Congress Finally Doing Something: Bundled Billing Won’t Solve Surprise Billing and More About Medicare, Is it Actually Lowering Costs?

57403779_2004991206297195_8128613615025520640_nI stated and I believe that the answer to our healthcare problem has to be a bipartisan solution. Last week Senate health committee Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.) introduced S.1895, the Lower Health Care Costs Act of 2019 — bipartisan legislation to deliver better health care at a lower cost. Chairman Alexander and Ranking Member Murray announced that the committee would vote on the legislation on June 26, 2019.

“The single issue I hear most about from Tennesseans is, ‘What are you going to do about the health care costs I pay for out of my own pocket?’ Well, we’ve got an answer,” said Chairman Alexander. “This legislation will reduce what Americans pay out of their pockets for health care in three major ways: First, it ends surprise billing; second, it creates more transparency — you can’t lower your health care costs until you know what your health care actually costs. And third, it increases prescription drug competition to help bring lower cost generic and biosimilar drugs to patients. I look forward to working with my colleagues in the Senate health committee to mark up this legislation next week before sending it to the full Senate for consideration.”

“People across the country have been facing impossible decisions to afford the care they need and are counting on us to act. So I’m glad my Republican colleagues decided to listen to families and join Democrats at the negotiating table to work on these bipartisan steps to help lower health care costs, end surprise billing, respond to issues like the maternal mortality crisis, vaccine hesitancy, and obesity, and more,” said Senator Murray. “But this must be a first step, not a last one. I hope Republicans will build on this momentum by joining us at the table on bigger health care issues too—like repairing the damage from President Trump’s health care sabotage and protecting people with pre-existing conditions.”

Since last Congress, the Senate health committee has held five hearings on ways to reduce health care costs and four hearings on the cost of prescription drugs. In May, Alexander and Murray released a draft of this legislation for discussion, receiving over 400 comments. The Lower Health Care Costs Act of 2019 is composed of nearly three dozen specific provisions from at least 16 Republican senators and 14 Democrat senators.

Congress is fully engaged in trying to solve “surprise” medical bills and the conversation has exploded into a full-fledged debate on the best way to rein in bad actors while ensuring that physicians receive fair reimbursement for their services. The bipartisan U.S. Senate Working Group on Transparency dropped a new bill in 2019 that aims to address surprise billing. This Working Group, led by Sen. Bill Cassidy, MD (R-LA), has engaged in the most thoughtful discussion on the issue, meeting with stakeholders since summer 2018.

It is no surprise that in May the White House turned to Sen. Cassidy for advice on how to address this issue through legislation. During these discussions, a proposal emerged that would utilize hospital bundled billing to curb unanticipated medical bills. In a letter to the bipartisan Working Group, ASPS and other stakeholders urged the Working Group to consider the full scope of bundling and its ripple effect on patients. This practice would negatively affect patients in rural communities, as bundling could lead to further financial strains on rural and underserved hospitals. Patients may face reduced access to specialty care if hospitals and other facilities are forced to close. The letter highlighted that the use of hospital bundled billing to address this issue is untested and could be highly disruptive to the healthcare delivery system.

Medicare program aimed at lowering costs, improving care may not be working as well as thought

Kara Gavin reported that as the Medicare system seeks to improve the care of older adults while also keeping costs from growing too fast, a new University of Michigan study suggests that one major effort may not be having as much of an impact as hoped.

A new analysis of data from the Medicare Shared Savings Program finds that high-cost physicians and high-cost patients dropping out of the program accounted for much of the savings reported from 2008 to 2014.

After the effects of those departures were taken into account, the Accountable Care Organizations taking part in the MSSP had the same costs as physicians in their area who weren’t taking part in ACOs but also took care of other patients with traditional Medicare coverage.

The study also compares ACO and non-ACO providers on measures of health care quality, finding that patients in an MSSP ACO were not more likely to get four proven tests for common health problems than similar patients with the same kind of Medicare coverage who weren’t part of an ACO.

The study is published in the Annals of Internal Medicine. The authors note that the results have greater implications for providers who voluntarily join an ACO, rather than physicians employed by large group practices that have engaged in Medicare cost and quality efforts for many years—such as those at Michigan Medicine, U-M’s academic medical center.

The findings suggest that as the federal government continues its effort to “bend the cost curve” for Medicare through voluntary reforms, it should take into consideration year-to-year shifts in which providers and patients are taking part in ACOs. Otherwise, the researchers say, “selection bias” could skew the interpretation of the program’s effects.

ACOs can earn extra dollars from Medicare based on their overall costs and quality averaged across all their providers’ patients or can lose money if they don’t meet cost or quality goals. The Centers for Medicare and Medicaid Services has set a goal of increasing the disincentives or “risk” that ACOs face, so accurate measurement of actual cost and quality performance will increase in importance, the researchers say.

