Tagged States

Nursing Home Staff Did Everything Possible To Help Patients After Hurricane, Facility Tells Congress

Nursing Home Staff Did Everything Possible To Help Patients After Hurricane, Facility Tells Congress

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State Highlights: Ohio Lawmaker Offers Price Transparency Bill; Workers Fired Over Refusal To Get Flu Shot

Top Doctor At D.C. Public Hospital Is Fired After Alleging Mismanagement

Top Doctor At D.C. Public Hospital Is Fired After Alleging Mismanagement

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Massachusetts Grabs Spotlight By Proposing New Twist On Medicaid Drug Coverage

In the absence of new federal policies to tame break-the-bank drug prices, Massachusetts’ state Medicaid program hopes to road-test an idea both radical and market-driven. It wants the power to negotiate discounts for the drugs it purchases and to exclude drugs with limited treatment value.

“This is a serious demonstration proposal,” said Sara Rosenbaum, a health policy expert and professor at George Washington University. “They’re not simply using [this idea] as an excuse to cut Medicaid. They’re trying to take a step toward efficiency.”

If the Department of Health and Human Services approves the Bay State’s plan, others will likely take similar action. According to the most recent federal data, Medicaid spending on prescription drugs increased about 25 percent in 2014 and nearly 14 percent in 2015.

Currently, state Medicaid programs are required to cover almost all drugs that have received Food and Drug Administration approval, including multiple drugs from different manufacturers used for the same purpose and in the same category. In exchange, manufacturers must discount those drugs — typically based on a set percentage of the list price, specified by federal law. The idea is Medicaid’s vulnerable beneficiaries get medications they need and the state doesn’t go broke paying for them.

As drug prices soar, states say, those fractional rebates no longer suffice to defray the burden of rising costs.

Take, for instance, the hepatitis C cures released in recent years. The price tags come in tens or even hundreds of thousands of dollars and — even after rebates — have cost Medicaid billions. In turn, some states tried to restrict access, so only the sickest patients could get the drugs. Advocates filed suit in response and won based on the argument that such limits violated Medicaid’s statutory drug benefit.

State officials contend that the current Medicaid rebate system may encourage drug price inflation, since a set percentage of a higher price yields a greater profit. Also, the legal requirement to cover most prescriptions leaves little wiggle room to negotiate a better price.

So, Massachusetts wants to go a different route, requesting a federal exemption known as a Section 1115 waiver, which is meant to let states test ways of improving Medicaid. It wants to pick which drugs it covers based on most beneficiaries’ medical needs and which medicines demonstrate the highest rates of cost effectiveness.

It says it will be able to negotiate better prices as a result, saving public dollars while maintaining patients’ access to needed therapies.

The federal Centers for Medicare & Medicaid Services, which will ultimately approve or reject Massachusetts’ proposal, has no deadline for its decision. A Massachusetts spokeswoman said officials are pushing for an answer by year’s end.

Already, though, the pitch is turning heads.

“This is absolutely something a lot of other states are looking very closely at,” said Matt Salo, executive director of the National Association of Medicaid Directors.

If the request is approved, agreed Jane Horvath, a senior policy fellow at the National Academy for State Health Policy, other states would follow suit “in about five minutes.”

Critics worry this change could make it harder for low-income people to get needed medications, without necessarily providing them an alternative. In the past decade, though, it has become commonplace for people with commercial insurance to have limited drug choices — meaning only those medicines listed on a plan’s formulary are covered.

The Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s trade group, has already lodged its displeasure, saying this would limit consumer access and is unnecessary on top of the rebates Medicaid programs receive.

“The pharmaceutical industry has a reputation for being litigious. This would be a big deal for them,” said Andy Schneider, a Medicaid expert at Georgetown University, who worked at CMS under the Obama administration. If CMS approves the waiver, analysts said, the industry would likely sue, though PhRMA wouldn’t comment on potential legal action.

But federal approval is no sure thing.

On one hand, the Trump administration has encouraged states to test changes that would run Medicaid more like a private insurance plan. Through that frame, Massachusetts’ approach seems a logical fit. Though a formal strategy has not been released, President Donald Trump has said his administration intends to bring drug prices “way down.”

