the run-up to next month’s midterm elections, the country’s three largest distributors alone have given nearly $3 million to congressional campaigns. Key lawmakers from both parties — including many of the ones who publicly shamed the companies for their role in the crisis — have accepted the contributions eagerly.

According to a STAT analysis of the current cycle’s campaign finance disclosures, two of the three largest distributors are on pace to exceed their campaign donations from 2016 — a notable increase, since campaign spending tends to stagnate in years without a presidential election.

In many cases, the largest contributions have gone to lawmakers who oversee investigations into those distributors or who play key roles in determining health care and drug policy.

Rep. Frank Pallone (D-N.J.) took $5,000 this cycle, topping off $56,500 from distributors and manufacturers before the 2016 election, according to a recent research letter published in the Journal of the American Medical Association. Rep. Diana DeGette (D-Colo.) took another $3,500. And following $23,500 in contributions from distributors and manufacturers last cycle, Rep. Greg Walden (R-Ore.), the chair of the House Energy and Commerce Committee, has accepted $8,500 to date from AmerisourceBergen and McKesson this election cycle.

From drug companies to insurers, lawmakers routinely accept campaign contributions from the companies across the health care industry that they are tasked with regulating. But few industries have faced more scrutiny than opioid distributors and manufacturers, many of which are being sued in a consolidated case in federal court, and which are increasingly shouldering the blame for a crisis taking nearly the lives of nearly 50,000 Americans each year.

Yet for all the money their campaigns have accepted from those very companies, lawmakers say their oversight abilities have not been compromised.

Walden’s committee hosted the hearing at which members had their say before the distributor executives, and he was key in shepherding through Congress a sweeping opioids bill that President Trump is expected to sign this month.

“No member of Congress has done more than Chairman Walden to end the deadly cycle of diversion, addiction, and overdose,” said a committee spokesman, Zach Hunter. “Any suggestion otherwise ignores his historic efforts to fight the opioid epidemic.”

A spokesman for Pallone also pointed to the congressman’s involvement in an ongoing House investigation of drug distributors.

Aides to every lawmaker contacted by STAT gave a similar response: The campaign cash has no bearing on how they conduct oversight or policymaking.

AmerisourceBergen has donated $1.2 million to date in the 2017-18 campaign cycle; Cardinal $825,000; McKesson nearly $920,000. McKesson’s spending is on pace to match the previous cycle, while AmerisourceBergen and Cardinal have already matched or outstripped their previous spending totals with a month remaining before the midterm elections.

Sen. Claire McCaskill (D-Mo.), who has not accepted campaign cash from distributors, has spoken of the pharmaceutical industry’s ability to sprinkle cash “like fairy dust” around the Capitol — and to use their curried favor to stall legislation that isn’t industry-friendly.

McCaskill has hinted this may be the case with a bill she introduced to restore some of the Drug Enforcement Administration’s enforcement authority over distributors, a provision that was left out of the opioids bill even though it enjoys support from lawmakers in both parties.

The donations in the current cycle follow a previous trend detailed in the JAMA research letter, which showed a consistent stream of cash flowing to the lawmakers on committees with most authority over the distributors prior to the 2016 election. (The analysis also included contributions from some drug manufacturers accused of marketing the potentially addictive drugs misleadingly.)

Numerous candidates — the JAMA research letter cited Sens. Elizabeth Warren (D-Mass.), Susan Collins (R-Maine), and Rand Paul (R-Ky.) — did not accept money in the 2016 cycle from opioid distributors or manufacturers.

“The ABC-PAC contributes to candidates of all political parties who maintain an active voice on health care issues, and who represent areas in which AmerisourceBergen maintains a significant presence,” a spokesman for the company said.

Cardinal Health declined to comment and McKesson referred a request for comment on the JAMA research letter to the Healthcare Distribution Alliance, the distributor trade group. An HDA spokesman declined to comment as to whether industry’s campaign donation strategy has changed in recent years.

Even the lawmaker who told distributors in May that he wanted them to “feel shame” — Rep. David McKinley (R-W.Va.) — is not a full exception to the rule.

On March 31, 2017, Cardinal Health wrote his campaign a check for $2,500.

Why Proposition 8 Is One of the Most Contentious, and Confusing, Ballot Measures in Play

Rich Pedroncelli / AP Photo

Source: Capital Public Radio

Roughly 140,000 Californians spend the equivalent of a part-time job — 12 to 20 hours a week — in a dialysis clinic, where a machine functioning as a kidney filters waste out of their blood.

