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Implementing Health Reform: Wraparound Coverage Excepted Benefits And Draft 2016 Letter To Issuers (Updated)


December 20th, 2014

In December 19, 2014, in what one hopes were their last major regulatory actions before the holidays, the Departments of Labor, Health and Human Services, and Treasury released a proposed rule on a new excepted benefit for wraparound coverage, while the Centers for Medicare and Medicaid Services released a Draft 2016 Letter to Issuers in the Federally Facilitated Marketplace.

This post will describe the wraparound coverage proposed rule.   It will be updated in the next day or two to analyze the letter to issuers (issuers being the Affordable Care Act word for insurers.)  I will note briefly, however, that the letter to issuers is very similar to the 2015 letter to issuers, with two major exceptions.  First, because open enrollment for 2016 begins on October 1, rather than November 15, as in 2015, the time frame for completing regulatory review begins earlier and is quite compressed.  Second, the 2016 letter picks up on a few new regulatory initiatives for 2016, such as attempts to provide more accurate provider directories and formulary information.  These changes will be explored more thoroughly in the update to this post.

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The Innovation Conundrum In Health Care


December 12th, 2014

Editor’s note: This post is part of a series of several posts related to the 4th European Forum on Health Policy and Management: Innovation & Implementation, to be held in Berlin, Germany on January 29 and 30, 2015. For more information or to request your personal invitation contact the Center for Healthcare Management.

It is never too early for new technology in health care. In contrast to the innovator’s dilemma in other industries where the adoption can be sluggish because current customers may not be able to use the future’s toolbox, in medicine innovators always can be assured of an audience when announcing the “life-saving impact” of something new.

Coverage and widespread implementation usually are a different story, but creating hype and demand for unusual and unfamiliar medical technology has never been hard. But who then drives the invention, diffusion, application, and evaluation of such innovation?

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Health Affairs Web First: National Health Spending In 2013 Continued Pattern Of Low Growth


December 3rd, 2014

A new analysis from the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) estimates that in 2013 health care spending in the United States grew at a rate of 3.6 percent in 2013 to $2.9 trillion, or $9,255 per person. The increase was slower than the 4.1 percent growth in 2012 and continued a pattern of low growth that has held relatively steady at between 3.6 percent and 4.1 percent annual growth for five consecutive years.

The continued low growth in health spending is consistent with the modest overall economic growth since the end of the recent severe recession and with the long-standing relationship between economic growth and health spending—particularly several years after the end of economic recessions, when health spending and overall economic growth tend to converge. As a result, health spending’s share of the nation’s gross domestic product (GDP) remained at 17.4 percent in 2013.

The study is being released today by Health Affairs as a Web First and will appear in the January issue of Health Affairs. It was discussed this morning at a reporters briefing in the National Press Club.

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Implementing Health Reform: 2016 Benefit And Payment Parameters Proposed Rule, Consumer Provisions; Hardship Exemptions


November 22nd, 2014

On November 15, 2014, the marketplaces reopened for 2015.  Anecdotal reports indicate that in most places enrollment and reenrollment are running smoothly.  But the Centers of Medicare and Medicaid Services (CMS) of the Department of Health and Human Services (HHS) is looking forward to 2016.  On November 21 CMS published its massive 2016 Notice of Benefit and Payment Parameters (BPP) Proposed Rule  with accompanying fact sheet.  It also published the draft 2016 actuarial value calculator and draft actuarial value calculator methodology for 2016.  Finally, CMS published a guidance on hardship exemptions for certain individuals.

Not to be outdone, the Department of the Treasury, Internal Revenue Service released its final regulation on Minimum Essential Coverage and other Rules Regarding the Shared Responsibility Payment for Individuals, together with a Notice regarding Individual Shared Responsibility Payment Hardship Exemptions that May be Claimed on a Federal Income Tax Return Without Obtaining a Hardship Exemption Certificate from the Marketplace and a Revenue Procedure setting out indexed adjusted percentages of income that will be used for determining the level of contributions expected of individuals before premium tax credits become available, the affordability threshold for the shared responsibility payments unaffordability exemption, and the threshold for determining whether employer coverage is affordable for purposes of determining eligibility for tax credits.

