Tagged Medicare

Analyzing The Issues: Cadillac Plans, The ‘Single-Payer Trap’, Health Care Appropriations And Medicare’s Future

Opinion writers offer their takes on health policies that operate as context to the current congressional debate.

Bloomberg: Democrats And The Single-Payer Trap
For seven and a half years, Republicans have campaigned and voted to replace the Affordable Health Care Act. When given a real chance at success, with governing control, they were impeded by a president who’s ignorant on the issue. Then, after Republican senators slipped behind closed doors to come up with their own plans, they provided products that voters, even some Trump supporters, overwhelmingly spotted as frauds. (Albert R. Hunt, 7/25)

Huffington Post: A Message For House Republicans: Actions Speak Louder Than Words
Republicans on the House Appropriations Committee offered some promising phrases when describing their fiscal year 2018 Labor-HHS budget: “Invest in essential health,” “focus investments in programs our people need the most,” and “targeting investments in … public health. ”House LHHS Subcommittee Chair Tom Cole concluded, “This bill is one that reflects the priorities that Americans value, and will continue to support the well-being of Americans through funding these vital programs.” (Clare Coleman, 7/24)

The Wall Street Journal: The Deadline To Kill The Death Panel
All eyes are on the Senate as it debates what to do about ObamaCare. But the House has a last chance this week to abolish one of the law’s most dangerous creations: a board with sweeping, unchecked power to ration care. The Independent Payment Advisory Board—what critics call the death panel—would be an unelected, unaccountable body with broad powers to slash Medicare spending. But the law contains a living will for IPAB. If the president signs a congressional resolution extinguishing the panel by Aug. 15, it will never come into existence. (Grace-Marie Turner and Doug Badger, 7/25)

Milwaukee Journal Sentinel: Medicare Cuts Are A Raw Deal For Wisconsin Seniors
Unfortunately, a federal advisory panel is urging lawmakers to cut Medicare Part B, the program that covers chemotherapies, immunotherapies and other advanced drugs that must be administered by doctors. If Congress implements this recommendation, these trends could reverse, as Wisconsin seniors would lose access to life-saving medications. (Sandra Gines and Carrie Riccobono, 7/25)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

Parsing The Policies: What’s To Become Of Medicaid And Medicare?

Opinion writers offer their thoughts on how the current Affordable Care Act replacement debate impacts Medicaid and how governors should proceed in pursuing Medicaid waivers as well as current Medicare funding issues.

Daily Beast: Medicaid Delivers As Obamacare Survives
Medicaid got a reprieve from the budget axe with the GOP’s failure so far to repeal, let alone replace, Obamacare. Suddenly, the program for the poor that began in 1965 seems less like a scapegoat for politicians looking to score rhetorical points and to shore up state budgets, and like it may join Medicare and Social Security on the third rail in American politics—touch it and you die. (Eleanor Clift, 7/24)

RealClear Health: Republicans Are Tackling Medicaid Wrongly
The high decibel fight in the Senate over Medicaid is one more example–did we need more?–of why lasting changes in social programs require thoughtful legislative deliberation leading to bipartisan consensus. There should be hearings to gather input from all sides and serious debate in committees as well as on the floor. If one party rams through big changes in any program as important as Medicaid, the other party will demonize the result. In the case of Medicaid cuts, arousing public outrage won’t be hard. Individuals and families, state governments, rural hospitals and other health providers will all be vocal about their plight. One wonders why either party would seek such opprobrium when they could be working together on sensible Medicaid reform. (Alice M. Rivlin, 7/24)

Morning Consult: Governors: Avoid Harmful Insurance Practices In Medicaid Waivers
While our nation’s governors recently gathered in Rhode Island for the summer meeting of the National Governors Association, most of the country’s political attention remained focused on the debate in Washington, D.C. over the fate of the Affordable Care Act. Less noticed, but also critically important, is that fact that each governor holds in their hands today the ability to radically reshape Medicaid for their state’s most vulnerable citizens regardless of the outcome of that debate. (Donna Christensen, Scott Mulhauser and Jason Resendez, 7/24)

CBS News: Medicare Funding: Problems And Solutions
Medicare’s funding problems often get overlooked when the Social Security trustees issue their annual report on the funded status of the Social Security and Medicare programs. Yet together they form the twin pillars of financial security for retirees. That’s why it’s important to understand Medicare’s financial situation, so you can be an informed health care planner — and voter. (Steve Vernon, 7/24)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

Policy Positions: Health Spending Is ‘The American Way’; What Becomes Of Medicare; And Does Universal Health Care Equal Freedom?

Media outlets explore important health policy questions.

