A group seeking lower drug prices is launching new attacks on the pharmaceutical industry to stop them from nixing a policy that will require them to give steeper discounts for Medicare drugs.
The group Patients for Affordable Drugs Now released an ad on Tuesday highlighting the drug industry's attempts to cut a “backroom deal” with Congress to eliminate a provision of law that requires them to give a bigger discount for certain drugs covered under Medicare.
“The drug corporations are pushing for a rollback of good policy in order to pad their profit margins and make the rest of us foot the $4 billion bill,” said David Mitchell, the group’s founder, in a statement. “Both Congress and the public need to know and put a stop to it.”
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The six-figure digital ad will run for an undetermined amount of time as negotiations in Congress continue, the group told the Washington Examiner.
[Also read: Senate advances bill to end pharmacy 'gag clauses']
The pharmaceutical lobby has been trying to eliminate a policy, inserted into a government funding bill in March, that closes a coverage gap in Medicare Part D, the program’s prescription drug plan, called the “donut hole” a year early.
Under Part D, a private plan only covers up to a certain amount for prescription drugs. Once a senior’s plan reaches this amount, then the senior has to cover their drug costs until they reach their catastrophic coverage level.
Seniors' 2018 plans cover up to $3,750 in drug costs, but once a senior reaches that level, they are in the donut hole. The senior gets out of the hole when their drug costs reach $5,000 overall, and then the insurance plan covers a majority of drug costs.
Obamacare mandated that the donut hole be closed in 2020, but it will now be closed in 2019 because of the March legislation. Technically the coverage gap still exists, but the senior will only have to pay 25 percent of the cost of their drugs from the time they enter and leave it.
Congress was able to close it early because the law raised the required discount that drugmakers have to provide for drugs in the donut hole.
Obamacare required drugmakers to cover 50 percent of the costs for drugs covered in the hole, but the omnibus increased that amount to 70 percent.
Patients for Affordable Drugs Now said that the pharmaceutical industry is lobbying lawmakers to decrease that requirement to 64 percent.
“This would result in a $4 billion windfall for the drug industry at the expense of patients,” the group said.
Earlier this year, Congress took steps to close the infamous Medicare drug “donut hole” a year early through provisions included in the Bipartisan Budget Act (BBA) of 2018. However, these changes, while ostensibly meant to address prescription drug affordability for Medicare patients, were a last-minute addition that missed the opportunity to pursue meaningful improvements.
Instead of tackling long-term, meaningful reductions in cost-sharing or direct benefits, the policy simply shifts responsibility from one industry to another. Setting aside how the changing dynamic may affect incentives for plans to manage costs, the real problem is that this action gives the illusion of progress while foregoing steps that could more directly improve affordability for patients.
The Medicare Part D program has provided crucial access to prescription drug coverage for tens of millions of beneficiaries since its implementation. Additionally, between 2006 and 2014, over 22,000 deaths were prevented due to a resulting reduction in hospital admissions. This decrease in costly hospital visits has saved Medicare nearly $1.5 billion each year. Simply stated, ensuring affordable access to prescription drugs can help improve health outcomes and reduce federal spending.
That said, there is always room for improvement. Both the administration and some leading members of Congress have indicated they want to address prescription drug access and affordability issues in Medicare and beyond. There are some important steps to make bipartisan progress that should be taken this year.
First and foremost, patient cost-sharing should be based on the price ultimately paid by the plan for the drug in question. Under current practice, beneficiary cost-sharing is artificially high because it generally is based on list prices (plus a dispensing fee), even though the plans acquire many drugs at a deep discount relative to list prices. In some cases, this means patients actually pay more than the cost of the drug. In other cases, high effective cost-sharing reduces access and adherence to needed medications. For example, public reports have indicated that plans purchase insulin at discounts of 60–70 percent or more from the list price. Yet because the savings are not passed on, many patients with diabetes forego this critical medicine.
Passing the discounts on is harder than it sounds, but that is not an excuse for the status quo. Ideally, this change would be enshrined in statute to ensure that patients always benefit directly from the discounts negotiated on their behalf. However, the administration could also pursue this through its rulemaking or, potentially, demonstration authority if Congress fails to act. Importantly, this is yet another opportunity for Medicare to lead the way in payment policy, as this problem is prevalent in private plans serving the working population and their families as well.
Second, there is a looming issue that Congress needs to address this year. The so-called subsidy “cliff” that was created during the drafting of the Affordable Care Act brought some relief to beneficiaries by allowing access to catastrophic coverage earlier. However, budget rules in effect at the time dictated that the provision had to expire 10 years after enactment. Current estimates indicate that the threshold will immediately increase by $1,250 in 2020, leaving high-need beneficiaries on the hook for a portion of the additional spending. Next year, plans bidding to cover Medicare patients for 2020 will have to take this into consideration unless Congress acts to permanently reset it before that process begins.
Third, there is no good reason to require beneficiaries to have “skin in the game” once they are in the catastrophic phase of coverage. Virtually no other payer requires residual cost-sharing once a patient crosses the catastrophic threshold. Establishing a true out-of-pocket cap for beneficiaries could provide significant relief to beneficiaries who suffer from chronic conditions or need high-cost treatments.
In my time on Capitol Hill, I had the privilege of working with lawmakers on both sides of the aisle to improve the Medicare program. I know there is an appetite to fix issues that threaten the success of Part D and ensure that beneficiaries continue to have access to the best possible prescription drug coverage at affordable prices. These changes should be addressed before the end of the year. Alternatively, if Congress is unwilling or unable to act, the administration should step forward to use its considerable authority to help lower costs for beneficiaries. The time for talk has come and gone; the time for action is now.
Cybele Bjorklund is a health policy expert focused on improving prescription drug affordability for Medicare beneficiaries and others. Bjorklund spent 20 years in leading staff roles in Congress, most recently serving as the Democratic staff director for the Subcommittee on Health and the senior health advisor for Democrats on the Committee on Ways & Means for 14 years.
