By Melanie Zanona, CQ Roll Call
 
March 11, 2016 -- Nearly 5 million new customers signed up for insurance under the exchanges established by the 2010 health care law, the Health and Human Services Department said Friday.
 
A final report on the third open enrollment period shows that a total of 12.7 million people either signed up or automatically renewed their health care plans for 2016, with 4.9 million of those individuals being new customers. About 76 percent of enrollees got covered in the 38 states that use the healthcare.gov website, while 24 percent are signed up through the state-based marketplaces.
 
“Almost 5 million Americans were new to the Health Insurance Marketplaces this year and about 20 million uninsured Americans have gained coverage because of the Affordable Care Act,” said HHS Secretary Sylvia Mathews Burwell in a statement. “This year’s customers are more engaged and better informed. New customers came in earlier because they wanted a full year’s coverage, and 70 percent of returning customers actively selected a plan."
 
The vast majority of consumers signed up for coverage with tax credits, which is similar to past years. In the healthcare.gov states, the average value of a tax credit is $290 per person per month.
 
The administration touted figures that illustrate 3.5 million people who are signed up for coverage are between the ages of 18 and 34 – a key demographic to help sustain the health law (PL 111-148, PL 111-152.) Among new enrollees, 33 percent are in that age range, up slightly from 31 percent the previous year. Health insurers would prefer a higher percentage of customers to be young adults, but HHS maintained in a press release that the “overall percentage of plan selections for those ages remains stable.”
 
The report also highlighted statistics that show existing consumers who switched plans in 2016 saved an average of $40 per month, and that new customers signed up earlier this year compared to previous years.
 

 

By Kerry Young, CQ Roll Call

 
March 10, 2016 -- A top federal health official at a hearing Thursday said it’s possible that failed insurance cooperatives created in the Democratic health care law will repay some of their startup loans. But Republicans didn't believe him.
 
“It is a near certainty that you are going to have a complete loss here,” Sen. Rob Portman, R-Ohio, told Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt at the  Senate Homeland Security and Governmental Affairs Committee’s investigations subcommittee hearing.
 
About half of the two dozen nonprofit health co-ops funded with $2.4 billion in federal loans provided through the 2010 health law have shuttered or are in the process of shutting down. CMS is coordinating with the Justice Department to see if any of the money provided to the failed co-ops will be recovered, Slavitt told the panel.
 
“I am reluctant to start negotiating publicly some figure, and I also think it’s very possible that I would be wrong” in making an estimate at this time, Slavitt said, before conceding that CMS doesn’t expect to recover all or 95 percent of the loans to the failed nonprofit insurers.
 
Sen. Ben Sasse, R-Neb., said the losses from failed co-ops have a far-reaching effect. His state saw one of the largest failures. An early star in the program, CoOportunity Health folded after attracting about 120,000 customers in Iowa and Nebraska. Surviving insurers in Nebraska have been assessed fees totaling $46.8 million last year to help cover CoOportunity’s unpaid claims, Sasse said. Nebraska’s tax revenue will be lowered by that amount because these insurers can reduce what they owe due to the forced contribution to CoOportunity’s costs, Sasse said.
 
“The state government will have this much less revenue to pay for state priorities like education, roads, and firefighters,” he said at the hearing.
 
The  co-ops remain a persistent target for Republicans in their criticism of the 2010 health law, while getting little support from congressional Democrats. No Democratic senators appeared at the hearing, which was led by the subcommittee’s chairman, Portman, and attended by Sen. Ron Johnson, R-Wis., the chairman of the Senate Homeland Security and Governmental Affairs.
 
Sen. Claire McCaskill of Missouri, the ranking Democrat on the investigations subcommittee, is on leave while being treated for breast cancer. Portman said that he had suggested postponing the hearing until McCaskill’s return but she told him to proceed. McCaskill intends to submit questions for the record, said Portman.
 
The absence of Democrats left Slavitt as the chief defender of the co-ops, arguing that they should be viewed as startup businesses operating in a tough environment.
 
