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The Medliminal Washington Report 4.24.18

April 24, 2018

Raleigh, North Carolina, USA downtown as viewed from the Capitol Building grounds.

The health care policy focus in Washington this week will again center on House and Senate efforts to confront the opioid epidemic. Both committees of jurisdiction in the House and Senate are moving on opioid legislation, with an unofficial timetable of Memorial Day to have a bill passed out each chamber and to the president’s desk. That’s not all going on Capitol Hill as Senate Democrats have unveiled a Medicare buy-in proposal that would allow individuals and large employers to purchase coverage through a new Medicare Part E plan. At the other end of Pennsylvania Avenue, the White House abruptly postponed the president’s first major policy speech on drug prices to an unknown future date. However, the speech delay offers a momentary reprieve for stakeholders, as a Request for Information is pending at the Office of Management and Budget, so it is likely that there will be some regulatory action announced eventually. Meanwhile, states continue to push their own health care solutions with Colorado advancing a drug price transparency bill and Wisconsin submitting a waiver request with CMS to authorize a state reinsurance pool. We break it all down in our weekly health care review.


The Administration

President Cancels Address on Prescription Drug Prices

On Monday, April 23, the White House announced the cancellation of the president’s much- anticipated address on drug prices that had been scheduled for April 26. White House staff did not provide a date or timeframe for when the speech would take place, or why it had been postponed. The address would have been the president’s first about lowering drug prices, one of the main issues he campaigned on in 2016, and one that his administration has announced some very modest proposals.

Health and Human Services (HHS) Secretary Alex Azar, who was scheduled to attend the speech, was hospitalized last week for the second time for diverticulitis. The Secretary was discharged from the hospital and returned to his home state of Indiana to recover with his family, and according to an HHS spokesperson, it was unlikely he would return to Washington until sometime this week.

The White House’s Office of Management and Budget is officially evaluating a proposal from HHS that would “lower drug prices and reduce out-of-pocket costs.” It appears that release of the proposal would have been tied to the president’s address.  While it’s not clear exactly what is included in the notice, it will likely include some ideas from the proposed federal budget on Medicare Part D rebates or changes to Medicare Part B.

Justice Department to Review Cigna-Express Scripts Deal

The Department of Justice (DOJ) will review the $54 billion deal between health insurer Cigna and pharmacy benefits manager Express Scripts. The review, first reported by Bloomberg, comes amid concerns about increasing consolidation in the health insurance market.

According to Bloomberg, Cigna CEO David Cordani told investors in early April that the DOJ would review its vertical acquisition of Express Scripts. Historically, vertical integrations (merging different components of the same industry) have survived federal regulator scrutiny. However, the DOJ’s efforts to scuttle AT&T’s proposed bid for Time Warner could mean a shift in regulatory approval of large scale mergers and acquisitions. In a statement to Bloomberg, Cigna said it is “optimistic in our ability to obtain regulatory approval” from the department. It is worth noting that CVS Health’s $69 billion bid for Aetna is also facing DOJ review.

The Justice Department has moved to stop healthcare deals before because of antitrust concerns, most notably suing to block a deal between insurers Cigna and Anthem and another between Humana and Aetna. Both deals fell apart after DOJ opposition.

HHS Secretary Taps Insurance Executive as Health Reform Adviser

HHS Secretary Alex Azar has nominated James Parker, former CEO of Medicaid managed care organization MDwise, as senior adviser and director of the Office of Health Reform. Parker led a provider-sponsored health insurance and population health management at Indiana University Health, and was co-chair of Indiana University Health Population Health Management Services Organization. He also spent 20 years with Anthem, in a number of senior leadership roles advancing initiatives to improve the quality and affordability of health insurance. “His knowledge and expertise will be vital to our work at HHS to ensure that Americans have access to insurance that meets their needs,” Azar said in a press statement. He has said that tackling rising premiums, particularly for Obamacare customers, is a top priority for the agency.


Senate Democrats Unveil New Medicare Buy-in Proposal

On April 18, Senators Chris Murphy (D-Conn.) and Jeff Merkley (D-Ore.) unveiled a Medicare buy-in proposal that would allow individuals and large employers to purchase coverage through a new Medicare Part E plan. The “The Choose Medicare Act” is one of a half-dozen Democratic proposals to expand access to Medicare plans, but like the others, the latest proposal is unlikely to pass in the near future. However, it’s another sign that health care will be a top issue in the upcoming mid-term elections, with an eye towards the 2020 presidential race.