Bloomberg: Spending A Lot On Health Care Is The American Way
The U.S. has some of the most expensive medicine in the world, with health-care spending now almost 18 percent of gross domestic product. But why? And might we hope to get this spending down? Unfortunately, expensive health care is embedded in the American way of life — more specifically, the American desire to live it up with high consumption. (Tyler Cowen, 7/20)

Forbes: How GOP Will Still Carve Up Medicare
The rehashed House GOP budget blueprint wants to reshape Medicare into more of a Medicare Advantage model, which now covers some 19 million Americans. What does that mean? Funding for the guaranteed part of Medicare would be shifted into the privatized scheme. You’d receive a fixed stipend or “premium support” to buy a private policy on an exchange. (John Wasik, 7/19)

USA Today: Dear America, Universal Health Care Is What Real Freedom Looks Like
In 1991, after nearly 10 years of recurring wracking pain in my lower abdomen, I walked into a hospital in Helsinki, Finland. I wasn’t a Finnish citizen and wasn’t, at that time, married to one. I was an American writer visiting my Finnish boyfriend, working temporarily in Helsinki. An admitting nurse listened to my symptoms and guessed my problem — a diagnosis that received preliminary confirmation by ultrasound within the hour. (Anne Korkeakivi, 7/20)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

Research Roundup: Early Hospice Discharges Turn Profits; Integrating Mental Health Care

Each week, KHN compiles a selection of recently released health policy studies and briefs.

Health Affairs: A Positive Association Between Hospice Profit Margin And The Rate At Which Patients Are Discharged Before Death
Although certain live discharges are consistent with high-quality care, regulators have expressed concern that some hospices’ desire to maximize profits drives them to inappropriately discharge patients… Adjusted analyses showed positive and significant associations between both operating and total margins and hospice-level rates of live discharge: One-unit increases in operating and total margin were associated with increases of 3 percent and 4 percent in expected hospice-level live discharge rates, respectively. (Dolin et. al., 7/1)

Health Affairs: Medicare Advantage Associated With More Racial Disparity Than Traditional Medicare For Hospital Readmissions
We compared racial disparities in thirty-day readmissions between traditional Medicare and Medicare Advantage beneficiaries who underwent one of six major surgeries in New York State in 2013. We found that Medicare Advantage was associated with greater racial disparity, compared to traditional Medicare. After controlling for patient, hospital, and geographic characteristics in a propensity score based approach, we found that in traditional Medicare, black patients were 33 percent more likely than white patients to be readmitted, whereas in Medicare Advantage, black patients were 64 percent more likely than white patients to be readmitted. (Li et. al., 7/1)

RAND: Possible Legal Barriers For PCP Access To Mental Health Treatment Records
Provider and payer groups have endorsed the goal of improving the integration of primary care and behavioral health across a variety of programs and settings… Preliminary investigation found that in almost one third of the states (including large-population states such as Florida, Georgia, Massachusetts, New York, and Texas), primary care physicians (PCPs) may have difficulty accessing mental health treatment records without the patient’s (or his/her guardian/conservator’s) written consent. If a comprehensive legal analysis supports this conclusion, then those advocating integration of behavioral and primary care may need to consider seeking appropriate state legislative solutions. (Rothenberg et. al., 7/19)

New England Journal of Medicine: Implementation Of Medical Homes In Federally Qualified Health Centers 
We examined the achievement of medical-home recognition and used Medicare claims and beneficiary surveys to measure utilization of services, quality of care, patients’ experiences, and Medicare expenditures in demonstration sites versus comparison sites… Demonstration sites had higher rates of medical-home recognition and smaller decreases in the number of patients’ visits to federally qualified health centers than did comparison sites, findings that may reflect better access to primary care relative to comparison sites. (Timbie et. al., 7/20)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

Trump Administration Seeking New Federal Payment System For Mental Health Services

The Centers for Medicare & Medicaid Services announced it wants to design a payment or service delivery model to improve health care quality and access for Medicare, Medicaid or Children’s Health Insurance Program beneficiaries who need behavioral health treatment.

Modern Healthcare: CMS Looks To Launch Behavioral Health Pay Model
The CMS is interested in launching a new pay model that will target behavioral health services and is seeking public comment on what the new effort should look like. On Thursday, the CMS announced that its Innovation Center would like to design a payment or service delivery model to improve healthcare quality and access for Medicare, Medicaid or Children’s Health Insurance Program beneficiaries with behavioral health conditions. (Dickson, 7/20)

And in news on Medicare —

Forbes: UnitedHealth Group Predicts 50% Of Seniors Will Choose Medicare Advantage
UnitedHealth Group executives are confident it’s only a matter of time before more than half of the nation’s seniors are enrolled in a Medicare Advantage plan over traditional fee-for service Medicare. The insurer’s executives wouldn’t say when such growth would take place but health plans reporting earnings in the next two weeks are expected to report solid growth. (Japsen, 7/20)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

Depression Among Heart Attack Survivors Can Be Deadly, Yet Is Often Ignored

Clyde Boyce has been hospitalized 14 times in the past four years.

Boyce, 61, survived two strokes and five operations to unblock arteries around his heart, including three procedures in which doctors propped open his blood vessels with stents. He takes 18 pills a day and gets injections every two weeks with a powerful drug to lower cholesterol.

