Medicare Experiment Could Put More Pressure On Insurers to Save Money On Prescription Drugs

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Source: STAT

The federal government is giving health insurance companies that run Medicare prescription drug plans new tools it hopes will save money for patients.

The Centers for Medicare and Medicaid Services announced a voluntary program Friday that will allow Medicare Part D plans, which share the cost of prescription drug insurance with the federal government, to keep more of the savings they negotiate — with the caveat that if they don’t save enough money, they have to pay the government back for it.

In a call with reporters, CMS Administrator Seema Verma said that this should result in lower costs for patients who typically spend a lot of money on prescription drugs.

Insurance companies have until March 1 to decide if they want to participate in this program, which will begin on Jan. 1, 2020. It’s being run through the Centers for Medicare and Medicaid Innovation, a division established by the Affordable Care Act that has broad authority to run experiments to test new ways of the government paying for health care.

Companies that participate in this experiment would see a change to the “catastrophic” portion of Medicare prescription drug coverage, which applies once a patient has already spent $5,100 in out-of-pocket costs. Once they’ve spent that much on prescription drugs, patients are responsible for only 5 percent of new costs — their insurance picks up the other 95 percent.

That 95 percent is split between the federal government and the private insurance company that runs the patient’s Medicare prescription drug plan. The government pays 80 percentage points and the plan pays the additional 15 percentage points.

That means the insurance company has an incentive to cut good deals with pharmaceutical companies for lower prices on drugs — but only to a certain extent, because they get to keep only 15 percent of the savings.

Under the new program, if plans do a good enough job, they could keep more of the savings, shifting the 15/80 split in favor of the insurance companies. The current description of the program doesn’t say by how much. But the plans would also be responsible for paying the government back if they end up spending more money on drugs, which would shift the 15/80 split in favor of the government.

“The devil will be in the details,” said a health care lobbyist. The lobbyist added that plans’ enthusiasm about the program will depend on exactly how much money they could save and how much they might stand to lose.

Verma told reporters that while patients will still pay the same 5 percent under this new program, the fact the insurance companies will have the ability to save more money will encourage them to drive a harder bargain with drug companies. Patients will benefit from that, she said, because they’re paying 5 percent of the price that the insurance companies negotiate.

“Even though the individual is still responsible for 5 percent, hopefully they’re paying a lower amount because the plan has a greater incentive to manage that piece of the benefit,” Verma said.

Verma said she didn’t know if the department had an estimate of how many plans would participate in the program.

CMS Wants to End Silver-Loading

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Source: Modern Healthcare

The CMS issued a proposed rule on Thursday that would cut Affordable Care Act user fees and laid the groundwork to eliminate “silver-loading.”

In its proposed notice of benefit and payment parameters for ACA exchanges in 2020, the agency proposed reducing the exchange user fee that is charged to health insurers to fund the health insurance exchanges. That would help lower premiums in 2020, the agency said.

The CMS also noted that the Trump administration supports a legislative solution that would appropriate funding for cost-sharing reduction payments, which the administration ended in 2017. It also supports ending the practice of “silver-loading.”

The agency asked stakeholders to comment on ways the federal government might address silver-loading in future rules no sooner than 2021.

Silver-loading refers to when health insurers loaded premium increases into the popular silver-level exchange plans to make up for the loss of CSR payments. Loading premium surcharges onto silver plans boosted the size of the premium tax credits available to people with incomes below 400% of the federal poverty level.

The proposals outlined in the 331-page notice are intended to further the Trump administration’s goals of reducing the regulatory burden on health insurers and lowering premiums for consumers. The changes proposed apply to ACA exchange and individual market insurers, as well as insurers who participate in the small group, large group and self-funded group health plan markets.

“Following the first-ever drop in premiums for plans sold on the federal exchange for 2019, in another first CMS is proposing to reduce the exchange user fee charged to insurers to fund exchange operations,” CMS Administrator Seema Verma said in a statement. “Reducing this user fee will reduce the premium each consumer pays in 2020. Under President Trump’s leadership, we’re finally moving the exchange and the market in a new and positive direction.”

The exchange user fee would be lowered to 3% from 3.5% of premiums for qualified health plans sold on the federal exchange in 2020, while the rate would be lowered to 2.5% from 3.0% for plans sold on state-based exchanges.

Beyond that, the CMS said it aims to lower drug spending by allowing individual, small group and large group insurers to adopt mid-year prescription drug formulary changes to encourage members to use lower-cost generic drugs. Under the proposal, an insurer would be able to add a generic drug to the formulary if one becomes available in the middle of the year and drop the brand-name equivalent from the formulary or move it to a different cost-sharing tier. Insurers would have to give plan members at least 60 days’ notice.

It would further allow insurers to not count cost-sharing toward a member’s maximum out-of-pocket limit if a plan member selects a brand name drug when a generic alternative is available. Likewise, insurers would be able to exclude drug manufacturer coupons from counting toward the annual cost-sharing limit when a generic is available.

