Ensuring that people with preexisting health conditions can get and keep health insurance has become one of the leading issues around the country ahead of this fall’s midterm elections. And it has put Republicans in something of a bind — many either voted to repeal these coverage protections as part of the 2017 effort in Congress or have signed onto a lawsuit that would invalidate them.
Meanwhile, the Trump administration, eager to show progress regarding high prescription drug costs — another issue important to voters — has issued a regulation that would require prices to be posted as part of television drug advertisements.
Also this week: an interview with California Attorney General Xavier Becerra, a former member of Congress who is using his current post to pursue a long list of health initiatives.
This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Rebecca Adams of CQ Roll Call, Stephanie Armour of The Wall Street Journal and Joanne Kenen of Politico.
Among the takeaways from this week’s podcast:
Democrats have made health care — especially the protections for people with preexisting conditions — their central strategy in midterm campaigns. It’s an issue that the GOP did not want to be campaigning on.
Republicans say that despite their moves to destroy the federal health law, they would work to preserve coverage options for people with preexisting conditions. But they don’t lay out what those options would be and earlier efforts have major loopholes, Democrats point out.
The announcement by federal health officials this week that they want drug prices added to advertisements about the products is expected to have marginal effects because pricing is so complicated. If the federal government requires drugmakers to post their prices on ads, the manufacturers are widely expected to sue based on First Amendment issues.
Open enrollment for Medicare began this week and runs until Dec. 7. Medicare Advantage, the private-plan option for enrollees, is becoming increasingly popular and now covers more than a third of Medicare beneficiaries.
But while Medicare Advantage offers many benefits the traditional program does not — frequently including dental and foot care — a recent report from the inspector general at the Department of Health and Human Services finds that some of these plans may be wrongly denying care to Medicare patients. At the same time, Medicare beneficiaries who choose to use Medicare Advantage plans may be in for a shock if they later decide to switch back to the traditional form of Medicare. They may not be eligible at that point to buy a Medigap plan to help cover their cost sharing.
Plus, for extra credit, the panelists recommend their favorite health stories of the week they think you should read, too:
Julie Rovner: The New York Times’ “Is Medicare for All the Answer to Sky-High Administrative Costs?” by Austin Frakt
Stephanie Armour: The Associated Press’ “Study: Without Medicaid Expansion, Poor Forgo Medical Care,” by Ricardo Alonso-Zaldivar
Rebecca Adams: The New Yorker’s “Rural Georgians Want Medicaid, But They’re Divided on Stacey Abrams, the Candidate Who Wants to Expand It,” by Charles Bethea
Joanne Kenen: Seven Days Vermont’s “Obituary: Madelyn Linsenmeir, 1988-2018.”
To hear all our podcasts, click here.
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The Trump administration’s top Medicare official Tuesday slammed the federal health program as riddled with problems that hinder care to beneficiaries, increase costs for taxpayers and escalate fraud and abuse.
Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), said those troubles underscore why she opposes calls by many Democrats for dramatically widening eligibility for Medicare, now serving 60 million seniors and people with disabilities, to tens of millions other people.
“We only have to look at some of Medicare’s major problems to know it’s a bad idea,” Verma told health insurance executives at a meeting in Washington.
CMS lacks the authority from Congress to operate the program effectively, Verma said, which means it often pays higher-than-necessary rates to doctors and hospitals and can’t take steps used by private insurers to control costs.
“We face tremendous barriers to supporting and bringing innovation to Medicare, and it literally takes an act of Congress to add new types of benefits for the Medicare population,” she added.
Since Medicare was approved in 1965, Congress has held power over eligibility and benefits — largely to control spending. That has meant efforts to expand services can get weighed down by partisan politics and swayed by lobbying groups, which significantly delay changes. One example: Congress didn’t add a pharmaceutical benefit to Medicare until 2003 — decades after drugs became a mainstay in most treatments.
Advocates for seniors have called for adding vision and dental benefits for many years, but the proposals have gotten little traction because of cost concerns.
Another problem, according to Verma, is that her agency reviews less than 0.2 percent of the more than 1 billion claims that Medicare receives from providers. “That is ridiculously low,” she said.
Verma also lamented the traditional Medicare program’s limited ability to require doctors and hospitals to get prior authorization from the federal government before performing certain procedures. That process — which has been routine for decades in the private sector — can lead to higher improper payments to doctors and more fraud and abuse, she said.