It’s a tricky procedure — and right now it’s at the center of a heated political battle between labor unions and dialysis companies.

Californians will vote in November on Proposition 8, which would regulate dialysis clinic spending. It’s a move that could either improve patient conditions or degrade them, depending on who you ask.

So far, it’s the most expensive proposition on the ballot, with supporters putting in $20 million and opponents fighting back with $99 million as of October 11.

The measure would cap what clinics can spend on overhead and administrative costs, versus actual care.

One of the largest health care labor groups on the West Coast — Service Employees International Union – United Healthcare Workers West — put it on the ballot. Their members say clinic owners are overcharging for low-quality care, and that Prop. 8 will force dialysis companies to spend more on patients, including hiring additional staff.

The opposition campaign, backed by two of the state’s largest dialysis companies, argues that spending limitations could make it harder for clinics to stay afloat.

Los Angeles resident Tangi Foster, who’s working with the “Yes on 8” campaign, said she’s visited multiple dialysis clinics over the last decade and that employees seem overwhelmed and exhausted. She says this makes her feel unsafe.

“These people have to save our lives,” she said. “ I don’t think it’s fair to them, nor is it fair to us as patients, for them to carry this kind of workload.”

Opponents of the measure argue it is a power-play by labor groups trying to unionize dialysis workers.

They also worry that, if the measure passes, funding for certain positions would be in jeopardy. That’s because it would create two categories for dialysis company spending: “allowable” and “other” costs. Anything that goes over the limit in the other category would have to be paid back to insurance companies.

“These things are going to result in the closure of clinics, and they are going to result in less access for patients,” said Dr. Luis Alvarez, a practicing physician and board member for a dialysis clinic group called Satellite Healthcare. “To me, that is really a terrible, terrible thing.”

The allowable category would include “non-managerial” staff that provide direct care to dialysis patients. Opponents say jobs that are key to delivering patient care, such as medical director or nurse manager, could be excluded and face a funding cut.

Prop. 8 would also require clinic operators to report spending to the state, and forbid them from turning away patients based on their insurance payer.

The California Department of Public Health received 577 complaints about dialysis clinics and found 370 deficiencies during a two-and-a-half-year period between 2014 and 2017 — roughly 18 complaints and 12 deficiencies per month, according to an analysis by nonprofit journalism site CalMatters.

Those included complaints that patients’ vital signs weren’t checked by staff every 30 minutes, as required by law, and that translation services were not provided to non-English-speaking patients.

One grievance accused staff members of failing to check the connection between a patient and machine, even though blood was inappropriately oozing from the patient’s medical port, according to the CalMatters story.

DaVita, one of two major dialysis companies in California, has faced multiple lawsuits in recent years from the families of patients who died at their clinics.

If the measure passes, the decision on how clinics can spend their budgets will fall to the state and to the courts. The nonpartisan Legislative Analyst’s Office said in its assessment that the measure’s vague language makes its fiscal impact difficult to determine.

“If the measure is ultimately interpreted to have a narrower, more restrictive definition of allowable costs, the amount of rebates chronic dialysis clinic owners and operators are required to pay would be greater,” the office wrote in the California voter guide.

The office said clinic groups might need to “scale back operations in the state.”

Ken Jacobs at the UC Berkeley Center for Labor Research and Education pointed out that just two dialysis companies control 70 percent of all clinics in California. And because very few laws require them to be transparent about their costs, prices will just continue to climb.

“I think we’re going to see a lot more attention on these issues in the future,” he said. “The ballot initiative specifically addresses [market consolidation] in a particularly profitable industry in terms of the dialysis centers. But the issues its raising are issues that go well beyond this particular case.”

Opponents feel the measure is too drastic and doesn’t belong on the ballot. Supporters have tried legislation before — bills to require staffing ratios in dialysis clinics and impose a revenue cap on clinic operators failed in prior legislative sessions.

Still, much of the Prop. 8 debate brings into question whether the voters should be the ones to decide how to fix these problems.

Medicare Advantage Plans Shift Their Financial Risk to Doctors

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Source: Modern Healthcare

Dr. Christopher Rao jumped out of his office chair. He’d just learned an elderly patient at high risk of falling was resisting his advice to go to an inpatient rehabilitation facility following a hip fracture.

He strode into the exam room where Priscilla Finamore was crying about having to leave her home and husband, Freddy.

“Look, I would feel the same way if I was you and did not want to go to a nursing home, to a strange place,” Rao told her in September, holding her hand. “But the reality is, if you slip at home even a little, it could end up in a bad, bad way.”