Several other proposals aim to expand options for people buying health coverage. The CMS pitched allowing individuals or families who get their health insurance off-exchange to qualify for a special enrollment period if their household income decreases and they become eligible for a premium subsidy. Another proposal would require exchange insurers that offer plans covering abortion services to also offer otherwise identical coverage that omits abortion services.

At the same time, the proposed rule would increase the annual cost-sharing limit by 3.8% to $8,200 from $7,900 in 2020 for self-only coverage, and $16,400 from $15,800 for family coverage.

Notably, the CMS also discussed ways to increase healthcare cost transparency to improve people’s ability to shop for services. The agency said it is considering whether to require health insurers to inform a plan member of their anticipated costs for certain services when requested within a certain timeframe, or require issuers to disclose anticipated costs for a set number of common coverage scenarios.

Secretive ‘Rebate Trap’ Keeps Generic Drugs For Diabetes And Other Ills Out Of Reach

Image result for Secretive ‘Rebate Trap’ Keeps Generic Drugs For Diabetes And Other Ills Out Of Reach imagesSource: Kaiser Health News

Lisa Crook was lucky. She saved $800 last year after her insurance company started covering a new, less expensive insulin called Basaglar that was virtually identical to the brand she had used for years.

The list price for Lantus, a long-acting insulin made by Sanofi that she injected once a day, had nearly quadrupled over a decade.

With Basaglar, “I’ve never had my insulin cost drop so significantly,” said Crook, a legal assistant in Dallas who has Type 1 diabetes.

But many people with diabetes can’t get the deal Crook got. In a practice that policy experts say smothers competition and keeps prices high, drug companies routinely make hidden pacts with middlemen that effectively block patients from getting cheaper generic medicines.

Such agreements “make it difficult for generics to compete or know what they’re competing against,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University School of Medicine.

Here’s how it works: Makers of established brands give volume-based rebates to insurers or intermediaries called pharmacy benefit managers. In return, those middlemen often leave competing generics off the menu of drugs they cover, called a formulary, or they jack up the price for patients. The result is that many can’t get the cheaper drugs unless they shoulder a bigger copay or buy them with no help from insurance.

Brand-drug sellers “pay for position” on the formulary, said Michael Rea, CEO of Rx Savings Solutions, which helps health plans and employers manage pharma costs. “In this country, the most cost-effective drugs don’t necessarily mean anyone will have access to them … [Companies with] the deepest pockets win.”

This so-called rebate trap joins a long history of efforts by makers of brand-name drugs to stifle generics, including protecting drugs with multiple layers of dubious patents, “pay for delay” deals to keep generics off the market and withholding key ingredients needed for generic production, critics say.

Because rebate contracts are secret, nobody knows the full extent of the practice nor how much it costs the health system in unrealized savings.

“The deals between the drug companies and the PBM middle players are guarded as fiercely as Fort Knox,” said Robin Feldman, a law professor at the University of California, Hastings College of the Law, who studies pharma policy. “No one gets to see them.”

But new research is turning up plenty of evidence of rebates distorting the market, such as numerous instances of effective, less expensive generics missing from formularies or patients burdened with higher out-of-pocket costs for generic drugs.

In unpublished research, Dusetzina found that only 17 percent of Medicare plans for seniors covered Basaglar, the biosimilar launched by Eli Lilly two years ago. Nearly all of them covered brand-name Lantus, sold by Sanofi, as of early last year.

Her research suggests rebates from Sanofi might have induced insurers to leave lower-priced Basaglar off their formularies, Dusetzina said.

Sanofi works with insurers and pharmacy benefit managers “to negotiate access for patients to our portfolio of products including Lantus,” said company spokesman Jon Florio, declining to disclose specifics.

Medicare plans covering Lantus but not Basaglar include numerous offerings from Anthem, the biggest for-profit, Blue Cross and Blue Shield insurer.

“After evaluating the total cost impact on consumers, taxpayers and the government, we chose to cover the brand drug, Lantus, over the biosimilar, Basaglar,” said Anthem spokeswoman Lori McLaughlin.

Replacement versions of complex drugs often made from living cells are called biosimilars, not generics. Basaglar is considered clinically equivalent to Lantus but, because of a legal wrinkle, won’t technically be considered a biosimilar by regulators until 2020.

Merck scrapped its own biosimilar version of Lantus last fall, despite receiving tentative approval by the Food and Drug Administration, after “assessing … the market environment,” the company said.

Coverage of Lilly’s Basaglar has grown, and the drug is now included in formularies used by slightly more than half the patients who have health insurance, said Eli Lilly spokesman Greg Kueterman.

In another forthcoming study, this one examining 2018 Medicare coverage, researchers at Johns Hopkins Bloomberg School of Public Health found that “almost every plan has at least one branded drug on the formulary that’s in a better place than the generic,” said Gerard Anderson, the professor leading the research.

(A grant from the Laura and John Arnold Foundation, which helps support Kaiser Health News, financed the Hopkins research.)