"Clearly starting up a small insurance company is one of the biggest challenges imaginable," Slavitt said. "They face significant entrenched competitors with years of history.”
 
Democratic leaders had included the co-op initiative in the 2010 health law as a concession to colleagues who were disappointed that the overhaul didn’t include a government-run health plan option. The co-ops were attractive to some consumers because they were designed as nonprofits with a goal of competing against large insurers and returning savings to their customers. Evergreen Health in Maryland, one of the surviving businesses, describes itself as having been "founded by local doctors who knew that Maryland needed a new kind of health coverage." Evergreen calls itself a "company that listens to its members and provides coordinated care and personalized service, at a price that you can afford."

By Kerry Young, CQ Roll Call
 
March 10, 2016 -- Congress is unlikely to step in to ease the challenges facing doctors in the years ahead due to the implementation of last year's overhaul of Medicare's payments to physicians, a consultant said at a conference for insurers.
 
The overhaul (PL 114-10) is intended to spur doctors to embrace new payment systems such as accountable care organizations, which are pegged to judgments about the quality of the care they provide. Those who don't agree to participate in these newer payment models will see the current Medicare fee-for-service system of payments replaced by one that will place more of an emphasis on meeting quality judgments.
 
Congress in the past has changed many laws and delayed the implementation of regulations at the behest of doctors, such as holding off for several years on a switch to the new ICD-10 billing codes and staving off slated Medicare payment cuts through a series of what were known as "doc fix" bills. That won't be the case for the physician fee overhaul, said Anne Phelps, principal of the health care regulatory practice at consulting firm Deloitte & Touche LLP.
 
Lawmakers in both parties agree that Medicare needs to readjust its standards for paying doctors, said Phelps, who earlier worked for the Senate Health, Education, Labor and Pensions Committee and as a George W. Bush administration health adviser. The passage of the overhaul last year marked a point of unity for Democrats and Republicans, who were at odds on health policy since the 2010 passage of the health care law, Phelps said at the annual policy conference of America's Health Insurance Plans, a trade group.
 
"They want to see this work well, both sides," Phelps said. "This is not the ACA."
 
The Centers for Medicare and Medicaid Services likely will ease the transition in some cases, seeking to make it easier for doctors to meet the standards, but is not expected to delay or undercut the requirements, Phelp said.
 
CMS is in the process of implementing the first stage of the overhaul, working out the details of the so-called merit-based incentive payment system. Under the law, doctors who after 2019 fare well on quality measures set in initial rules will face rising expectations as new metrics are added as conditions of Medicare payment.
 
The implementation of the 2015 physician fee overhaul will represent a continual challenge for doctors in the years ahead, she said.
 
Doctors remain an influential lobbying force in Washington, due to both the clout of the American Medical Association and their presence in virtually all congressional districts. The forces demanding a reshaping of Medicare's payments, though, mean that they will have to adjust to the new reality of this law. The aging of the baby boomers added urgency to steps expected to rein in Medicare's rising costs, whether through immediate pay reductions or through efforts to prevent disease and preserve health such as the quality measures.

By Kerry Young, CQ Roll Call
 
March 9, 2016 -- The Obama administration has plunged into a contest with the pharmaceutical industry, putting forward a wide-ranging proposal for overhauling Medicare payments for chemotherapy, glaucoma treatments, and other often costly drugs administered in doctors’ offices.
 
The pharmaceutical tab doubled to $22 billion between 2015 and 2007 for Medicare’s Part B program, which covers services provided in private medical practices and hospital outpatient departments, according to a draft rule unveiled Tuesday. The Centers for Medicare and Medicaid Services proposal not only seeks savings in Medicare’s Part B program but also opens discussion on a path for tying future drug payments to judgments about how much benefit a treatment provided patients, with rebates possible for poor outcomes.
 
The draft marks one of the last chances for the Obama administration to leave a major stamp on American medicine through the Center for Medicare and Medicaid Innovation, which was created by the 2010 health law. CMS wants to start the earliest stage of the Part B drug model this fall and set the stage for broader work to begin as early as 2017. It’s unclear what will happen to CMMI, which has been the engine for several major Medicare test programs, in the next administration.
 
