Last week’s news and what’s ahead this week illustrate clearly the prominent themes that are redefining the future of U.S. healthcare system.
NEWS FROM LAST WEEK
Health Reform Plans from Republicans
As Democrats debate the merits and costs associated with Medicare for All, Medical for All who Want It, a public option and other proposals, two Republican alternatives approaches emerged last week:
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Republican Study Committee (RSC): Tuesday, the RSC, composed of 145 conservatives among 199 GOP members in the U.S. House of Representatives, released their plan that includes making Medicaid into a block-grant system for states, increased use of health savings accounts, dismantling the essential health benefits provisions for qualified health plans in the Affordable Care Act (ACA), use of high-risk pools to stabilize the individual insurance market, work requirements for Medicaid enrollees, and greater flexibility for short-term insurance plans, health sharing ministries, association health plans, and less-expensive alternatives to plans.
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Massachusetts Governor Charlie Baker: Friday, the Republican Governor who previously served as the state’s Secretary of Health and CEO of Harvard Pilgrim Health Plan, introduced legislation ending surprise medical bills, requirements for walk-in clinics to treat low-income patients on Medicaid, penalties for drug companies that raise prices on medications by more than 2% a year above inflation, increasing the scope of practice for nurses, optometrists and dental practitioners, limiting facility fees at hospital outpatient departments, requirements for pharmacists to advise customers when a drug costs less out-of-pocket if a customer does not use insurance, and a 30% increase in funding for primary care and behavioral health by 2023.
Medicaid Trends
Results from the 19th annual Medicaid Budget Survey conducted by The Kaiser Family Foundation (KFF) and Health Management Associates (HMA) were released last week. Highlights include:
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Medicaid enrollment declined 1.7% in FY 2019 due to changes in renewal processes, new functionality of upgraded eligibility systems, and enhanced verifications and data matching efforts.
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Medicaid spending growth slowed to 2.9% in FY 2019 because of enrollment declines but is projected to return to a more typical growth of 6.2% in FY 2020.
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Total Medicaid spending growth outpaced state spending growth in FY 2019 despite an increase in the state contributions for Medicaid expansion under the Affordable Care Act.
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40 states (including DC) contract with risk-based managed care organizations (MCOs) to serve their Medicaid enrollees: 33 of these reported that 75% or more of their Medicaid beneficiaries were enrolled in MCOs.
CMS Updates its Plans for Alternative Payment Models, Primary Care Pilot Guidance
Last week, CMS released a request for applications (RFA) detailing how healthcare providers can apply to participate in one of the Primary Care First (PCF) model options set to begin in January 2021. CMS is also expected to release guidance about its Direct Contracting (DC) model options which is also expected to begin January 2021.
Separately, goals for its Medicare value-based models were announced by CMS’ Health Care Payment Learning and Action Network (LAN) last Thursday. Medicare goals: 30% of Medicare Advantage (MA) and traditional Medicare fee-for-service payments tied to alternative payment models by 2020, 50% by 2022 and 100% 2025. For commercial and Medicaid: 15% of payments tied to alternative payment models by 2020, 25% by 2022 and 50% by 2025.
Per LAN, 35.8% of total health care payments in 2018 were tied in alternative payment models or population-based models vs. 34% in 2017.
CVS, Amazon Expand Primary Care Capabilities
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CVS: Telemedicine will extend the reach of CVS’ 1100 Minute Clinics to enable access to care 24 hours a day, seven days a week to consumers in 32 states and the District of Columbia. MinuteClinic Video Visits are supported by Teledoc’s technology platform and will cost $59 for patients ages two years and up who seek treatment for a minor illness, injury or skin conditions. CVS also plans to roll out 1,500 “HealthHUBs” in 1500 of its 9600 U.S. stores by the end of 2021, offering a broader range of healthcare services including digital and on-demand health tools. Note: CVS has 5 million retail visitors to its stores daily.
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Amazon confirmed it had agreed to acquire Health Navigator, an online symptom checker and virtual triage service, which along with PillPack acquired last year will round out its Amazon Care, the company’s virtual care platform for its own employees. The company works with a range of telemedicine, electronic health record, and call center companies, providing clinical content and a diagnosis engine that enables virtual triage of patients based on symptoms, using a natural language processing tool to capture patient complaints and match them to clinical conditions.
THIS WEEK
Medicare Advantage (MA) Enrollment Indicators
2020 Open enrollment began last Tuesday (October 15). CMS should release first week stats. FYI: this year, seniors have an average of 28 plans from which to choose depending on where they live (up to 60 options in some urban areas but none in 77 rural counties). 49% of the plans will not charge an additional premium. The most popular MA offerings beyond traditional Medicare coverage include prescription drug coverage (90%), a fitness benefit (93%), dental (88%), eye care (87%), hearings aids (83%), a nutrition benefits such as cooking classes/meal delivery (46%) and transportation (33%). Last year, 22 million seniors signed up for MA coverage.