In 2015, only 19 percent of generic drugs covered by Medicare were in the preferred formulary tiers with the lowest out-of-pocket costs, found a study last year by consultants Avalere. In 2011, on the other hand, 71 percent of generics had been in the best tier, which helps determine what patients are prescribed.

The Association for Accessible Medicines, the generic drug lobby, paid for that study. Rebate-influenced barriers to generics are “increasingly problematic,” said AAM CEO Chip Davis.

Disputes over formulary choices have hit the courts. Pfizer sued Johnson & Johnson in 2017, alleging that rebates induced insurers to prefer Remicade, an anti-inflammatory biologic, at the expense of Pfizer’s lower-priced product.

Critics of rebate traps include top Trump administration officials, under pressure from a president who has promised to lower drug prices.

Because quick rebates from brands are often more attractive to PBMs and insurers than long-term savings from generics, “this is a real challenge in terms of biosimilars coming to market and gaining market share” Scott Gottlieb, head of the FDA, said in an interview.

Such objections add to a crescendo of grievances against hidden rebates. Consumers and advocates have complained for years that rebates cut costs for PBMs and insurers but do little for patients, who are often left paying their out-of-pocket share based on soaring list prices.

Crook’s out-of-pocket costs for Lantus rose steadily over the years to about $900 annually, she said. After switching to Basaglar last year, her cost was less than $100.

Mark Gooley, who has Type 1 diabetes and lives in Florida, said he started ordering Lantus by mail from Canada after the U.S. list price rose fourfold in a little more than a decade.

“I have a very low opinion of companies like Sanofi,” he said. “They could afford to sell it to me when it came out” at a much lower price, he said. “Inflation has not been 400 percent.”

Because of rebates paid to PBMs, Sanofi’s net price for Lantus has actually decreased over the past five years despite the list-price increases, said company spokesman Florio. “Unfortunately, these savings are not consistently passed through to patients,” he said.

PBMs say they respond to the terms drug companies offer and negotiate to save billions for government, insurers and employers. “Simply put, the easiest way to lower costs would be for drug companies to lower their prices,” the Pharmaceutical Care Management Association, the PBM lobby, said in an emailed statement.

For its part, PhRMA, the branded-drug association, has said it wants to scrap the rebate system and have PBMs paid for services provided.

Congress has done little to fix the rebate problem despite widespread criticism, but senior legislators in both chambers have pledged to address high drug prices this year.

Last summer, the Department of Health and Human Services proposed changing “safe harbor” protections that shield pharma rebates from being viewed as illegal kickbacks. But the proposal, under review at the Office of Management and Budget since July, has never been publicly aired, leaving the industry to wonder how substantial it is and if it will ever take effect.

Can States Fix American Health Care?

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Source: Kaiser Health News

Last week, California’s new governor, Gavin Newsom, promised to pursue a smörgåsbord of changes to his state’s health care system: state negotiation of drug prices, a requirement that every Californian have health insurance, more assistance to help middle-class Californians afford it and health care for undocumented immigrants up to age 26.

The proposals fell short of the sweeping government-run single-payer plan Newsom had supported during his campaign — a system in which the state government would pay all the bills and effectively control the rates paid for services. (Many California politicians before him had flirted with such an idea, before backing off when it was estimated that it could cost $400 billion a year.) But in firing off this opening salvo, Newsom has challenged the notion that states can’t meaningfully tackle health care on their own. And he’s not alone.

A day later, Gov. Jay Inslee of Washington proposed that his state offer a public plan, with rates tied to those of Medicare, to compete with private offerings.

New Mexico is considering a plan that would allow any resident to buy in to the state’s Medicaid program. And this month, Mayor Bill de Blasio of New York announced a plan to expand health care access to uninsured, low-income residents of the city, including undocumented immigrants.

For over a decade, we’ve been waiting for Washington to solve our health care woes, with endless political wrangling and mixed results. Around 70 percent of Americans have said that health care is “in a state of crisis” or has “major problems.” Now, with Washington in total dysfunction, state and local politicians are taking up the baton.

The legalization of gay marriage began in a few states and quickly became national policy. Marijuana legalization seems to be headed in the same direction. Could reforming health care follow the same trajectory?

States have always cared about health care costs, but mostly insofar as they related to Medicaid, since that comes from state budgets. “The interesting new frontier is how states can use state power to change the health care system,” said Joshua Sharfstein, a vice dean at Johns Hopkins Bloomberg School of Public Health and a former secretary of the Maryland Department of Health and Mental Hygiene. He added that the new proposals “open the conversation about using the power of the state to leverage lower prices in health care generally.”

Already states have proved to be a good crucible for experimentation. Massachusetts introduced “Romneycare,” a system credited as the model for the Affordable Care Act, in 2006. It now has the lowest uninsured rate in the nation, under 4 percent. Maryland has successfully regulated hospital prices based on an “all payer” system.

