Election 2016: What Each Candidate Could Mean for Pharma

Every four years we are inundated with non-stop coverage of the presidential election, with both sides vying contentiously for control of the White House as well as Congress. Thankfully, each election year also brings us the Summer Olympics, which offer a brief but much-needed respite from the talking heads and partisan bickering. For two short weeks, Americans come together to support the heroes who motivate and inspire us all, before returning to the ones who polarize and divide us. It’s easy for all of us to rally behind Michael Phelps and Simone Biles, sharing in their successes and taking pride in the honor they bring to our country. However, reaching a consensus on Trump and Clinton is a different story.

After the Olympics are over and the kids are back in school, Government Pricing professionals will convene in Chicago once again for IIR’s 21st Annual Summit on the Medicaid Drug Rebate Program (MDRP). We will all come with our own opinions and political convictions, but we will also be wondering how our day-to-day responsibilities will be impacted by the election. Although we at Government Pricing Specialists (GPS) don’t have a crystal ball, we can compare and contrast the candidates’ platforms, and how they could change the face of GP. Here are their positions on a few GP-related issues:

The Patient Protection and Affordable Care Act (ACA)

• Clinton – Per her website, Clinton would “Defend and expand the Affordable Care Act, which covers 20 million people.”

• Trump – Per Trump’s website, “On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.”

• Potential GP Impact:  

Under a Clinton presidency, if the ACA stands, the changes codified in the recent MDRP Final Rule would likely remain in effect but the “Cadillac Tax,” the excise tax on high-cost health insurance plans, would likely be repealed. 

Under a Trump presidency, the legitimacy of the Final Rule could be challenged if the ACA is repealed. However, repealing the ACA may be difficult since taking away a benefit is usually unpopular with voters. If the Republicans control both houses of Congress, it is more likely that substantial changes to the ACA would be introduced but if Democrats control the House of Representatives or the Senate, it is unlikely that we will see significant change.

Medicaid

• Clinton – Per Clinton’s website, she would “Fight for health insurance for the lowest-income Americans in every state by incentivizing states to expand Medicaid – and make enrollment through Medicaid and the Affordable Care Act easier.” 

• Trump – Trump has said that the Federal Government should provide block-grants to the states for Medicaid, that it should be entirely controlled by the states which he believes would reduce the fraud, abuse, and waste. 

• Potential GP Impact:

Under Clinton, if Medicaid enrollment increases, Medicaid sales would likely increase, as would the volume of Medicaid rebates. 

Under Trump, if federal funding is reduced, it could actually put pressure on manufacturers to provide more in terms of rebates. However, Trump believes that his plan to get more Americans working would actually reduce the need for Medicaid because more people would have access to health insurance through their employer.

Medicare

• Clinton – Per her website, Clinton would “require drug manufacturers to provide rebates for low-income Medicare enrollees that are equivalent to rebates in the Medicaid program.” She would also “Allow Medicare to negotiate drug and biologic prices… Clinton believes that we should drive the best bargain for Americans, and especially for senior citizens, by allowing Medicare to negotiate drug prices, notably for high-cost drugs with limited competition.” Clinton also supports the idea of allowing people to “buy into” Medicare if they do not meet the eligibility requirements.

• Trump – Although he does not specifically address allowing Medicare to negotiate prices on his website, at a January rally in NH Trump supported allowing Medicare to negotiate drug prices, saying, “Drugs with Medicare, they don’t bid ‘em out… They pay like this wholesale incredible number… They say like $300 billion could be saved if we bid ‘em out. We don’t do it…”

• Potential GP Impact – A proposal to create a rebate program for Medicare, similar to the MDRP, would likely take significant time to pass and be finalized (think of the 6 years we waited for the AMP Final Rule). More likely is an extension of the Medicaid rebate to prescription drugs for “dual eligibles” (participants eligible for Medicaid and Medicare), but even that may take a bit of time. A plan to allow Medicare to negotiate drug prices with manufacturers, which both candidates support, although not the GOP at large, could require manufacturers to manage Medicare contracts similar to how they manage their VA contracts.

This election may be the most interesting one in our lifetimes, at least to date. As healthcare and health insurance become a greater part of our nation’s economy, and our own budgets, these issues will continue to receive a lot of focus. Government Pricing has always been the image of that old saying, “May you live in interesting times,” but this election year has become the poster child for it!