Yet the disease that came closest to taking Boyce’s life wasn’t a heart condition. It was depression, which led him to attempt suicide twice in the year after his first surgery.

One in 5 people hospitalized for heart attack or chest pain develop major depression — about four times the rate in the general population, according to the American Heart Association. One in 3 stroke survivors become depressed, along with up to half of those who undergo heart bypass surgery.

Heart disease patients who become depressed are twice as likely to die within the following decade as other patients, according to an unpublished study presented in March at the American College of Cardiology’s annual meeting.

Depression increased the risk of death more than any other risk factor in the study — even smoking, said lead author Heidi May, a cardiovascular epidemiologist at the Intermountain Medical Center Heart Institute in Salt Lake City.

Relatively few heart patients die from suicide.

Most often, depressed heart attack survivors die of physical causes, partly because they’re less motivated to take care of themselves and take medication as directed, said Dr. Martha Gulati, a spokeswoman for the American College of Cardiology.

People suffering from depression are also more likely to smoke but often less likely to exercise and follow a healthy diet than those who are not depressed, Gulati said.

“You may be told to change your diet, but if you’re depressed, you may think, ‘This is too overwhelming. I can’t even process this information right now,’ ” said Kim Smolderen, an assistant professor at the University of Missouri-Kansas City.

The American Heart Association has recommended that cardiologists screen all heart attack patients for depression, using a short questionnaire, since 2008.

Yet nearly a decade later, relatively few cardiologists screen patients for depression, Smolderen said. In May, she published a study in Circulation of younger heart attack survivors, most of whom were women, showing that only 42 percent of depressed heart attack patients received treatment.

Overall, only half of all Americans diagnosed with depression receive care, according to the National Institute of Mental Health.

Many cardiologists say they don’t have the time or the expertise to handle mental health care, Smolderen said. Critics note there’s little to no evidence that depression screening prevents additional heart attacks.

Yet many doctors also fail to refer patients to cardiac rehabilitation — a program of supervised exercise and education — which has been shown to both reduce depression and help prevent heart attacks and deaths, according to a 2015 study in JAMA Internal Medicine.

Although the American Heart Association strongly recommends cardiac rehab, doctors refer only 2 out of 3 heart attack survivors for the program, the study found.

A fraction of patients referred to the program — which involves three sessions a week for 12 weeks — actually show up. Due to cost and other barriers — such as long drives to hospital rehab centers — just 23 percent of patients attended one or more sessions, and 5 percent completed all 36 recommended sessions, the study found.

Cardiac rehab programs include stress management and teach relaxation techniques and coping skills similar to those used in some types of depression therapy. The programs can reduce the risks of heart attack more than standard rehab.

In a three-year study published in Circulation last year, which included heart patients ages 36 to 84, nearly half of patients who didn’t attend cardiac rehab died or had a heart attack, stroke or hospitalization due to chest pain, compared with 33 percent of those who attended rehab.

Among those whose rehab included stress management, only 18 percent suffered one of these heart-related complications, the study found.

Ignoring The Warning Signs

Boyce — who said depression sent him into rages that tested his marriage — said no one screened him for mental illness after his heart procedures, although he had suffered several debilitating depressions since adolescence.

He wasn’t prescribed antidepressants, Boyce said, until after his first suicide attempt.

“The system failed him,” said psychologist Barry Jacobs, a spokesman for the American Heart Association, when he heard Boyce’s story. “What you’re describing is not the way it’s supposed to work.”

After Boyce’s second heart procedure, he stopped taking his heart medications for five days — a move that his doctors viewed as a suicide attempt. His doctor committed him to a state psychiatric hospital for almost a week, prescribed medication and referred him to a psychiatrist.

Yet Boyce’s depression deepened as the bad health news piled up. Doctors diagnosed heart rhythm problems that required a pacemaker; congestive heart failure, caused when weakened heart muscle allows fluid to build up in the lungs; as well as asthmatic bronchitis, which affects the lungs. Boyce began to dread that he would suffer a fate similar to his mother, who died after six months in a coma, brought on by a long battle with heart disease.

A year after his first suicide attempt, Boyce tried to overdose on prescription medication. His wife found him and took him to the hospital, where doctors committed him to a psychiatric ward.

“Everything was happening so fast,” said Boyce, a former advertising executive from Murchison, Texas, who retired due to his health problems. “I was just convinced I was going to die. I thought to myself, ‘I’m going to end up on a ventilator, unconscious, just like my mother.’ ”

Boyce, 61, of Murchison, Texas, shows his smallest and largest pills — two of 18 he takes every day for various conditions. (Sarah A. Miller for KHN)

Boyce received help from a variety of sources: medication; counseling with a psychologist; a “mindfulness” stress reduction program, which borrows techniques used in meditation; and cardiac rehabilitation.