“Our results suggest that there is less reason for optimism about the MSSP’s effects to date that might have been suggested by other studies,” said Andy Ryan, senior author of the new study and a professor at the U-M School of Public Health. “We hope CMS will consider the implications as it moves forward with evaluating programs aimed at improving the long-term sustainability of the Medicare system.”

Ryan worked with Adam Markovitz, who led the analysis as part of his doctoral degree in public health and is now completing his medical degree at the U-M Medical School as part of the Medical Scientist Training Program.

“At the project’s outset, we hypothesized that early savings in this voluntary ACO program were driven by the disproportionate entry of high-performing “early adopter” clinicians into ACOs,” Markovitz said. “To our surprise, we found that ACO savings may be driven by the disproportionate exit of higher-spending clinicians out of ACOs.”

In all, the ACO providers whose overall costs were in the top 1% of all providers studied were more than twice as likely to leave an MSSP ACO as providers whose costs fell into the middle level of spending.

Whether these providers were encouraged to leave the ACO because of their costs, or whether they left voluntarily because they were unable or unwilling to reduce the growth in the cost of their patients’ care, can’t be determined through the current study.

MSSP ACO administrators are able to see the costs attributed to each of the providers taking part in their ACO, so “gaming” of which providers to include could be happening, say Ryan and Markovitz.

“We would hope that if a provider shows a trend toward low-value care, the ACO would work with them to remedy the situation,” Ryan said.

Markovitz, Ryan, and colleagues published a study in Health Affairs earlier this year, showing that high-cost patients were slightly more likely to leave ACOs than lower-cost ones. They noted in that study that the MSSP program does not adjust ACOs’ payments depending on how much more ill their participating patients have become over time—the payment is based on how sick each patient was when their provider first joined the ACO.

While this has apparently kept ACOs from “up-coding” patients to game the system, it also means that ACOs may have an incentive to drop providers whose patients become more severely ill—and therefore more costly.

That study and the new study have implications for the changes being proposed for MSSP and other value-based payment programs in Medicare.

“There need to be more safeguards against the selective attrition of patients and providers from ACOs that we’ve observed in our studies,” Ryan said. “As CMS encourages more provider risk-taking, it should design its systems to support what’s working best to improve care and efficiency.”

Markovitz also notes that CMS could design more future Medicare innovations as true experiments—for instance, with randomization (as in Medicare’s bundled payment plan for joint replacement surgery) or a phased roll-out that allows researchers to evaluate more readily whether a program truly saved money or improved quality.

CVS just laid out a big reason why health companies are worried about Amazon

Kyle Walsh of CNBC noted that when word spread that Amazon would move into health care in 2017, health-care executives had a ready answer: We are not afraid.

“I honestly don’t believe that Amazon will be interested in the near future in the next few years in this market,” Walgreens’ CEO Stefano Pessina told investors in an earnings call in July 2017.

“I think we have a lot of capabilities and a value proposition that can compete effectively in the market,” CVS CEO Larry Merlo said back in August.

But recent legal actions tell a different story.

In April, CVS filed a lawsuit against John Lavin, a former senior vice president in charge of CVS Caremark’s retail pharmacy network, after Lavin told the company he was leaving to take a job at Amazon’s pharmacy arm, PillPack. The judge this week ruled in CVS’ favor, preventing Lavin from taking immediate employment at PillPack.

That follows another case from January of this year, where insurance giant UnitedHealth sued one of its employees for attempting to join a different Amazon initiative. That was Haven, Amazon’s joint employer health venture with Berkshire Hathaway and J.P. Morgan.

These lawsuits suggest incumbents are more concerned than they’re letting on in public.

The underlying concern: Amazon going directly to insurers

Amazon has said almost nothing in public about its health-care strategy.

But Amazon could disrupt the space dramatically by negotiating directly with insurance companies on drug pricing, cutting out the existing pharmacy benefits managers, or PBMs. All of that could potentially lower health-care costs for consumers.

Among other functions, PBMs help insurance companies negotiate lower drug costs. Manufacturers arrange discounts, called rebates, with the benefits managers so they can fix a spot for their products on a PBM’s list of preferred drugs. It’s a huge business — CVS’ PBM business represented approximately 60% of its overall revenues in 2018, or around $116 billion, according to a person familiar with CVS’ business.

Amazon PillPack CEO TJ Parker, in a deposition in the Lavin case, admitted to the court that the company had “explored a number of different things.”

But he said the company had “no immediate plans” to compete with CVS Caremark’s core offering, its PBM.

CVS certainly seems to think differently, according to the lawsuit to prevent Lavin from working for PillPack.

“Given its robust infrastructure, operational capacity, and distribution reach, Amazon-PillPack is uniquely positioned to negotiate directly with payers (insurers) and displace CVS Caremark’s email-based services,” CVS argued in support of its motion for a preliminary injunction.

In other words, CVS worries that Amazon is hiring Lavin to approach its clients — insurance plans — for deals that could undercut its PBM.

In particular, CVS said PillPack is already approaching Blue Cross Blue Shield. (CNBC reported talks between PillPack and the insurance network in May.)