Jonathan Oberlander, a professor in the department of health policy and management at the University of North Carolina-Chapel Hill, agreed with Verma that “Medicare is not always nimble, particularly in adjusting benefits,” and officials have long complained that Congress micromanages the program. Still, he added, “with a program as large and important to Americans as Medicare, it is perfectly appropriate for Congress to weigh in on the addition of new benefits, especially since taxpayers will bear the costs of those changes.”
Verma for months has spoken out against the “Medicare-for-all” proposals pushed by Sen. Bernie Sanders (I-Vt.) and a growing chorus of Democrats. But her 35-minute address to the meeting of the trade group America’s Health Insurance Plans marked the first time she listed the litany of problems with Medicare, which she has run since March 2017.
Proponents of “Medicare-for-all” are reacting to problems caused by the Affordable Care Act, she said, and should know expanding Medicare will worsen the program’s existing challenges of controlling costs and improving care.
“But their solution is literally to do more of what’s not working,” she added. “It’s like the man who has a pounding headache, who then takes a hammer to his head to make it go away.”
Verma’s comments, however, overlooked the key leadership role that Medicare plays in the health sector, which is often emulated by private insurers, Oberlander said.
“In payment reform, Medicare has a record of being a leader and innovator,” he said. “For all of their supposed advantages, private insurers pay much higher prices than Medicare does for medical services. Verma ignores the fact that Medicare’s price regulation has produced substantial savings.”
Although Verma heavily criticized the traditional Medicare program, which covers two-thirds of enrollees, she boasted about how she and the Trump administration were running Medicare Advantage, the fast-growing alternative program that is operated by private insurers such as UnitedHealthcare and Humana.
More than 20 million Medicare beneficiaries are enrolled in these plans, which often cost members less than traditional Medicare and have additional benefits. But they generally require members to use only the plan’s network of providers.
“Medicare Advantage represents value for our beneficiaries and taxpayers,” Verma said.
She touted a 2019 CMS initiative that will for the first time allow the Advantage plans to offer supplemental health benefits that go beyond traditional dental and health services. These include adult day care, in home support services and meals.
It is “one of the most significant changes made to the Medicare program” and “will have a major impact” on improving health for plan members, she said.
But the private plans have taken a cautious approach to adding those benefits.
About 270 Medicare Advantage plans — or fewer than 10 percent of the total — agreed to offer these services next year.
At the AHIP conference on Monday, health insurance executives said they were still trying to figure out which of their members would most likely benefit from the new offerings.
“We are operating in a vacuum of good evidence,” said William Shrank, chief medical officer of UPMC Health Plan in Pittsburgh. Nonetheless, Shrank said the opportunity to offer new benefits going beyond just health care could help beneficiaries stay out of the hospital and lead healthier lives.
Verma did not mention a report last month by the Department of Health and Human Services’ inspector general that found many Advantage plans were improperly denying claims from patients and doctors.
Administration critics were quick to note that omission.
“Her intemperate attack on traditional Medicare — on which two-thirds of all beneficiaries rely and which millions value so highly” — is “striking,” said Sara Rosenbaum, a professor of health law and policy at George Washington University. As is “her utter failure to acknowledge the serious challenges in making Medicare Advantage operate fairly, which her own inspector general underscored.”
Health care experts widely expected the Affordable Care Act to hobble Medicare Advantage, the government-funded private health plans that millions of seniors have chosen as an alternative to original Medicare.
To pay for expanding coverage to the uninsured, the 2010 law cut billions of dollars in federal payments to the plans. Government budget analysts predicted that would lead to a sharp drop in enrollment as insurers reduced benefits, exited states or left the business altogether.
But the dire projections proved wrong.
Since 2010, enrollment in Medicare Advantage has doubled to more than 20 million enrollees, growing from a quarter of Medicare beneficiaries to more than a third.
“The Affordable Care Act did not kill Medicare Advantage, and the program looks poised to continue to grow quite rapidly,” said Bill Frack, managing director with L.E.K. Consulting, which advises health companies.
And as beneficiaries get set to shop for plans during open enrollment — which runs from Monday through Dec. 7 — they will find a greater choice of insurers.