We look forward to the MDRP Summit to hear more on the potential GP implications of the 2016 election, and to hear your questions and comments. If you have not already registered, do so today and use code XP2158MISC to get an additional $100 off of the current registration fee. GPS will be onsite and blogging for the 2nd year in a row, so we look forward to seeing you there!


Sources:
https://trumpcare.com/trumpcare-and-medicaid/
http://www.nytimes.com/2016/04/09/us/politics/donald-trump-health-care.html?_r=0 
https://www.hillaryclinton.com/issues/social-security-and-medicare/ http://www.ontheissues.org/Senate/Hillary_Clinton_Health_Care.htm http://www.nytimes.com/2016/05/11/us/politics/hillary-clinton-health-care-public-option.html 
http://www.ontheissues.org/2016/Donald_Trump_Health_Care.htm


About the Authors: 
Katie Lapins & Dana Zelig Collins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com. ; D.Collins@gp-specialists.com

Pricing of Prescription Drugs Debated

(This article "Pricing of Prescription Drugs Debated" originally appeared on the HealthLeaders website, January 18, 2016.)

By Christopher Cheney.

In the "Great Drug Pricing Debate of 2016," a semi-fictional duo goes head-to-head on whether the pricing of prescription drugs is spiraling out of control, whether price controls should be instituted, and whether drugs can be priced based on value. 

Pricing practices for prescription drugs are drawing intense scrutiny from inside and outside the healthcare industry.

Healthcare payers are apoplectic over the rising costs of prescription drugs. America's Health Insurance Plans, the trade association for healthcare payers, has been blasting pharmaceutical companies over drug pricing on a nearly daily basis.

Healthcare providers also are sounding the alarm, with the American Medical Association announcing in November that it would launch an "advocacy campaign to drive solutions and help make prescription drugs more affordable."

Drug pricing is already a hot topic in this year's presidential race, with Democratic Party contender Hillary Clinton calling for affordable drug pricing in political advertising and on her campaign's website. Her main opponent, Sen. Bernie Sanders (D, VT) has his own plan to lower prescription drug prices.

Capitation's Second Coming Debated 

To debate the issue, I have assembled a semi-fictional duo with opposing perspectives on drug-pricing trends and their impact on the healthcare industry. The debate format gives each participant about 500 words to answer a handful of questions.

Arguing in favor of the drug-pricing practices of pharmaceutical companies is Reginald Thump, wealthy Manhattan businessman and candidate for president of the United States.

Arguing against the drug-pricing practices of pharmaceutical companies is Jennifer Campbell, analyst for healthcare cost and delivery at the National Business Group on Health.

HLM: Are prescription drug prices trending at unsustainably high levels?

Thump: This country is not as great as it used to be and certainly not as great as I could make it again. Let's face it folks, the ability to innovate is one of America's greatest strengths, and it blows my mind that my opponent and others like her want to beat up on one of the most innovative sectors of our economy.

Screws Tighten on 340B Program 

If we want to focus on unsustainable healthcare costs, we should not be focusing on prescription drugs. Pharmacy-dispensed drugs account for about 10% of total healthcare spending, and the cost of those drugs pale in significance compared to the costs of ER visits and hospitalizations. Drugs keep people out of the hospital, which generates cost savings for the entire healthcare industry. That's an undeniable fact that pharma's critics want to ignore.

Campbell: The trend is unsustainable.

While drug pricing and utilization both continue to surge, drug spending will increase by 6% or more annually from now until 2022, according to the Centers for Medicare & Medicaid Services. In 2014, U.S. spending on prescription drugs hit $379 billion, a third of which can be attributed to specialty drugs.

Layering on top of this growing financial burden is that these drugs are now being formulated and targeted for chronic conditions affecting much larger patient populations, a trend that will spark continued discovery and growth of specialty drugs.

Under current law, the Food and Drug Administration grants brand-name biologic drugs a 12-year exclusivity period upon approval. Such a long exclusivity period essentially removes the benefits of price competition, resulting in higher drug prices and a failure of less-costly generic versions to reach the market—all of which will continue to endanger affordable coverage options.