After a few minutes of coaxing, Finamore, 89, relented and agreed to go into rehab.

Keeping patients healthy and out of the hospital is a goal for any physician. For Rao, a family doctor in this retiree-rich city 100 miles north of Miami, it’s also a wise financial strategy.

Rao works for WellMed, a physician-management company whose doctors treat more than 350,000 Medicare patients at primary care clinics in Florida and Texas. Instead of being reimbursed for each patient visit, WellMed gets a fixed monthly payment from private Medicare Advantage plans to cover virtually all of their members’ health needs, including drugs and physician, hospital, mental health and rehabilitation services.

If they can stay under budget, the physician companies profit. If not, they lose money.

This model — known as “full-risk” or “global risk” — is increasingly used by Medicare plans such as Humana and UnitedHealthcare to shift their financial exposure from costly patients to WellMed and other physician-management companies. It gives the doctors’ groups more money upfront and control over patient care.As a result, they go to extraordinary lengths to keep their members healthy and avoid expensive hospital stays.

WellMed, along with similar fast-growing companies such as Miami-based ChenMed, Boston-based Iora Health and Chicago-based Oak Street Health, say they provide patients significantly more time with their doctors, same-day or next-day appointments and health coaches. These doctors generally work on salary.

ChenMed doctors encourage their Medicare patients to visit their clinic every month — for no charge and with free door-to-door transportation — to stay on top of preventive care and better manage chronic conditions. If patients are not feeling well after-hours, ChenMed even will send a paramedic to their home.

“We can be much more creative in how we meet patient needs,” said Iora CEO Rushika Fernandopulle. “By taking risk, we never have to ask … ‘Do we get paid for this or not?’”

A way to ‘provide less care’

Some patient advocates, pointing to similar experiments that failed in the 1990s, fear “global risk” could lead doctors to skimp on care — particularly for expensive services such as CT tests and surgical procedures.“At the end of the day, this is a way to keep costs down and provide less care,” said Judith Stein, executive director of the Center for Medicare Advocacy.

Dr. Brant Mittler, a Texas cardiologist and trial attorney who has followed the issue, said Medicare Advantage members should be suspicious.

“Patients don’t know that decisions made on their behalf are often financially based. There may be pressure on doctors to cut corners to save money and that may not be in the best interests of a patient’s health,” he said.

The insurers and physician groups disagree. They said limiting necessary care would only exacerbate a patient’s health problems and cost the doctors’ group more money.

Noting that Medicare members stay with Humana an average of eight years, Roy Beveridge, the insurer’s chief medical officer, said the plan would be unwise to skimp on care because that would eventually leave the company with sicker patients and longer hospitalizations.

“It makes even less sense for physicians at financial risk to skimp on care because patients are typically with their physicians much longer than they are with a health plan,” he said.

A study that examined care at ChenMed, published last month in the American Journal of Managed Care, found health costs were 28 percent lower among patients who had more than double the number of typical visits with their primary physician. The study was conducted by researchers at ChenMed and the University of Miami.

To offer more personal care, ChenMed doctors typically see only about a dozen patients per day — about half as many as is usual for a doctor who gets paid for each individual service.

Medicare beneficiaries, who can choose a private health plan during the open-enrollment period that runs from Oct. 15 to Dec. 7, generally have no idea if their health plan has ceded control of their care to these large doctors’ groups.

After choosing a Medicare Advantage plan, they generally sign up for a medical group that is part of their health plan’s network, often because doctors are close to where they live or because the doctors offer extra benefits such as free transportation to appointments.

Eloy Gonzalez, 71, of Miami, said that before switching to ChenMed a couple of years ago his doctors always seemed to be in a hurry when he saw them. He’s happy with his ChenMed physicians.

On a recent visit, he spent nearly 20 minutes with Dr. Juana Sofia Recabarren-Velarde talking about keeping his blood pressure and lung condition under control. She also showed him exercises to manage back and shoulder pain.

“If she thinks she needs to see me once a month to monitor my blood pressure and see if anything else is happening, it’s OK with me,” said Gonzalez, who pays nothing for the office visits or generic drugs under his Humana Medicare Advantage plan with ChenMed.

A growth spurt

Nearly one-third of the 57 million Medicare beneficiaries are covered by private Medicare Advantage plans — an alternative to government-run Medicare — and federal officials have estimated that the proportion will rise to 41 percent over the next decade. The government pays these plans to provide medical services to their members.The “global risk” system has been used in South Florida and Southern California since the late 1990s and nearly half of Medicare Advantage members in those regions get care in the model. The use has spread further in the past two years as large physician companies have become more common, and about 10 percent of Medicare Advantage plan members across the nation are in them now, health consultants say.