President Donald Trump on several occasions has taken credit for making Medicare “stronger.” In one instance, he said, “Medicare will be $700 billion stronger over the next decade thanks to our growth.”
In fact, Medicare’s finances have worsened since he took office, and economic growth is not expected to help the program as much as he claims:
The latest Medicare trustees report says the Medicare Part A trust fund, which covers payments to hospitals, will run out of money by 2026, three years earlier than projected just last year. That’s partly because the tax cut law that Trump signed last year will reduce Medicare revenues and increase expenses.
Medicare remains on an unsustainable path. The annual cost for all four parts of Medicare — including physician payments and prescription drugs — is expected to more than double from $710 billion in 2017 to $1.44 trillion in 2027, and general revenues will increase as a share of Medicare financing from 41 percent in 2017 to 49 percent in 2032.
The Congressional Budget Office in April estimated that economic growth could increase all payroll tax revenues, including Social Security, by $92 billion over the next 10 years. That’s far short of Trump’s $700 billion figure, which he said was just for Medicare.
Financial Outlook Worsens
Trump made claims about strengthening Medicare — the health insurance program for senior citizens and the disabled — several times over the course of three days in early September.
In remarks at the White House on Sept. 5, Trump boasted that “we have done more as an administration than any other administration in already less than two years,” including on health care. “We’re saving Medicare,” he said.
A day later, while campaigning in Montana for Republican Senate candidate Matt Rosendale, Trump said, “Matt Rosendale is going to make sure we’re not touching your Social Security and your Medicare is only going one way. That’s stronger.”
On Sept. 7, the president made the specific claim about the impact of economic growth on Medicare. His remarks came at a fundraiser for GOP Rep. Kristi Noem, who is running for governor of South Dakota against Democrat Billie Sutton. The winner will replace outgoing Republican Gov. Dennis Daugaard.
Trump, Sept. 7: Medicare will be $700 billion stronger over the next decade thanks to our growth. And I will tell you that Billie Sutton, and people like Billie Sutton, Democrats with a very strong liberal leaning, they’re going to destroy your Medicare and they’re going to destroy your Social Security. I’m leaving your social — it’s going to be left alone, your Social Security will be left alone. We’re not touching your Social [Security], we’re just going to make it stronger. We’re going to make the country stronger. We pay for things through growth. The way we’re growing right now will be able to pay for things that nobody thought possible. Remember during debates they’d say, “How are you going to do it?” I said, “We’re going to do it through growth.”
Medicare and budget experts we contacted said Medicare’s financial outlook has worsened and economic growth is not expected to provide much help.
“If anything, some of the administration’s actions appear to be working in the opposite direction, at least as measured by the status of the Medicare Part A trust fund,” Juliette Cubanski, associate director of the Kaiser Family Foundation’s Program on Medicare Policy, told us in an email.
Cubanski is referring to the Medicare trustees’ most recent annual report, which provides an updated projection on the financial status of the Hospital Insurance, or HI, trust fund.
Medicare is made up of four parts: Part A (payments to hospitals), Part B (payments to physicians), Part C (Medicare Advantage, or private insurance options) and Part D (prescription drug coverage). Those parts are funded by two funds: the Hospital Insurance (HI) trust fund, which is funded primarily by a payroll tax paid by workers and their employers, and the Supplementary Medical Insurance (SMI) trust fund, which is funded primarily through general revenue and beneficiary premiums.
The Medicare Part A trust fund is designed to be self-supporting, but the trustee report warns that the financial outlook for the fund “has deteriorated as compared to the projections in last year’s annual report.”
The HI fund spent more on hospital payments than it received in income from 2008 through 2015, the report said. Although the fund had a slight surplus in 2016 and 2017 and a balance of about $200 billion prior to 2017, the trustees say deficit spending will return this year and accelerate in the coming decade, exhausting the fund earlier than expected.
“The estimated depletion date for the HI trust fund is 2026, 3 years earlier than in last year’s report,” the report said. At that point, Medicare would be able to pay only 91 percent of hospital expenses, as the table on page 29 shows. (The SMI trust fund, because of how it is structured, cannot be depleted.)
The trustees, in part, cited the tax cut law as a reason the HI fund is expected to run out of money more rapidly than previously expected.
The Tax Cuts and Jobs Act of 2017 that Trump signed in December repealed the so-called individual mandate in the Affordable Care Act, which requires people to have health insurance or pay a penalty. The repeal, which is effective in 2019, is expected to increase the number of uninsured Americans and that, in turn, will increase Medicare Disproportionate Share payments made to hospitals that serve large populations of low-income people without insurance.
“[T]he percentage of people without health insurance is expected to increase. Because the change in this percentage is a factor used in determining payments to Medicare disproportionate share hospitals for uncompensated care, these payments are expected to increase as well,” the trustees’ report said.
Also, about 8 percent of HI trust fund revenues come from a federal income tax on Social Security benefits. But the tax cut law reduced the federal income tax rates, meaning a portion of Social Security benefits will be taxed at a lower rate and generate less income for Medicare, as explained in a July report by the Congressional Research Service on Medicare’s finances.
“A stronger economy is definitely one of the factors that could help to shore up the status of the Medicare Part A trust fund, since the majority of funding for that comes from payroll taxes,” Cubanski, of the Kaiser Family Foundation, said. “But all of the factors that affect Medicare financing would have to be going in a positive direction, whereas the administration has taken other steps that have actually made Medicare’s funding situation worse.”
As we said, Medicare Part A is just one part of the program for seniors and the disabled. In total, Medicare cost $710 billion in 2017 and about 41 percent of that was paid through general revenues (see Table II.B1). Total Medicare expenditures will more than double to about $1.44 trillion by 2027, as illustrated by the CRS chart below, and the share of general revenues will increase to 49 percent by 2032, the trustees report said.
Separately, the Bipartisan Budget Act of 2018, which Trump signed in February, will have a negative impact on all parts of Medicare, the trustees’ report said.
