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The Medliminal Washington Report 5.7.18

May 7, 2018

The White House on a beautiful summer day, Washington, DC.

Both house of Congress return from their week long recess, and has been the case for the last month, the nation’s opioid epidemic will be front and center. Three House subcommittees will hold hearings focused on different aspects of the crisis and the full House Energy and Commerce Committee has scheduled mark ups for the 50+ opioid bills passed by the Health Subcommittee prior to the recess, the first of which has been scheduled for Wednesday. The president is expected to deliver a speech on drug prices; planned for Tuesday, there are suggestions that it could be pushed back to Friday. The head of the Food and Drug Administration and the Secretary of Health and Human Services delivered remarks of their own last week that could preview an ambitious agenda by the president. Meanwhile, new reports show health insurers posting strong earnings, increased market integration following a wave of merger activity, and an increase in the percentage of Americans without health insurance. We’ve got it all covered in this week’s health care review.

The Administration

President Expected to Deliver Health Care Address This Week

President Trump is expected to deliver a major speech outlining administration plans to tackle rising drug prices this week. The details of the speech have not been announced, and neither the White House nor the Department of Health and Human Services confirmed the new date for the speech.

The speech was scheduled for April 26 but was postponed after Health and Human Services (HHS) Secretary Alex Azar was hospitalized for treatment of diverticulitis. At the time, the White House indicated that the speech wouldn’t include new policy proposals other than requesting information on “various drug pricing ideas.”

However, senior administration officials may have offered a preview in separate addresses last week. HHS Secretary Azar implied that Medicare Part B changes would be a major focus of the administration’s quest to lower drug prices. In his speech at the World Health Care Congress in Washington, Azar noted that the White House’s strategy will be “building on the proposals in the President’s 2019 budget,” which included capping out-of-pocket spending under Medicare Part B, $5 billion in cuts to the Medicare program, and moving Part B drug coverage into Part D to foster better price negotiations.

In a separate address, Food and Drug Administration (FDA) Commissioner Scott Gottlieb hinted that the government may reexamine safe harbors for drug rebates under the federal Anti-Kickback Statute. “Such a step could help restore some semblance of reality to the relationship between list and negotiated prices, and thereby boost affordability and competition,” he said, adding that Trump and Azar “will have more on this topic soon.” Dr. Gottlieb also indicated interest in issuing guidance to crack down on delay tactics that slow cheaper generic drugs coming to market, often referred to as “pay for delay.”

Health care stakeholders will be closely watching what the president has to say. Drug pricing was a major issue of the Trump campaign, accusing drug makers as “getting away with murder.” As a candidate, he backed two of the most far-reaching proposals on drug pricing: the federal government directly negotiating prices and allowing importation of drugs from abroad. Both ideas are broadly supported by Democrats and strongly opposed by drug companies. While no one expects those ideas will be included in the speech, there is always the concern that the president could deviate from his prepared remarks.

CMS Chief Encourages States to Think Carefully About Medicaid Work Rules

Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma said publicly last week that states which have not expanded Medicaid and are looking to impose work requirements should consider whether their ideas would help meet the ultimate goal of shifting beneficiaries off the programs.

“As I’m looking at states that have these types of proposals, what I want them to consider is: We need to figure out a pathway, a bridge to self-sufficiency. And hopefully, it’s a permanent path out of poverty,” Verma said during a briefing with reporters in Washington. “We have to make sure whatever we put together doesn’t create those big subsidy cliffs.”

CMS has already approved work requirement waivers in Arkansas, Indiana, and Kentucky, which all expanded Medicaid under the Affordable Care Act (ACA). Verma’s remarks come just days after the U.S. Department of Health and Human Services filed a legal brief in the litigation of Kentucky’s plan to impose work requirements. In that briefing, the Trump administration said it viewed work requirements primarily as an option for adults in expansion states, and appeared hesitant about their use for other populations.