In addition, new information technology allows these groups to better track their patients. With mixed results, Medicare Advantage insurers for years offered doctors bonuses to meet certain quality care standards, such as getting members vaccinated against the flu or controlling diabetes and other chronic diseases.

Under the “global risk” arrangements, the health plans give the physician companies the bulk of their Medicare funding when they take on the mantle of being financially responsible for all patient care.

For the doctors’ groups, the arrangement means they get paid a large amount of money upfront for patient care and don’t have to worry about billing or having to get insurers to always preapprove treatments.

Because the “global risk” arrangements are designed to reduce plans’ costs, they potentially allow the companies to lower premiums and attract more customers, said Mark Fendrick, director of the University of Michigan’s Center for Value-Based Insurance Design.

“I see this trend continuing to grow as clinicians will be accountable for the first time for the care they provide,” he said.

Historical lessons

But Ana Gupte, a securities analyst with Leerink Partners in New York, noted providers can also lose money if not successful.That’s what happened in the late 1990s when some physician-management companies such as FPA Medical Management and PhyMatrix took on financial risk from insurers only to later go bankrupt, interrupting care to thousands of patients.

Health insurers say they now trust only doctors’ groups that have shown they can handle the financial risk. They also retain varying levels of control. Insurers set benefits, handle member complaints and review which doctors are allowed in its network.

Martin Graf, a partner with consulting firm Oliver Wyman, said the old financial arrangements failed because provider groups did not manage the risks facing their patients.

“Now they know physician groups must be vigilant about their patients — whether they are in the office or not,” he said. “Everyone is aware of the failure of the past.”

Why Congress is Poised to Give the Drug Industry a $4B Windfall


Source: Politico

President Donald Trump may rail against drug companies “getting away with murder,” but Congress appears to be moving in the opposite direction — helping to boost industry profits.

While the pharmaceutical industry lost an eleventh-hour bid last week to attach a $4 billion windfall to Congress’ bipartisan opioid bill, lawmakers and industry analysts expect it to try again with good prospects of prevailing — perhaps as soon as the lame-duck session after the November election.

Drugmakers took a rare financial hit in the bipartisan budget deal passed in February when they were put on the hook to pay $11.8 billion toward senior medicines over 10 years in the fight over the Medicare drug benefit “doughnut” hole. Now they’re trying to soften that blow, seeking relief from at least $4 billion of those costs in what they describe as “a technical correction“ to a calculation that made the industry responsible for more money than lawmakers had sought. Congressional aides to senior members of both parties say they have a good chance of success — a stark reminder of how challenging it will be for lawmakers to take on the drug lobby, even as voters across party lines demand lower costs of medicines.

Health industry lobbyists say the change is being pushed by House Republican leadership, including Speaker Paul Ryan, Majority Leader Kevin McCarthy and Energy and Commerce Chairman Greg Walden and Senate Minority Leader Chuck Schumer on the other side of the aisle, who was also demanding consumer-friendly trade-offs as part of the package.

But drug price advocates say that what the industry calls a fix is “really … a multi-billion dollar bailout with no relief from out-of-control drug prices,” said Lauren Blair spokesperson for the Campaign for Sustainable Rx Pricing, a coalition of health insurers, hospitals, physicians and other groups focused on the cost of medicines.

K Street watchers say the industry’s clout is largely a function of its lobbying might along with the geographic dynamics of the industry. Drug companies employ many Americans, with the largest concentration in more liberal states like California and New York, creating alliances with lawmakers who might otherwise be more willing to push back on the industry. And they’re adept at conveying the message that their products extend and improve lives.

“This is an industry that has deep pockets that can afford to check all the boxes,” said Sheila Krumholz, executive director of the Center for Responsive Politics, a nonprofit that tracks money and its influence on politics. “And voters themselves are conflicted.”