That law, among other things, repealed the Independent Payment Advisory Board, a 15-member board created by the Affordable Care Act to reduce Medicare costs. As designed, the board would make recommendations for cutting spending that could only be overridden with a three-fifths majority of both houses of Congress, or Congress could institute its own reductions of an equal amount recommended by the IPAB. (The IPAB had not yet been formed.)
“The expenditures in this year’s report are higher than last year’s mostly due to (i) the Bipartisan Budget Act of 2018, which eliminated the Independent Payment Advisory Board and removed payment caps for certain therapy services, and (ii) higher projected Medicare Advantage (MA) payments attributable to higher risk scores for beneficiaries enrolled in MA plans,” the report said. (Risk scores are estimates of the cost of care for beneficiaries.)
Economic Growth Projections
As for Trump’s claim that “Medicare will be $700 billion stronger over the next decade thanks to our growth,” the Committee for a Responsible Federal Budget and Cubanski, of the Kaiser Family Foundation, were not aware of any economic projections that would improve Medicare’s finances by that amount.
The CRFB referred us to Table A-1 of the nonpartisan Congressional Budget Office’s April 2018 Budget and Economic Outlook, which projects the impact of economic revisions since June 2017 — including effects of newly enacted legislation and updated economic data. The CBO projected that the economic changes will result in an additional $92 billion in all payroll tax revenues, which includes Medicare and Society Security, over 10 years.
More than half of the additional economic growth was the result of recently enacted legislation, specifically the 2017 tax act, the 2018 budget act and the fiscal year 2018 appropriations law, the CBO report explained. “Updated data for key measures from the national income and product accounts (NIPAs) also led to economic revisions. (The NIPAs, which are produced by the Bureau of Economic Analysis, track components of the nation’s economic output and income that CBO uses in its economic analyses,)” CBO said.
So why did the president say Medicare will be $700 billion stronger over 10 years because of economic growth?
The White House told us that the president was referring to Medicare and Social Security, not just Medicare. It said the administration’s policies will result in “extra economic growth that is on track to add more than $700 billion to Medicare and Social Security revenues.”
More precisely, the White House estimates that economic growth will generate an additional $858 billion more in payroll taxes over 11 years, from 2018 to 2028, compared with CBO projections.
The White House took the administration’s nominal gross domestic product projections for each year from 2018 to 2028 (Table 1 of the White House’s Mid-Session Review of its fiscal 2019 budget proposal) and applied the CBO’s payroll tax revenue as a share of GDP for each year (Table 4-1 of CBO’s Budget and Economic Outlook) to estimate total payroll tax revenues for those 11 years. It then subtracted CBO’s payroll tax revenue projections from its own and got $858 billion in additional payroll tax revenue due to growth from 2018 to 2028.
But there are three problems with that logic, beginning with the fact that it doesn’t support what the president said.
First, the president said he strengthened Medicare by $700 billion over 10 years, but the White House gave us the impact of economic growth on all payroll revenues — including Social Security, which is the largest.
We found that the White House (see Table S-4) estimates $129 billion more in Medicare tax revenue than CBO (see tab 4).
So, Trump is wrong about the impact of economic growth on Medicare even by his administration’s own numbers.
Second, the White House projects higher payroll tax revenues based on sustained economic growth through 2028. It projects real GDP will grow at an average annual rate of nearly 3 percent for the next decade — which is about a percentage point higher than most economic forecasters predict.
In August, CBO projected real GDP will grow 3.1 percent this year and 2.4 percent next year, but over the 10-year budget period, from 2018 to 2028, CBO projects an average annual growth rate of 1.9 percent.
The consensus among economic forecasters is that tax cuts and increased federal spending will stimulate the economy, but only in the short term, according to the CRFB.
For example, the most recent median forecast of the Federal Reserve Board members and Federal Reserve Bank presidents, released June 13, is for 2.8 percent in 2018, 2.4 percent in 2019 and 2.0 percent in 2020. But the “longer-run” median forecast is 1.8 percent.
Third, although Trump says “we pay for things through growth,” the additional payroll tax revenue generated by economic growth — even at the level projected by the White House — is a small fraction of the cost of Social Security and Medicare.
The administration’s proposed budget for mandatory programs (Table S-4) shows that it expects to spend $8.75 trillion on Medicare from 2019 to 2028, but take in only $3.6 trillion in Medicare payroll taxes. As for Social Security, the administration expects to spend $13.66 trillion and take in only $11.6 trillion.
Budget experts say mandatory programs remain on track to consume an increasingly greater share of federal spending.
In its April report, CBO estimated that “spending for people age 65 or older in several large mandatory programs — Social Security, Medicare, Medicaid, and military and federal civilian retirement programs” — will increase from 38 percent of federal spending in 2018 to 45 percent in 2028. (That does not include federal spending on interest.)
Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget, told us in an email: “There has been no major Social Security or Medicare legislation enacted, so the programs are essentially on the same path they were on before the President took office.”
Canyon News - UNITED STATES—Dear Toni: I have been told that Medicare does not cover drugs when you are in an emergency room? My husband, Joe went in the hospital from the ER for two days and because it was considered “under observation,” we are now fighting the hospital because they say his drugs were not covered during his stay.
He does not have a Part D plan because he did not take any prescriptions when he turned 65 What should we do? Thanks, Cynthia from Tomball area
Cynthia: Since your husband did not enrolled in a Medicare Prescription Drug Part D plan and his hospital stay falls in “under observation” he might have to pay for the drugs administered because his stay is under Part B which does not cover prescriptions given orally.
Part B (Medical Insurance) covers IV (intravenous infusion) drugs and since your husband was considered outpatient care he was not an inpatient care, which would have qualified for a Medicare Part A – inpatient hospital stay with drugs covered.
Medicare Part B generally covers care that you receive in a hospital outpatient setting like an emergency room, observation unit, and outpatient surgery center or pain.
This is why enrolling in a Part D Medicare drug plan is so important because when you are admitted in a hospital on an outpatient basis you may need your self-administered drugs. Self-administered drugs are what you would normally take on your own or over the counter type drugs. Part B does not pay for these types of drugs, but a Medicare Part D Prescription Drug plan can.