Exercise helped him feel stronger and less disabled, Boyce said.

“I do think the rehab raised my spirits … feeling like I could still do some things,” Boyce said.

What helped Boyce turn the corner, he said, was a conversation with God.

“It was the night before my third or fourth operation, and for some reason, I was sure I was not going to live through it,” Boyce said. “I said, ‘God, all I ask is that you give me one more day, and I will try to be a better man every day.’”

Boyce lost his fear of death. Although he occasionally still gets depressed, Boyce said, he’s able to manage his fears and anxieties better than in the past.

An Expensive Problem To Ignore

Cardiologists are divided about whether to screen heart patients for depression, but many primary care doctors have embraced the idea, said Dr. Ken Duckworth, medical director for the National Alliance on Mental Illness.

Both the American Academy of Family Physicians and the U.S. Preventive Services Task Force, an expert panel that advises Congress on health care, now recommend that doctors screen all adults for depression. The family physician group also singles out heart attack survivors for depression screening.

Studies increasingly suggest that the most effective care comes from addressing physical and mental health conditions together, rather than forcing frail patients to make separate trips to a variety of specialists, Duckworth said.

Successful approaches have involved “packages of care,” rather than individual services, said Dr. Bruce Rollman, a professor at the University of Pittsburgh School of Medicine.

The team approach is key.

A mild decrease in depression led to a big decrease in cost.

Bruce Rollman, University of Pittsburgh School of Medicine

In an approach called collaborative care, mental health nurses or social workers serve as care managers, who reach out directly to patients, often by phone, to educate them about their disease, suggest ways to manage their depression and make sure that treatments are working, said Dr. Mary Whooley, director of cardiac rehabilitation at the San Francisco VA Health Care System.

Care managers work with primary care doctors to quickly adjust patients’ medications or other treatments as needed. They consult with a psychiatrist, often over the phone, Whooley said.

“You can’t stay home and get depressed … they won’t let you,” said Dr. Anita Everett, president of the American Psychiatric Association. “They reach out to you.”

A 2014 study in JAMA Internal Medicine found that collaborative care could be delivered over the phone. Patients in the study had blocked arteries, heart rhythm problems or heart failure.

Even on the phone, care managers “develop a trusted relationship with our patients,” said study co-author Dr. Bruce Rollman, a professor at the University of Pittsburgh School of Medicine.

An earlier study of collaborative care, which focused on patients who had undergone bypass surgery, found that telephone care not only improved depression, quality of life and patients’ physical functioning, it saved over $2,000 a year per patient. Rollman is now studying ways to treat depression and heart failure together.

Keeping depression under control can save money if patients stay healthy and spend less time in the hospital, Rollman said.

Depression costs the U.S. more than $210 billion a year, with much of the cost coming from reduced productivity at work, according to a 2015 study.

“There are very, very few things in health care that save money,” Rollman said. “A mild decrease in depression led to a big decrease in cost.”

Officials at the University of Pittsburgh Medical Center Health Plan were impressed enough by the results to include depression screening as part of a checklist of care for patients who are sent home after a heart attack.

Medicare, the federal health insurance program for Americans age 65 and older, began paying doctors to deliver collaborative care in January. Medicare has covered depression screenings in primary care settings since 2012.

In that time, Medicare payments for depression screening have grown from $1.7 million a year to $9.5 million a year, according to a Kaiser Health News analysis. While those screenings make a small fraction of Medicare’s annual budget of $646.2 billion, Duckworth called the services “a noteworthy trend in the right direction.”

Elizabeth Lucas contributed to this story.

KHN’s coverage related to aging & improving care of older adults is supported by The John A. Hartford Foundation.

Categories: Medicare, Mental Health, Public Health

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Fraud And Billing Mistakes Cost Medicare — And Taxpayers — Tens Of Billions Last Year

Federal health officials made more than $16 billion in improper payments to private Medicare Advantage health plans last year and need to crack down on billing errors by the insurers, a top congressional auditor testified Wednesday.

James Cosgrove, who directs health care reviews for the Government Accountability Office, told the House Ways and Means oversight subcommittee that the Medicare Advantage improper payment rate was 10 percent in 2016, which comes to $16.2 billion.

Adding in the overpayments for standard Medicare programs, the tally for last year approached $60 billion — which is almost twice as much as the National Institutes of Health spends on medical research each year.

“Fundamental changes are necessary” to improve how the federal Centers for Medicare and Medicaid Services ferrets out billing mistakes and recoups overpayments from health insurers, he said.

Medicare serves about 56 million people, both those 65 and older and disabled people of any age. About 19 million have chosen to enroll in Medicare Advantage plans as an alternative to standard Medicare.

Federal officials predict the Medicare Advantage option will grow further as massive numbers of baby boomers retire in coming years.

Standard Medicare has a similar problem making accurate payments to doctors, hospitals and other health care providers, according to statistics presented at the hearing. Standard Medicare’s payment error rate was cited at 11 percent, or $41 billion for 2016.