The new proposal builds on research that raised questions about how well patients may fare under Medicare’s current Part B reimbursement approach, which adds a premium to the reported average sales price of a drug. The fee, intended to be 6 percent of the average sales price, was reduced by the budget sequester to about 4.3 percent of the reported price. These financial incentives put a doctor or medical organization at a disadvantage for using a less costly drug when a similar, more expensive one is available or reducing the use of medicines.
 
“These models would test how to improve Medicare beneficiaries’ care by aligning incentives to reward value and the most successful patient outcomes,” said Patrick Conway, CMS’ chief medical officer and leader of CMMI, said in announcing the rule. “The choice of medications for beneficiaries should be driven by the best available evidence, the unique needs of the patient, and what best promotes high quality care.”
 
Conway said that the model would not restrict what medicines can be used. Still, the draft proposal drew fierce opposition from drugmakers even before it was unveiled. CMS had let details slip in a notice accidentally posted last month for its administrative contractors. On Tuesday, the Pharmaceutical Research and Manufacturers of America and Biotechnology Innovation Organization both quickly reacted to the draft, arguing that it could limit patients’ access to crucial medicine.
 
The CMS plan will draw further criticism in the public comments that the agency will accept through May 9, including complaints from cancer doctors. Influential medical groups will likely protest to lawmakers about the plan, seeking their aid in altering or stopping CMS from changing reimbursements. The decisions made in the final rule may indicate how well advocates for reining in pharmaceutical costs will fare in battles with the influential industry.
 
Compelling Participation
 
With the Part B plan, CMS builds on a trend toward mandating participation in tests of alternative payments instead of seeking volunteers. 
 
CMS last year designed a program for tying payments for home health care to judgments about the quality of service, a so-called value-based model. The participants are home health agencies in nine selected states. CMS then created a test program with a similar focus on tying payments to results for one of the most common surgical procedures for people on Medicare, knee and hip replacements. Most hospitals in 67 regions of the country will be compelled to participate.
 
The Part B model goes a step further and is designed to sweep in much of the nation. CMS is seeking to create four comparison groups, including a control arm, for the model in selected geographic areas. Maryland will be excluded due to a large-scale test program already underway between the state and CMS regarding payments. That leaves about 7,000 separate areas in different parts of the country to participate.
 
"Mandatory participation allows us to observe the experiences of an entire class of providers and suppliers with various characteristics, such as different geographies, patient populations, and specialty mixes, and to examine whether these characteristics impact the effect of the model" on prescription patterns and Medicare expenses, CMS said.
 
In the control arm, the current average sale price plus 6 percent model would persist. In the three other groups, the add-on payment would fall to 2.5 percent of reported prices with a flat fee added. CMS has proposed $16.80 as the flat fee, although the agency appears flexible to other suggestions. In some of these arms of the model, tools to spur a shift toward value-based purchasing could be added in later stages, CMS said, including procedures already used by insurers and pharmacy benefit managers to control costs.
 
CMS said it intends to use a number of factors to judge the success of the alternative payment systems. It will examine whether the program has reduced costs, changed prescribing patterns or had unintentional consequences, the agency said.
 
In the draft, CMS also sought to revive consideration of an alternative Part B payment that was brought forward and abandoned during President George W. Bush’s administration. The model, now labeled the competitive acquisition program, was designed to relieve doctors of the administrative burden of managing a supply of medicines. Under the program, physicians purchased drugs through a vendor instead of buying drugs and billing Medicare for them. That eliminated the administrative costs, which physicians have cited as a reason for continuing add-on reimbursements based on a percentage of the average sales price. The program ran from 2005 to 2008. If it was reintroduced, it may need to be tweaked, CMS said, and requested comments on this point.
 
Officials also requested feedback on moving toward a bundled-pricing approach, with one set price for episodes of illnesses that are treated with Part B drugs.
 