On the other hand, analysts said, CMS’ decision-making regarding waivers has proven unpredictable. The agency declined to comment beyond confirming it was reviewing Massachusetts’ request.

It’s clear why states are interested. On average, between 25 and 30 percent of state budgets go to Medicaid, and program directors across the country identify rising drug costs as a major contributor to spending increases, according to a recent survey by the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

In Massachusetts, Medicaid accounts for about 40 percent of the state’s budget. Prescription-drug spending has in the past seven years more than doubled — from about $917 million in 2010 to about $1.94 billion last year, according to figures provided by the state health department.

If the waiver is approved, the state’s Medicaid program would cover at least one medication per therapeutic class — that is, per specific medical need.

It also would have an appeals process for people to get their off-formulary drugs covered, if they’re medically necessary.

Number crunchers say it’s hard to estimate what this would save. It depends on how the state negotiates, how industry responds and what the program covers. The potential result is significant, though.

“You’d have to be foolish not to consider this,” said Ameet Sarpatwari, an epidemiologist and lawyer at Harvard Medical School, who studies drug pricing and related legislation.

But consumer groups worry about Medicaid’s low-income beneficiaries, even as they acknowledge that rising drug costs are unsupportable for state budgets.

“The Medicaid population is different from the commercially insured — they’re more vulnerable and have a lot more going on in their lives, and are generally poorer. So they have fewer resources to try to get the services and prescription drugs they need,” said Suzanne Curry, associate director of policy and government relations at Health Care For All, a Massachusetts-based advocacy group.

Although Massachusetts, a state with a long history of innovation, has committed to making sure patients get needed medicine, “you have to ask what will real-world implementation looks like,” said Benjamin Sommers, an associate professor of health policy and economics at Harvard’s public health school. Appeals processes, he noted, can be onerous or restrictive.

And even if Massachusetts receives federal approval, it still couldn’t challenge the cost of certain expensive drugs that are the only offering in their therapeutic class. For instance, Spinraza, which treats the rare but debilitating disease of spinal muscular atrophy, has a price tag of $750,000 for an initial year of treatment. With no therapeutic equivalent, it would still have to be covered.

But states are desperate to push back in new ways and however they can. “We have seen in the past year … drugs that have almost bankrupted state budgets,” Sarpatwari said. “There will be many other states that will be interested in following this lead.”

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

Related Topics

Medicaid Pharmaceuticals States

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Viewpoints: Using Emergency Authority To Fight Opioids; Knowing If Alzheimer’s Is In Your Future…

Perspectives: A New Front For An Old Obamacare War; How Tax Reform Tees Up Medicare Cuts

Perspectives: A New Front For An Old Obamacare War; How Tax Reform Tees Up Medicare Cuts

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State Highlights: Calif. Officials Continue To Search For Source Of Legionnaires’ Cases; Texas Lawmakers Fund Anti-Abortion Program

Feds Give States $600 Million To Tide Over Children’s Coverage Programs

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Medicaid Expansion Takes A Bite Out Of Medical Debt

As the Trump administration and Republicans in Congress look to scale back Medicaid, many voters and state lawmakers across the country are moving to make it bigger.

On Nov. 7, Maine voters approved a ballot measure to expand Medicaid under the Affordable Care Act. Advocates are looking to follow suit with ballot measures in Utah, Missouri and Idaho in 2018.

Virginia may also have another go at expansion after the Legislature thwarted Gov. Terry McAuliffe’s attempt to expand Medicaid. Virginia voters elected Democrat Ralph Northam to succeed McAuliffe as governor in January, and Democrats made inroads in the state Legislature, too.

An exit poll of Virginia voters on Election Day found that 39 percent of them ranked health care as their No. 1 issue. More than three-quarters of the Virginians in this group voted for Democrats.

study from the Urban Institute may shed light on why Medicaid eligibility remains a pressing problem: medical debt. While personal debts related to health care are on the decline overall, they remain far higher in states that didn’t expand Medicaid.

In some cases, struggles with medical debt can be all-consuming.

Geneva Wilson is in her mid-40s and lives outside of Lowry City, Mo. She has a long history of health problems, including a blood disorder, depression and a painful misalignment of the hip joint called hip dysplasia.