When there is a lack of lower cost substitutes for these steeply priced drugs, health plans and employers alike will increasingly struggle to execute drug access and cost management strategies. More and more, we are seeing that even when efficacious, low-cost generics do exist, payment incentives are not always aligned to promote their use.

HLM: Should there be price controls or windfall-profit taxes in the pharmaceutical sector?

Thump: Price controls would harm patients. U.S. patients have more treatment options and earlier access to medications than patients in any other country on Earth.

The new hepatitis drugs, which we should be celebrating because they cure a dreaded disease, are a great example. The doomsday predictions about these drugs have not come true. All of the patients who need these drugs have gotten these drugs. The market does work.

Campbell: We support neither approach and believe, instead, that the current pricing models are unsustainable and that manufacturers and payers should come to a consensus on pricing.

One promising approach involves manufacturers taking on risk if medications don't deliver as promised and either fail to reduce downstream costs or increase them.

HLM: What is the best way to contain rising prescription drug costs?

Thump: The costs of life-saving medications are not the problem, and the health plans should look in the mirror before they start pointing fingers at pharmaceutical companies.

The way health plans craft benefit designs contributes to increased drug prices. Some health plans require doctors to use an expensive medication when there is a cheaper alternative. Other health plans have placed generic drugs in the highest tier of their drug-pricing benefit designs with brand-name medications.

Campbell: There are a number of best practices that employers follow. In conjunction with their pharmacy benefit manager and health plan provider, employers first seek to provide employees with tools and support to guide appropriate specialty medication management.

Second, [employers seek to] create a comprehensive utilization management framework, complete with prior authorization, step therapy, quantity limit, and exclusion protocols.

Third, [they] implement a custom drug formulary that is designed based on evidence of drug safety and efficacy, and promote patient access to appropriate treatments while effectively controlling costs.

Fourth, [they] promote a more dynamic relationship between patients and their physicians and pharmacists to ensure practical treatment recommendations and compliant drug utilization behavior.

And fifth, [they] focus on site-of-care strategies and the most cost-effective distribution channels, such as specialty pharmacy chains.

HLM: Can prescription drugs be priced based on value, such as how well one drug performs clinically compared to competing drugs?

Thump: Every sector of the healthcare industry is struggling with this challenge. Singling out pharma for the sector's struggle to price prescription drugs based on value is the height of hypocrisy. I'm just saying.

Campbell: In the new value-driven healthcare system, pharma companies are feeling the pressure to demonstrate real, measurable product value. Employers have long been clamoring for more alignment between purchasers and manufacturers.

Finally, we're starting to hear more chatter around this. There are multiple efforts in the United States to make drug price determinations based on value, including the Institute for Clinical and Economic Review and DrugAbacus.

HLM: Are the costs of prescription drugs taking up too large a share of patients' total cost of care?

Thump: Again, the health plans need to take their fair share of responsibility for what is happening with the price of prescription drugs. In this country, the cost of all medications has consistently accounted for about 14% of total healthcare spending.

Patients are enduring higher out-of-pocket costs for their medications because of the way health plans are crafting benefit designs, including high deductibles. The prescription-drug share of the healthcare spend has been consistent, but the patient share of the healthcare spending burden is going up because of the way health plans are changing their benefit designs.

Campbell: The simple answer is yes, although the question is not quite that simple. As one of our forward-thinking employer members has pointed out, we need to understand the downstream costs associated with medications such as medical side effects in addition to the "value add" of the drug. 

However, in general, on a per-member, per-month basis, "specialty drugs" are having an impact on patients' total cost of care. In general, increasing drug costs are driving higher costs to health plans as well as to members, both on the medical and pharmacy side.

The better question might be, "how has specialty pharmacy had an impact on the member's total medication cost share over the course of the last year or so?" To which one member responded, "It's going up, and with no end in sight."

By Christopher Cheney, the senior finance editor at HealthLeaders Media.

Contributor Biography: Christopher Cheney has been a professional journalist for 20 years. He currently works as senior finance editor at Danvers, Massachusetts-based HealthLeaders Media. Prior to joining the staff at HLM, he worked in multiple roles at several newspapers in New England, including the Boston Herald, Cape Cod Times and Concord Monitor. Cheney began his career in healthcare research administration at Children's Hospital Boston. He holds three university degrees, including a master's degree in journalism from Boston University. Cheney is a native of the Red Sox side of Connecticut and lives in New Hampshire with his wife, Jennifer.