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Last week, Attorney General Jeff Sessions announced the arrest of 412 people, some 100 doctors among them, in a scattershot of health care fraud schemes that allegedly ripped off the government for about $1.3 billion, mostly from Medicare.

CMS official Jonathan Morse said that the “largest contributors” to billing mistakes in standard Medicare were claims from home health care and inpatient rehabilitation facilities.

Some lawmakers appeared frustrated that CMS cannot say for sure how much of the “improper payments” in both Medicare options are caused by fraud. The agency uses the term broadly to cover billing fraud, waste and abuse, as well as simply overcharges and underpayments.

“When trying to understand how much fraud is in Medicare, the answer is simply we don’t know,” subcommittee Chairman Vern Buchanan (R-Fla.) said.

Yet he added that “it doesn’t take a big percentage [of fraud] to get a giant number” of dollars.

CMS official Morse did little to clear up any confusion over billing mistakes. In his written testimony, he said that improper payments are “most often payments for which there is no or insufficient supporting documentation to determine whether the service … was medically necessary.”

In his testimony, GAO official Cosgrove focused on the Medicare Advantage program. He took aim at a little-known government audit process called Risk Adjustment Data Validation, or RADV. These audits require health plans to submit a sample of patient records for review.

Cosgrove said that the RADV audits take too long to complete and failed to focus on health plans with the greatest potential for recovery of overcharges. He also said that CMS officials had not done enough to make sure the payment data they use are accurate. As a result, “the soundness of billions of dollars in Medicare expenditures remains unsubstantiated,” according to written testimony.

The GAO, the watchdog arm of Congress, has previously criticized CMS for its failure to ferret out overcharges in Medicare Advantage. In an April report, GAO found that CMS has spent about $117 million on the Medicare Advantage audits since 2010 but recouped just under $14 million in total.

Payment errors and overcharges by Medicare Advantage plans were the subject of a lengthy investigation by Kaiser Health News and the Center for Public Integrity. Federal officials have struggled for years to weed out billing irregularities by Medicare Advantage plans, according to CMS records obtained through a Freedom of Information Act lawsuit filed by the Center for Public Integrity.

The investigation found that Medicare Advantage payment errors result mostly from flaws in a billing formula called a risk score. Congress expected risk scores would pay higher amounts for sicker patients and less for people in good health when it began phasing in the billing scales in 2004.

But since then, a wide range of CMS audits and other reviews have found that Medicare wastes billions of tax dollars annually because some health plans inflate risk scores by exaggerating how sick their patients are. One CMS memo made public through the FOIA lawsuit referred to risk-based payments as essentially an “honor system,” with few audits to curtail fraud and abuse.

Even when RADV audits have detected widespread overpayments, CMS officials have failed to recoup money after years of haggling with the health plans.

In January, Kaiser Health News reported that Medicare had potentially overpaid five Medicare Advantage health plans by $128 million in 2007, but under pressure from the insurance industry collected just $3.4 million and settled the cases.

Morse testified on Wednesday that CMS is still in the process of completing appeals of RADV audits from 2007. He said that payment errors have been calculated for 2011 and that reviews for 2012 and 2013 were underway.

These results are years behind schedule, according to CMS documents, which show the results were expected in early 2014. In the past, officials have said that they expected to collect as much as $370 million from the 2011 audits.

Morse said on Wednesday he didn’t know when the 2011 audit results would be released. “Hopefully soon,” he said after the hearing. “I actually don’t know.”

KHN’s coverage related to aging & improving care of older adults is supported by The John A. Hartford Foundation.

Categories: Cost and Quality, Health Industry, Medicare

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Congress Squares Off Over Drug Pricing And A Controversial Drug Discount Program

House Democrats are calling foul on Republican assertions that cuts to a little-known discount drug program will eventually reduce skyrocketing drug prices.

At a hearing Tuesday, Rep. Diana DeGette (D-Colo.) said high drug prices should be investigated separately from the focus on oversight of the drug discount program, known as 340B.

“I think we need an investigation, a robust investigation, and a series of hearings that explore in-depth the reasons for exorbitant cost of drugs and why the prices continue to rise,” DeGette said.

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Last week, Health and Human Services Secretary Tom Price proposed steep cuts in what Medicare reimburses some hospitals for outpatient drugs under the 340B program. In a release, Price said such cuts would be “a significant step toward fulfilling President [Donald] Trump’s promise to address rising drug prices.”

DeGette countered Tuesday that the proposal “would do nothing” to address high drug prices and said making that connection “seems more like fantasy than reality.”

Also on Tuesday, there were other hints at Trump Administration efforts to address drug pricing. Food and Drug Administration Commissioner Scott Gottlieb talked in a public meeting about lowering drug prices on a different front — saying that the agency needs to increase generic drug competition.

