Dem Single-Payer Fight Set to Shift to Battle Over Medicare ‘Buy-In’

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Source: The Hill

Momentum is building among House Democrats for a more moderate alternative to single-payer health-care legislation.

The legislation, which would allow people aged 50 to 65 to buy Medicare, is being championed by Rep. Brian Higgins (D-N.Y.), who supported House Minority Nancy Pelosi (D-Calif.) for Speaker in exchange for a commitment to work on his bill when Democrats take control of the House early next year.

“We agreed in principle to get this done,” Higgins told The Hill.

Higgins told The Hill that Pelosi’s support of his buy-in legislation was the key to switching his position on her Speakership.

Higgins said he wasn’t promised a vote on the legislation, just a commitment that he will be the point person of the effort to shepherd it through the legislative process.

“It’s got to be scored, go through committee. It’s got to do a lot of things,” Higgins said. “We fell short of a vote in committee [with Republicans in control]. So now that changes.”

Under Higgins’s plan, anyone aged 50 to 64 who buys insurance through the health-care exchanges would be eligible to buy in to Medicare.

It would also apply to people with employer-sponsored insurance and allow employers to pay Medicare premiums on their behalf — a feature that could expand the number of older working individuals who select the buy-in option.

Hillary Clinton offered a similar proposal when she ran for president in 2016. Former President Bill Clinton also proposed expanding Medicare in 1998 by allowing certain workers between the ages of 55 and 65 to buy Medicare. Those workers had to either lack insurance or be retired or laid-off.

Rep. Frank Pallone Jr. (D-N.J.), the likely chairman of the Energy and Commerce Committee next year, said he thinks a Medicare buy-in should be on the agenda next year.

“We certainly would consider a Medicare buy-in,” Pallone told The Hill. “I think we’ve got to wait and see what the caucus wants to do and what the committee wants to do, but I’ll just say it’s certainly something we should consider.”

“Medicare for all” supporters are energized after sweeping Democratic victories in the midterm elections, however, and see the Medicare buy-in bill as too small a step.

“We are dead set against any buy-in or public option,” said Kenneth Zinn, political director of National Nurses United. “Our goal as RNs is to ensure a universal system of guaranteed health care for everyone and this does not accomplish that. I would urge Congress to reject it.”

Zinn said private insurance shouldn’t have any role in health coverage moving forward. A single-payer plan covers everyone, regardless of income, and eliminates copays, deductibles and premiums. It also eliminates private insurance.

Rep. Pramila Jayapal (D-Wash.), who is co-chair of the Medicare for All Caucus in the House, told The Hill said she has spoken with Higgins and expressed her concerns about his bill.

“We have to be careful not to perpetuate the system we have,” Jayapal said.  “I would prefer to have a reduction of the age of Medicare so that more people could qualify but not a buy-in, because that continues the problems that we have right now.”

Jayapal added that lowering the eligibility age “would be an appropriate way to go where we’re taking a step forward towards a system that will ultimately cover everybody.”

Still, she said with Democrats in control of the House, there will be more of an “exchange of ideas” than there has been previously.  

Higgins said a Medicare buy-in is quicker and cheaper to implement than single-payer. It can also be a bridge to Medicare for all, he said.

“I support the exploration of Medicare for all, but you have to be well balanced and practical about this. Establishing a brand-new health insurance program is going to take time,” Higgins said.

Adam Green, co-founder of the Progressive Change Campaign Committee, said he supports giving everyone the option to buy in to Medicare, and thinks the legislation from Higgins will start a conversation. He wants a “buy-in for all” to be the “new floor” in the debate.

“It’s ironic that it took a conservative Democrat to jumpstart the momentum for Medicare buy-in but now that it’s there, there will be a huge push for Medicare option for all,” Green said. 

“It’s jumpstarting the concept of a buy-in in 2019 and will lead to momentum of a buy-in for every family and small business.”

Editorial: How Newsom, California Should Approach Single-Payer

Image result for Editorial: How Newsom, California Should Approach Single-Payer imagesSource: Mercury News

A single-payer health care system may yet prove to be the best alternative for California and the nation. But Gov.-elect Gavin Newsom should make clear that the Legislature shouldn’t waste time on any legislation in 2019 unless it includes a prudent financial plan that makes sense for California consumers, health care providers and business interests.

Newsom called for installing a single-payer system during his campaign but has been tamping down expectations since July — with good reason. California can’t possibly make it work unless Congress and the president cooperate.

The federal government would need to turn over to the state all the Medicare and Medicaid money it spends in California. That’s about $200 billion annually. How far do proponents think they will get as long as Republican Mitch McConnell is Senate Majority Leader and Donald Trump sits in the White House?

Until there’s a viable financial plan, the governor should instead prioritize other pressing California issues that demand immediate attention, including tax reform, wildfires and paying down pension debt.