Healthcare.Gov Enrollment
States are gearing up for their marketplace enrollment that starts November 1. HHS officials announced last week that average rates for the most popular, middle-priced marketplace plans will fall 4% in 2020 following a 1.5% decrease in 2019. An additional 20 insurers are participating in 2020, giving 70% of enrollees at least three options. A survey of 300 insured individuals currently enrolled in ACA plans and 400 uninsured consumers eligible for coverage in 2020 by Hart Research from Sept. 27 – Oct. 6 found a majority of insured and uninsured Americans did not realize there was no longer a penalty for failing to buy coverage. Once told the penalty’s gone, about 70% of people with coverage said that they intend to stay enrolled, and just 5% said they would not, and the rest were 50-50. However, 31% of those without insurance still planned to buy a plan, just slightly more than the 29% who said that they would not, and 40% were on the fence.
Private Equity Responses to Congressional Inquiries about their Roles in Surprise Medical Bills
Sen. Elizabeth Warren (D-MA), Rep. Mark Pocan (D-WI) and Rep. Lloyd Doggett (D-TX) initiated inquiries about the role played by private equity firms in surprise billing in hospital settings and in emergency transport. The lawmakers sent letters to five private equity firms (KKR, Blackstone Group, Welsh, Carson, Anderson & Stowe, American Securities and Enhanced Equity Funds) that invest in physician staffing and emergency transport and asked about the total revenue each makes from in-network and out-of-network billing. They asked the firms to submit information by this Wednesday. Separately, the House Energy & Commerce Committee is also investigating the first three. Note: two-thirds of U.S. emergency rooms in the United States are run by physician staffing companies and two of three air medical transport companies are private-equity owned.
OTC
The Senate health committee will mark up over-the-counter drug reform legislation this Thursday which would establish a user fee program for OTC drugs and reform the OTC drug regulatory process at FDA. The periods of exclusivity for innovative OTC drugs varied between the House and Senate versions of the legislation last year, with the House allowing for 18 months of exclusivity and the Senate providing 24 months.
And Congressional action on HR3 (Pelosi drug pricing legislation) and a possible decision in Texas v. Azar which will impact the future of the Affordable Care Act.
MY TAKE
These news items point to three prominent themes:
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Primary Care Innovation: The significance of new primary care models that leverage telehealth, digital connectivity, team-based models inclusive of physical and mental health, nutrition, dentistry, and pharmacists that are paid to manage population health and control unnecessary spending. Traditionalist models centered on primary care physician access are taking a back seat to newer models that offer more.
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Alternative Payment Models: Prompted by Medicare, the transition from volume (fee for service) to value is gaining traction. Their ultimate impact will be defined by their adoption by commercial insurers and in state Medicaid plans.
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Business Relationship Scrutiny: Special attention to the role of private equity in surprise medical bills is the tip of an iceberg certain to extend to other issues and business sectors.
Every week, the landscape in healthcare is becoming more complicated. These themes are not new, but the attention they’re getting is likely to increase.
It’s a new day in healthcare. Just follow the news.
Paul
RESOURCES
“Baker-Polito Administration Announces Health Care Legislation Aimed at Addressing Key Challenges” State of Massachusetts October 18, 2019 https://www.mass.gov/news/baker-polito-administration-announces-health-care-legislation-aimed-at-addressing-key
“The RSC Health Care Plan: A Framework for Personalized, Affordable Care” Republican Study Committee October 22, 2019 https://rsc-johnson.house.gov/
“Annual 50 State Medicaid Director Survey” Kaiser Family Foundation and Healthcare Management Associates October 22, 2019 https://www.healthmanagement.com/knowledge-share/briefs-reports/annual-50-state-medicaid-director-survey-released-states-report-expansion-and-enhancement/
“Medicare Advantage 2020 Spotlight: First Look” Kaiser Family Foundation October 24, 2019 https://www.kff.org/medicare/issue-brief/medicare-advantage-2020-spotlight-first-look/
“Delivering value-based transformation in primary care” CMS https://innovation.cms.gov/Files/x/primary-cares-initiative-onepager.pdf
“CMS delays new primary-care pay model, calls for providers to join” Modern Healthcare October 24, 2019https://www.modernhealthcare.com/payment/cms-delays-new-primary-care-pay-model-calls-providers-join?CSAuthResp=1%3A%3A663920%3A1061%3A24%3Asuccess
“Private equity firm defends itself on ‘surprise’ medical billing in letter to House” The Hill October 17, 2019 https://thehill.com/regulation/healthcare/466384-private-equity-firm-defends-itself-on-surprise-medical-billing-in