Medicaid Drug Rebate Program Summit (MDRP) 2015 Wrap Up!

• John Shakow highlighted the “hot topics” from the various presentations that were provided prior to the conference. Some of the slides he referenced included:

• From Miree Lee’s Government Pricing Basics, the numerous pharmaceutical price points, including AAC, EAC, UAC, MAC, SMAC, NADAC, AMP, FUL, BP, URA, 340B, ASP, NFAMP, and FCP. 

• Alice Leiter (Hogan Lovells) highlighted the critical components of a 340B policy that can be applied to other GP Policies.

• Steven Ruscus (Morgan Lewis) presented the only slide about biosimilars and Part B, highlighting how they will be reimbursed which is a special hybrid arrangement. This could define the next generation of reimbursement.

• Chris Cobourn (Huron) discussed the recent results/trends of a GP diagnostic survey showing many companies have insufficient resources, inconsistent documentation, and no G/L reconciliations.

• Connie Wilkinson & Alan Arville (Epstein Becker) highlighted the recent guidance regarding an the definition of an eligible patient for the 340B program.

• Bill Sarraille (Sidley Austin) went over what that he’ll be looking for if/when the Final Rule is released.

• Alice Valder Curran (Hogan Lovells) showed how manufacturers should be evaluating the Final Rule by looking at it with the thought, “Potential challenges if the Final Rule says…” Manufacturers should know that litigation is an option, but as John Shakow noted, only if you submitted a comment to the Proposed Rule, or potentially if you are part of an associated such as PhRMA that submitted comments.

• David Tawes from the OIG, discussing the future work involving Medicaid drugs and the possibility of attaching an inflation penalty to generic products.

• John Shakow’s own slide on the 340B Proposed Rule and the comments from the covered entities that an instance of overcharging should be defined as per unit, not per order.

This year’s MDRP was full of information for manufacturers and as always, there’s a lot going on in the government programs, so if you need help or are overwhelmed by all of the information, give me a call. I can help you figure out what is relevant and how to ensure you’re ready for the Final Rule! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com.

IIR's MDRP Summit 2015 | Day 2 – External Counsel

Friday morning, IIR arranged for a session made up of group of attorneys who serve as external counsel to pharmaceutical manufacturers, focusing in part on the government healthcare programs.  This powerhouse group was moderated by Sabrina Yohai (Pfizer), and the panelists were Alice Valder Curran (Hogan Lovells), John Shakow (King & Spalding) Jeff Handwerker (Arnold & Porter), and Bill Saraille (Sidley Austin).

First, Alice walked the attendees through the legislative process for those areas that affect pharmaceutical manufacturers, explaining the differences between legislation, regulations, rules, and guidance, and also the actual contracts with the government and the preamble of rules. Sabrina emphasized the need for manufacturers to understand all of the “documents” that can affect their operations.

The panelists then discussed the questions that are most frequently being asked of them these days:
John S – bona fide service fees, and when a drug manufacturer should blend AMPs across an NDC-9;
John H – also bona fide service fees, free goods/PAP, especially in the context of a past purchase vs. a future purchase, and outcomes-based contracting;
Bill – same as the others with the comment that outcomes-based contracting is fast becoming a big issue, and the other area is ESI offers;
Alice – besides the issues previously mentioned, she also sees questions around limited distribution plans for the 340B program.

With regards to the Final Rule, what issues are most concerning to you, and what would cause you the most heartburn:

John H – the proposed change to the definition of “bundled sales” with the possibility of it being applied retroactively, and the BP exclusions that currently allow any price to a 340B entity, but the proposed rule narrows to sales under the 340B contract.
Bill – agrees with John, especially with regards to bundled sales, and the lack of compliance by the Covered Entities in the 340B Program.
Alice – potential expansion beyond three years for restatement periods and when that might be allowed, Medicaid MCO reporting, and the potential for CMS to make rules based on the ease of implementation, not always the statutory standard.
John S – agreed with the list and added the issue of how specialty pharmacies are treated within the context of retail community pharmacies.