Fourteen new companies have begun selling Medicare Advantage plans for 2019, several more than a typical year, according to a report out Monday from the Kaiser Family Foundation. (KHN is an editorially independent part of the foundation.)
Overall, Medicare beneficiaries can choose from about 3,700 plans for 2019, or 600 more than this year, according to the federal government’s Centers for Medicare & Medicaid Services.
CMS expects Medicare Advantage enrollment to jump to nearly 23 million people in 2019, a 12 percent increase. Enrollees shopping for new plans this fall will likely find lower or no premiums and improved benefits, CMS officials say.
With about 10,000 baby boomers aging into Medicare range each day, the general view of the insurance industry, said Robert Berenson, a Medicare expert with the nonpartisan Urban Institute, “is that their future is Medicare and it’s crazy not to pursue Medicare enrollees more actively.”
Bright Health, Clover Health and Devoted Health, all for-profit companies, began offering Medicare Advantage plans for 2018 or will do so for 2019.
Mutual of Omaha, a company owned by its policyholders, is also moving into Medicare Advantage for the first time in two decades, providing plans in San Antonio and Cincinnati.
Some nonprofit hospitals are offering Medicare plans for the first time too, such as the BayCare Health system in the Tampa, Fla., area.
While Medicare beneficiaries in most counties have a choice of several plans, enrollment for years had been consolidated into several for-profit companies, primarily UnitedHealthcare, Humana and Aetna, which have accumulated just under half the national enrollment.
These insurance giants are also expanding into new markets for next year. Humana in 2019 will offer its Medicare HMO in 97 new counties in 14 states. UnitedHealthcare is moving into 130 new counties in 13 states, including for the first time Minnesota, its headquarters for the past four decades.
Seniors have long been attracted to Advantage plans because they often include benefits not available with government-run Medicare, such as vision and dental coverage. Many private plans save seniors money because their premiums, deductibles and other patient cost sharing are lower than what beneficiaries pay with original Medicare. But there is a trade-off: The private plans usually require seniors to use a restricted network of doctors and hospitals.
The federal government pays the plans to provide coverage for beneficiaries. When drafting the ACA, Democratic lawmakers targeted the Medicare Advantage plans because studies had shown that enrollees in the private plans cost the government 14 percent more than people in the original program.
Medicare plans weathered the billions in funding cuts in part by qualifying for new federal bonus payments available to those that score a “4” or better on a five-notch scale of quality and customer satisfaction.
Health plans also gained extra revenue by identifying illnesses and health risks of members that would entitle the companies to federal “risk-adjustment” payments. That has provided hundreds of billions in extra dollars to Medicare plans, though congressional analysts and federal investigators have raised concerns about insurers exaggerating how sick their members are.
A study last year found that those risk adjustments could add more than $200 billion to the cost of Medicare Advantage plans in the next decade, despite no change in enrollees’ health.
For-profit Medicare Advantage insurers made a 5 percent profit margin in 2016 — twice the average of Medicare plans overall, according to the Medicare Payment Advisory Commission, which reports to Congress. That’s slightly better than the health insurance industry’s overall 4 percent margin reported by Standard & Poor’s.
Those profit margins could expand. The Trump administration boosted payments to Medicare Advantage plans by 3.4 percent for 2019, 0.45 percentage points higher than the 2018 increase.
Betsy Seals, chief consulting officer for Gorman Health Group, a Washington company that advises Medicare Advantage plans, said many health plans hesitated to enter that market or expand after President Donald Trump was elected because they weren’t sure the new administration would support the program. But such concerns were erased with the announcement on 2019 reimbursement rates.
“The administration’s support of the Medicare Advantage program is clear,” Seals said. “We have seen the downstream impact of this support with new entrants to the market — a trend we expect to see continue.”
Getting Consumers To Switch
Since the 1960s, Mutual of Omaha has sold Medicare Supplement policies — coverage to help beneficiaries in government-run Medicare pay the portion of costs that program doesn’t pick up. But the company only briefly entered the Medicare Advantage business once — in its home state of Nebraska in the 1990s.
“In the past 10 or 20 years it never seemed quite the right time,” said Amber Rinehart, a senior vice president for the insurer. “The main hindrance was around the political environment and funding for Medicare Advantage.”
Yet after watching Medicare Advantage enrollment soar and government funding increase, the insurer has decided now is the time to act. “We have seen a lot more stability of funding and the political tailwinds are there,” she said.