Verma had originally planned to use the briefing to announce that CMS would reject Kansas’s request to impose a three-year lifetime limit on Medicaid benefits before changing plans at the last minute, reportedly due to internal policy disagreements within CMS. During her remarks, she expressed concerns about lifetime limits.

“The concern has been with a lot of these programs: Are we creating a disincentive to not try to improve their lives? That’s why we are getting these proposals with lifetime limits,” she said. “We understand people’s circumstances change over time. They may get a job and then something happens. Those are the things we want to keep in mind.”


House Democrats Call for a Vote on Insurance Market Stabilization Bill

Three top Democratic House committee members sent a letter to House Speaker Paul Ryan on May 4, encouraging him to allow a floor vote on legislation intended to strengthen the ACA exchanges and stabilize the insurance markets.

The letter, signed by the ranking Democrats on the three House committees with jurisdiction over health care – Ways and Means Committee Ranking Member Richard Neal (D-MA), Energy and Commerce Committee ranking member Frank Pallone (D-NJ) and Education and Workforce Committee ranking member Bobby Scott (D-VA) – said Ryan should allow a vote on a bill they said would make coverage more affordable. The bill, the Undo Sabotage and Expand Affordability of Health Insurance Act of 2018 (HR 5155) has only 40 co-sponsors, and is not expected to move this year. Any congressional action to stabilize the insurance markets will likely come from a bipartisan proposal in the Senate that is still being debated.

“May the 4th marked a low point in our nation’s decades-long history of improving Americans’ access to health care,” the letter says. “In fact, since President Trump took office, his administration and a Republican Congress have unwaveringly pursued their goal of tearing down our health care system.”

“This is not what we want for our constituents and the millions of Americans who benefit from having access to quality health insurance,” the Democrats wrote.  “We believe we should be working across the aisle to strengthen health insurance and consumer affordability and access.”

Senators Urge FDA to Remove Powerful Opioids from Pharmacy Shelves

In a May 3 letter to FDA Commissioner Scott Gottlieb, U.S. Senators Joe Manchin (D-WV), Dick Durbin (D-IL) and Ed Markey (D-MA) urged the agency to remove ultra-high dose opioids from the market, saying that “powerful opioids — those exceeding 90 milligrams of morphine per day — should be taken off the shelves due to concerns about “accidental ingestion, borrowed medication, and recreational use.”

“We urge you to heed this important, potentially life-saving request,” the senators wrote. “We appreciate your commitment to using all tools at the FDA’s disposal to help address the opioid crisis.”

The senators said patients who already take high doses of opioids for cancer and other conditions could still receive the treatment they need by taking multiple pills, patches or other formulations. “We believe these ultra-high dose opioids can be removed from the market without imposing hardship on those with legitimate pain needs,” the letter states.

An estimated 115 Americans die each day due to overdose deaths involving opioids.

Health Policy

The Number of Uninsured Americans is on the Rise

Health insurance coverage gains since the enactment of the ACA in 2010 are starting to weaken and reverse, according to findings from the Commonwealth Fund ACA Tracking Survey. The report finds that the uninsured rate among low-income adults rose from 20.9 percent in March 2016 to 25.7 percent in March 2018, based on several factors:

  • The failure to shore up weaknesses in the ACA
  • Confusion about the status of the law
  • A lack of advertising during open enrollment

Five percent of insured adults indicated that they plan to drop insurance because the tax cut bill passed in December removes the individual mandate penalty. Of those surveyed, 60 percent were aware that the penalty had been eliminated. Last month, a health tracking poll from Kaiser Family Foundation surveyed those with individual health insurance, and 90 percent of respondents said that they intend to continue buying their own insurance despite no longer facing a penalty.

A Gallup survey published in January also found an increase in the number of uninsured. According to Gallup, 12.2 percent of American adults did not have health insurance in the 4th quarter of 2017, an increase of 1.3 percentage points (3.2 million people) from the record low of 10.9 percent in the 4th quarter of 2016. The 1.3-point increase in the uninsured rate during 2017 marked the largest single-year increase in a decade.