With regards to enforcement and settlements, the panel sees the following as “HOT TOPICS”:

Bill – bona fide service fees remain a focal point as well as a shift from Best Price to AMP and ASP issues, and with regards to defending against potential investigations, the importance of documenting your methodology and assumptions.
John H - agrees with Bill and emphasized that the standard is reasonable, but the government has shifted to what you subjectively believed at the time of a submission. Documentation is the best way to demonstrate this, including advice of counsel.
Sabrina asked about how to submit assumptions and the panel agreed that it should be focused on those areas most critical to you, and when things change.
John S - ASP submissions should include reasonable assumptions.
Bill - submit early and often!
Alice - don’t assume, a prosecutor understands or interprets the statute/regulations like CMS, so make sure, you document your interpretations.
John H - US Attorney might look at how something impacts the government’s budget even if a pharmaceutical manufacturer does not consider this when making assumptions.
Sabrina - remember that being “conservative” in one program may not be conservative in another program and make sure, your internal documentation is solid.

If you were named general counsel of a major pharma tomorrow, what would you do to strengthen the GP area:

Alice – make sure, the rest of the business understands what you do and the importance of their role in GP (regulatory with product master, rebate team with BP and tracking customers.)
John S – educate company executives to understand the issues GP folks deal with (size, way commercial programs impact GP, risks of failing to fulfill the requirements.)
John H – look at documentation (policies, SOPs, assumptions) to make sure, it is sufficient for a government audit.
Bill – would add the need to audit the system setup for GPcalcs.

What’s a good way to get the conversation started with senior executives within an organization:

John S – focus on small pieces;
Alice – look at the gross-to-net impact of the programs to highlight this as a bigger piece of the business;
John H – has seen an increased focus by senior executives.

Questions form the audience were related to Texas price reporting, co-pay cards/programs, the new DOJ policy about filing criminal charges, and The First Amendment within the context of off-label promotion.

Final advice or comments from the attorneys: understand what it is others within your company do; the importance of making sure the GP team members feel valuable, especially for the women in this arena; we can be proud that we work in an industry that saves lives, and our job within these organizations is to make sure, our products are available to the most needy in a compliant manner.

As always, MDRP Summit has provided a vast amount of information and great opportunities for networking with others in the industry. If you would like more information on any of the topics that were covered this week, please contact me. As always, there’s a lot going on in the government programs, and I can help your organization figure out what is relevant, and how to ensure you’re ready for an audit! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6456, K.Lapins@GP-Specialists.com.

MDRP Summit: Day 1. Morning Sessions & Keynote Address

The first day of the conference kicked off today with Edward McAdam from Fresenius Medical Care discussing current events in the pharmaceutical industry, including recent price increases that have been covered by all of the media outlets.

The keynote address was from Ezra Klein, Editor-in-Chief of Vox.com and the central theme was, “Where is healthcare going?” within the context of politics, reform, and policy. 

Mr. Klein first spoke about Zoltan Esteban who is running for President of the United States and is going around country in a bus shaped like a coffin. “He is the only candidate whose sole issue is to conquer death.” Looking at historical elections, oftentimes, topics that were important then now seem ridiculous. To Mr. Klein, that may be the case with our current situation. All of the conversations about things like immigration reform may be viewed by historians as a waste. Obamacare, one of the biggest pieces of legislation in this administration, has been experienced as a slow moving political “trauma” by both sides of the aisle. Republicans have not been able to repeal it and Democrats have lost the House over it. This law is here to stay, especially since the US Supreme Court has made rulings on issues before it, and the best anyone can do is to change it, but neither side is comfortable with it.  Unfortunately, the most recent round of healthcare reform has not focused on what’s probably most important and that’s value within the healthcare system. 

Most people today, including political candidates, agree that the focus of healthcare reform should be on controlling cost, not increasing access. To. Mr. Klein, the belief that the central concern should be about controlling cost, there is something wrong. It should be focused on providing value. Consider these 2 scenarios:

1.    The federal government passes a law that bans all healthcare. Spending drops to a negligible amount of GDP as a result, or,
2.    Researchers invent a pill that guarantees a life span of 180 years with a good quality of life, but doing so raises healthcare costs to 45% of GDP.

Virtually everyone can agree that Option 1 costs the least but the outcome is not desirable. Option 2 costs a lot more but the outcome is more preferable to society as a whole and probably to each individual. 