If you do not have a Part D drug plan while in a Part B “under observation,” hospital outpatient setting or emergency room, then you may pay for the drug cost out of your pocket as you and your husband are experiencing.
During a Toni Says® Medicare consultation, everyone is advised on the importance of enrolling in a Medicare Part D plan when first enrolling in Medicare.
The new American Baby Boomer Society website has course #6 which explains Medicare Part D and the famous donut hole. Visit www.abbs4u.com website to join.
To keep Joe from paying for prescriptions out of pocket whether in or out of the hospital, I would advise you to see if he qualifies for Part D “Extra Help” from Social Security or Medicaid. If he qualifies then he can enroll in a Part D plan now or he will have to wait until Medicare’s open enrollment which takes place in October 2018 and enroll in a Medicare Part D plan because he has missed his “initial enrollment period.”
Below is what to do when one receives a hospital bill for prescriptions not covered by Part B in a hospital ER or outpatient setting:
· Most hospital pharmacies do not participate in Medicare Part D; you may need to pay up front and submit the claim to your Medicare Part D drug plan for a refund.
· Follow instructions on how to submit an out-of-network claim.
· You may need to forward certain information like emergency room bills that show what self-administered drugs you were given.
· Keep copies of receipts and paper work you send to your Part D plan.
Toni King, author of the new Medicare Survival Guide® offers a Toni Says® Medicare column readers discount available at www.tonisays.com. Email Medicare/long term care questions to firstname.lastname@example.org or call 832/519-TONI (8664).
The Trump administration is looking to make “disruptive” changes to U.S. drug pricing to bring down costs for patients, Health and Human Services Secretary Alex Azar said.
“Every player in the system has their share of blame,” Azar said in an interview at Bloomberg headquarters in New York on Wednesday, adding that he’s working on overhauling the system. “Part of that is going to be some fairly large, disruptive changing of the rules of the road.”
The administration has taken aim at the list prices of prescription drugs, and some drugmakers have pulled back from proposed hikes in recent months. Pharma companies have long pointed to the role of middlemen such as pharmacy-benefit managers in pushing drug prices higher. PBMs collect rebates from drugmakers in exchange for preferred status on drug plans, which helps boost sales of their products.
“Pharma companies set their price,” said Azar, a former pharmaceutical industry executive. “They may be doing so within an economic system that has various incentives, and my job is to change the system.”
He was careful not to single out PBMs as the sole reason the system is working the way it is.
“I am not blaming pharmacy-benefit managers for the position we are in around drug pricing or the dynamic of rebates,” he said. “The pharmacy-benefit managers do an incredible job negotiating discounts, rebates in our system. In fact, a major part of the president’s plan is that we’re further empowering pharmacy-benefit managers,” referencing Medicare drug programs for the elderly.
In August, Health and Human Services granted private insurers, which provide coverage to about 20 million seniors through Medicare Advantage, new powers to bargain over drugs administered in doctor’s offices or hospitals. The government and consumers in those plans spent $25.7 billion in 2015 on drugs administered in a doctor’s office or hospital.
Azar also said the rebate system could potentially be replaced in part by discounts that consumers receive at the pharmacy counter.
In July, HHS submitted a proposal to the White House that would curb kickback exemptions that allow drugmakers to offer insurers and pharmacy-benefit managers rebates. Details of the proposal weren’t available, but its title provides a clue to the changes being considered: “Removal Of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection.”
It could represent a sweeping shift in how drug prices are set in the U.S. and potentially eliminate some of the opacity that surrounds the system. Azar wouldn’t comment specifically on what was in the proposal.
“There will be margins, there will be businesses,” he said, implying the changes aren’t designed to dismantle companies. “They will reorient their business models and the channel will reorient around any changes we make to the rules of the road.”
Regulators have also been focused on how to increase the use of biosimilars, which are less expensive copycats of high-priced biologic drugs that often cost in the tens of thousands of dollars. Makers of these lower-cost alternatives have said that incentives in the system have made it challenging for them to compete against brand-name equivalents.
Azar said his ultimate desire would be to make it so that pharmacists could freely substitute cheaper biosimilars for their high-priced counterparts.
He’s seeking to create as “robust” a market for biosimilars as exists for generic drugs, without laying out a specific timeframe for this initiative.
The introduction of biosimilars was expected to cut billions of dollars in drug spending from the health-care system but some drugmakers say it hasn’t worked that way. Drug giant Pfizer Inc. is currently suing rival Johnson & Johnson over what it argues is anti-competitive behavior that has prevented patients from taking Pfizer’s less-expensive version of J&J’s blockbuster Remicade.
— With assistance by Blake Dodge, Jared S Hopkins, and Robert Langreth
(Updates with information about impacts to companies in eleventh graf.)
Feds ease rules on cheaper coverage, sparking consumer warnings on benefits.
August 1, 2018 By Andy Miller
Fewer benefits. Riskier coverage. Buyer beware.
The Trump administration issued a final rule Wednesday that promotes the sale of more “short-term’’ health plans, but the move immediately drew criticism from consumer advocates and health care industry organizations.
The short-term plans don’t have to cover pre-existing conditions and can provide a limited range of benefits. Many such plans do not cover prescription drugs, maternity care, mental health or substance abuse treatment. The tradeoff is that the premiums are cheaper.
The White House action allows people to buy limited-duration health coverage that lasts up to 12 months and renew that coverage for a maximum of 36 months. The Obama administration, citing consumer protections, had limited such plans to less than three months, and they were not renewable.
President Trump has touted the rule change as producing “much less expensive health care at a much lower price. We’re finally taking care of our people.”
The administration estimates that premiums for a short-term plan could be about one-third the cost of comprehensive coverage required under the ACA.
A short-term plan “is cheap, but you get what you pay for,’’ Russ Childers, an Americus health insurance agent, told GHN on Wednesday. “It may not pay the benefit you think it might.”