“On the one hand, there is a view that these companies are rapacious in their drug pricing and we have the poster boys in Martin Shkreli and Heather Bresch,” she added, referring to the Turing Pharmaceuticals CEO who jacked up prices and mocked Congress before being jailed on unrelated charges and Bresch, CEO of the company that makes Epipens. “On the other hand, we look to these companies as star innovators in the constellation of U.S. industry and the saviors in terms of providing cures for horrific disease.“

The drug lobby justifies its push for $4 billion in relief by saying that the Congressional Budget Office initially estimated the February 2018 change would save the government $7.7 billion over 10 years for senior medicines, but shortly after the law was enacted, CBO learned of new data on prescription drug spending that changed its estimate of government savings to $11.8 billion. The budget measure requires drug manufacturers to provide deeper discounts to Medicare beneficiaries whose spending on prescription drugs falls within a range called the coverage gap, or the “doughnut hole.” The discount, now 50 percent on brand-name drugs, is set to rise next year to 70 percent.

The change was designed to provide some financial relief to Medicare Part D beneficiaries with high prescription drug expenses who have to pay the cost of their medicines out of pocket once they reach a certain cost threshold — until they hit a yearly limit. It also shifted more of those costs from insurance companies to the drug industry in an effort to lower insurance premiums and save taxpayers money.

The Pharmaceutical Research and Manufacturers of America said it plans to keep working with lawmakers of both parties to change its doughnut hole contribution, as well as to seek changes to a so-called “doughnut hole cliff,“ that will require seniors to spend more money to get out of the coverage gap period of their drug benefit starting in 2020.

Fixing that would save money for seniors and the drug companies, as would rolling back drug companies’ doughnut hole responsibility, PhRMA argues, because the current framework doesn’t incentivize insurance companies to negotiate for lower-cost drugs. Under PhRMA’s proposal, insurance companies would pay more for drugs, and drug companies say that should motivate them to get better deals for seniors.

Correcting CBO’s error “would protect seniors by helping restore balance to payment responsibility and securing the Part D program for the future. Further, combining that fix with a solution to prevent the looming $1,250 spike in our-of-pocket costs in the [doughnut] hole, would save seniors money and leave seniors … better off,” PhRMA said in a statement.

GOP lawmakers have echoed this messaging. Walden “is supportive of continued efforts to correct for a faulty CBO analysis,” a committee aide told POLITICO.

Democratic support for the change is less assured — buy-in after the November elections will likely depend on the package of trade-offs, as well as the makeup of the new Congress. Schumer declined to comment for this story.

Health industry lobbyists say the most likely vehicle for the change is when lawmakers extend the funding of several agencies subject to a continuing resolution, which expires Dec. 7. But groups that successfully mobilized to prevent PhRMA’s win in the opioids package say they’ll be ready to oppose it again.

“I have no clue what politician in their right mind would push a $4 billion bailout for drug companies when drug companies’ unpopularity are at the highest levels in American politics,” said Ben Wakana, executive director of Patients for Affordable Drugs NOW. “It seems like political malpractice.”

In Washington, though, money talks and the drug industry has a lot of it.

The pharmaceuticals and health products sector spends more money on lobbying than any other industry in Washington — nearly $151 million so far in 2018, compared to the next biggest spender — the insurance industry, at $82 million, according to the Center for Responsive Politics. The bulk of that spending is by pharmaceutical companies and trade groups, Krumholz said.

That includes contributions from the main drug lobbying organization, PhRMA, which has spent $15.7 million this year on lobbying, making it the third highest single spender on lobbying. PhRMA also spent over half a million on direct campaign contributions for the 2018 election cycle.

The pharmaceutical and health products sector also has 980 lobbyists who previously worked in government, giving them personal connections to many of the Congressional offices and agencies they target — that’s more former government employees than any other industry and makes up nearly two-thirds of the industry’s lobbyists, per the Center for Responsive Politics.

“For a long time, politicians have been able to do pharma favors, bring in a lot of cash and that didn’t hurt you in the polls,” said Shawn Gremminger, senior director of federal relations at Families USA, a left-leaning group focused on improving U.S. health care for American consumers. “So long as our campaign finance system remains essentially the same, I think the pharmaceutical industry is going to continue to exercise really outsized influence in D.C.,” Gremminger said.

But others say it’s too simplistic to attribute the legislative support for PhRMA’s proposal simply to the industry’s financial clout.

Former Pennsylvanian Republican Rep. Phil English, who now lobbies for a few drug companies, says it’s important to think about how geography creates close alliances between some very progressive members of Congress and pharmaceutical companies.

“There are places in the U.S. where life sciences and pharmaceutical companies are the core part of the good-paying jobs — suburban Philadelphia, New Jersey, some of the suburbs in Boston, California, Chicago,” English said. “For representatives of these areas, what happens to the drug industry is a constituent issue as much as anything else,” English said.