Instead of focusing on costs, the question should be, “Are we getting good value for our healthcare dollar spending?” Mr. Klein says no, we’re paying more to get less and the problem is in the value, not in the “abstract amount” of what we spend. In recent years, the growth in healthcare expenditures has been slowed but that’s been a result of making healthcare more expensive at the individual level through higher copays, deductibles, etc., and lowering the costs with the providers such as hospitals and drug companies and narrowing networks to enable insurance companies to be able to better negotiate rates. A tremendous amount of the focus currently is on increasing individual responsibility with regards to cost and making people more cognizant of their healthcare decisions.  These both lower cost at the government level but do nothing to improve healthcare. 

So what is good healthcare policy? The big “win” in healthcare is not dying, not getting an infection when you go to the hospital, finding a cure for Alzheimer’s. Very little spending occurs related to things such as research and cures, with more of an emphasis on treatment. Today, the most important thing in healthcare in Washington is not the care given as part of health but is the budget related to it.  This is true in other areas that include research and development – we will often not know the advancements and opportunities we missed. Viewing healthcare as a scientific issue, not a budget or social justice issue, is a different way of looking at it, and we don’t track how healthy we are and how healthy we could be. Many of the healthcare spending forecasts do not take into account the potential savings from investments in prevention and treatment. Sovaldi® is a good example. It was in the media when it first launched because of its high cost. It treats Hepatitis C and is an expensive drug but it’s cheaper than the ongoing treatment of someone with Hepatitis C. 

Chris Hatwig from Apexus, the company that handles the 340B Prime Vendor Program, next provided an overview of their services and then went through the Proposed Guidance recently issued. (See yesterday’s post for a lot more detail on this hot topic!) And next, although CMS was going to speak about recent updates, at the last minute, they were unable to make it, so Dave Tawes from the Office of Evaluation and Inspections, Office of the Inspector General, graciously stepped in and spoke about their recent initiatives and their work plan. This included information about recent Medicaid studies as well as an interesting study about the use of anti-psychotic drugs in children covered by Medicaid. In this study, 67% of the claims showed there was “quality of care” concerns, 53% poor monitoring, and other issues such as too many drugs being prescribed, the side effects, and the use of drugs not indicated for children.

Other topics included AMP reporting and a comparison of drug expenditures under Medicaid and Medicare Part D. Not surprisingly, drug costs under Medicaid are less than those under Part D. Also, the OIG reached a $12.64 million settlement with a manufacturer for misrepresenting ASP data to Medicare. 

The future work plan includes requests from Congress and HHS, mandatory OIG reviews, emerging issues such as price increases in the industry that made recent news, generic drug price increases, treatment of authorized generics, specialty drug pricing, audits of states’ collection of rebates for drugs from Medicaid MCOs, contractor oversight of covered uses for Part B drugs, and the spread for high cost drugs within the context of Part B and reimbursement.

Check back tomorrow for more updates from MDRP Summit and if you would like more information on any of these topics, please contact me. As always, there’s a lot going on in the government programs and I can help your organization figure out what is relevant and how to ensure you’re ready for an audit! Katie Lapins, Government Pricing Specialists, LLC, 303.993.6466, K.Lapins@GP-Specialists.com.

Is Medicaid Extension Really Feasible?

The following excerpt is from a Podcast recorded by the MDRP Summit with Grace-Marie Turner, President of the Galen Institute last June. Access the complete MP3 and Transcript here.

Is Medicaid extension really feasible?

Grace-Marie: I just think that it’s going to be very difficult to convince those other states that have resisted so far because more and more evidence is coming down to show that expanding Medicaid as a traditional program as it is currently structured is real harmful to people. And it’s really harmful to the most vulnerable citizens who are on Medicaid today. If people have many chronic conditions, many of them have no place else to go. They are basically not insurable in the private marketplace. If they are under 100 or 138% of poverty, Medicaid really is their only option. As a result, you wind up with more people competing for the same limited number of doctors who will see Medicaid patients and making it even more difficult for people on Medicaid today to find a doctor to see them.

I had a father write to me recently who has a daughter who is on Medicaid – many chronic conditions and in a wheelchair. He said: “It takes me sometimes six weeks to get an appointment with her urologist”. He said: “Do they even think about how much more difficult it’s going to be to get an appointment with the urologist if there are a million more people competing for those same appointments?” So, we must fix it so that it allows the safety net to be intact for the most vulnerable people and give those who have the option to get private coverage to do so, so that they are not competing.