Kaiser Family Foundation did a survey this year of current short-term plans and found that:
** 43 percent do not cover mental health services.
** 62 percent do not cover substance abuse treatment.
** 71 percent do not cover outpatient prescription drugs.
** None cover maternity care.
“The administration’s rule change is dangerous for Georgia consumers,’’ said Laura Colbert of Georgians for a Healthy Future, a consumer advocacy group that supports the ACA. “Because many consumers shop for insurance based on premium price, these plans will look attractive but when consumers need to use their coverage, they may find that the services they need are not covered and they are left with large medical bills.
“The administration is irresponsibly condoning short-term plans as quality, affordable coverage and putting Georgians at risk,” Colbert said Wednesday.
The administration action comes at a time of increasing stability for Georgia’s health insurance exchange, created by the ACA.
Last month, the Georgia insurance department released proposed premiums for the state’s 2019 insurance exchange that ranged from about 2 percent to almost 15 percent. Those hikes are modest compared with the 2018 Georgia exchange hikes, which exceeded 50 percent for the four participating health plans.
The action on short-term plans is part of the administration’s and Republican lawmakers’ campaign to weaken the ACA. Next year, because of legislation passed in 2017, there will no longer be a tax penalty for someone who opts to not have insurance or who buys a short-term plan.
Short-term plans join “association health plans” for small businesses as the administration promotes lower-cost insurance options that cover less. Such plans can be offered across state lines and are also designed for self-employed people, The Associated Press reported.
Bill Custer, a health insurance expert at Georgia State University, said Wednesday that he sees “no other rationale’’ for pushing short-term health plans other than “undermining the ACA markets.”
These plans may attract healthier consumers who earn too high an income to receive a subsidy under the ACA exchanges, Custer said. Insurers offering these plans will have to balance a lower price with providing enough coverage to attract people, he said.
“They may market it to look better than what it is,’’ Custer added. “It’s going to be difficult for consumers to understand exactly what they’re buying.’’
The White House acknowledged these cheaper plans are not for everyone. “We make no representation that it’s equivalent coverage,” said Jim Parker, a senior adviser at the U.S. Department of Health and Human Services. “But what we do know is that there are individuals today who have been priced out of coverage.”
NFIB, a small-business advocacy organization, issued a statement that said “today’s final rule by HHS is another positive step for small-business owners that are seeking more affordable, flexible, and predictable options for themselves and their employees.”
But the American Hospital Association issued a statement Wednesday claiming that the new rule “will reintroduce, to an already shaky individual market, health plans that do not constitute true ‘insurance.’
“They could end up costing a patient far more by covering fewer benefits and ensuring fewer critical protections, like covering pre-existing conditions. Patients could find themselves responsible for their entire medical bill without any help from their ‘health plan.’
“For providers, these products will lead to increased bad debt, with underinsured patients unable to afford the care they need but that is not covered,’’ the AHA statement said.
The hospital organization added that these plans would remove younger, healthier people from the risk pool and driving up costs for those who remain.
By siphoning off younger or healthier consumers, the short-term plan expansion will add up to a 1.7 percent increase to premiums next year, according to the industry group America’s Health Insurance Plans, Kaiser Health News reported.
Insurance agent Childers agreed that more short-term plans may skim off healthier patients from the regular insurance market. “No one is buying them if they’ve been sick or have been sick,’’ he said.
Some in the industry say they’re developing “next generation” short-term plans that will be more responsive to consumer needs, with pros and cons clearly spelled out. Major insurer United Healthcare is marketing short-term plans, the AP reported.
The nonpartisan Congressional Budget Office estimates that roughly 6 million more people will eventually enroll in either an association plan or a short-term plan. The administration says it expects about 1.6 million people to pick a short-term when the plans are fully phased in, The AP reported.
Jan Dubauskas, general counsel for the IHC Group, an organization of insurance carriers headquartered in Stamford, Conn., told Kaiser Health News that she expects IHC to offer 12-month versions as soon as the rule goes into effect, which will be 60 days after it is published.
Georgia insurance department officials told GHN that they believe these short-term health plans “have served the public interest relatively well over the years, generally helping many consumers by bridging health coverage between employment-related group health insurance plans. Our experience with these products has never caused any patterns of consumer complaints regarding any of the relatively few insurers offering these short-term limited-duration products.”
The state officials said that they “are gratified to see that the former 3-month maximum duration federal rules have been stricken, and replaced by new rules.’’
The agency said it’s ready to assist any individual who has questions about insurance plans through its toll-free number in Georgia at (800) 656-2298 or through website www.oci.ga.gov
The Good Pill drug donation and reuse program is now serving about 1,000 patients in the state, and the number has been growing by 40 percent a month since its formal launch in January. (Special Photo: Georgia Health News)
Good Pill is affiliated with a national nonprofit known as Sirum (Supporting Initiatives to Redistribute Unused Medicine), which was founded by students at Stanford University in California to help the uninsured and underinsured and others struggling to pay their prescription costs.
JULY 27, 2018 On Wednesday, the Centers for Medicare and Medicaid Services (CMS) released the calendar year (CY) 2019 hospital outpatient prospective payment system (OPPS) proposed rule addressing payments to hospital outpatient departments and ambulatory surgery centers (ASCs).
In the proposed rule, CMS made several significant proposals, including to expand a controversial policy that pays off-campus hospital departments at the same rate as physician clinics and to extend cuts for 340B-related drugs to such sites as well. Several proposals address the opioid epidemic, including un-packaging non-opioid pain medications in ASC surgical payments. CMS also requested input, while not formally proposing, a renewed Competitive Acquisition Program (CAP)-type model for purchasing Part B drugs through the Center for Medicare and Medicaid Innovation (CMMI).
Comments on the proposed rule are due by September 24 with a final rule expected by around November 1.
Overall, CMS estimates that outpatient hospital payments would decrease by a net of 0.1 percent ($80 million nationwide) relative to 2018 rates, which reflects a general market basket-based increase, then decreased by several adjustments, including for productivity, the off-campus policy described above, and a cut mandated by Congress.