Meanwhile, single-payer proponents should use 2019 to bring together the broadest range of interested parties possible to explore the issue in detail. It’s the best way to bring forward a credible plan that can win widespread support throughout the state and in Washington, D.C. It also would serve to put health care front-and-center, where it belongs, in the 2020 presidential campaign.

Warren Buffett has it right when he says “the ballooning costs of health care act as a hungry tapeworm on the American economy.”

In 2000, the United States spent only $4,881 per person on health care. That equals $7,312 in today’s dollars. Today, the United States spends $11,193 per person, or more than $3.3 trillion a year.

]Health care accounts for roughly 18 percent of the U.S. economy. The United States cannot expect to compete on the global level when its major Western competitors spend on average only $5,169 per person on health care, or less than 10 percent of their economies. Especially when those same competitors enjoy better outcomes than their American counterparts.

Ultimately, this is a problem that requires a national solution. Jeopardizing state finances is not the way to solve it. California shouldn’t waste time as it did earlier this year debating SB 562, Sen. Ricardo Lara’s single-payer plan. Assembly Speaker Anthony Rendon killed the effort, accurately calling it “woefully incomplete.”

appalling that the state Senate passed the legislation despite, as Rendon noted, failing to address such critical issues as financing, delivery of care, cost controls and the need for federal cooperation. Keep in mind that if California were to adopt a single-payer plan, it would mean, for example, that nearly 6 million senior citizens would no longer be covered by Medicare.  They would instead be placed under the new state plan along with every California resident. That level of change demands a broad, transparent public debate before passage and implementation.

California has made great strides under the Affordable Care Act in bringing down the number of uninsured residents, but the state and the nation clearly need major changes to get health care costs under control. Further exploration of the merits of a single-payer system has merit, but California’s new governor should only move forward when a prudent financial plan with broad support in Washington and Sacramento that has been developed and fully vetted.

Democrat to Introduce Bill Extending Health care to Undocumented Immigrants, Pressuring Newsom

Assemblyman Joaquin Arambula | AP Photo

Source: Politico

A Democratic assemblyman will introduce a bill Monday to expand health coverage to all undocumented immigrants in California, a move that could pressure Gov.-elect Gavin Newsom into acting on his chief campaign promise of creating a universal health care system in the state.

The bill by Assemblyman Joaquin Arambula (D-Fresno) would allow undocumented immigrants over the age of 19 to enroll in Medi-Cal, the state’s low-income health care program should they meet income requirements. It would have a price tag of $3 billion per year, according to early estimates.

Roughly 60 percent of the remaining 3 million uninsured Californians are undocumented immigrants who qualify for Medi-Cal but are unable to fully participate in the program because of their immigration status.

Arambula, a former Central Valley emergency room doctor, told POLITICO he sees health care as “a human right” and hopes, through his bill, that Newsom will immediately take up the charge of covering everyone, including those living in the country illegally. He’s introducing the bill on the first day of the 2019-20 legislative session.

“What I have seen through my lifetime, working on the front lines of health care, is gross inequality … people whose lives are threatened or ruined because of their inability to access health care,” Arambula said. “I hope the incoming administration will be bold in trying to be a beacon for the rest of the United States … and show that here in California, we can do what every other industrialized nation does, which is provide health care as a human right.”

It’s Arambula’s second attempt at expanding health care for undocumented adult immigrants. He authored a similar bill this year, but it died in the state Senate. Gov. Jerry Brown declined to fund it in the state budget.

California already allows undocumented immigrants, up to age 19, to enroll in full-scope Medi-Cal. Undocumented adults qualify for limited Medi-Cal coverage — pregnancy and emergency room care.

Expanding the program to all undocumented, low-income adults would come at a cost of $3 billion per year from the state general fund, according to a May analysis by the Assembly Appropriations Committee. Extending coverage to undocumented adults age 26 or younger — a cohort that mirrors the college-age citizen population that benefited from the health care expansion under Obamacare — would cost nearly $500 million per year, according to a separate analysis by the Senate Appropriations Committee, which examined amendments Arambula sought earlier this year.

A companion bill in the Senate, authored by state Sen. Ricardo Lara (D-Bell Gardens) that sought to expand Medi-Cal to undocumented adults ages 65 and older would have cost $200 million per year, according to an Assembly fiscal analysis.

Under California’s Medi-Cal expansion under the Affordable Care Act, the state has cut its uninsured rate to 7.2 percent, a 10-point drop since before Obamacare took effect — larger than any other state in the country, according to the latest data available from the U.S. Census Bureau. If California were to expand care to the undocumented, its uninsured rate would drop to roughly 3 percent, rivaling only one other state in its coverage success.

Massachusetts, which has long had a state-based individual mandate, has the lowest uninsured rate in the nation at 2.8 percent, according to a 2017 Census Bureau report.