The drug industry also indirectly influences lawmakers through its support for patient advocacy groups, to whom it contributed at least $116 million in 2015, per an analysis by Kaiser Health News.

“And as the years go by, you see the progression of the disease, people talking about how important these prescription drugs are for them,“ said Jason Altmire, a former Democratic representative from Pennsylvania, who has lobbied on behalf of other parts of the health sector. “There’s nothing stronger than seeing that right in front of you, with people that you have become friends with that have a personal story to tell. It’s not about money. It’s about your constituents and people that you know.”

The drug industry has also gotten pro-consumer measures on the table as part of the discussion. Besides the fix to the Medicare Part D cliff, it is also pushing a version of a bill known as the CREATES Act, which aims to speed generic competition to branded medicines by preventing brand drug companies from abusing FDA-mandated safety programs to keep out cheaper competition.

A Democratic source familiar with the negotiations over PhRMA’s provision in the opioid bill blamed lack of agreement on the CREATES Act, for keeping the changes out of the opioid measure.

But opponents also say these trades aren’t enough to justify what they call a windfall to the industry

Seniors’ groups including AARP, the insurance industry lobby and the Campaign for Sustainable Rx Drugs say they will continue watching closely to try to block PhRMA’s continuing efforts.

“They have the ability where … they just wait out the clock, wait until people aren’t paying close attention, wait until it’s a low-profile spending bill at the end of the year … and before you know it, there is a provision in there that gives pharma a big handout,” said Families USA’s Gremminger. “So just because we’ve won the last three rounds doesn’t mean we are going to win round four. I certainly hope so and we’re fighting for it. But you know, they are really, really clever.”

Feds Settle Huge Whistleblower Suit Over Medicare Advantage Fraud

Image result for Feds Settle Huge Whistleblower Suit Over Medicare Advantage Fraud images

Source: Kaiser Health News

One of the nation’s largest dialysis providers will pay $270 million to settle a whistleblower’s allegation that it helped Medicare Advantage insurance plans cheat the government for several years.

The settlement by HealthCare Partners Holdings LLC, part of giant dialysis company DaVita Inc., is believed to be the largest to date involving allegations that some Medicare Advantage plans exaggerate how sick their patients are to inflate government payments. DaVita, which is headquartered in El Segundo, Calif., did not admit fault.

“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said U.S. Attorney Nick Hanna in announcing the settlement Monday.

Medicare Advantage plans, which now enroll more than 1 in 3 seniors nationwide, have faced growing government scrutiny in recent years over their billing practices. At least a half-dozen whistleblowers have filed lawsuits accusing the insurers of boosting payments by overstating how sick patients are. In May 2017, two Florida Medicare Advantage insurers agreed to pay nearly $32 million to settle a similar lawsuit.

The DaVita settlement cites improper medical coding by HealthCare Partners from early 2007 through the end of 2014. The company, according to the settlement agreement, submitted “unsupported” diagnostic codes that allowed the health plans to receive higher payments than they were due. Officials did not identify the health plans that overcharged as a result.

One such “unsupported” code was for a spinal condition known as spinal enthesopathy that was improperly diagnosed in patients in Florida, Nevada and California from Nov. 1, 2011, to Dec. 31, 2014, according to the settlement. The agreement did not say how much health plans took in from the unsupported codes.

The company also contracted with a Nevada firm from 2010 through January 2016 that sent health care providers to visit patients in their homes, a controversial practice that critics have long held is done largely to inflate Medicare payments. These house calls also generated “unsupported or undocumented” diagnostic codes, according to the settlement.

Officials said that DaVita disclosed the practices to the government. It acquired HealthCare Partners, a large California-based doctors’ group, in 2012. They said the government agreed to a “favorable resolution” of the allegations payment because of the self-disclosure.

In a statement, DaVita said the settlement “reflects close cooperation with the government to address practices largely originating with HealthCare Partners.” DaVita said the settlement will be paid with escrow funds set aside by the former owners.

“This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review — all for the purpose of boosting the bottom line,” reads the government’s statement.

The settlement also resolves allegations made by whistleblower James Swoben that HealthCare Partners knew that many of the diagnostic codes were unsupported, but failed to report them. The company reported only cases in which it deserved higher reimbursement, while ignoring codes that would slash payments, a practice known as “one-way” chart reviews.

Swoben, a former employee of a company that did business with DaVita, will receive just over $10 million for the settlement of the “one-way” allegations, under the federal False Claims Act, which rewards whistleblowers who expose fraud.

Last Updated 10/17/2018

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