House and Senate Republican committee chairmen on Wednesday called the rule “another troubling example of unelected bureaucrats making decisions behind closed doors that impact the American people and their healthcare.”
 
“This decision was made with a complete lack of transparency and clear disregard for the people and stakeholders who will be impacted the most,” said a statement by House Ways and Means Committee Chairman Kevin Brady of Texas, House Energy and Commerce Committee Chairman Fred Upton of Michigan and Senate Finance Committee Chairman Orrin G. Hatch of Utah. “CMMI's proposed experiment on seniors stands to limit access to the critical care the sickest Medicare beneficiaries rely on, as well as disrupt how health care providers serve patients in the future. The model could ultimately result in seniors' receiving different standards of care based solely on where they live in the country.”
 

 

By Kerry Young, CQ Roll Call
 
March 10, 2016 -- A top federal health official cited Medicare’s recent success in imposing payment conditions on hospitals and doctors as evidence that it will succeed with a controversial proposal on reimbursement for chemotherapies and other often costly drugs.
 
“This is the beginning of a discussion,” Andy Slavitt, the acting administrator of the Centers for Medicare and Medicaid Services, said Wednesday at the Pharmaceutical Research and Manufacturers of America’s policy conference.
 
CMS plunged Monday into a significant health policy fight when it released a draft proposal that would within months change the formula in many cases that Medicare pays for medicine through its Part B program, which covers care in doctors’ offices. The plan also opens a discussion of larger changes for Part B drug payments, now a roughly $22 billion annual expense, including pegging future payments to the results for patients. CMS is accepting comments on the Part B drug model through May 9.
 
The proposal set off a quick firestorm, including criticism from the lawmakers overseeing Medicare: Senate Finance Chairman Orrin G. Hatch, R-Utah, House Ways and Means Chairman Kevin Brady, R-Texas, and House Energy and Commerce Chairman Fred Upton, R-Mich. The American Hospital Association, whose members’ outpatient departments are paid through Part B, joined PhRMA and other powerful trade groups in condemning the plan.
 
Slavitt noted that there also had been resistance as CMS began shifting some of Medicare's other expenses away from its traditional fee-for-service model to alternative forms of payment that assess the quality of the service provided. In recent years, CMS has sought to persuade hospitals and doctors to participate in programs such as accountable care organizations, which are intended to monitor how well people on Medicare fare after medical treatments. Health and Human Services Secretary Sylvia Mathews Burwell last year set a 2018 goal of moving 90 percent of Medicare’s fee-for-service payments to new quality-based payment plans. 
 
“In 2011, the Medicare system paid hospitals and physicians 100 percent fee for service, so there were no incentives for value,” Slavitt said at the PhRMA conference. “Last Friday, we announced that 30 percent of the payments to hospitals and physicians through Medicare fee-for-service program are now connected to” a payment system with quality measures.
 
Still, Slavitt acknowledged the political risk in the uproar over the Part B model.
 
“People are pretty good at killing things” in Washington, Slavitt said. “That’s an approach. My hope is that people engage in this” and instead work with CMS to revise the model.
 
The furor over the Part B drug model could put at risk a key platform of the Obama administration’s signature domestic achievement, the 2010 health overhaul, said Joel White, president of Horizon Government Affairs and a former House Ways and Means staffer. The model was put forward by the Center for Medicare and Medicaid Innovation (CMMI), a $10 billion initiative created by the law to tests ways to improve care and rein in costs by changing how doctors and other health professional are paid.
 
“This may result in Congress repealing CMMI,” White said.
 
In White’s view, CMS has not made a strong case for upending the Part B drug payments as proposed.
 
Designed as a test program, the CMS model would in many cases change payments for many of the nation’s doctors and hospitals. Some would remain on the current system to serve as a control group in the experiment, getting reimbursed the average sales price for Part B drugs plus a premium set at 6 percent by statute. The test group would get a payment of the average sale price plus 2.5 percent and an additional flat fee of perhaps $16.80. Several groups already have argued that this could be a financial hit on doctors in private practice.
 