Senators Kamala Harris (D-CA), Cory Booker (D-NJ), Tammy Baldwin (D-WI), Brian Schatz (D-HI), Jeanne Shaheen (D-NH), Martin Heinrich (D-NM), Richard Blumenthal (D-CT), Tom Udall (D-NM), and Kirsten Gillibrand (D-NY) have signed on as co-sponsors.

“People in Connecticut love Medicare. It’s popular, it’s patient friendly, and it’s cost effective. Every individual and every business should have the right to buy into Medicare, and our bill allows this to finally happen,” Senator Murphy said in a statement. “For those who think that Medicare is the right plan for all Americans, this bill puts that theory to test and allows for consumers and businesses to decide whether they want to remain on private insurance or switch to Medicare.”

Under the proposed bill, the newly created Medicare Part E would be offered on all state and federal exchanges, and people could use the existing ACA tax subsidies to help pay for it.  Additionally, employers could choose to select Medicare Part E rather than private insurance to provide insurance coverage to their employees.

Senators press administration on mental health parity

A bipartisan group of senators are urging the Trump administration to implement a policy that requires health plans to cover mental health care to the same extent that they cover physical health care services. Senate Health, Education, Labor and Pensions Committee (HELP) Chair Lamar Alexander, ranking member Sen. Patty Murray and a handful of other committee members sent a letter to HHS Secretary Alex Azar, Labor Secretary Alexander Acosta and Treasury Secretary Steve Mnuchin arguing that several deadlines related to mental health parity included in the 21st Century Cures Act have yet to be met, and asking for information as to why the deadlines were missed and how federal agencies are administering federal mental health parity laws.

According to the letter, the administration failed to take a number of required actions by December 13, 2017, pointing out that the agencies

  • Didn’t issue guidance to help employers and insurers implement parity and improve inter-agency coordination
  • Haven’t implemented an action plan to beef up enforcement efforts
  • Failed to inform the HELP Committee and the House Energy and Commerce Committee on the number of federal parity investigations conducted during the reporting period

The senators requested a formal response from the White House by May 1, and also requested a briefing on how the administration will implement the provisions. Senators Cassidy (R-LA), Murkowski (R-AK), Stabenow (D-MI) and Murphy (D-CT) also signed the letter.

Health Policy

Survey: Number of Enrollees in HSAs, High-Deductible Plans up 8 Percent

According to a new survey by America’s Health Insurance Plans (AHIP), the number of enrollees in a health savings account (HSA) and high-deductible plan increased 8 percent from 20.2 million in 2016 to 21.8 million 2017. Data also showed 9.2 percent growth in HSA and high-deductible plan enrollment rates among 45 plans that participated in both 2016 and 2017 surveys, and 85 percent of health insurance providers in 2017 offered tools designed to help members manage their health and finances.

Health Care Data Breaches on the Rise, Most Inside Jobs

According to Verizon’s annual Data Breach Investigations Report, released on April 20, data security breaches are now literally more than a daily occurrence—2,216 happened in the past year alone. Health-related organizations accounted for a quarter of those incidents, and the majority of data breaches are caused by individuals inside the organizations. The report found that 56 percent of breaches that occurred in the health care industry in 2017 resulted from insider threats, marking the first time that insider threats spurred the majority of breaches in any industry.

Other key findings from the report:


  • The healthcare industry is rife with error and misuse. Ransomware is endemic in the industry—it accounts for 85 percent of all malware in healthcare.
  • In total, there were 750 incidents and 536 with confirmed data disclosed
  • The top three patterns include: miscellaneous errors, crimeware and privilege misuse, which represent 63 percent of all incidents within healthcare
  • Breach threat actors: 56 percent internal; 43 percent external; 4 percent partner; and 2 percent multiple parties
  • Breach actor motives: 75 percent financial; 13 percent fun; 5 percent convenience
  • Data compromised: 79 percent medical; 37 percent personal; 4 percent payment

Industry News

Moody’s: Health Care Mergers Could Lower Long-term Medical Costs

On April 17, Moody’s Investors Service released its latest Healthcare Quarterly, examining how planned mergers between health insurers and other health care companies, as well as potential new entrants to the U.S. health care market, will affect various sectors of the industry. One of the more surprising findings was that the proposed CVS-Aetna and Cigna-Express Scripts acquisitions will be credit negative in the short-term, but could lower medical costs in the long run. “Both of these mergers are designed to better control rising medical costs, which is one of the most vexing problems facing health insurers,” the report concludes.