And then finally, I think that the states who want to expand the program need to guarantee that providers will be paid enough that they will be able to see a Medicaid patient. In some states like New Mexico that have a very high match rate, Medicaid pays at very close to Medicare rates. In other states, a doctor may be paid $5 or $7 for an office visit – not even enough to begin to cover expenses. Doctors want to take care of these patients, but they can only keep so many and keep the lights on and pay their own bills. So, we’ve got to be able to pay providers more and that’s the kind of leverage that I think that the states would be able to have if they were not so constrained by an avalanche of federal rules and all the “Mother May I?” waiver requests that they have to get to make any changes to their plan.

If they had more flexibility, then they could make sure that patients on the program today could actually find a doctor to see them and also make sure that those who may be in an expansion population have the option of coverage that looks more like the private insurance and the private marketplace so that it’s a track and a platform to private coverage rather than the cliff that Medicaid is today – either in or out. If you make $1 too much money then you’re out of Medicaid or $1 less and you’re in. It needs to be a smoother ramp to private coverage and there are a lot of ideas to do that, including giving people the option of basically taking their Medicaid allotment as a voucher to buy into private coverage. There are a lot of ideas out there to improve this program, but we need to remember that we’re doing it for the most vulnerable citizens who are on the program today, who have no place else to go, competing for a limited number of appointments with a shrinking number of doctors to actually get appointments.

We can do so much better and I think you’re going to see many more governors actually demanding those kinds of changes and that kind of flexibility in exchange for any expansion.


Join us at the 2015 MDRP Summit for complete coverage on all things pricing, rebates, contracting and collaboration. Register now and save $300 when you use the code: XP2058BLOG. 

This Week in Healthcare: 6/8 – 6/12

Top news from around the healthcare industry this week: 

Walgreens, MDLive expand telehealth collaboration to three more states 
Walgreens has expanded its relationship with telehealth service provider MDLive, bringing remote physician access to customers in three new states and, for the first time, to PCs as well as mobile devices. Users of Walgreens mobile apps and the walgreens.com portal in Colorado, Illinois and Washington state now can consult 24/7 with board-certified MDLive physicians for $49 per encounter, the two companies announced Tuesday.

Outraged, engaged patient takes aim at paternalistic physician 
It’s hard to know how many patients out there are truly “empowered,” and I suspect it is a relatively small number, but one of the louder voices out there is Duncan Cross, a longtime engaged patient with Crohn’s disease.

Arizona hospitals, doctors avoid 5 percent Medicaid pay cut 
Arizona hospitals, doctors and other health providers will get a reprieve after the state's Medicaid program announced it will cancel a planned 5 percent payment cut because of lower-than-expected use among enrollees and a prescription-drug rebate.

One nation, under sedation: Medicare paid for nearly 40 million tranquilizer prescriptions in 2013 
In 2012, Medicare’s massive prescription drug program didn’t spend a penny on popular tranquilizers such as Valium, Xanax and Ativan. The following year, it doled out more than $377 million for the drugs. While it might appear that an epidemic of anxiety swept the nation’s Medicare enrollees, the spike actually reflects a failed policy initiative by Congress.

Game Changer: CMS’ Proposed Medicaid Managed Care Regulation 
The Centers for Medicare and Medicaid Services (CMS) released its long awaited Medicaid managed care proposed rules on May 26; the rules were published in the Federal Register on June 1 (80 Fed. Reg. 30198-31297). The last time the federal government seriously tackled Medicaid managed care was in a 2002 regulation (67 Fed. Reg. 40989, June 14), a response to the Balanced Budget Act of 1997 (Pub. L. 105-33), which itself amounted to a major new chapter in Medicaid’s relationship to what by then had become known as managed care.


Happy reading! Have a great weekend. 

This is the Only Government Programs Event You Need to Attend

How many Government Programs events do you attend a year?

IIR's 7th Annual Government Programs Summit is the one-stop-shop for all things government programs, merging together regulatory compliance and financial calculations to maximize revenue potential. We're delivering the most government officials AND experts from pharma and biotechs — all under one roof! They'll provide policy answers to strategic, compliance, operational, technical and tactical issues on all things government programs. 