White contrasted the CMS Part B model with the effort that resulted in the creation of the current approach for paying for these drugs in a sweeping 2003 Medicare law (PL 108-173). The Office of the Inspector General (OIG) at the Department of Health and Human Services and the Government Accountability Office (GAO) had documented many flaws in the previous payment system, based on reported average wholesale prices, White said.
 
“We had a stack of OIG and GAO reports about how outrageous the system was. There was clearly abuse going on,” said White, who worked on the measure as a congressional staffer. “There’s not any data in the CMS proposed rule that says physicians are actually overprescribing because of the add-on" to support the changes proposed in the new Part B model.
 
White said that this weakness in the Part B model will help its opponents block it. Lawmakers will be getting calls from powerful groups, likely including hospital executives in their districts. 
 
“You’ve got to make sure that you’ve got some pretty hard evidence and data that something bad is going on” to proceed with major changes to Part B drug pricing, White said. “Otherwise, politically, you can get your head kicked in."
 

By Kerry Young, CQ Roll Call
 
March 7, 2016 -- Advisers to Congress are rekindling a debate over whether Medicare can mimic a common tactic that private insurers use to limit drug price increases, wading into a controversial topic amid rising concerns about the cost of pharmaceuticals.
 
The Medicare Payment Advisory Commission last week resurrected the idea of of eliminating some of the six so-called protected classes of medicine in the Part D prescription drug program, a proposal Medicare officials discarded two years ago. MedPAC intends to offer recommendations on prescription drugs in its June report to Congress.
 
The insurer-run plans now much cover substantially all of the medicines available for six conditions: seizures and epilepsy, cancer, certain viral infections, depression, psychosis, and the prevention of rejected transplanted organs.
 
The Part D program is projected to cost roughly $98 billion this year, according to Medicare trustees, making it one of the single biggest federal health expenses and one of the nation's largest buyers of medicines. MedPAC staff last week suggested cutting antidepressants and transplant medicines from the list of protected classes of medicines in the drug program. The suggestion is part of a package of draft recommendations on the Part D program that the commission will vote on next month. 
 
The revival of the idea may be a sign of the growing interest in Washington in addressing rising drug costs.  The Centers for Medicare and Medicaid Services in January 2014 proposed eliminating antidepressants, psychosis and immunosuppressants used for transplant patients from the coverage mandates. By May 2014, CMS had backed off the proposal due to a considerable backlash. The proposal is likely to continue to draw opponents, said Juliette Cubanski, associate director of the program on Medicare policy at the nonpartisan Kaiser Family Foundation, in an interview Monday. 
 
“It’s a fair question of whether MedPAC would be showing any interest in this type of idea were it not for the pressing concern that many people have about rising costs for prescription drugs,” Cubanski said.
 
A Kaiser Family Foundation poll last year found that 63 percent of respondents thought government action to lower prescription drug prices should be a priority for lawmakers and the next president.
 
The proposed changes to the Part D program are meant to increase the insurers’ bargaining clout for the medicines in question. Insurers routinely seek to bargain with drug companies by dictating terms for covering their medicines, weighing in pricing factors when the perceived benefits of products are similar.
 
“They basically have no ability to do any sort of negotiations with drug companies” for medicines in the protected classes in Part D, Cubanski said. “That really is their leveraging tool, to include some drugs and not others.”
 
The Partnership for Part D Access, a coalition of patient advocacy, industry groups and companies such as Johnson & Johnson, last week objected to MedPAC’s decision to raise again the suggestion of cutting back on the protected medicine classes.
 
“Restricting timely access to medicine jeopardizes patient health, puts patients at greater risk for poor clinical outcomes, and increases costs for patients and taxpayers, said Chuck Ingoglia, senior vice president of the National Council for Behavioral Health and executive director of the Partnership for Part D Access.
 
Separately, Sen. Charles E. Grassley last year introduced a bill (S 648) that would codify the initial approach CMS took in creating the six protected classes of medicines. It has two cosponsors, both Democrats.