California residents qualify for Medi-Cal under income limits set by the federal government. A single person must earn $16,395 per year or less, according to the state Department of Health Care Services. A couple qualifies if its combined income is $22,108 or less. For a family of four, the threshold is $33,354 per year.

Brown has dismissed calls to expand health care to all undocumented immigrants, expressing reluctance to absorb recurring costs to the state budget out of concern the state will soon face a recession. While California is expected to have nearly a $15 billion surplus next fiscal year, the state can only increase the permanent budget by about $3 billion before risking eventual deficits, according to the Legislative Analyst’s Office.

Newsom, however, promised throughout his campaign he will be California’s “health care governor” and said he’d make universal health care a top legislative priority if elected. He has since sought to tamp down expectations, telling POLITICO in a previous interview that he doesn’t expect to take the step toward covering all undocumented immigrants immediately.

“There will not be that money. I don’t expect there to be that money,” he said in the previous interview. “It would be fiscally irresponsible to spend 3-plus billion dollars until we assess the budget, and taking away rainy day reserve when we should be adding to it.”

Arambula argued it’s far costlier not to provide access to preventive services, forcing people to seek care in the emergency room where patients are often dealt the most expensive bills, or delay care altogether.

“What we should be doing is making smarter, more efficient decisions on our budget that invest in people … prevent disease and keep people healthy,” he said. “I’m looking to our next administration to provide some leadership on this issue and hoping our discussion around health care will motivate the next governor to work on this crucial issue.”

Arambula, co-chair of a special 2018 Assembly committee formed by Speaker Anthony Rendon to study the prospects of a government-financed, single-payer system, echoed the catchphrase of the California Nurses Association and other strong single-payer advocates in characterizing health care as a human right.

He said health care is as much a right as providing an education for every child, but suggested that California cannot enact single-payer under President Donald Trump — a point Newsom has made repeatedly.

“I look forward to hopefully a new federal administration that would be willing to discuss what health care reform looks like and how it can be a partner to California,” Arambula said. “I believe that our role and responsibility in government is to take care of those less fortunate than ourselves.”

With Federal Public Charge Rule Pending, California Braces For Possible Medi-Cal Exodus

Image result for With Federal Public Charge Rule Pending, California Braces For Possible Medi-Cal Exodus images

Source: Capital Public Radio

A draft Trump administration rule that would penalize immigrants seeking green cards for accessing social services — including Medicaid — could cause thousands of kids to lose their health insurance, some advocates fear.

The proposal says people applying for legal permanent residency may be turned away if they’re deemed a “public charge,” meaning someone who’s become dependent on government assistance. There’s a laundry list of benefits that could be held against applicants, including housing assistance, food stamps and most Medicaid services.

The Department of Homeland security says the rule will “promote immigrant self-sufficiency” and “protect finite resources.”

California health advocates worry that legal citizens from mixed-status families who are entitled to Medi-Cal may drop their insurance for fear of negatively impacting their loved ones’ applications.

Kimberly Chen with the California Pan-Ethnic Health Network said even though undocumented children have been entitled to Medi-Cal since 2016, there’s confusion around what the proposed federal penalty means.

“Perhaps the kids are citizens and the parents are permanent residents,” she said. “Maybe they’re fearful that their use of Medi-Cal to get themselves healthy, that that would endanger their whole family’s’ ability to become citizens in the future.”

Advocates are also worried the draft rule will keep some people from enrolling in Covered California this year, even though only Medicaid would be included in the proposal.

An analysis from the nonprofit Institute for Community Health shows that as many as 455,000 California kids could leave their insurance plans for fear of endangering an undocumented family member. They got the number by tallying the 1.3 million children who get care through the Medi-Cal program and live with at least one non-citizen parent, then applying disenrollment rates of 15 to 35 percent.

If these patients drop their coverage but continue accessing medical care, hospitals worry they’ll have to foot the bill.

The California Hospital Association is bracing for an estimated $5 billion loss in federal reimbursements —  $2.9 billion for citizen patients who leave their plans for fear of endangering a non-citizen family member, and $2.2 billion for non-citizens. These estimates are based on 2016 enrollment and reimbursement rates.

The association is requesting that the federal Department of Health Services asking them to withdraw the proposed rule. Comments on the proposal end Dec. 10.

In Health Insurance Wastelands, Rosier Options Crop Up For 2019

Image result for In Health Insurance Wastelands, Rosier Options Crop Up For 2019 images

Source: Kaiser Health News

In recent years, places such as Memphis and Phoenix had withered into health insurance wastelands as insurers fled and premiums skyrocketed in the insurance marketplaces set up by the Affordable Care Act. But today, as in many parts of the country, these two cities are experiencing something unprecedented: Premiums are sinking and choices are sprouting.