Download the Agenda for Full Speaker and Session Details

PLUS! Calculate liability and optimize accuracy and accountability at the newly included full-day summit on Gross-to-Net! Invite your GTN and finance peers to join and experience true collaboration by breaking down interdepartmental silos through candid conversations and networking you can only have onsite at the event!

Register online to join us this March 23-25, 2015 in Arlington. Use the code XP2051BLOG now and save $400!

Prevention, Incentives and Medicare Costs

By Nalini K Pande, JD

A little over a year ago at my previous consulting job, I served as the project director for a very interesting prevention project.   The project was for the Bipartisan Policy Center’s (BPC) Health Care Cost Containment Initiative¹.   BPC had asked us to develop a financial model of the costs and benefits of a diabetes Type 2 prevention program.  Our report illustrated how the financial incentives for three different payors  (commercial plans, Medicare, and ACOs) vary given different assumptions of who would pay for these prevention services and the age at which individuals would first receive prevention services. We chose to model Type 2 diabetes prevention services given that Type 2 diabetes is reversible and given the tremendous amount that the US spends on Type 2 diabetes² .   What we learned was fascinating.

Prevention Efforts Can Yield Cost Savings

The key finding from our report was that a diabetes prevention program “can produce overall cost savings which increase over time for an individual.” Given this, why wouldn’t we roll out these prevention programs on a widespread basis?  Well, the answer may surprise you.  To delve into this, you will need to understand three key issues:

• - First, who pays for the diabetes prevention program? 
• - Second, who benefits?
• - Third, when do the savings kick in?

Our report showed that if private commercial plans bear the cost of the diabetes prevention program, they may not reap all the benefits.  This is because of two reasons.  First, if individuals switch health plans over time, another plan would reap the benefits – allowing for only small benefits for the plan that implemented the prevention program.  Second, if you’re 55 or older, there is no incentive for a private commercial plan to cover your participation in a diabetes prevention program.  Simply put, by the time the cost savings would kick in (10 years), you would be on Medicare and Medicare, not the plan, would reap the benefits. 

So, what if Medicare paid private plans to cover these diabetes prevention programs?  Perhaps, then, we would all win.  Those with private commercial plans would benefit from diabetes prevention services and Medicare would benefit from healthier beneficiaries who save the program money. Our report found that while the Government does recoup savings when it pays for the program, it only did so for those who are near 60.  In fact, the Government receives very little savings from a younger population who would stay with the private sector and continue to be with a commercial plan during the timeframe when most of the savings would be realized over a 25-year period.

Where does this leave us?

In essence, what we have is a scenario where payors are reluctant to pay for prevention services since they won’t benefit completely.  Has our patchwork system of health care created disincentives around prevention?  Not quite.  Our study found that if patients could join an ACO when they are under 65 (as a commercial ACO) and then stay in the same ACO when they are over 65 (as a Medicare ACO with shared savings between the ACO and Medicare), perhaps the ACO would get the best of both worlds.  In this scenario, an ACO could invest in its patients through prevention programs and recoup the benefits, assuming limited plan switching.

Investing in prevention appears to be a game of “what’s in it for me?” How do we change it to a “win-win” scenario? The answer is simple.  We do so by utilizing new systems like ACOs that allow payors to reap long-term savings. 

Nalini Pande, Managing Director, Sappho Health Strategies has nearly 20 years of experience in healthcare policy and reform.  She has considerable experience in Medicare and Medicaid, prevention, population health, and emerging payment models including accountable care organizations and patient-centered medical homes. Ms. Pande also has strong expertise in dual eligibles and the specific issues facing this unique population.  Ms. Pande is a graduate of Harvard Law School and Princeton's Woodrow Wilson School of Public and International Affairs.


Follow @nalinipande

                                           

¹ Under the leadership of former Senate Majority Leaders Tom Daschle (D-SD) and Bill Frist (R-TN), former Senator Pete Domenici (R-NM), and former White House and Congressional Budget Office Director Dr. Alice Rivlin, BPC’s Health Care Cost Containment Initiative  “explored and evaluated strategies to contain health care cost growth on a system-wide basis, while enhancing health care quality and value.” 
 ² In Appendix D of our report, we noted a study by Dall and colleagues that estimated the costs associated with Type 2 diabetes as $105 billion for medical costs (along with $54 billion for non-medical costs such as lost work days).