Finally, the Office of Personnel Management released a lengthy proposed rule proposing modifications in the multi-state plan program.  These rules, proposed rules, and guidances will be addressed in a series of posts over the next several days.  This post will address primarily the consumer-facing provisions of the BPP proposed rule, focusing on changes in benefits.  A second post will follow, discussing the provisions of the rule more relevant to insurers, such as proposed changes in the reinsurance, risk adjustment, and risk corridor rules.  A final post will discuss the IRS rule, which is primarily a finalization of proposals and guidances already made public, and the OPM multi-state plan rule.

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Sovaldi, Harvoni, And Why It’s Different This Time


November 21st, 2014

With the Food and Drug Administration (FDA)’s approval of Harvoni, the successor to Gilead Science’s Sovaldi, the alarm bells have officially rung on breakthrough hepatitis C treatments. One can’t open a newspaper or scan a Twitter feed without stumbling on at least one reference to either of the these two drugs for hepatitis C — an often debilitating viral infection impacting the liver that affects somewhere between 3 to 5 million Americans and several hundred million people worldwide. Hepatitis C infection is often asymptomatic and can have long latency periods. In up to 20 percent of people, chronic infection can lead to liver failure, liver cancer, and potentially liver transplantation.

Gilead Sciences paid $11 billion to acquire the rights to Sovaldi — a drug that offers significant improvement in viral clearance over existing therapies — and launched the drug in the U.S. market at a price ($1,000 per pill, or $84,000 per course of treatment) that is usually reserved for drugs targeting “orphan conditions” for much smaller populations. Not surprisingly, Congress has taken an interest, patient advocacy groups are organizing, the health care community is holding conferences, coalitions are channeling a growing national outrage about the price, and public and private payers are stymied by the challenge of responsibly managing utilization of the drug.

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The Latest Health Wonk Review


November 21st, 2014

In this week’s “turkey edition” of the Health Wonk Review, David Harlow of HealthBlawg provides a veritable smorgasbord of health policy posts, including a Health Affairs Blog essay by Jordan Paradise on biosimilars and patent disclosures.

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Medicare, Medicaid, And Pharmaceuticals: The Price Of Innovation


November 20th, 2014

Editor’s note: This post is part of a series of several posts stemming from presentations given at “The Law of Medicare and Medicaid at Fifty,” a conference held at Yale Law School on November 6 and 7.

Through much of the last half century, Medicare and Medicaid (MM) have not for the most part supported research intended to lead to new drugs. For their role in drug development, we need to look to infrastructure and incentives. The record of the National Institutes of Health (NIH) illustrates the potential of both for pharmaceutical innovation. The current budget of NIH, the big elephant in the zoo of the federal biomedical enterprise, is $30 billion, but apart from a dozen small programs devoted to targeted drug development, most of these billions are not aimed directly at pharmaceutical innovation (See page 234).

Yet the NIH investment in biomedicine has indirectly fueled drug development in the private sector to a huge degree. It has paid for the training of biomedical scientists and clinicians, many of whom went on to staff the drug industry, especially its laboratories. NIH-sponsored research has also generated basic knowledge and technologies and it has encouraged universities to spin out their potentially useful findings into the industry by allowing for the patenting and licensing of the findings.

Like NIH, MM has helped fuel drug development indirectly by supporting selected experimental cancer treatments, medical education, and some clinical research and training. But investment in these activities has been small and their impact on drug development apparently very limited. In contrast to NIH, the MM stimulus to drug innovation has resided not in the production of new scientists or the patented uses of new knowledge, but principally in markets and pricing.

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Spreading Like A Wildfire: Interprofessional Education – The Vanderbilt Experience


November 20th, 2014

Well before the Affordable Care Act was passed in 2010, efforts to expand interprofessional education (IPE) were beginning to change the mindset that permeated much of health professional education in the US. One such example is the Vanderbilt Program in Interprofessional Learning (VPIL) that was established in 2010 with initial support from the Josiah Macy Jr. Foundation, and later from the Baptist Health Trust.