In the newly competitive market in Memphis, the cheapest midlevel “silver” plan for next year will cost $498 a month for a 40-year-old, a 17 percent decrease. Four insurers are selling policies in Phoenix, which then-presidential candidate Donald Trump highlighted in 2016 as proof of “the madness of Obamacare” as all but one insurer left the region.

Janice Johnson, a 63-year-old retiree in Arizona’s Maricopa County, which includes Phoenix, said her premium for a high-deductible bronze plan will be $207 instead of $270 because she is switching carriers.

“When you’re on a fixed income, that makes a difference,” said Johnson, who receives a government subsidy to help cover her premium. “I’ll know more than a year from now if I’m going to stick with this company, but I’m going to give them a chance, and I’m pretty excited by that.”

Across all 50 states, premiums for the average “benchmark” silver plan, which the government uses to set subsidies, are dropping nearly 1 percent. And more than half of the counties that use the federal exchange are experiencing an average 10 percent price decrease for their cheapest plan.

In most places, the declines are not enough to erase the price hikes that have accrued since the creation in 2014 of the health care exchanges for people who don’t get insurance through an employer or the government.

Instead, experts said, next year’s price cuts help to correct the huge increases that jittery insurers set for 2018 plans to protect themselves from anticipated Republican assaults on the markets. Although Congress came up one vote shy of repealing the law, Trump and Republicans in Congress did strip away structural underpinnings that pushed customers to buy plans and helped insurers pay for some of their low-income customers’ copayments and deductibles. Insurers responded with 32 percent average increases.

“Insurers overshot last year,” said Chris Sloan, a director at Avalere, a health care consulting company in Washington, D.C. “We are nowhere close to erasing that increase. This is still a really expensive market with poor benefits when it comes to deductibles and cost.”

For 2019, the average benchmark silver premium will be 75 percent higher than it was in 2014, according to data from the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

When Republicans failed to kill the health law last year, they inadvertently may have made it stronger. Insurers banked hefty profits this year, and new companies are moving in.

All these factors were especially influential in Tennessee, where the average benchmark premium is dropping 26 percent, according to a government analysis. That is more than in any other state.

In 2018, 78 of 95 Tennessee counties had just one insurer. That monopoly allowed the insurer to set the prices of its plans without fear of competition, said David Anderson, a researcher at the Duke-Margolis Center for Health Policy in Durham, N.C. “They were massively overpriced,” he said.

But for the coming year, 49 Tennessee counties will have more than one insurer, with a few — like Shelby County, where Memphis is located — having four companies competing. There, Cigna dropped the price of its lowest-cost silver plan by 15 percent. Nonetheless, it was underbid by Ambetter of Tennessee, which is owned by the managed-care insurer Centene Corp.

“We’re finally at the point where the market is stabilized,” said Bobby Huffaker, the CEO of American Exchange, an insurance brokerage firm based in Tennessee. “From the beginning, every underwriter, and the people who were the architects, they knew it would take several years for the market to mature.”

Still, the cheapest Memphis silver premium is nearly three times what it was in 2014, the first year of the marketplaces. A family of four with 40-year-old parents will be paying $19,119 for all of next year unless they qualify for a government subsidy.

“The unsubsidized are leaving,” said Sabrina Corlette, a professor at Georgetown University’s Health Policy Institute. “They are finding these premiums unaffordable.”

The landscape in Phoenix is greatly improved from when Trump visited after the federal government announced a 116 percent premium increase for 2017, as the number of insurers dropped from eight to one.

But now, three new insurers are entering Maricopa County. Ambetter, the only insurer this year, dropped its lowest price for a silver plan for next year by 12 percent and still offers the cheapest such plan.

Ambetter’s plan is still 114 percent above the least expensive silver plan in the first year of the exchanges. And none of the insurers are offering as broad and flexible a choice of doctors and hospitals as consumers had back then, said Michael Malasnik, a local broker.

Since the start of the exchanges, he said, insurers have “raised their rates by multiples, and they’ve figured out you have to be a very narrow network.”

Each plan for 2019 contains trade-offs. He said only Bright Health’s plan includes Phoenix Children’s Hospital. Ambetter’s plan includes the most popular hospital and doctor groups, but they are not as conveniently located for people living in the southeastern corner of the county, making other insurers’ plans appealing.

“Geography is the name of the game this year,” Malasnik said.

Theresa Flood, a preschool teacher who lives outside Phoenix, said none of the plans she considered accepted her doctors, who include a specialist for her spine problems — she has had four surgeries — and a neurologist who monitors a cyst and benign tumor in her brain.

“I have to establish care with a whole new spine doctor and establish care with a whole new neurologist if I want to follow up on these things,” Flood, 59, said. “You’re going from established care to who in the heck am I going to see?”