Major teaching hospitals take the brunt of the hit, seeing an average decrease of 0.8 percent, while all other hospitals, on average, would see a 0.5% increase to payments.
For ASCs, citing comments received during the 2017 rulemaking cycle, CMS proposes to update rates based on the hospital market basket index instead of the consumer price index-urban (CPI-U) as it ordinarily does.
CMS estimates that ASC payments would increase by $32 million in CY 2019 compared to if they were based on the CPI-U approach. With all factors considered, ASC rates would increase by 2.0 percent in 2019, reflecting a 2.8 percent projected hospital market basket minus a 0.8 percent multi-factor productivity adjustment.
Expansion Of Site Neutrality For Outpatient Services
Section 603 of the Bipartisan Budget Act of 2015 (BBA) reduced payments to off-campus provider-based hospital departments to the amount paid to physician clinics for the same service, effective January 1, 2017. The BBA excepted certain sites from these payment reductions, namely those already billing under the hospital outpatient rate as of the date of enactment of the BBA (i.e., existing sites were grandfathered) and emergency services furnished by off-campus emergency departments.
In the proposed rule, CMS aims to extend this site neutrality policy beyond what is required by the BBA. It would cut payments to currently grandfathered sites for certain clinic visit services, citing concerns about the existing trend where more services are shifting away from doctor offices and into hospital outpatient departments. The proposal is not budget neutral, which is why it contributes to the net overall reduction in hospital payments that would be effectuated under the rule. According to the agency, about a fifth of the gross $760 million in savings from the proposal would accrue to patients in the form of reduced cost-sharing.
Further, CMS proposes to apply the site neutral payment policy to new lines of service added to previously st sharing exempted/grandfathered outpatient departments, positing that Congress would not have intended to allow such new families of service to be exempted from the BBA policy. The agency also notes that observed growth in new service lines at these outpatient facilities may have been an unintended consequence of the initial policy that it believes is best halted.
New 340B-Related Cuts
Last year, CMS finalized a policy to pay covered outpatient drugs and biologicals acquired by hospitals under the 340B Program at a rate of average sales price (ASP) minus 22.5 percent, rather than ASP plus 6 percent that is typical under the payment system. This cut did not initially apply to off-campus hospital departments subject to the site neutrality policy described above, because the agency essentially now treats those sites like physician clinics.
Here, CMS is now reversing that policy and would extend these cuts for 340B drugs to off-campus departments already facing payment cuts under the site neutrality policy. The agency would continue to exempt rural sole community hospitals, children’s hospitals, and certain cancer hospitals.
CMS proposes modifications to patient experience measures included in the hospital quality reporting program to remove three pain communication-related metrics. The change stems in part from concerns that providers may feel unduly pressured by patients seeking opioid-based therapies who can, in turn, report the physician neglected their preferences.
Further, citing the President’s Opioid Commission work, the agency adds new separate payment for non-opioid pain medications that otherwise function as a supply under the ASC payment system. It cites reports showing a 70 percent decline in such products after they lose pass-through status. CMS notes it is not applying the same change to hospital outpatient departments, suggesting that there is less evidence of behavioral change when pass-through status is removed in that setting.
RFI On Using Authority For Part B Competitive Acquisition Program Through CMMI
As signaled in the Administrations’ drug pricing Blueprint, CMS seeks comment on “key design considerations” for testing a CAP-like model through CMMI, citing comments submitted in response to a Request for Information (RFI) that accompanied the document.
Specific questions are posed in four categories: 1) included providers and suppliers; 2) included drugs and biologicals; 3) beneficiary cost-sharing, 4) protections and fiscal considerations; 5) model vendors; 6) regulatory barriers and transparency issues; 7) manufacturer participation; and 8) model scope.
Initially established under the Medicare Modernization Act, the CAP program ultimately languished due to lack of provider or vendor participation. A pagereflecting the operation of the program is still available on CMS’s website.
Relatedly, CMS also seeks comment on how to promote interoperable electronic data exchange across providers and adds a new RFI on price transparency, including making charge information publicly available.
There are several other policies in the proposed rule that I won’t address here but can be skimmed on the helpful fact sheet accompanying the release. Happy reg spelunking.
An increasingly popular culprit in the debate over high drug prices is the pharmaceutical rebate, the after-the-fact discounts that form the heart of the nation’s arcane — many would say broken — market for prescription drugs.
Now, a growing chorus wants to get rid of them, or at least change the way they are applied after drug companies have already set their prices. Rebates, critics say, have pushed up the list price of brand-name drugs, which consumers are increasingly responsible for paying. Insurers generally get to keep the rebates without passing them along to their members.
Last week, the drug industry’s largest trade group, the Pharmaceutical Research and Manufacturers of America, took aim at the rebate system, proposing a change to the way middlemen handle rebates, and how those companies are paid.
And the Trump administration has taken the first step toward eliminating a “safe-harbor” provision that allows rebates to be paid in Medicare’s Part D drug program without violating federal anti-kickback laws.
The details, though sparse, briefly caused the fall of the stocks of major pharmacy benefit managers like Express Scripts and CVS Health as investors worried that company profits would be hurt by the rebate’s demise.
Here’s a rundown on everything you need to know about rebates.
What is a rebate?
Pharmaceutical rebates are similar to the type that you get when you buy a toaster — discounts that are redeemed after the transaction has taken place.
Except with the toaster, you get to keep the money. With drug rebates, it’s the insurer or employers who usually reap the benefit.
Under the current system, drug makers set a list price for their products, then negotiate with pharmacy benefit managers like Express Scripts or CVS over how much of a discount they will provide off that list price.
The size of the rebate depends on a range of factors, including how many drugs are used by the insurers’ members, and how generously the product will be covered on a formulary, or list of covered medicines. Companies that offer bigger rebates are often rewarded with better access like smaller co-payments.