“Most recently, Amazon-PillPack engaged in direct discussions with Blue Cross Blue Shield, a federation of 36 health insurance plans that cover more than 100 million Americans, to provide its members with prescription home delivery,” CVS’ motion reads.

Lavin, who has an extensive background working with payers, would be well positioned if Amazon PillPack did decide to take that step toward direct contracting over time.

According to Jefferies’ analyst Brian Tanquilut, who also reviewed the legal documents, there’s a real threat that Amazon could chip away at CVS Caremark’s business over time by going directly to insurers. “The lawsuit shows that pharmacy benefits managers are now also at risk of being dis-intermediated,” he wrote.

To that assertion, a PillPack spokesperson responded: “It is important to keep in mind that what’s being reported here is another company’s speculation about our business strategy for a lawsuit to which neither Amazon nor PillPack is a party.”

However, other drug supply chain experts agree that the PBMs have reason to worry, especially as the health industry consolidates and policymakers are pushing PBMs to be more transparent about their practices.

“PBMs are going to be more protective of their mail pharmacy business than ever and less welcoming to outsiders like PillPack,” said Stephen Buck, a drug supply chain expert who previously worked at McKesson.

For his part, Lavin said in communications to his former employer that he would not be competing head-on with them but would be negotiating from the opposite side of the table.

“I’ll be … handling [PillPack’s] negotiations with PBMs … in other words, it’ll be the opposite of what I did for CVS,” he noted in an email to CVS’ human resources department that was disclosed during the case.

The judge disagreed and granted CVS’ motion to enforce the non-compete agreement and block Lavin from working for PillPack for 18 months.

In his ruling, Judge John J. McConnell wrote, “Mr. Lavin will also negotiate and build relationships with private Payers and public Payers, both of whom are current CVS clients.” McConnell wrote, “It also appears that PillPack will be looking to negotiate directly with the insurers and others on the Payer level.”

CVS, in a statement to CNBC, denied any claim that it is working to block competition and said that it will continue to work with new players.

“We remain focused on delivering innovative solutions to transform the health care experience, but there is always room for new players in health care, as competition can help lower overall costs for payers and patients,” said a spokesperson for CVS Caremark.

If you remember our discussion last week, last we noted was that Wilbur Mills the Chairman of the Ways and Means Committee hit upon the idea of combining the most ambitious components of three of the bills that all of the various groups arguing for a health care solution for the senior population. His idea was quickly embraced by the Administration because they all regarded it as insurance against any Republican attack. On Marci 23, 1965, the Ways and Means Committee voted to substitute the Mill’s bill for the King-Anderson bill and on the following day, it was introduced on the House floor. After only one day of floor debate, the Mill’s bill was passed without amendment by a vote of 313 to 115.

The features of the new bill was incorporated into two amendments to the Social Security Act, which provided in Title 18 for a universal hospital insurance program for the elderly and for optional coverage of physicians’ services while Title 19 (known as Medicaid) expanded the Kerr-Mills program of medical coverage for the needed.

When the Mills bill was referred to the Senate, months of debate and discussion proceeded and then was referred out of committee having been amended no less than seventy-five times.  The full Senate considered further 250 amendments, passed the bill as amended. It was then sent to a Senate-House conference committee with the task to resolve the over 500 differences between the two chambers.

In July the House passed the finally revised bill to be officially part of the Social Security Amendments of 1965 and the next day after the House passed it the Senate approved the measure. Finally, on July 30, 1965, President Johnson flew into Independence Missouri to sign the Medicare bill into law in the presence of former President Truman. Success finally!!

What were the provisions of the legislation?

Title XVIII, Part A: Hospital Insurance provided that all persons over the age of sixty-five otherwise entitled to benefit under the Social Security or Railroad Retirement Act were eligible and were automatically covered. The benefits were measured in sixty-day periods following discharge from a hospital or extended-care facility. During each benefit period, they were entitled to up to ninety days in a hospital, one hundred days in an extended care facility, and home-care benefits for up to one year after the most recent discharge from either a hospital or extended care facility.

Care in either a psychiatric or tuberculosis hospital was limited to a lifetime amount of 190 days, provided that a physician as being “reasonably expected to improve” certified the patient.  Subscribers were required to pay a “front-end deductible” for each hospital stay of up to ninety days. This deductible started at $40 but has risen to more than $760 for the first sixty days and an additional $190 for days 61-90. No front-end deductibles were imposed for the use of extended care facilities for the first twenty days but after that point, a daily copayment was levied.

The program was financed by earmarked payroll taxes levied on employers and employees and disbursements were made from the fund either directly to providers or through an intermediary insurance company who then reimbursed the providers based or what was and still is known as “reasonable costs.”

Because there is a lot more to the bill I will further breakdown the other provisions of the Medicare bill. But as seen in the eventual design and passing of the Medicare bill it took cooperation and bipartisanship to get the job done.

Listen up Congress, no matter which party you belong to!!

More to come.

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