The plan she chose would have been too expensive except that she and her husband, John, a pastor, qualified for a $1,263-a-month subsidy that will drop the cost to $207 a month. That bronze plan from Ambetter carries a $6,550-per-person deductible, so she expects she’ll still have to pay for her doctors on her own unless she needs extensive medical attention.

“It’s gone from being able to have a plan that you could sort of afford and got some benefit from, to putting up with what you can afford and hoping nothing happens that you actually have to use your insurance,” she said. “At this point, I’ll take what I can get.”

Trump Administration Invites Health Care Industry to Help Rewrite Ban on Kickbacks

Image result for Trump Administration Invites Health Care Industry to Help Rewrite Ban on Kickbacks images

Source: New York Times

The Trump administration has labored zealously to cut federal regulations, but its latest move has still astonished some experts on health care: It has asked for recommendations to relax rules that prohibit kickbacks and other payments intended to influence care for people on Medicare or Medicaid.

The goal is to open pathways for doctors and hospitals to work together to improve care and save money. The challenge will be to accomplish that without also increasing the risk of fraud.

With its request for advice, the administration has touched off a lobbying frenzy. Health care providers of all types are urging officials to waive or roll back the requirements of federal fraud and abuse laws so they can join forces and coordinate care, sharing cost reductions and profits in ways that would not otherwise be allowed.

From hundreds of letters sent to the government by health care executives and lobbyists in the last few weeks, some themes emerge: Federal laws prevent insurers from rewarding Medicare patients who lose weight or take medicines as prescribed. And they create legal risks for any arrangement in which a hospital pays a bonus to doctors for cutting costs or achieving clinical goals.

The existing rules are aimed at preventing improper influence over choices of doctors, hospitals and prescription drugs for Medicare and Medicaid beneficiaries. The two programs cover more than 100 million Americans and account for more than one-third of all health spending, so even small changes in law enforcement priorities can have big implications.

Federal health officials are reviewing the proposals for what they call a “regulatory sprint to coordinated care” even as the Justice Department and other law enforcement agencies crack down on health care fraud, continually exposing schemes to bilk government health programs.

“The administration is inviting companies in the health care industry to write a ‘get out of jail free card’ for themselves, which they can use if they are investigated or prosecuted,” said James J. Pepper, a lawyer outside Philadelphia who has represented many whistle-blowers in the industry.

Federal laws make it a crime to offer or pay any “remuneration” in return for the referral of Medicare or Medicaid patients, and they limit doctors’ ability to refer patients to medical businesses in which the doctors have a financial interest, a practice known as self-referral.

These laws “impose undue burdens on physicians and serve as obstacles to coordinated care,” said Dr. James L. Madara, the chief executive of the American Medical Association. The laws, he said, were enacted decades ago “in a fee-for-service world that paid for services on a piecemeal basis.”

Melinda R. Hatton, senior vice president and general counsel of the American Hospital Association, said the laws stifle “many innocuous or beneficial arrangements” that could provide patients with better care at lower cost.

Hospitals often say they want to reward doctors who meet certain goals for improving the health of patients, reducing the length of hospital stays and preventing readmissions. But federal courts have held that the anti-kickback statute can be violated if even one purpose of the remuneration is to induce referrals or generate business for the hospital.

The premise of the kickback and self-referral laws is that health care providers should make medical decisions based on the needs of patients, not on the financial interests of doctors or other providers.

Health care providers can be fined if they offer financial incentives to Medicare or Medicaid patients to use their services or products. Drug companies have been found to violate the law when they give kickbacks to pharmacies in return for recommending their drugs to patients. Hospitals can also be fined if they make payments to a doctor “as an inducement to reduce or limit services” provided to a Medicare or Medicaid beneficiary.

Doctors, hospitals and drug companies are urging the Trump administration to provide broad legal protection — a “safe harbor” — for arrangements that promote coordinated, “value-based care.” In soliciting advice, the Trump administration said it wanted to hear about the possible need for “a new exception to the physician self-referral law” and “exceptions to the definition of remuneration.”

Almost every week the Justice Department files another case against health care providers. Many of the cases were brought to the government’s attention by people who say they saw the bad behavior while working in the industry.

“Good providers can work within the existing rules,” said Joel M. Androphy, a Houston lawyer who has handled many health care fraud cases. “The only people I ever hear complaining are people who got caught cheating or are trying to take advantage of the system. It would be disgraceful to change the rules to appease the violators.”

But the laws are complex, and the stakes are high. A health care provider who violates the anti-kickback or self-referral law may face business-crippling fines under the False Claims Act and can be excluded from Medicare and Medicaid, a penalty tantamount to a professional death sentence for some providers.

Federal law generally prevents insurers and health care providers from offering free or discounted goods and services to Medicare and Medicaid patients if the gifts are likely to influence a patient’s choice of a particular provider. Hospital executives say the law creates potential problems when they want to offer social services, free meals, transportation vouchers or housing assistance to patients in the community.