She’s managed to find some peace living in a small cabin in the woods. She keeps chickens, raises rabbits and has a garden. Her long-term goal is to live off her land by selling what she raises at farmers markets.

Her health has made it hard to keep a job and obtain the insurance that typically comes with it. And Missouri’s stringent Medicaid requirements — which exclude nondisabled adults without children — have kept her from getting public assistance.

Since graduating from college more than 20 years ago, Wilson has mostly had to pay out-of-pocket for medical care, and that’s left her with a seemingly endless pile of medical debt.

“As soon as I get it down a little bit, something happens, and I have to start all over again,” Wilson said.

Right now her medical debt stands at about $3,000, which she pays down by $50 a month. She desperately needs a hip replacement, but she canceled the surgery because, even with a deeply discounted rate from a nearby hospital, she couldn’t afford it.

“Approximately $11,000 is what would come out of my pocket to pay for the hip. That’s my entire pretax wage from last year,” Wilson said. “So it’s kind of on hold, but I don’t know if I can survive the year without going ahead and trying to get it done.”

For many people like Wilson, medical debt can be nearly as problematic as an illness. In 2015, 30.6 percent of Missouri adults ages 18 to 64 had past-due medical debt, the seventh-highest rate in the country. Kansas, at 27 percent, had the 15th-highest rate. In Maine, which voted to expand Medicaid this week, it was 27.7 percent.

Researchers Aaron Sojourner and Ezra Golberstein of the University of Minnesota studied financial data from 2012 to 2015 for people who would be eligible for Medicaid where it was expanded.

They found that in states that didn’t expand, the percentage of low-income, nonelderly adults with unpaid medical bills dropped from 47 to 40 percent within three years.

“The economy improved and maybe other components of the ACA contributed to a 7-percentage-point reduction,” Sojourner says. “Where they did expand Medicaid, it fell by almost twice as much.”

Those states saw an average drop of 13 percentage points, from 43 to 30 percent.

In Kansas, the rate of medical debt for nonelderly adults fell by 4 percentage points to 27 percent. In Missouri, the rate dropped 4 points to 31 percent, according to the Urban Institute. In Maine, it dropped only 1.4 percentage points from 2012 to 2015.

Medicaid, as opposed to private insurance, is the key, said the Urban Institute’s Kyle Caswell, because it requires little out-of-pocket costs.

Even if Medicaid patients need lots of care, they aren’t on the hook for big out-of-pocket costs in the same way someone with private insurance might be.

“We would certainly expect their risk to out-of-pocket expenses to be much lower, and ultimately the risk of unpaid bills to ultimately be also lower,” Caswell said.

But Medicaid’s debt-reducing advantages over private insurance could disappear under the leadership of the Trump administration.

Shortly after Seema Verma was confirmed as the administrator for the Centers for Medicare & Medicaid Services, she and Tom Price, then head of the Department of Health and Human Services, sent a letter to the governors outlining their plans for Medicaid.

The letter encouraged states to consider measures that would make their Medicaid programs operate more like commercial health insurance, including introducing premiums and copayments for emergency room visits.

Verma said that by giving recipients more “skin in the game,” they will take more responsibility for the cost of care and save the program money.

Republican proposals in Congress to repeal and replace the Affordable Care Act would have eliminated or limited Medicaid expansion. And that would have affected the last few years’ downward trend in medical debt.

“Anything that reduces access to Medicaid most likely would have the reverse effect of what we’re seeing in our paper,” Caswell said. “Reduced access to Medicaid would likely increase exposure to medical out-of-pocket spending and ultimately unpaid medical bills.”

As Geneva Wilson tends to her chickens, she said, she tries not to think too much about her medical debt or how she’ll pay for that hip replacement.

“It’s going to the point where, if I were to go shopping at Walmart, I would have to get one of the carts you drive because I can’t manage,” she said.

Wilson has already sold her jewelry, some furniture and a wood stove to pay down her debts. Now there’s not much left to sell except her cabin and her land.

“Probably the homestead and garden that I want, that I’ve been wanting and trying to work for, I don’t think they are a viable dream either,” Wilson said. “It’s hard losing your dreams.”

This story is part of a partnership that includes KCUR, NPR and Kaiser Health News.

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