Trump routinely criticized high drug prices on the campaign trail last year and promised to take action during his presidency. In June, a leaked draft of an executive order on drug prices, first reported by The New York Times, spoke of facilitating more drug competition but also targeted the 340B program. That strategy immediately drew criticism from Sen. Al Franken (D-Minn.), who said scaling back the program would drive up what hospital patients pay for drugs and force Americans “to choose between health and other basic life necessities, like putting food on the table and a roof overhead for the family.”

The federal 340B program requires pharmaceutical manufacturers to provide outpatient drugs at a significant discount to hospitals and clinics that serve a largely low-income population.

After buying the discounted drugs, the hospitals and clinics can bill Medicare or other insurers at their regular rate, pocketing the difference.

About 40 percent of hospitals nationwide participate in the program and, as House members pointed out Tuesday, the program has grown dramatically in recent years to become a significant force in the pharmaceutical marketplace. The Medicare Payment Advisory Commission estimated that hospitals and other participating entities spent more than $7 billion to buy 340B drugs in 2013, three times the amount spent in 2005.

Advocates of the program say the discounts — and the money hospitals make on payments from Medicare — are necessary to combat skyrocketing drug prices.

But federal reports in recent years from the Medicare advisory board, as well as the Government Accountability Office and the Office of Inspector General, have raised concerns about oversight and abuse of the 340B program.

Rep. Joe Barton (R-Texas) noted “this is a difficult hearing” because while the program was created with good intent, its complexity makes it challenging to understand. For example, hospitals and clinics aren’t required to pass any discounts they receive on to patients — they can direct the money to their general fund.

Looking at his colleagues, Barton said: “We all support the program but it has grown topsy-turvy. We need to put the best minds on this.”

Republican lawmakers are not the only ones raising concerns about 340B oversight. The Pharmaceutical Research and Manufacturers of America, which represents drugmakers, advocates ensuring hospitals are “good stewards” of the money they gain from the program’s discounts.

Peggy Tighe, who represents hospitals in the 340B program as a principal at the D.C. law firm Powers, said “PhRMA has done a particularly good job of getting the attention of the administration …. They haven’t let up on 340B.”

The rule that Price proposed last week would cut what hospitals are paid for drugs from the Medicare Part B program, which covers outpatient drugs including those delivered through infusion.

Currently, Medicare pays hospitals an average sales price plus 6 percent for most of the Part B drugs they purchase. The administration’s proposal is to cut that to average sales price minus 22.5 percent.

340B Health, a coalition that represents hospitals, immediately responded to the proposal saying the cuts would be “devastating” to hospitals and would “lead to cuts in patient services.”

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Categories: Health Care Costs, Health Industry, Medicare, Pharmaceuticals

CMS Considers Slashing 340B Payments As Way To Curb High Drug Spending

With the proposed changes, if a drug costs $84,000, CMS would pay just over $65,000, instead of $89,000.

Modern Healthcare: CMS Proposes Slashing 340B Rates, Allow Joint Procedures At Outpatient Facilties
The CMS wants to slash 340B drug payments to hospitals and allow Medicare to pay for hip and knee replacement procedures that take place in outpatient facilities, according to a proposal released Thursday. To agency proposes paying hospitals 22.5% less than the average sales price for drugs acquired under the 340B program. The CMS is looking to cut drug costs for a program intended to lower operating costs for hospitals with disproportionate numbers of low-income patients. (Dickson, 7/13)

Politico Pro: CMS Proposes 340B Changes With Aim Of Lowering Drug Costs
CMS is proposing to pay doctors and hospitals less for certain physician-administered drugs purchased through the 340B pricing program, a move the agency says helps fulfill President Donald Trump’s promise to lower the cost of medicines. The agency wants to lower the reimbursement rate it gives 340B hospitals for Medicare Part B patients so it’s more in line with the price hospitals actually pay for the drugs. (Karlin-Smih, 7/13)

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.

Medicare’s Financial Outlook Slightly Improved, Trustees Say

The Trump administration said Thursday that the financial outlook for Medicare’s hospital insurance trust fund improved in the past year due to health costs rising more slowly than expected and predictions that enrollees will use hospital services less often.

The report said that trust fund would last through 2029, one year later than what was projected last year. Two years ago, 2030 was the projected depletion date.

Medicare Part B premiums — which cover visits to physicians and other outpatient costs — should remain stable next year, the trustees said. About a quarter of Part B costs are paid for by beneficiary premiums with the rest from the federal budget.

In contrast, the Part A hospital trust fund is financed mostly through payroll taxes.

The report, from the trustees of the Medicare program, noted that projected costs of the program assume the Affordable Care Act stays in place. President Donald Trump and Republicans in Congress are trying to overhaul the law, which when enacted in 2010 added several years to the fiscal life of the trust fund.

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Health and Human Services Secretary Tom Price, one of four Medicare trustees, also said the hospital trust fund forecast was secure enough that it would not trigger an ACA provision to make automatic cuts to the program. Those cuts are required by the ACA when spending is expected to exceed certain benchmarks.