Likewise, drug companies say they want to provide financial assistance to Medicare patients who cannot afford their share of the bill for expensive medicines.

AstraZeneca, the drug company, said that older Americans with drug coverage under Part D of Medicare “often face prohibitively high cost-sharing amounts for their medicines,” but that drug manufacturers cannot help them pay these costs. For this reason, it said, the government should provide legal protection for arrangements that link the cost of a drug to its value for patients.

Even as health care providers complain about the broad reach of the anti-kickback statute, the Justice Department is aggressively pursuing violations.

A Texas hospital administrator was convicted in October for his role in submitting false claims to Medicare for the treatment of people with severe mental illness. Evidence at the trial showed that he and others had paid kickbacks to “patient recruiters” who sent Medicare patients to the hospital.

The owner of a Florida pharmacy pleaded guilty last month for his role in a scheme to pay kickbacks to Medicare beneficiaries in exchange for their promise to fill prescriptions at his pharmacy.

The Justice Department in April accused Insys Therapeutics of paying kickbacks to induce doctors to prescribe its powerful opioid painkiller for their patients. The company said in August that it had reached an agreement in principle to settle the case by paying the government $150 million.

The line between patient assistance and marketing tactics is sometimes vague.

This month, the inspector general of the Department of Health and Human Services refused to approve a proposal by a drug company to give hospitals free vials of an expensive drug to treat a disorder that causes seizures in young children. The inspector general said this arrangement could encourage doctors to continue prescribing the drug for patients outside the hospital, driving up costs for consumers, Medicare, Medicaid and commercial insurance.

Trump Administration Looks to Give Private Medicare Plans Negotiating Power on Drugs

Trump administration looks to give private Medicare plans negotiating power on drugs

Source: The Hill

Insurers that participate in Medicare’s prescription drug program would be able to exclude certain drugs if prices rise faster than inflation as part of a new proposal from the Trump administration.

The proposal, announced Monday, is aimed at lowering prescription drug costs for seniors by giving Medicare plans leverage in price negotiations.

Currently, private Medicare health plans are required to cover all or “substantially all” drug in six “protected” classes, such as HIV treatments, antidepressants and cancer drugs, regardless of cost.

This gives pharmaceutical companies little incentive to make the drugs affordable, administration officials said.

“The lack of any ability for Part D plans to manage drugs in the protected classes has allowed the pharmaceutical industry to command high prices on protected class drugs in Part D, without patients getting a good deal,” Centers for Medicare and Medicaid Services Administrator Seema Verma said in a statement.

Under the proposal, health plans would be allowed to exclude protected drugs with price increases that are greater than inflation, as well as certain new drug formulations that are not a “significant innovation” over the original product.

The proposal could save taxpayers $692 million over a decade, officials said.

“By bringing the latest tools from the private sector to Medicare Part D, we can save money for taxpayers and seniors, improve access to expensive drugs many seniors need, and expand their choice of plans,” Health and Human Services Secretary Alex Azar wrote in a Monday blog post.

The proposal would also allow private Medicare plans to use two controversial policies called prior authorization and step therapy — requiring patients try cheaper drugs before turning to more expensive ones, regardless of what their doctor prescribes.

The proposal is sure to elicit significant pushback from the pharmaceutical industry. Patient advocacy groups were quick to argue such policies would restrict seniors’ access to medicine.

“Step therapy is unheard of in the treatment of HIV due to the danger of developing resistance to an entire class of drugs and potential side effects,” the AIDS Institute said in a statement. “The Medicare Part D Program is working well for people living with HIV, and there is no reason to take these draconian actions.”

The American Cancer Society’s advocacy arm also expressed concern with the proposal.

“The proposals aim to save the Medicare program money, but in their current form could actually have the inverse effect, raising costs in other parts of the program and likely resulting in tremendous cost-shifting to patients,” said Chris Hansen, president of ACS’s Cancer Action Network

Administration officials pushed back on the argument of access, saying patients will be “in the driver’s seat.”

“[I]t’s important to remember that if seniors don’t like a plan that takes advantage of these new flexibilities, they are in the driver’s seat. They have the option to choose a different plan that better meets their needs. These new tools will only become as common as beneficiaries want them to be,” Azar said in the blog post.

A Drug Maker Boosted the Price of Its Opioid-Overdose Antidote by 600 percent, and Taxpayers Suffered

Image result for A Drug Maker Boosted the Price of Its Opioid-Overdose Antidote by 600 percent, and Taxpayers Suffered images

Source: STAT

In order to capitalize on the opioid crisis, a small company that sells a version of naloxone, a decades-old drug that is widely used to reverse the effect of opioid and heroin overdoses, raised the price of its product by more than 600 percent between 2014 and 2017, which cost the federal government more than $142 million, according to a lengthy report from a Senate subcommittee.