One challenge for the new insurers will be attracting members from existing companies since beneficiaries tend to stick with the same insurer for many years.
Vivek Garipalli, CEO of Clover Health, said his San Francisco-based company hopes to gain members by offering low-cost plans with a large choice of hospitals and doctors and allowing members to see specialists in its network without prior approval from their primary care doctor. The company is also focused on appealing to blacks and Hispanics who have been less likely to join Medicare Advantage.
“We see a lot of opportunity in markets where there are underserved populations,” Garipalli said.
Clover has received funding from Alphabet Inc., the parent company of Google. Clover sold Medicare plans in New Jersey last year and is expanding for 2019 into El Paso, Texas; Nashville, Tenn.; and Savannah, Ga.
Newton, Mass.-based Devoted Health is moving into Medicare Advantage with plans in South Florida and Central Florida. Minneapolis-based BrightHealth is expanding into several new markets including Phoenix, Nashville, Cincinnati and New York City.
BayCare, based in Clearwater, Fla., is offering a Medicare plan for the first time in 2019.
“We think there is enough market share to be had and we are not afraid to compete,” said Jim Beermann, vice president of insurance strategy for BayCare.
Hospitals are attracted to the Medicare business because it gives them access to more of premium dollars directed to health costs, said Frack of L.E.K. Consulting. “You control more of your destiny,” he added.
As Election Day draws near, a ballot initiative in Maine to provide universal home care is shining a spotlight on the inadequacies of the nation’s long-term care system.
The essential problem: Although most older adults want to live at home when their health starts to decline or they become frail, programs that help them do so are narrow in scope, fragmented and poorly funded.
Medicare’s home care benefits are limited to seniors and adults with disabilities who are homebound and need skilled services intermittently. State Medicaid programs vary widely but are generally restricted to people at the lower end of the income ladder. Long-term care insurance is expensive and covers only a small slice of the older population.
That leaves millions of middle-class families struggling to figure out what to do when an older relative develops a serious chronic illness, such as heart failure, or suffers an acute medical crisis, such as a stroke.
“We’re about to have the largest older population we’ve ever had, which is going to need exponentially more care than has ever been needed before. And we’re not prepared,” said Ai-jen Poo, co-director of Caring Across Generations, an organization working to expand long-term care services across the U.S.
Maine, with nearly 20 percent of its residents age 65 and older, is exploring a radical response to this dilemma that’s being closely watched by other states.
Its ballot initiative, known as Question 1, proposes that home care services be available to all residents, at no cost, regardless of income. If enacted, it would become the first such program in the nation.
Adults would be eligible for the program when they need help with at least one “activity of daily living”: walking, bathing, dressing, eating, toileting, personal hygiene, and getting in or out of bed. Services covered would include care from aides and companions; speech, physical and occupational therapy; counseling; home repairs; transportation; respite care; devices for people with disabilities; and even, occasionally, small rent subsidies.
Stipends would be granted to family caregivers. Seventy-seven percent of program funds would be directed to home care aides, in a move to strengthen this workforce.
More than 21,000 people could qualify for home care services under the new program, in addition to about 5,600 people who already receive services through Maine Medicaid and other state programs, according to the most definitive analysis to date, published last month by researchers at the University of Southern Maine’s Muskie School of Public Service.
Funding for the new program would come from a new 3.8 percent tax on wages and non-wage income that isn’t taxed by Social Security: a threshold of $128,400 per person in 2018. Between $180 million and $310 million would be raised annually, according to various estimates. The program would be fully implemented by January 2022.
The political battle over Question 1 is fierce, although no one questions the need for affordable home care for seniors and people with disabilities. In AARP’s most recent “Long-Term Services and Supports State Scorecard,” Maine ranked last in the nation on affordability of home care.
Among thousands of people affected are Rick Alexander of Blue Hill, Maine. 70, a retired school librarian, and his wife, Debbie, 64, who has multiple sclerosis.
“Since Debbie has a progressive form of MS, her needs are going to increase,” said Alexander, his wife’s sole, unpaid caregiver and a supporter of Question 1. “We brought in some paid help years back, but we couldn’t do that for very long: It’s too expensive.”
Alexander wants to keep Debbie at home as long as possible, but he worries about the physical demands and emotional consequences. “I have chronic clinical depression and periodically I go down into the dumps, a long way,” he admitted. “When that happens, it’s hard for me to motivate myself to do anything.”