Other key findings:

  • The CVS-Aetna merger has the potential to lower medical costs as Aetna will be better able to engage with its members as they purchase drugs at CVS retail pharmacies or through its prescription drug programs. The combination will foster increased use of lower-cost care as Aetna members access routine care at CVS stores and Minute Clinics.
  • Cigna will incrementally benefit from its purchase of Express Scripts by combining its own integrated solutions with Express Scripts’ ability to manage pharmacy costs. While Express Scripts does not have a retail presence, Cigna will benefit from a more diversified revenue stream.
  • The impact of these mergers on the health insurance sector is limited. When finalized, the three largest PBMs will each be part of a vertically integrated entity that includes a large health insurer.
  • Incumbent healthcare companies could face a long-term threat from ventures such as that announced by Amazon, Berkshire Hathaway, and J.P. Morgan Chase. While the ambitious nature of that venture suggests it will be more than a partnership to increase bargaining power, whether or not it is a harbinger of more heated competition from non-traditional participants in health insurance remains the larger question.

In The States

Colorado House Passes Drug Transparency Bill

On April 17, the Colorado House of Representatives passed drug-pricing transparency legislation (HB 1260). The Prescription Drug Price Transparency Act of 2018 would require drug makers – starting in 2020 – to notify the state, health plans and PBMs when prices rise by more than 10 percent. In addition, the bill requires 90 days advance public notice prior to drug price increases. The bill would also require insurance carriers to provide information on the top 25 costliest and most prescribed drugs in the state, as well as the drugs that have the highest year-to-year price increases. Finally, drug makers that fail to report required data to the state insurance commissioner would be subject to a fine of $1,000 per day for each day the manufacturer fails to comply with the notice or reporting requirements.

Following the passage, the bill was introduced in the state Senate, where it will have its initial hearing on April 30 in the State, Veterans, & Military Affairs Committee.

Wisconsin Submits Waiver Request to CMS to Implement State Reinsurance pool

Wisconsin Governor Scott Walker on April 18 submitted a waiver request to HHS seeking a section 1332 waiver that would allow Wisconsin to develop a $200 million reinsurance program designed to lower premiums and attract more providers to the private marketplace.

In a press statement, the governor suggested that premiums will be reduced by 10.6 percent from levels that otherwise would have occurred, resulting in a 5 percent decrease in 2019 premiums, compared to 2018. “Premiums in Obamacare’s individual market went up by 44 percent on average this year; some aw much larger increases. That is unsustainable and unacceptable,” said Governor Walker.

If approved by HHS, the state will pay an estimated $34 million for reinsurance in 2019; the federal government will pay the remaining $166 million in “pass through” funds representing federal savings from the program. Under the reinsurance program, the government would provide money to health insurers to pay about 50 percent of medical claims costing between $50,000 and $200,000 starting in 2019.

According to Insurance Department data, there were 227,000 exchange enrollees in 2017, but that dropped to just over 202,000 in 2018. The decrease came at the same time premiums increased 44 percent from an average of $520 to $751 a month. They are projected to drop to $710 next year with the reinsurance program.

New Hampshire ‘Balance Billing’ Legislation Advances in State Senate

On April 17, the New Hampshire state Senate Health and Human Services Committee approved a bill (HB 1809) designed to protect patients from ‘balance billing.’ The bill will now head to a Senate floor vote on April 26. The bill easily passed the House (392-12) and Governor Chris Sununu has signaled his support for the measure.

If enacted, ‘balance billing’ charges will have to be resolved between providers and insurers, with the state insurance department available to mediate unresolved disputes between the parties. Presently, 21 states have laws on the books that provide some amount of consumer protection from balance and surprise bills in emergency departments and in-network hospitals, though laws vary in their scope. Six states have banned providers from “balance billing” altogether, while 15 states have implemented dispute resolution requirements, such as arbitration procedures, in the event of a balance billing dispute between a provider and a patient.

The Week Ahead

The U.S. House of Representatives and Senate will be in session the week of April 23-27.

April 24: The Senate Health, Education, Labor & Pensions Committee will meet in Executive Session on several bills, including the Opioid Crisis Response Act.

April 25: The House Ways & Means Committee will hold a hearing titled, “Stopping the Flow of Synthetic Opioids in the International Mail System.

April 25: The House Energy & Commerce’s Health Subcommittee will mark up several opioid-related bills.

April 26: The House Ways and Means Committee will hold a hearing titled, “Hearing on Innovation in Health Care.”

April 26, President Trump White House Address on Prescription Drug Prices