Central to its strategy, Kaleo circumvented the traditional pharmaceutical market by subsidizing patients who were given its Evzio opioid antidote device, instead of contracting with pharmacy benefit managers and insurers. In doing so, the company used a controversial scheme to provide Evzio at no cost to patients, but counted on private and public insurers to pay an ever-rising wholesale, or list, price.

“Kaléo’s more than 600 percent price increase of EVZIO not only exploits a country in the middle of an opioid crisis, but also American taxpayers who fund government-run health care programs designed to be a safety net for our country’s elderly and most vulnerable,” the Senate Permanent Subcommittee on Investigations alleged.

Evzio is an auto-injector device that provides verbal instructions that talk the user through using the product on an overdose victim. Kaleo began selling the device in July 2014 at $575 per unit, but since then, has regularly boosted the price, which is $4,100. However, a lower-cost alternative known as Narcan is available for $125 which, the committee noted, also includes two doses.

For its part, Kaleo did not deny the pricing moves, but argued its product has saved more than 5,500 lives and that the company is working with “stakeholders” to provide Evzio at a lower cost. The drug maker also derided “negative attention” to what it called a “complex story.” The Senate report,  which is worth reading, was given in advance to “60 Minutes,” which broadcast a critical segment on its Sunday night program.

The report arrives as the U.S. struggles to contain the number of overdoses and deaths attributed to opioids, which the Centers for Disease Control and Prevention pegged at more than 49,000 in 2017. A growing number of city, county, and state governments, meanwhile, have sued opioid makers for underplaying the addictive risks of their painkillers and encouraging unnecessary prescribing.

Products such as Evzio have been among the tools increasingly used by law enforcement and government agencies in recent years to blunt the costly impact of the opioid crisis. But at the same time, there have been growing complaints about rising price tags. Amphastar Pharmaceutical was first probed three years ago and Kaleo, in particular, has been in the crosshairs more recently.

Kaleo landed there thanks to a tactic that has generated confusion and, in some quarters, dismay. After dramatically raising the list price, Kaleo sales reps encouraged physician offices to sign prior authorization paperwork for Evzio prescriptions, which indicated the device was medically necessary. This move triggered insurance coverage without first requiring patients to try a cheaper option.

In reality, patients received Evzio at no cost regardless of whether they had commercial insurance coverage. How so? Kaleo paid for prescriptions not covered by commercial health plans, including any associated fees. And for patients with commercial insurance coverage, the company paid any associated copays.

At the same time, Kaleo ended contracts with pharmacy benefit managers and health plans for both commercial and Medicare Part D drug coverage. This meant Kaleo no longer paid administrative fees as well as rebates that reduced the cost of Evzio. And the company stopped participating in Medicaid. As a result of these moves, both Medicare and Medicaid began paying more for the device.

The Senate committee found that Medicare was paying an average of $3,522 for each Evzio unit and Medicaid was paying an average of $2,412. Meanwhile, commercial health insurers were only paying an average of $367, which meant that government health care programs were subsidizing usage. It is worth noting that lawmakers have probed Kaleo over pricing tactics for its Auvi-Q allergic reaction device, an EpiPen rival.

The model has been used before. In fact, Kaleo hired two consultants, including Todd Smith, who had previously run two drug makers that relied on this strategy, Horizon Pharma and Novum Pharma. He and his partner were paid $10.2 million over a two-year period for advising Kaleo.

Five years ago, when Smith ran Horizon, the drug maker bought the rights to the Vimovo painkiller and on the first day the deal closed, raised the price for 60 tablets by 587 percent, to $959.00. After yet another huge price hike, the company maintained there would always be a “limited financial impact on the patient,” and that about 97 percent of Vimovo patients would not pay out-of-pocket costs.

Smith later moved to Novum Pharma which, two years ago, gained notice for huge price hikes on skin gels. The company blamed middlemen for passing on extra costs to patients, and claimed that patients do not actually pay much for its products. In fact, Novum insisted people with commercial insurance paid nothing for its gels, even when their insurance does not provide coverage.

As for Kaleo, a spokeswoman sent us this: “We believe two facts are critical to the Evzio story. First, we have received voluntary reports from recipients of donated product that Evzio has saved more than 5,500 lives since we launched the product in 2014. Second, we have never turned an annual profit on the sale of Evzio. Patients, not profits, have driven our actions.

“We believe patients and physicians should have meaningful choices. There is no doubt, the complexity of our health care system has had unintended negative implications for everyone involved, but most importantly, for patients. To this end, we explored viable paths within the current healthcare system to make Evzio available to patients in a responsible, meaningful and affordable way.