To learn about the challenges, successes, and surprises experienced by those who developed and lead IPE at Vanderbilt, I interviewed Linda Norman, Dean of Vanderbilt University School of Nursing, Bonnie Miller, Associate Vice Chancellor for Health Affairs and Senior Associate Dean for Health Sciences Education at Vanderbilt University Medical Center, and Heather Davidson, Director of Program Development for VPIL.

Peter Buerhaus: What were the key challenges faced when you started IPE at Vanderbilt?

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New Health Policy Brief: The 340B Drug Discount Program


November 18th, 2014

A new policy brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) examines the 340B Drug Discount Program. This federal program, established in 1992, was created to allow safety-net health care organizations serving vulnerable populations to buy outpatient prescription drugs at a discount. In the past few years, government reports have highlighted deficiencies in the oversight and management of the 340B program, whose sales in 2012 were reported by the Department of Health and Human Services (HHS) to total $6.9 billion.

The program has also received more attention as a result of two factors: the Affordable Care Act’s (ACA’s) addition of more program-eligible institutions and new guidelines from the Health Resources and Services Administration (HRSA) allowing program participants to contract with multiple pharmacies. Some critics have raised concerns about a philosophical difference between the original intent of the program (helping safety-net institutions to stretch limited resources) from the fact that many institutions see a profit when public and private payers reimburse them at a rate higher than what they paid for the drugs.

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Analysis Of Medicare Spending Slowdown Leads Health Affairs Blog October Most-Read List


November 17th, 2014

Loren Adler and Adam Rosenberg’s examination of the causes of slower Medicare spending growth was the most-read Health Affairs Blog post in October. Their post was followed by Jeff Goldsmith’s interview with former Kaiser Permanente CEO George Halvorson.

Next on the top-ten list was J. Stephen Morrison’s look at the US response to Ebola and the role of Centers for Disease Control and Prevention Director Tom Frieden, followed by Tim Jost’s post on reference pricing and network adequacy.

The full list is below:

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Battle Lines Drawn Over Biosimilar Application And Patent Disclosure Process


November 17th, 2014

The Biosimilars Price Competition and Innovation Act of 2009 (BPCIA) introduced a long-awaited, and highly-supported, abbreviated route to market for “biosimilar” and “interchangeable” biologic products. The goal was to create incentives for development and reduce health care costs in the same way that previous legislation had accomplished in the generic arena over three decades ago.

However, widespread criticism of BPCIA provisions to facilitate interactions between biosimilar applicants and reference biologic sponsors regarding application submission and patent status was swift and unrelenting. Attorneys practicing in the realm of Hatch-Waxman litigation for generic drugs balked at the drastic differences between the familiar public process grounded in required patent disclosures, FDA Orange Book listings, and generic applicant certifications and the private, iterative process set forth in the BPCIA. Legal scholars, industry representatives, and practitioners alike projected that a courtroom battle regarding real-world operation of the provisions was imminent.

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The Short-Term And Long-Term Outlook Of Drug Coupons


November 12th, 2014

In the October 2014 Health Affairs article, “Specialty Drug Coupons Lower Out-Of-Pocket Costs And May Improve Adherence At The Risk Of Increasing Premiums,” Catherine Starner and coauthors explore the relationship between drug coupons and specialty drugs. Specialty drugs, primarily injectables and biologics, are costly drugs used to treat complicated, chronic conditions that typically require special handling, administration, and monitoring. Starner et al. report that specialty drugs have an average monthly cost to patients and payers of about $3,500.

In their innovative study, Starner et al. find that nearly half of the patients in their sample who were prescribed specialty drugs used personal drug coupons to reduce their personal financial responsibilities. Coupons come in the form of maximum copay and monthly savings cards, and can be accessed from the brand-name manufacturer’s website, printed out, and cashed in at the pharmacy.

Manufacturers promote drug coupons as supplementary patient assistance programs that can fill gaps in insurance coverage by reducing individual patients’ responsibilities for out-of-pocket health care costs related to high-cost specialty drugs or other pharmaceutical products. For example, patients taking etanercept (Enbrel), an expensive biologic specialty drug indicated for rheumatoid arthritis, can receive savings via the Enbrel Support plan, which reduces the monthly co-pay to $0 for the first six months and $10 per month thereafter.