It remains to be seen how far the West Coast governors can take their proposals. Businesses — pharmaceutical companies, hospitals, doctors’ groups — are likely to fight every step of the way to protect their financial interests. These are powerful constituents, with lobbyists and cash to throw around.

The California Hospital Association came out in full support of Newsom’s proposals to expand insurance (after all, this would be good for hospitals’ bottom lines). It offered a slightly less enthusiastic endorsement for the drug negotiation program (which is less certain to help their budgets), calling it a “welcome” development. It’s notable that his proposals didn’t directly take on hospital pricing, even though many of the state’s medical centers are notoriously expensive.

Giving the state power to negotiate drug prices for the more than 13 million patients either covered by Medicaid or employed by the state is likely to yield better prices for some. But pharma is an agile adversary and may well respond by charging those with private insurance more. The governor’s plan will eventually allow some employers to join in the negotiating bloc. But how that might happen remains unclear.

The proposal by Washington Gov. Inslee to tie payment under the public option plans to Medicare’s rates drew “deep concern” from the Washington State Medical Association, which called those rates “artificially low, arbitrary and subject to the political whims of Washington, D.C.”

On the bright side, if Newsom or Inslee succeeds in making health care more affordable and accessible for all with a new model, it will probably be replicated one by one in other states. That’s why I’m hopeful.

In 2004, the Canadian Broadcasting Corp. conducted an exhaustive nationwide poll to select the greatest Canadian of all time. The top-10 list included Wayne Gretzky, Alexander Graham Bell and Pierre Trudeau. No. 1 is someone most Americans have never heard of: Tommy Douglas.

Douglas, a Baptist minister and left-wing politician, was premier of Saskatchewan from 1944 to 1961. Considered the father of Canada’s health system, he arduously built up the components of universal health care in that province, even in the face of an infamous 23-day doctors’ strike.

In 1962, the province implemented a single-payer program of universal, publicly funded health insurance. Within a decade, all of Canada had adopted it.

The United States will presumably, sooner or later, find a model for health care that suits its values and its needs. But 2019 may be a time to look to the states for ideas rather than to the nation’s capital. Whichever state official pioneers such a system will certainly be regarded as a great American.

Hospital Drug Spend Spiked 19% from 2015-17, Coalition Says

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Source: Healthcare Dive

The report is the latest sortie in the ongoing PR battle between providers and pharmaceutical companies over who exactly is to blame for skyrocketing drug prices in the U.S.

Those costs have been growing at an unsustainable rate over the past few years, faster than overall healthcare costs and inflation alike. Snowballing prices aren’t tied to utilization — instead, the U.S. Department of Labor found the increases are driven primarily by higher launch prices and annual price increases in the drugs themselves.

Providers, which purchase such drugs in bulk, are furious about the situation. “With today’s report, we’re putting drug companies on notice,” AHA President Rick Pollack said on a Tuesday call.

More than 90% of the hospitals surveyed had to identify alternative therapies to mitigate the impact of the cost increases and drug shortages, according to the report. One in four facilities had to downsize staff.

“Each shortage is basically an emergency,” said Erin Fox, senior director of drug information and support services at University of Utah Health. “All hands on deck.”

Some specific drugs saw much higher spend increases than others, including the widely-used heart attack and stroke drug Activase (19% increase from $3,486 in 2015 to $4,143 in 2017) and immunosuppressants Remicade, Humira and Enbrel (between 15-21% over the time period). Orphan drugs and hepatitis C treatments were also significantly more expensive at the study period’s end.

The majority of U.S. hospitals surveyed reported that competition from new entrants into the market had a small impact on drug prices. The report found that for the 10 most expensive drugs in FY 2017, two had a generic or biosimilar competitor enter the market in 2016. Those two still saw a 4.1% increase in prices (compared to a 14.4% increase among the other eight).

However, interviewed hospitals were still concerned that brand manufacturers were raising prices prior to a generic launch, along with the overall lack of generic competition in the market (of the five biosimilars approved in 2017, only one launched).

The report also noted the effect high prices have on insurers, finding that the growth in prices exceeded the Medicare reimbursement update by a factor of five from 2015 to 2017 and exceeded the growth in general healthcare expenditures.

Powerful drug lobby PhRMA has in the past reiterated that hospitals mark up drug prices by an average of 500% in an attempt to deflect the blame.

The report comes as lawmakers are ramping up pressure on drug companies. This week, House Oversight Committee Chairman Elijah Cummings, D-Md., sent letters to a dozen drug companies asking for information on their pricing practices, investments in research and development and corporate strategies.

And President Donald Trump has proved himself verbally bullish on lowering drug costs, with HHS following through in October of last year with a plan to link Medicare Part B reimbursement to an international composite.

Many hospitals are fed up with what they see as governmental inaction, however. Roughly 750 hospitals have joined a venture called Civica Rx, a not-for-profit generic drug company established last year to cut costs and provide a predictable supply of drugs to health systems.

“At the minimum, we need to focus on the generics,” Chip Kahn, president and CEO of the Federation of American Hospitals told reporters. “All those actions on the generic front would go at least 40 to 50% down the way to solving our problems.”