Survey: Employees Say High Deductible Health Plans Help Them Make Better Decisions

According to a new survey commissioned by WEX Health, a healthcare financial technology provider, 82 percent of employees said having a high-deductible health plan (HDHP) helped them make better health care decisions and 75 percent said lower premiums were a bigger factor in their decision to choose a HDHP than other cost-sharing factors. The primary reasons HDHP enrollees also enrolled in a health savings account (HSA) were to save for future healthcare needs (36 percent) and to have an ability to save for out-of-pocket or unexpected medical costs (29 percent).

Additional findings include:

  • Nearly 50 percent of respondents were somewhat or very worried about the cost of healthcare in retirement, and roughly two-thirds were somewhat or very worried about unexpected healthcare costs for current needs or illnesses.
  • 25 percent of respondents forgo healthcare services “all the time” or “often” due to out-of-pocket expenses.
  • If faced with an unexpected healthcare cost of $1,000 or more, 33 percent of respondents would use their HSA, 25 percent aren’t sure how they would cover it and 20 percent would put it on a credit card.
  • When asked what the most challenging part about using a high-deductible health plan is, 29 percent said making sure they have enough funds set aside to cover deductible expenses, 21 percent said figuring out how much money to put into the account and 14 percent said managing bills from their physician.
  • More than half (54 percent) of respondents were not aware they could invest funds from their health savings account in stocks or other investment opportunities.
  • Three-quarters of American adults see their HSA as a way to pay for healthcare expenses this year, which may suggest they are not aware the funds can be carried over year-to-year.

Industry News

As Employers Continue to Expand Wellness Programs, Nearly 90 Percent Offer Financial Incentives

According to the ninth annual Health and Well-Being Survey released last week by Fidelity Investments and the National Business Group on Health, employers across the country will continue to expand wellness programs to create healthier and more productive workforces. Nearly nine in ten employers (86 percent, up from 74 percent in 2017) offer financial incentives as part of their well-being platform, and the average employee incentive amount increased to $784 for 2018, up from $742 in 2017, and a 50 percent increase from the average of $521 in 2013. Financial incentives are expected to continue to be a key benefit in the future, as 29 percent of employers indicated they plan to continue to increase the amount of financial incentives offered to employees over the next 3-5 years.

The survey also reveals that more than two-thirds (67 percent) of companies plan to expand their well-being initiatives over the next 3-5 years to include programs not specifically focused on physical health. In addition to traditional health-focused programs, such as weight management and smoking cessation, 92 percent of employers are expanding their well-being platforms to include emotional health programs, and 90 percent are now including financial wellness programs, such as debt management and budgeting. Other examples of increasingly popular non-health well-being activities include stress management training (77 percent), community involvement/volunteerism activities (72 percent) and social connectedness opportunities (60 percent).

New Report Shows Increased M&A Activity in Health Care Industry

New research from PricewaterhouseCoopers Health Research Institute shows the impact on the recent wave of mergers and acquisitions in the health care industry. In 2017, 967 deals occurred in the US health services market, down slightly from 2016, but the valuation of new deals climbed substantially, increasing 146 percent to $175.2 billion. Currently, 84 percent of Fortune 50 companies are involved in healthcare, up from 76 percent in 2013.

The report highlights vertically integrated moves such as Cigna’s purchase of Express Scripts and the proposed CVS Health-Aetna merger, and argues that integration creates new capabilities and efficiencies by providing access to data and services in pharmacy benefits, claims, consumer preferences, value of care and more. The report notes several vertical integrators have said their new scale and negotiating power will allow them to reduce costs of services and products. However, the report also notes that vertical integration can be tricky, with large, complex organizations consisting of teams with different missions, cultures, staffs, electronic health records (EHR) systems and other databases holding sensitive, protected data. 58 percent of executives involved in M&A transactions said integrations were more difficult than expected; 42 percent said their staff and organizations were still not fully integrated months after the deal.