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Addressing The Threat Of Antibiotic Resistance: Policy Solutions To Fix A Broken Pipeline


November 6th, 2014

Recently, the White House released a major new national strategy to combat antibiotic resistance. As efforts begin to translate that unprecedented announcement into action, it is critical that any strategy to address resistance contain a plan to ensure an adequate antibiotic development pipeline. The overall number of antibiotics reaching the market has declined over time, with 29 and 23 new antibiotics approved in the U.S. in the 1980s and 1990s, respectively, but only nine between 2000 and 2010.

Meanwhile, the evolution of drug-resistance has outpaced the development of new antibiotics. Doctors routinely encounter patients with infections that do not respond to currently available treatments. Some life-threatening infections, such as those caused by carbapenem-resistant Enterobacteriaceae, or CRE, are resistant to nearly all available therapies. The Centers for Disease Control and Prevention estimates that in the United States at least two million people are sickened by resistant bacteria each year and 23,000 die as a result.

Current State of Antibiotic Development

In order to better understand the pipeline and evaluate policies to spur antibiotic development, the Pew Charitable Trusts has identified antibacterial drugs in clinical development (Phases 1-3) for the U.S. market. Published on our website and updated quarterly, this resource provides policymakers, the medical community, and industry stakeholders with an up-to-date picture of drugs in development.

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Social Services And Community Health: Health Affairs’ November Issue


November 3rd, 2014

The November issue of Health Affairs includes a number of studies looking at how social services and community support programs can improve the health of local residents. Other subjects covered: the potential for pay-for-performance payment models to create a market that values health, not just health care; how one safety-net accountable care organization is uniquely improving care coordination; a three-year progress report on a regional health collaborative; and more.

This issue of Health Affairs is supported by The Kresge Foundation, the Robert Wood Johnson Foundation, and the Annie E. Casey Foundation. It will be discussed at a Wednesday, November 5 briefing at the National Press Club in Washington, DC.

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Lessons from Ebola: The Infectious Disease Era, And The Need To Prepare, Will Never Be Over


October 28th, 2014

With the wall-to-wall news coverage of Ebola recently, it’s hard for many to distinguish fact from fiction and to really understand the risk the disease poses and how prepared we are to fight it.

Fighting infectious diseases requires constant vigilance. Along with Ebola, health officials around the globe are closely watching other emerging threats: MERS-CoV, pandemic flu strains, Marburg, Chikungunya and Enterovirus D68. The best defense to all of these threats is a good offense — detecting, treating and containing as quickly and effectively as possible.

And yet, we have consistently degraded our ability to respond to these new, emerging and re-emerging threats by underfunding and undercutting existing capabilities and expecting the country to ramp up overnight when new threats emerge.

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Exhibit Of The Month: Comparing The Cost And Value Of Specialty And Traditional Drugs


October 27th, 2014

Editor’s note: This post is part of an ongoing “Exhibit of the Month” series. Readers who’d like to highlight other noteworthy exhibits from the same issue are encouraged to make their pitch in the comments section below.

This month’s exhibits, from the article, “Despite High Costs, Specialty Drugs May Offer Value For Money Comparable To That Of Traditional Drugs,” published in the October issue of Health Affairs, compare the value and costs of specialty and traditional drugs approved by the Food and Drug Administration from 1999-2011.

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Adult Conversation On High-Priced Drugs? Don’t Hold Your Breath (But Hang In There) …


October 27th, 2014

The benevolent identity of the health care enterprise tends to moderate disagreements and keep them under a big tent of shared goals. In the case of very high prices for powerful new drugs, however, the commons gets stretched painfully thin. Drug companies which see themselves as pioneers are accused of being merely greedy. Cost-conscious payers and regulators are impugned for depriving patients of life-conserving treatment breakthroughs. A divisive political undercurrent often threatens to obtrude. Altogether, a tough environment for rational policy assessment.