Most of the rebate — and sometimes, all of it — goes to those who are paying the bill for the drugs, mainly insurers or large employers who cover their workers’ health care. Pharmacy benefit managers usually keep a percentage of the rebate as payment.
Insurers and employers get their rebates in lump sums that they say are often used to offset general health care costs and to hold down premiums.
What’s all the fuss about?
Although rebates have been used to negotiate drug prices for years, they didn’t catch much attention until 2011, when CVS, which operates one of the country’s largest pharmacy benefit managers, announced it was excluding 34 drugs from its national formulary.
The rebate then became a potent negotiating tool, pitting drug companies against each other in an effort to secure a place on the formulary. Other benefit managers, like Express Scripts, soon followed suit.
But that has led to an escalating game, where drug companies raise their list prices to maintain their profits and to offer bigger rebates.
Some say the system has created a series of perverse incentives, where the middlemen have an interest in keeping the list price high. In addition to pharmacy benefit managers, wholesalers and pharmacies are also paid based on a percentage of the list price.
Drug makers — on the defensive after weathering attacks by President Trump, other elected officials and the public — have pointed fingers at the pharmacy benefit managers, saying they are under pressure to raise list prices to keep all of these players happy.
But pharmacy benefit managers and insurers disagree, arguing that rebates are a diversion and that their negotiating tactics have kept total drug costs in check. As proof they point to data that shows that in 2017, net spending on brand-name drugs grew only 1.9 percent, according to IQVIA, a drug research firm, while list prices grew 6.9 percent.
In a twist, the pharmaceutical companies cite the same research to showthat drug prices are not as steep as they seem.
How are consumers affected?
Even as insurers’ drug spending has grown slowly, critics say the rebate game has served to inflate the list price of drugs, which consumers are increasingly responsible for paying. This is especially true for expensive specialty drugs, which treat serious conditions like cancer and multiple sclerosis — and whose prices have been skyrocketing.
As the cost of these products has gone up, insurers have raised deductibles and out-of-pocket contributions so that many of the sickest Americans must now pay thousands of dollars a year to cover their drug costs. These out-of-pocket costs are calculated using something close to the list price of a product, not the net price.
CONSUMERS AND HIGH DRUG PRICES
Many Americans are struggling to afford life-saving treatments for diseases like diabetes, multiple sclerosis, and cancer.
The Price They Pay
March 5, 2018
What’s being proposed?
Alex M. Azar II, the secretary of health and human services, has singled out rebates as a primary way that patients’ costs could fall.
“Right now, everybody in the system makes their money off a percentage of list prices,” Mr. Azar testified in June before a Senate committee. “We may need to move toward a system without rebates.”
Last week, the Trump administration signaled that it might try to end the “safe harbor” exemption that protects rebates from falling under anti-kickback laws. That would affect government programs like Medicare’s Part D drug plans, but it wouldn’t affect rebates in private plans — like those offered by employers. Changes to large programs like Medicare often have a rippling effect across the industry.
Pharmacy benefit managers and insurers warn that eliminating rebates could face legal hurdles, and said that the move could wind up raising consumers’ premiums because insurers and employers use their rebate payments to plug other holes.
“Plan costs in the short run would go up, that’s just the reality of the situation,” said David Dross, the national leader of the managed pharmacy practice at Mercer, which negotiates with pharmacy benefit managers on behalf of employers.
Doing away with rebates won’t fix other problems. The companies that sell the most expensive drugs — newly approved products that cost hundreds of thousands of dollars a year — don’t offer many discounts because they have little to no competition. IQVIA, the drug research firm, found that rebates amounted to about 40 percent of the list price for treatments of some diseases, like diabetes. But they reduced the list price by only 10 percent in treating other diseases, like cancer.
The Trump administration is also considering a proposal, first floated last fall, that would give a portion of rebates to Medicare beneficiaries at the pharmacy counter. The move would lower out-of-pocket costs for people with high drug bills, but could increase premiums for Medicare drug plans. Private insurers, like UnitedHealthcare, have also recently introduced plans that offer these “point-of-sale” rebates to some of their members.
How likely are rebates to disappear?
The drug industry, though it hasn’t specifically called for an end to rebates, has targeted the discounts and blamed the pharmacy benefit managers for the current situation. The industry is one of the most powerful lobbying forces in Washington, and with the support of Mr. Azar — until recently a top executive with Eli Lilly — they are not to be underestimated.
Kara Eastman, the Democratic nominee in Nebraska’s Second Congressional District, tells a story while campaigning about visiting her mother while she was dying from cancer. Her mother’s medicals bills were stacked so high on the kitchen table, Eastman says, that when she visited, they couldn’t see each other through the piles. Just one of her mother’s pills cost $2,500 a month.
Eastman decided to run for Congress to offer alternatives to the skyrocketing cost of health care. She campaigns calling for Medicare for All and further solutions to the crisis of unaffordable prescription drugs. Her message is resonating. She beat a well-known opponent in her primary by a few hundred votes.
Spending on prescription drugs is growing faster than any other sector of our health-care system. Drug companies, meanwhile, are raking in record profits, far higher than those in other industries—and they are spending considerably more of it on buybacks and dividends than on research and development. Most importantly for their bottom line, they are breaking records with their spending to influence Congress to protect their monopolies.
Drug company revenues soared from $534 billion in 2006 to $775 billion in 2015. That’s billion with a “b.”
According to a study by researcher Adam Gaffney, Americans spend more on outpatient drugs than the residents of any other industrialized nation—$1,026 per capita annually. The average in advanced industrial nations is $515; in Denmark, it’s just $240. The problem isn’t that Americans use four times the drugs that Danes do; it’s that drug prices are much higher in the United States than anyplace else. In 2014, a daily 50-unit dose of insulin glargine cost $186 a month, after applicable discounts, in the United States—but only $63 in the United Kingdom and $46 in France.