Despite the slightly improved outlook, the trustees warned that the aging of the baby boom population and rising health care costs will cause Medicare expenses to increase from 3.6 percent of gross domestic product in 2016 to 5.6 percent of GDP in 2041, and then level off somewhat to 5.9 percent by 2091.

As in previous trustee reports, the latest analysis warned that Washington should address the financial challenges of Medicare as soon as possible to avoid having to cut benefits to millions of retirees and seniors.

The trustees said national health expenses have slowed considerably in recent years, although it is uncertain if this is a result of the Great Recession, which ended in 2009, or efforts taken by the federal government and private sector to change doctor and hospital reimbursement programs. Senior administration officials said some of the slowing growth in Medicare was due to Obamacare saving money through its accountable care organizations, which pay doctors and hospitals a lump sum each month to care for senior citizens.

Medicare provides health coverage to nearly 57 million people, including seniors and people with disabilities. It has added 5 million people since 2013.

“For 51 years, Medicare has played a crucial role in providing healthcare for America’s senior citizens,” Price said in a statement. “Unfortunately, on its current trajectory, Medicare’s hospital insurance trust fund will be depleted in just over a decade. … As the Trustees Report says, this means that reform to the program is needed.”

Medicare spending were about $679 billion last year. The hospital insurance trust fund helps pay hospital, home health services, nursing home costs and hospice costs.

Categories: Cost and Quality, Medicare

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Medicare Analysis To Be Released Today Could Trigger Obamacare’s Mandate To Cut Spending

Experts have warned that the report expected to be released today on the finances of Medicare could launch a process under the health law to make cuts. A panel expected to do that, called the Independent Payment Advisory Board, has not been named, however.

Stat: Board That Inspired ‘Death Panel’ May Have To Be Convened By Trump
Remember “death panels”? They may be back. As soon as Thursday, Trump administration officials may have to launch the process that inspired that phrase — and that is aimed at making cuts to Medicare. …The panel, known as the Independent Payment Advisory Board, or IPAB, has never had to meet or make a decision about spending. But Medicare experts have warned that this year’s data, which is widely expected to be released as soon as Thursday, might trigger the panel — setting off a new political firestorm in the midst of congressional Republicans’ efforts to overhaul the rest of the health care system. (Mershon, 7/12)

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Nursing Homes Move Into The Insurance Business

Around the country, a handful of nursing home companies have begun selling their own private Medicare insurance policies, pledging close coordination and promising to give clinicians more authority to decide what treatments they will cover for each patient.

These plans are recent additions to the Medicare Advantage market, where private plans have become an increasingly popular alternative to traditional fee-for-service coverage. Unlike other plans, these policies offered by long-term care companies often place a nurse in the skilled nursing facility or retirement village, where they can talk directly to staff and assess patients’ conditions. Some provide primary care doctors and nurses to residents in the homes or in affiliated assisted living facilities or retirement villages with the aim of staving off hospitalizations.

“The traditional model is making decisions based on paper, and in our model, these decisions are being made by clinicians who are really talking to the staff and seeing the patient,” said Angie Tolbert, a vice president of quality at PruittHealth, which began offering its plan to residents in 10 of its nursing homes in Georgia last year. “It’s a big shift in mindset.”

Not everyone finds such plans superior. Some patients who are in disputes with the insurers have faulted the nursing home staff — who work for the same company — for not helping challenge decisions about coverage. They complain that the company holds an unfair advantage over Medicare beneficiaries.

“There’s a conflict there,” said Toby Edelman, a senior attorney with the Center for Medicare Advocacy.

In an Erickson Living retirement village in Silver Spring, Md., Faith Daiak signed up for an Erickson Advantage plan sold by a nurse whose office was in the main village building, according to her son, J.J. Daiak. After a bout with the flu last February weakened her enough to need a 10-day hospitalization, she was sent to her village’s skilled nursing facility. There, the insurer repeatedly tried to cut short her stay.

Erickson Advantage first said it would stop paying for Daiak, 88, because she wasn’t getting healthier in the nursing facility. Her son appealed by pointing out that Medicare explicitly said as part of the 2014 settlement of a class-action lawsuit that patients do not have to be improving to qualify for skilled nursing care.

Daiak’s appeal was denied, but the issue was sidelined in March when her rapid weight loss in the nursing home sent her back to the hospital, he said.

After Daiak returned to the nursing home with a feeding tube in her stomach, the insurer again tried to curtail her time there, saying she did not need that level of care. The family successfully appealed that decision after noting that Medicare’s manual said feeding-tube maintenance required the skilled care of a nursing facility.

In April, Erickson Advantage again said it would not continue paying for Daiak’s stay. It reversed that decision after Kaiser Health News asked the company about the case, J.J. Daiak said. He said the plan did not explain its turnaround.