Pelosi Health Care Strategy

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Source: U.S News

House Speaker Nancy Pelosi is laying out her strategy on health care and first up is improvements to “Obamacare” and legislation to lower prescription drug costs. “Medicare for all” will get hearings.

Pelosi and President Donald Trump have been sounding similar themes about the need to address the high drug costs. But her plans to broaden financial help for health insurance through the Affordable Care Act are unlikely to find takers among Republicans.

Either way, Democrats believe voters gave them a mandate on health care in the midterm elections that returned the House to their control.

Pushing her agenda, Pelosi is working from the ground up through major House committees. Her relationships with powerful chairmen and subcommittee chairs stretch back years. She’s “playing chess on three boards at once,” said Jim McDermott, a former Democratic congressman from Washington state, who predicts Pelosi’s most difficult challenge will be “herding new members” impatient for sweeping changes.

Responding to written questions from The Associated Press, Pelosi called the ACA “a pillar of health and financial security,” comparing it to Medicare, Medicaid and Social Security. “Democrats have the opportunity not only to reverse the years of Republicans’ health care sabotage, but to update and improve the Affordable Care Act to further lower families’ premiums and out-of-pocket costs, and expand coverage.”

Legislation from Energy and Commerce Chairman Frank Pallone, D-N.J., Ways and Means Chairman Richard Neal, D-Mass., and Workforce and Education Chairman Bobby Scott, D-Va., would broaden the number of people who can get financial assistance with their premiums under the Obama health law, and undo the “family glitch” that prevents some from qualifying for subsidies. It would also restore the HealthCare.gov advertising budget slashed by Trump and block some of his administration’s health insurance alternatives.

Those issues are separate from legal questions raised by ongoing Republican litigation to overturn the health law. The Democratic-led House has voted to intervene in the court case to defend the law.

The 2010 health law belonged as much to Pelosi as to former President Barack Obama, said McDermott. “She’s taking ‘Obamacare’ and very carefully figuring out where you have to support it,” he said.

The House ACA package has little chance as a stand-alone bill. But parts of it could become bargaining chips when Congress considers major budget legislation.

On prescription drugs, Trump and the Democrats are occupying some of the same rhetorical territory, an unusual circumstance that could bring about unexpected results.

Both say Americans shouldn’t have to keep paying more for medications than consumers in other economically advanced countries where governments regulate prices.

The Trump administration has designed an experiment to apply international pricing to Medicare “Part B” drugs administered in doctors’ offices.

Pelosi wants to expand price relief to retail pharmacy drugs that seniors purchase through Medicare’s “Part D” prescription drug benefit, a much bigger move. A bill introduced by leading Democrats would authorize Medicare to negotiate directly with drug companies using international prices as a fallback.

“President Trump said he’d ‘negotiate like crazy’ to bring down Medicare prescription drug prices, and since the midterm election he’s spoken about working with Democrats,” Pelosi wrote to AP. “We have an opportunity to enact the tough legislative negotiating authority needed to actually lower prescription drug prices for consumers.”

One of the top Senate Republicans on health care says he’s not inclined to do that. Finance Committee Chairman Chuck Grassley of Iowa says having private insurers negotiate with drug companies has worked.

“Part D is the only federal program I’ve been involved with that has come in under budget,” said Grassley. “If it’s working, don’t mess with it.”

Nonetheless, former Health and Human Services Secretary Mike Leavitt, a Republican, said Medicare is “a good example of places where the administration might surprise.”

“Prescription drug pricing is in a category where both the president and the Democrats have made a commitment,” Leavitt added. “There will be a lot of division, but in the end there is a very good chance they will find a way that they can both claim victory.”

But the biggest health care idea among Democrats is “Medicare for all,” and on that, Pelosi is cautious. To those on the left “M4A” means a government-run health care system that would cover every American. That would require major tax increases and a big expansion of government.

Pelosi has tapped two committees, Budget and Rules, to handle “Medicare for all.” Health care legislation doesn’t usually originate in either of them.

Says Pelosi: “We’re going to have hearings.”

Proposed Changes Could Raise Individual and Group Premiums

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Source: Cbpp.org

A seemingly minor change included in the Administration’s proposed rule setting Affordable Care Act (ACA) marketplace standards for 2020 would raise premiums for at least 7.3 million marketplace consumers by cutting their premium tax credits. These higher premiums — for example, $196 more annually for a family of four with income of $80,000 — would cause 100,000 people to drop marketplace coverage each year, according to the Administration’s own estimates.

The proposed change would also increase limits on total out-of-pocket costs for millions of people, including many with employer coverage. Families that experience costly illnesses or injuries, whether insured through the marketplace or through their employer, could face an additional $400 in medical bills because of the new policy. People with pre-existing health conditions, who are more likely to reach their plans’ limits on total out-of-pocket costs, would be disproportionately affected.

The proposed change is not required by the ACA or any other statute; the Administration is making an entirely discretionary choice to raise costs for millions of people.