In fact, U.S. taxpayers are paying twice. First, their taxes fund the research and development of new drugs: Federally funded studies contributed to the science behind every single one of the 210 drugs approved between 2010 and 2016. Taxpayers, for example, funded the development of Crestor, a popular medication to lower cholesterol. Now Crestor is sold by the private pharmaceutical giant AstraZeneca, which made over $16 billion in profits on Crestor alone during a three-year period.
It’s clear that simply strengthening regulations on pharmaceutical corporations is not enough. Such corporations will prioritize lining their pockets over saving the lives of everyone who needs their medications, when the laws permit that—as they do in the United States. And when they do invest, they will always invest where there is the greatest potential for profit, not where there is the greater potential benefit to the public health.
One way to address that dilemma is to create a taxpayer-owned drug company to produce and distribute medications at affordable prices—especially drugs that have been developed with U.S. taxpayer dollars. Unlike private corporations, this public drug company would focus on developing drugs based on public need rather than perceived profitability. The company could use private contractors to develop and manufacture the drugs, but it would own the patents and therefore ensure that everybody has access to them. Economist Dean Baker has pointed out that this type of model is how the Department of Defense operates to create many weapons of war.
The United States would not be the first country to create a national drug company. Brazil, Cuba, South Africa, and Sweden all have publicly owned drug companies. While there would be a cost to setting up a public drug company, Baker and others have shown that the savings on drug prices in the United States could fully offset the added costs of a such a company. Depending on the scope of that company, Baker has shown savings of hundreds of billions of dollars per year.
This is not just good policy. It’s good politics, too.
The Progressive Change Campaign Committee (co-founded by one of the authors) recently polled a cross-section of Republicans, independents, and Democrats in swing and Republican-leaning congressional districts on support for the idea of creating “a publicly-owned not-for-profit pharmaceutical company to compete against private drug companies, to create more competition in the marketplace and stop big drug companies from jacking up prices for our seniors.”
In the Third Congressional District in Kansas, currently represented by Republican Kevin Yoder, 61 percent said they support the idea, 23 percent are opposed, and 16 percent are not sure.
In the First Congressional District in Wisconsin, currently represented by Republican Speaker Paul Ryan, 69 percent support the idea, 20 percent oppose it, and 11 percent are not sure.
In the Third Congressional District of New Jersey, currently represented by Republican Tom McArthur (who introduced the bill that gutted much of the Affordable Care Act), 66 percent support the idea, 19 percent oppose it, and 14 percent are not sure.
These are overwhelming bipartisan numbers that reflect the impact that big pharma’s greed is having on Americans across the country. Families everywhere are struggling to absorb the skyrocketing cost of prescription drugs—drugs that were often developed with public money in the first place.
There is no good reason or justification for continuing with business as usual. We’re calling for a public drug company that allows us to keep life-saving technologies developed with our dollars in the public domain—and get them into the hands of everyone who needs them.
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Several studies have found that medical marijuana has reduced opiate deaths by 25 percent while significantly curbing opiate use among Medicare patients.
While there is no silver bullet for solving an opioid epidemic that has claimed the lives of thousands of New Yorkers, the surest way to stem the tide is by preventing addiction from occurring in the first place. Fortunately, state lawmakers have a golden opportunity to begin doing this by expanding access to medical marijuana treatments that can provide patients a valuable alternative to addictive prescription drugs.
What’s clear is that policymakers must be open to a range of approaches for curbing New York’s escalating opioid crisis. A recent Rockefeller Institute study found opioid-related deaths are surging in New York City and across the state. From 2015 to 2016, opioid-related deaths increased by 39 percent in the city and 23 percent throughout the rest of the state, as New York’s drug death rate climbed from 34th worst in the country to 27th worst. Overall, the state has seen a staggering 121 percent increase in opioid deaths since 2010.
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In response to this increasing public health crisis, lawmakers have taken several steps in recent years to try to reverse the trend. This has included more than $25 million in federal funding to expand services for those with opioid-use disorders in counties that have been hit hardest by the crisis. In February, Governor Cuomo announced $10 millionin state funding for detox withdrawal services.
While these funds are critical for helping those who have fallen victim to opioid addiction, they should be part of a multifaceted effort that includes greater access to effective treatment alternatives to opioid-based prescription drugs — a major gateway to addiction. In fact, according to the National Institute of Drug Addiction, the vast majorityof opioid deaths in the United States are linked to legally obtained prescriptions.
Medical marijuana can provide this alternative and should play a key role in New York’s fight against opioid use, but it can only do so if more patients who need it can get it.
While the state’s medical marijuana program launched in January 2016, access remains limited for a variety reasons. The list of eligible conditions for entering the program is restrictive, while dispensaries are still widely scattered across the state. Last year, the state took several steps to build on the program by making post-traumatic stress disorder and chronic pain eligible conditions and licensing five new companies to produce and dispense medical marijuana products.
But two pieces of proposed legislation in Albany offer lawmakers the opportunity to dramatically expand the state’s program and target medical marijuana to those who are mired in opioid use and addiction. These bills would allow doctors to prescribe medical marijuana as a treatment for opioid addiction while increasing the number of dispensaries each company can operate from four to 25.
As a doctor who has helped hundreds of patients at my Manhattan and White Plains clinics apply for the state’s program and find the right medical marijuana treatments, I know firsthand the role cannabis-based medicines can play in reducing the use of prescription drugs such as morphine and fentanyl. In fact, many of my patients come to me in the midst of exhaustive battles with opioid use, searching for an alternative to these powerful drugs that will help them manage their pain.
Numerous studies support the results we regularly see at my clinics. Several studies, for instance, have found that medical marijuana has reduced opiate deaths by 25 percent while significantly curbing opiate use among Medicare patients.
Of course, expanding access to medical marijuana is not a panacea for ending New York’s opioid crisis. But it can offer hope for those in pain who are desperate for an alternative to the prescription drugs that have cut short too many lives throughout our state. I hope lawmakers will listen to those of us who see the potential in medical marijuana and take action that will save lives and benefit thousands of New Yorkers.
Dr. Junella Chin is a Bronx native and osteopathic physician who operates clinics in Manhattan and White Plains.