Dolphine Williams (left) and Rita Coopersmith visit Faith Daiak in the Riderwood-ArborRidge Skilled Nursing Facility in Silver Spring, Md., on May 12, 2017. (Courtesy of the Daiak family)

While this Medicare Advantage plan touts its “team that knows you personally and wants to help,” J.J. Daiak said he found the registered nurse at Erickson’s Silver Spring community not helpful. “All I see is her trying to get Erickson out of having to pay for the nursing home,” he said. He subsequently switched his mother to traditional Medicare coverage with a supplemental Medigap policy, which she had until this year.

Erickson Living, the parent company of the nursing home and insurer, declined to discuss individual cases but noted that Medicare has given its insurance plans the best quality rating of five stars. In a written statement, the company said that “medical service determinations for Erickson Advantage members are based on reviews by licensed clinical staff and clinical guideline criteria. Our primary focus is always on ensuring that the healthcare being provided for our residents matches a patient’s needs and established clinical treatment protocols.”

Edelman said the dispute was particularly troubling because Erickson’s retirement villages are marketed on the promise that the company will care for seniors in all stages of aging. “They don’t tell you what they won’t pay for,” she said.

Popular Alternative

There are nearly 18 million enrollees in the overall Medicare Advantage market. Medicare pays private insurers a set amount to care for each beneficiary. In theory, this payment method gives the insurers motivation to keep patients from needing costly medical services such as hospitalizations.

A subset of Medicare Advantage plans are designed exclusively for people who either require or are expected to require at least 90 days of skilled services from nursing homes, assisted living facilities or other long-term care institutions. UnitedHealthcare directly offers three-quarters of these plans with about 40,000 enrollees, far more than those offered by nursing home companies. Matthew Burns, a UnitedHealth spokesman, said the majority of the company’s plans are rated four stars or better on Medicare’s five-star quality scale.

“Our plans offer members quality and peace of mind — and they are considered above average to excellent by CMS quality and performance standards,” he said in a statement.

United also underwrites Erickson’s policies, which have around 200 enrollees, and were the first Advantage plans offered by a long-term care operator. Under the arrangement, Erickson Advantage decides when a nursing home stay is covered.

Nick Williams, PruittHealth’s care integration officer, said its Medicare insurance plan has resulted in 30 percent fewer hospitalizations among residents since it began last year. The company intends to expand the insurance coverage to residents at 42 of its other nursing homes in Georgia. Other nursing home chains are experimenting with this model in Missouri, South Carolina, Virginia and elsewhere.

Anne Tumlinson, a Washington health care industry consultant who specializes in long-term care, said that when a nursing home’s company is on the hook for the cost of hospitalizations of their patients, it is more likely to make efforts to prevent them.

“It gets them out of hospitalizing people at the drop of the hat,” she said. “If you live in a nursing home or are living in assisted living and they have one of these plans going, they’re going to be investing heavily in 24/7 access to primary care.”

She said big insurers have so many different types of enrollees that they are less focused on the particular needs of nursing home patients. “They’re too big, they’re bureaucratic, and they are insurers, not providers,” she said.

The Costs Patients Face

In Hingham, Mass., Suzanne Carmick has been frustrated with the Erickson plan’s unwillingness to pay for most of her mother’s prolonged stay. Last October, 98-year-old Lorraine Carmick went into Erickson’s nursing home after a hospitalization. Eleven days later, Erickson Advantage notified Suzanne Carmick it would stop paying for the facility because it said her mother was strong enough to move with the help of a rolling walker. Under Medicare’s rules, nursing home stays are not covered if a patient does not need daily physical therapy. Erickson said two or three days was sufficient for Carmick.

Suzanne Carmick appealed the decision, saying Erickson exaggerated her mother’s recovery, noting that she had dementia, an infection and was wearing two stiff leg braces. She said getting therapy five days a week provided in the nursing home would help her mother recover faster.

“She still cannot stand up or sit down or go anywhere … without an aide helping her by pulling her up or setting her in a chair,” Carmick wrote. “She is improving but is now supposed to stop or decrease PT [physical therapy], and she must start paying out-of-pocket?”

After a week’s extension, the nursing home began billing her mother at its daily rate of $463, which rose to $483 this year as Lorraine Carmick remained in the nursing home. A Medicare appeals judge subsequently ruled Erickson’s action was justified, based on the testimony from the nursing home staff — all Erickson employees. If the insurer had covered a maximum stay, Carmick would have avoided more than $30,000 in bills she now owes. Suzanne Carmick said her mother has been on a wait list for six months for a bed on a less expensive floor in the nursing facility.

“It is a closed system where the skilled nursing facility, physicians and Medicare Advantage plan are all one and the same,” she said. “The Erickson Advantage plan is turning out to be quite a disadvantage at this point.”

KHN’s coverage related to aging & improving care of older adults is supported by The John A. Hartford Foundation. Coverage of aging and long-term care issues is supported by The SCAN Foundation.

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