February 22, 2018
Chipping away at the ACA

Last week it was Blue Cross of Idaho's non-ACA compliant "Freedom Blue" plans.

This week it's the Trump administration's  proposed regulation that would extend the time limits on short-term health plans (which also don't comply with ACA coverage rules) from three months to 364 days.

According to the Washington Post, the administration is also entertaining proposals that would allow people to renew their coverage under a short-term health plan. Short term, it seems, might become pretty long term.

Republicans couldn't muster the votes in the Senate last year to repeal the ACA, but it looks like the central part of the law--regulation and subsidization in the individual market-is being taken apart, piece by piece. It's been called ACA jenga.

In a conference call with reporters on Tuesday, the new HHS Secretary, Alex Azar, said lengthening short-term coverage would give Americans more choice and make insurance more affordable, especially for Americans who don't qualify for ACA subsidies. CMS Administrator Seema Verma, an increasingly visible architect of the Trump administration's health care policies, said (according to the Post) that only a few people would switch from ACA plans and that premiums for ACA-compliant plans won't go up.

Several media accounts quoted unnamed government actuaries as saying that between 100,000 to 200,000 are expected to buy the new yearlong short-term coverage.

Democrats and ACA stalwarts see things differently. AHIP put out a milquetoast statement expressing concern about fragmentation of the individual market. Oregon's Democratic Sen. Ron Wyden said the Trump administration was promoting junk insurance. It doesn't take much imagination to envision the ACA-compliant part of the individual market becoming--in fact, if not in name--a kind of high-risk pool.

On Twitter Andy Slavitt came out blazing: "The new impact of the short-term policy change is to allow insurers to make unlimited sums of money at the expense of consumers. State insurance departments will be weakened. Market monopolies with no transparency will persist. GOP will get the rightful blame."

It's not clear when the longer short-term plan will go on sale. The clock is ticking on a 60-day comment period on the proposed rule. Once that's over, the regulation can be finalized.
PBMs flaunt their 2017 drug spends

Criticized for being greedy middlemen that hide their wheeling and dealing, PBMs are now fighting back with their 2017 drug trend reports. Clearly, the companies want to send a different message: We are effective managers of cost and bargainers of price that hold down what our customers actually pay for prescription drugs. 
Two weeks ago, Express Script released its  2017 drug trend report that showed prescription drug spending by its commercial insurance customers rose by 1.5% on a per-person basis in 2017. The company touted that as the smallest increase in 24 years and that spending for just under half (44%) of its commercial plan customers decreased in 2017. The results for its Medicare customers (a 2.3% increase in prescription drug spending) and Medicaid (a 3.7% increase) weren't quite as impressive.
This week, Prime Therapeutics did Express Scripts one better with its  2017 trend report. Prime's report says its commercial customers spent 0.2% less on prescription drugs in 2017 than in 2016. Moreover, its Medicare Part D and Medicaid customers also saw decreases (0.8% for the Part D customers and 5.4% for the Medicaid ones). The Minnesota company pointed to rebates, utilization review, tight management of adherence gaps, and "network savings fueled by client adoption of Walgreens-anchored networks" as reasons for its success. Prime and Walgreens formed a partnership last year to create a specialty drug and mail-order business.
Here's one reason spending on cancer treatment has gone through the roof

Maybe the PBMs did keep a lid on prescription drug spending last year. But a study published in today's JAMA Oncology sheds some light on one of the reasons that spending on cancer treatment has gotten so expensive.
Using a large (more than 280,000 patients) database of cancer patients treated with infused chemotherapy who were covered by commercial insurance, the researchers found that the proportion of infusions delivered in hospital outpatient departments increased from just 6% in 2004 to 43% in 2014. So what? Well, in every way they measured, the payment was substantially higher for patients treated in hospital outpatient departments compared with those treated in physician offices. The biggest difference was in the six-month treatment episode ($84,660 for the hospital outpatient department patients vs. $43,700 for the physician office patients).
The reasons for the price difference were beyond the scope of this study (it's just a two-page research letter and some of the findings were presented at a meeting last year).
But  MedPAC and  others have been arguing that one relatively painless way to moderate health care spending would be to equalize payments among sites so hospital outpatient facilities don't get that extra bump in reimbursement.
Two more Catholic health care systems tie the knot

The announcement yesterday that Mercy Health in Cincinnati and Bon Secours Health System in Maryland are merging surprised exactly no one.

Other large Catholic hospitals have preceded them to the altar. Catholic Health Initiatives in Colorado and Dignity Health in California signed a merger agreement in December. Days later the Wall Street Journal reported that Ascension and Providence St. Joseph Health were in better-together discussions.

The Mercy-Bon Secours merger will create a 43-hospital system across seven states with $8 billion in net operating revenues. Alignment, economies of scale, infrastructure, providers bulking up because payers are--statements from the executives included the usual talking points. 

The arguments against such mergers are also familiar: Large provider organizations may have economies of scale, but their main reason to be is market dominance that is wielded to command higher prices. There is this:  Leemore Dafny, a Harvard Business School professor, told the  Journal yesterday that evidence for the pricing power is stronger when providers in the same market combine. Less clear are the consequences of mergers like this one that cross markets and state lines to create regional systems.
Would Noseworthy be interested in a job at Amazon?

John Noseworthy has had a pretty good run as CEO of the Mayo Clinic. During his nine years in charge of the renowned health care system in Rochester, Minn., the endowment has doubled and annual revenues hit $12 billion. He told the Star Tribune this week that reorganizing Mayo into one more centralized entity was one of his biggest accomplishments.

His tenure hasn't been entirely trouble free. Last year Noseworthy was  criticized for comments (he said they were taken out of context) about prioritizing patients with commercial insurance, and people in towns near Rochester say Mayo under his leadership has  cut back on local services.

Noseworthy said complimentary things when Bezos, Buffett, and Dimon announced their (deliberately vague?) initiative in January to slay the " hungry tapeworm" of American health care spending. And Buffett has said  nice things about Mayo.

So after he retires from the top job at the clinic at the end of this year would Noseworthy get involved in whatever disrupting Bezos et al. do in health care? We'll keep a lookout for it.

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