How the Proposed Rule Would Increase Premiums, Out-of-Pocket Costs

The Administration’s proposal would change how the ACA’s “applicable percentages” and “maximum out-of-pocket limit” are adjusted each year. The applicable percentages establish the share of income that marketplace consumers are expected to pay toward benchmark (silver plan) health coverage, with the ACA’s premium tax credits making up the difference. The maximum out-of-pocket limit establishes the maximum amount that consumers can be required to pay in cost sharing, whether through deductibles, co-pays, or co-insurance. It applies to nearly all private plans, whether offered through employers or in the individual market.

Under the Administration’s proposal, both the share of income that people pay in premiums (after tax credits) and the maximum out-of-pocket limit would increase more rapidly than they otherwise would have. If the rule is finalized, the applicable percentages would be 2.5 percent higher in 2020 than they otherwise would have been, and the maximum out-of-pocket limit would also be 2.5 percent higher. That means:

  • The large majority — at least 7.3 million — of the 8.9 million people who purchase subsidized coverage in the ACA marketplaces would pay higher premiums, because they would receive smaller premium tax credits. Subsidized consumers in every state (including state-based marketplaces) would be affected.Premiums would increase most for families with incomes well above the poverty level but still low enough to qualify for subsidies. For example, a family of four with income of $80,000 would pay an extra $196 in 2020 premiums as a result of the rule. (See Table 1 for impacts on single individuals and families at other income levels.)

    According to the Administration’s own analysis, included in the proposed rule, these premium increases would cause 100,000 people each year to drop marketplace coverage. In addition to the direct impact on these consumers, this could also hurt the marketplace risk pool, causing sticker price premiums (premiums before tax credits) to rise as well. As the rule itself explains, “the proposed change could also contribute to a decline in Exchange enrollment among premium tax credit eligible consumers, and could ultimately result in net premium increases for enrollees that remain in the individual market, both on and off the Exchanges, as healthier enrollees elect not to purchase Exchange coverage.”

  • The maximum out-of-pocket limit would increase by $200 for an individual and $400 for a family. (The individual out-of-pocket limit in 2020 would be $8,200, instead of $8,000, while the family limit would be $16,400, instead of $16,000.)As noted, the maximum out-of-pocket limit protects people with employer-sponsored coverage, as well as those with individual market plans. Among consumers with employer-sponsored coverage, millions have plans with out-of-pocket limits at or near the maximum; they could face an additional $200 per person in medical bills if they are seriously ill or injured in 2020. This change will disproportionately impact people with pre-existing health conditions, who are more likely to reach their plans’ out-of-pocket limits.

Administration’s Arguments for Change Are Flawed

The Administration has argued that the formula change is needed to contain federal costs for premium tax credits. But by its own analysis, most of the roughly $1 billion in annual premium tax credit savings from the proposal would come from a reduction in the number of people with marketplace coverage, with the rest coming from low- and moderate-income marketplace consumers paying more. The Administration’s willingness to save $1 billion per year by reducing marketplace coverage and requiring low- and moderate-income people to pay more in premiums contrasts with its willingness to spend about $3 billion per year to expand the availability of short-term, limited duration health insurance plans exempt from ACA consumer protections.

The Administration also tries to justify the proposed change on technical grounds. The ACA requires the applicable percentages and maximum out-of-pocket limit to rise each year based on premium growth, and the Administration argues that premium growth across all private plans (the metric its new method adopts) is a better measure than premium growth in employer plans (the current metric, established in past regulations). But as the proposed rule notes, the Department of Health and Human Services previously adopted the employer plan premium measure because it “reflect[s] trends in health care costs without being skewed by individual market premium fluctuations resulting from the early years of the [ACA].” In contrast, the new methodology increases costs for consumers — including people with employer plans — due to the one-time increases in individual market premiums that occurred as insurers adjusted to the ACA and as the ACA’s temporary reinsurance program (which reimbursed insurers for certain costs) phased out.

More important, the proposed change is purely at the Administration’s discretion: the statute does not require it. Rather, the Administration is choosing to adopt a formula change the effect of which is to raise premiums for millions of people and weaken protections against high out-of-pocket costs for millions more.

House Votes to Protect Health-Care Law as Democrats Put GOP on Record

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Source: Washington Post

In the first health-care vote since Democrats seized the House majority, the chamber on Wednesday gave itself the power to intervene legally after a federal judge ruled that the Affordable Care Act was unconstitutional.

Wednesday’s vote was largely symbolic — Democrats voted last week to authorize legal action as part of a broader rules package — but it was the first time that lawmakers were presented with a discrete measure dealing with what was a dominant issue in the Nov. 6 midterm elections.

In forcing the vote, House Speaker Nancy Pelosi (D-Calif.), who was crucial in ensuring passage of the 2010 law, now has Republicans on record on the lawsuit, and those votes could be used in campaign ads next year.

The measure passed 235 to 192, with all Democrats supporting it and all but three Republicans opposing it.