More than half of consumers surveyed said they believe technology companies can improve the patient experience, reduce costs, simplify healthcare and increase their access to personal health information. But they also expressed concerns about the quality of products and services offered by tech companies and privacy of their information. For example, 36% said they would not be very comfortable getting diagnostic tests through a tech company and 36% were uncomfortable with the idea of a virtual doctor visit.

In The States

Texas Supreme Court Ruling on ER Bill Could Have Broad Implications

The health care industry is closely watching a recent decision by the Texas Supreme Court that could have broader implications on how hospitals and health insurers negotiate their rates. In a 6-3 vote, the court sided with an uninsured woman who was billed $11,037 after an emergency room visit. The justices said that in order to prove her bill was “reasonable” compared with what an insured patient would be billed, the medical center would need to share in court details about the discounted rates it had with health insurers, data that’s generally seen as proprietary and confidential.

The Houston-area hospital that treated the plaintiff had fought to prevent the chargemaster pricing data from being admissible at trial, saying it wasn’t relevant since the woman was not insured. The Court disagreed. “The reimbursement rates sought, taken together, reflect the amounts the hospital is willing to accept from the vast majority of its patients as payment in full for such services,” the ruling said. Justice Debra Lehrmann wrote in her opinion that hospitals concerned about private information being made public could ask the trial court to seal that information, meaning those documents would aid the plaintiff and patients like her but wouldn’t be made publicly available. That decision would be made in the future by the trial court.

Chief Justice Nathan Hecht wrote the dissenting opinion, siding with the hospital. The dissent argued that neither the court nor the plaintiff could state how confidential reimbursement rates could be used to show that charges to an uninsured, self-paying consumer are unreasonable.

California Insurance Regulators Review CVS-Aetna Merger

On May 2, regulators at the California Department of Managed Health Care held a hearing on the proposed $69 billion merger of CVS and Aetna. The state review follows reports that a former Aetna medical director admitted under oath that he never looked at patients’ records before deciding whether to approve or deny care. Several consumer groups argued at the hearing the consolidation would lead to fewer choices and higher prices.

“This merger would give more market power to Aetna, which has a troublesome track record of unreasonable rate increases and denials of care,” Anthony Wright, director of Health Access California, said in a statement before the hearing.

State regulators cannot block the merger, which is under federal review, but both the managed care and insurance departments regulate the industry.

Maine to Seek Federal Approval of State Health Reinsurance Program

Maine Insurance Superintendent Eric Cioppa announced that the state’s Section 1332 State Innovation Waiver request, which would run through calendar year 2023, has gone through public hearings and should be sent to CMS  “very shortly.” Cioppa says that the waiver would allow the state to re-start the Maine Guaranteed Access Reinsurance Association (MGARA) beginning in calendar year 2019. The MGARA had been in place prior to the passage of the ACA as a nonprofit reinsurance program for the higher-risk segment of the state’s individual health insurance market. The waiver request became necessary because individual health insurance premiums have increased 20 percent during the past two years of the ACA, and the Trump administration’s decision to eliminate cost-sharing reduction funds created an uncertain market environment, he says.

Cioppa says that the reinsurance program is likely to produce rate reductions of as much as 9 percent in 2019. Maine’s program will operate like a traditional reinsurance program and will reimburse ceding carriers for eligible claims incurred under ceded policies, including 90 percent of claims paid in excess of $47,000-$77,000 and 100 percent of claims in excess of $77,000.

The Week Ahead

The U.S. House of Representatives and Senate will be in session the week of May 7-11.

May 8: The House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations will hold a hearing on opioid distribution and diversion.

May 8: The House Judiciary Committee will hear from the acting head of the Drug Enforcement Administration during its hearing on the opioid crisis.

May 8: The House Education and the Workforce Committee’s Subcommittee on Workforce Protections will hold a hearing to discuss the impact of opioid abuse on the federal workforce.

May 9: HHS Secretary Alex Azar will speak at the American Hospital Association’s annual conference