Credit is due, accordingly, to the Brookings Institution, for putting a wide array of views on display at its October 1 forum on “the cost and value of biomedical innovation,” which was jointly sponsored by the Schaeffer Center at the University of Southern California. With the head of Gilead Sciences at one pole of the discussion and a leading generics industry attorney at the other, the discussion didn’t lack for strongly-held views, strongly stated.

But the tone was civil, a lot of useful information was exchanged, and the audience went away carrying a meta-message about the importance of maintaining an “adult conversation” on a subject of such obvious importance and difficulty.

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Study Draws Misleading Conclusions Regarding 340B Program


October 23rd, 2014

After reading Rena Conti and Peter Bach’s recent study on hospitals’ purported misuse of the 340B Drug Discount Program, published in the October issue of Health Affairs, I had two questions:  first, how are the authors substantiating their conclusions? Second, what kind of sensational sound bites are going to come from this?

These are the questions that responsible researchers must ask themselves so there is not a false representation of what they did, what they found, and how the actual findings compare to their research intentions. Researchers have to be equally precise in both their statistical analysis AND in the discussion of the results.

I was tempted to run through several counterpoints that my 15 years of 340B policy and research experience yields, but was tempered by both the word count limitations on a blog post and the straightforwardness of my main objection. Simply put, the authors’ conclusions are not substantiated by the data collected. Conti and Bach say that they “found” that hospitals “served communities that were wealthier and had higher rates of insurance” and “generated profits.” They did not find this.

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The $500 Billion Medicare Slowdown: A Story About Part D


October 21st, 2014

A great deal of analysis has been published on the causes of the health care spending slowdown system-wide — including in the pages of Health Affairs. Much attention in particular has focused on the remarkable slowdown in Medicare spending over the past few years, and rightfully so: Spending per beneficiary actually shrank (!) by one percent this year (or grew only one percent if one removes the effects of temporary policy changes).

Yet the disproportionate role played by prescription drug spending (or Part D) has seemingly escaped notice. Despite constituting barely more than 10 percent of Medicare spending, our analysis shows that Part D has accounted for over 60 percent of the slowdown in Medicare benefits since 2011 (beyond the sequestration contained in the 2011 Budget Control Act).

Through April of this year, the last time the Congressional Budget Office (CBO) released detailed estimates of Medicare spending, CBO has lowered its projections of total spending on Medicare benefits from 2012 through 2021 by $370 billion, excluding sequestration savings. The $225 billion of that decline accounted for by Part D represents an astounding 24 percent of Part D spending. (By starting in 2011, this analysis excludes the direct impact of various spending reductions in the Affordable Care Act (ACA), although it could still reflect some ACA savings to the extent that the Medicare reforms have controlled costs better than originally anticipated.) Additionally, sequestration is responsible for $75 billion of reduced spending, and increased recoveries of improper payments amount to $85 billion, bringing the total ten-year Medicare savings to $530 billion.

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Drug Discount Analysis Misses The Mark


October 8th, 2014

Rena Conti and Peter Bach’s analysis of disproportionate share (DSH) hospitals in the 340B drug discount program — published in the October issue of Health Affairs — neglects an essential point: compared to non-340B DSH hospitals, 340B DSH hospitals provide over twice as much care to Medicaid and low-income Medicare patients, and almost twice as much uncompensated care. 340B DSH hospitals across the board provide high levels of uncompensated care. For these and other reasons enumerated below, the article does not support the criticism that 340B DSH hospitals are no longer serving vulnerable patients.

First, Conti and Bach misconstrue the 340B program’s intent. 340B is not – and never was – a direct assistance program for the poor. According to the Government Accountability Office, “The 340B program allows certain providers within the U.S. health care safety-net to stretch federal resources to reach more eligible patients and provide more comprehensive services, and we found that the covered entities we interviewed reported using it for these purposes.”

For example, 340B savings help The Henry Ford Hospital fund four oncology clinics and related services in Detroit and surrounding townships. The program is also enabling Henry Ford to hire pharmacists and nurses to follow up with their patients to ensure they are taking their medicines properly and that the treatment is effective.

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