“A campaign is part of forming a government, and no issue resonated with the American people in the last election like the issue of preexisting conditions,” said House Ways and Means Committee Chairman Richard E. Neal (D-Mass.). “There’s no arguing with the following statistic, that today, between 17 million and 20 million Americans have health insurance that didn’t have it before the Affordable Care Act.”

In the midterm campaign, Democrats argued that Republican efforts to repeal the ACA would deny the insurance protection afforded to millions of Americans with preexisting medical conditions, a core element of the Obama-era law.

Democrats have said that their singular focus on health care throughout the campaign was a winning political message as they flipped 40 House seats and claimed the majority.

Republicans, led by President Trump, repeatedly said they would ensure coverage for those Americans with conditions such as cancer, diabetes or even a pregnancy, while at the same time backing a lawsuit to invalidate the ACA.

About 20 states with Republican attorneys general sued to invalidate the law, arguing that its coverage guarantee was unconstitutional because the 2017 GOP tax law eliminated the individual mandate. The Trump administration supported the lawsuit, arguing in court that a key part of the ACA was unconstitutional.

In Texas, U.S. District Judge Reed O’Connor ruled last month that the ACA is invalid because of the change in tax law. His ruling is under appeal, and the law remains in effect pending a resolution.

GOP lawmakers argued Wednesday that the measure was a pointless messaging exercise and that Democrats are papering over problems with the ACA.

“Democrats are trying to sell this farce as a vote to protect people with preexisting conditions, but this is not a health-care vote,” said Rep. Devin Nunes (R-Calif.). “This is a vote to give cover because the law they passed was unconstitutional, and the individual mandate was deeply unpopular. They could put an end to this by passing a law that abides by the Constitution, but they are not willing to do that.”

GOP Seeks Health Care Reboot After 2018 Losses

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Source: The Hill

Republicans are looking for a new message and platform to replace their longtime call to repeal and replace ObamaCare, after efforts failed in the last Congress and left them empty-handed in the 2018 midterm elections.

Republican strategists concede that Democrats dominated the health care debate heading into Election Day, helping them pick up 40 seats in the House.

President Trump hammered away on immigration in the fall campaign, which helped Senate Republican candidates win in conservative states but proved less effective in suburban swing areas, which will be crucial in the 2020 election.

While Trump is focused on raising the profile of illegal immigration during a standoff over the border wall, other Republicans are quietly looking for a better strategy on health care, which is usually a top polling issue.

“Health care is such a significant part of our economy and the challenges are growing so great with the retirement of the baby boomers and the disruption brought about by ObamaCare that you can’t just cede a critically important issue to the other side,” said Whit Ayres, a Republican pollster.

“Republicans need a positive vision about what should happen to lower costs, expand access and protect pre-existing conditions,” he added. “You’ve got to be able to answer the question, ‘So what do you think we should do about health care?’ ”

A recent Associated Press-NORC Center for Public Affairs Research poll showed that 49 percent of respondents nationwide said government should tackle health care as a top priority, second only to economic concerns.

During his 2016 presidential campaign, Trump vowed to lower prescription drug costs, but the Republican-controlled Congress over the past couple of years focused on other matters. House Democrats who are now in the majority say they are willing to work with the White House on drug pricing, but it’s unclear if Republicans will take on the powerful pharmaceutical industry, long considered a GOP ally.

Republican candidates made the repeal of ObamaCare their main message in the 2010, 2012, 2014 and 2016 elections. But after repeal legislation collapsed with the late Sen. John McCain’s (R-Ariz.) famous “no” vote, the party’s message became muddled and Democrats went on the offensive.

Some Republicans continued to work on alternative legislation, such as a Medicaid block grant bill sponsored by Sens. Lindsey Graham (S.C.) and Bill Cassidy (La.), but it failed to gain much traction and the GOP health care message was left in limbo.

“We should be the guys and gals that are putting up things that make health care more affordable and more accessible,” said Jim McLaughlin, another Republican pollster. “No question Democrats had an advantage over us on health care, which they never should have had because they’re the ones that gave us the unpopular ObamaCare.”

“We need to take it to the next level,” he added. “You can’t get [ObamaCare] repealed. Let’s do things that will make health care more affordable and more accessible.”

Senate Health Committee Chairman Lamar Alexander (R-Tenn.), a close ally of Senate Majority Leader Mitch McConnell (R-Ky.), says finding an answer to that question will be his top priority in the weeks ahead.

Alexander will be meeting soon with Sen. Patty Murray (Wash.), the top Democrat on the Health Committee, as well as Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.), the leaders of the Senate Finance Committee, to explore solutions for lowering health care costs.

“I’ll be meeting with senators on reducing health care costs,” Alexander told The Hill in a recent interview. “At a time when one-half of our health care spending is unnecessary, according to the experts, we ought to be able to agree in a bipartisan way to reduce that.”