“We agree changes need to be made. We believe all patients should have the right to innovative products at reasonable prices. We are actively working with stakeholders in the health care system, including insurers, policymakers, and government officials, to provide Evzio at a lower cost while ensuring patients and their loved ones have access to this life-saving drug.”

The Senate subcommittee, meanwhile, offered several suggestions. This topped the list: The Centers for Medicare & Medicaid Services should review the use of medical necessity formulary exceptions to prevent companies from inappropriately influencing prescribing.

Lower Drug Prices Get an Assist From a Big Player

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Source: Bloomberg

Express Scripts Holding Co. and other pharmacy-benefit managers make money by negotiating drug prices on behalf of health-plan providers. The list prices that pharmaceutical companies set for their drugs diverge wildly from their real cost, and PBMs widen and feast on the gap, which helps make them some of the principal beneficiaries of America’s byzantine pricing system.

But on Tuesday, ahead of its acquisition by Cigna Inc. and possible regulation, Express Scripts announced a drastic departure from business as usual: a new drug list for clients that favors drugs with lower sticker prices over those that provide huge secret discounts. While unlikely to replace the current system any time soon, it’s a substantial shift for a major PBM, and an acknowledgment of tough political and business realities that could boost a nascent and positive trend in drug prices.

One of the main services PBMs provide are so-called drug formularies, or tiered lists of medicines, where drugs deemed “preferred” are much cheaper than those that are “excluded.” Preferred status on a major formulary can add millions in sales volume, and drugmakers offer huge rebates in order to secure it. The growing scale of PBMs — Express Scripts’s annual revenue has increased by $80 billion in the past decade — has contributed to an explosion in the size of rebates and the so-called gross-to-net gap between list prices and the amount that’s actually paid.

Critics contend that PBMs reap excessive profits from this arrangement, and that companies like Express Scripts have created an incentive for drugmakers to hike prices to offer higher rebates. This, in turn, has prompted regulatory scrutiny, in the form of a planned Trump administration rule.

The firm’s new formulary upends the status quo by creating a path to preferred status for drugs that have lower list prices. The strategy was enabled by drugmakers Gilead Sciences Inc. and Amgen Inc., which recently announced that they would make their pricey Hepatitis C and cholesterol medicines available at a substantially reduced list price as they try to boost sales volume in tough markets.

That new price is in line with what the drugs previously cost after rebates, so the overall cost to the system may not change much. But this is big news for people on high deductible plans as well as Medicare beneficiaries, who often have out-of-pocket expenses that are based on the full list price.

This formulary option likely won’t be broadly popular to start. List-price competition is very much still the exception, and the rebate system is firmly entrenched. Many health-plan sponsors actually like the status quo, as the rebates result in a big pile of money that they can use flexibly.

But it’s still a smart move for Express Scripts. Other drugmakers will likely follow Amgen and Gilead into a dual-class drug pricing structure if the two firms manage to boost sales volume 1 ; the new formulary from Express Scripts will make that shift easier. And if the U.S. government follows through on its plans to regulate rebates, this sort of pricing structure will likely become even more appealing.

This isn’t a panacea for high drug prices. But any step toward correcting a major health-care distortion that has a real human cost is a good one.

Incoming Dem Chairman: Medicare Negotiating Drug Prices is a Priority

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Source: The Hill

Rep. Frank Pallone Jr. (D-N.J.), who is slated to be the next chairman of a House committee overseeing drug prices, said Wednesday that his top priorities on the issue are allowing Medicare to negotiate prices and speeding the approval of cheaper generic drugs.

Pallone, who is set to become chairman of the House Energy and Commerce Committee in January, pointed to President Trump’s support for those two policies in expressing hope for a bipartisan deal.

“I’ve always been an advocate for negotiated prices under Medicare, and as you know, President Trump says that he’s for that, so I think that’s an area where we can get agreement with the president,” Pallone told reporters.

Trump has previously expressed support for allowing Medicare to negotiate drug prices, a top Democratic priority, but has since backed off the idea. Democrats are hoping to get him back on board, and they see drug prices as an area of possible bipartisan cooperation.

Pallone also mentioned bipartisan legislation that would crack down on stalling tactics used by drug companies to prevent cheaper generic competition from entering the market. That bill is known as the Creates Act, and has been delayed all year despite support from members of both parties.

“I think you need negotiated prices under Medicare, and I think you need the Creates Act and other initiatives that will aggressively bring generics to market,” Pallone said. “There’s an area where the president agrees with me and the Democrats, so why not?”

House Democrats say drug pricing legislation will be one of their top priorities next year in the majority.

It is unclear what can come out of the GOP-controlled Senate, but Democrats are hoping that if Trump supports legislation he can help get it through the Senate.

Passing drug pricing legislation would be an uphill climb, given that pharmaceutical companies have long been a powerful force in Washington.

Last Updated 12/05/2018

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