Health Care Industry Spends $30B A Year Pushing Its Wares, From Drugs To Stem Cell Treatment

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Source: Kaiser Health News

Hoping to earn its share of the $3.5 trillion health care market, the medical industry is pouring more money than ever into advertising its products — from high-priced prescriptions to do-it-yourself genetic tests and unapproved stem cell treatments.

Spending on health care marketing nearly doubled from 1997 to 2016, soaring to at least $30 billion a year, according to a study published Tuesday in JAMA.

“Marketing drives more testing. It drives more treatments. It’s a big part of why health care is so expensive, because it’s the fancy, high-tech stuff things that get marketed,” said Steven Woloshin, co-director of the Center for Medicine and Media at The Dartmouth Institute for Health Policy and Clinical Practice. His study captured only a portion of the many ways that drug companies, hospitals and labs promote themselves.

Advertising doesn’t just persuade people to pick one brand over another, said Woloshin. Sophisticated campaigns make people worry about diseases they don’t have and ask for drugs or exams they don’t need.

Consumer advocates say that taxpayers pay the real price, as seductive ads persuade doctors and patients alike to order pricey tests and brand-name pills.

“Whenever pharma or a hospital spends money on advertising, we the patients pay for it — through higher prices for drugs and hospital services,” said Shannon Brownlee, senior vice president of the Lown Institute, a Brookline, Mass., nonprofit that advocates for affordable care. “Marketing is built into the cost of care.”

High costs ultimately affect everyone, because they prompt insurance plans to raise premiums, said Diana Zuckerman, president of the National Center for Health Research, a nonprofit that provides medical information to consumers. And taxpayers foot the bill for publicly funded insurance programs, such as Medicare.

“These ads can be amazingly persuasive, and they can exploit desperate patients and family members,” said Zuckerman, who was not involved in the new study.

Drug companies spend the bulk of their money trying to influence doctors, showering them with free food, drinks and speaking fees, as well as paying for them to travel to conferences, according to the study.

Yet marketers also increasingly target consumers, said Woloshin, who wrote the study with his wife and longtime research partner, Dartmouth’s Dr. Lisa Schwartz, who died of cancer in November.

The biggest increase in medical marketing over the past 20 years was in “direct-to-consumer” advertising, including the TV commercials that exhort viewers to “ask your doctor” about a particular drug. Spending on such ads jumped from $2.1 billion in 1997 to nearly $10 billion in 2016, according to the study.

A spokeswoman for the pharmaceutical industry group, PhRMA, said that its ads provide “scientifically accurate information to patients.” These ads “increase awareness of the benefits and risks of new medicines and encourage appropriate use of medicines,” said Holly Campbell, of PhRMA.

The makers of genetic tests — including those that allow people to learn their ancestry or disease risk —also bombard the public with advertising. The number of ads for genetic testing grew from 14,100 in 1997 to 255,300 in 2016, at a cost that year of $82.6 million, according to the study. AncestryDNA spends more than any other company of its kind, devoting $38 million to marketing in 2016 alone.

Some companies are touting stem cell treatments that haven’t been approved by federal regulators. The Food and Drug Administration has approved stem cell therapy for only a few specific uses — such as bone marrow transplants for people with leukemia. But hundreds of clinics claim to use these cells taken from umbilical cord blood to treat disease. Many patients have no idea that these stem cell therapies are unapproved, said Angie Botto-van Bemden, director of osteoarthritis programs at the Arthritis Foundation.

Stem cell clinics have boosted their marketing from $900,000 in 2012 to $11.3 million in 2016, according to the study.

In recent months, the FDA has issued warnings to clinics marketing unapproved stem cell therapies. Twelve patients have been hospitalized for serious infections after receiving stem cell injections, according to the Centers for Disease Control and Prevention.

Medical advertising today goes beyond TV and radio commercials. Some online campaigns encourage patients to diagnose themselves, Woloshin said.

The website for Restasis, which treats dry eyes, prompts patients to take a quizto learn if they need the prescription eye drops, said Woloshin, who co-wrote a February study with Schwartz on the drug’s marketing strategy. The Restasis website also allows patients to “find an eye doctor near you.”

Many of the doctors included in the Restasis directory have taken gifts from its manufacturer, Allergan, Woloshin said. The doctor directory includes seven of the top 10 physicians paid by the company, his study says.

In a statement, Allergan spokeswoman Amy Rose said the company uses direct-to-consumer advertising “to support responsible disease awareness efforts.” The ads “do not displace the patient-physician relationship, but enhance them, helping to create well-informed and empowered consumer and patient communities.”

Drug sites don’t just lead patients to doctors. They also provide scripts for suggested conversations. For example, the website for Viagra, which treats erectile dysfunction, provides specific questions for patients to ask.

The website for Addyi, often called the “female Viagra,” goes even further. Patients who answer a number of medical questions online are offered a 10- to 15-minute phone consultation about the drug for $49. Patients who don’t immediately book an appointment receive an email reminder a few minutes later.

“This is more evidence,” Brownlee said, “that drug companies are not run by dummies.”

Last Updated 01/23/2019

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