Also, it’s generally accepted in Maine that something needs to be done about a severe shortage of home care aides — a problem surfacing nationwide. Each week, 6,000 hours of home care services that have been authorized aren’t delivered by Maine agencies because of staff shortages, which are particularly acute in rural areas, according to the Maine Council on Aging.
Despite these areas of consensus, however, disagreements surrounding Question 1 are intense and most Maine health care and business associations oppose it, along with all four candidates for governor.
Taxes are a key point of contention. Question 1 supporters argue that a relatively small number of high-income individuals would pay extra taxes. The Maine Center for Economic Policy estimates that only 3.4 percent of people earning income in Maine would be affected, according to a September report.
Citing ambiguous language in the initiative, opponents argue that families earning more than $128,400 would also be subject to the tax hike, significantly expanding its impact. A pressing concern is that higher taxes would discourage doctors, nurses and other professionals from moving to or remaining in Maine.
“We have a workforce crisis already, and this increase — which would make our income tax rate among the highest in the country — would be a disaster,” said Jeffrey Austin, vice president of government affairs at the Maine Hospital Association.
The program is too expansive and expensive to be sustained long term, other opponents say. “We have limited public resources in Maine and those should be dedicated to the people most in need, fiscally and physically,” said Newell Augur, a lobbyist for the Home Care & Hospice Alliance of Maine and chair of the “NO on Question One/Stop the Scam” campaign.
In a statement, AARP Maine, which has not taken a stand on Question 1, expressed reservations. “Using a payroll tax to pay for HCBS [home and community-based services] is an untested policy at the local level,” it noted.
Also controversial is the board that would be established to operate the home care program. The initiative calls for nine members (three from home care agencies, three direct care workers and three service recipients) elected by constituent organizations to oversee the program.
“The board wouldn’t be accountable to the governor or the legislature, and Maine taxpayers would have no say over how their money is being spent,” said Jacob Posik, a policy analyst at the conservative-leaning Maine Heritage Policy Center.
Supporters note that an advisory committee would include state officials from multiple agencies. The board’s structure is meant to be “responsive to the people providing and receiving the care,” said Mike Tipping, communications director for the Maine People’s Alliance, a grass-roots organization that’s spearheading Question 1 and that helped pass a 2017 ballot initiative expanding Medicaid in Maine, currently tied up in the courts.
For all these policy disputes, it’s clear that Question 1 has considerable emotional resonance. “I’ve never had people cry signing a petition and tell me how much something like this would have changed their lives,” said Kevin Simowitz, political director for Caring Across Generations.
One of the people who’s spoken out publicly is the Rev. Myrick Cross, 75, of St. Patrick’s Episcopal Church in Brewer.
Cross works part time at the church so he can pay for aides that care for his 38-year-old daughter with Down syndrome and his 95-year-old mother, who has suffered from kidney disease, falls, wounds that didn’t heal and pneumonia in the past several years. “I will do whatever I need to keep them home,” he said.
Originally, Cross looked to home care agencies for assistance, but with rates of $23 to $25 per hour “that was more than I could afford,” he said. Today, three local residents provide more than 50 hours of care a week for $12 to $15 an hour.
“I’m blessed that I’m able to work and to hire all these people to keep us going,” Cross said. “But several members of my congregation are older and don’t have the family resources that we have. This would make the quality of their lives better.”
We’re eager to hear from readers about questions you’d like answered, problems you’ve been having with your care and advice you need in dealing with the health care system. Visit khn.org/columnists to submit your requests or tips.
The Trump administration wants Medicare for the first time to embrace telemedicine across the country by paying doctors $14 for a five-minute “check-in” phone call with their patients.
But many physicians say the proposed reimbursement will cover a service they already do for free. And the Medicare reimbursement — intended to motivate doctors to communicate with patients outside the office — could have a chilling effect on patients because they would be required to pay a 20 percent cost-sharing charge.
Medicare said the call would be used to help patients determine whether they need to come in for an appointment. But doctors and consultants said the virtual sessions could cover a broad array of services, including monitoring patients starting a new medicine or those trying to manage chronic illnesses, such as diabetes. The Medicare Payment Advisory Commission, which provides guidance to Congress, panned the proposal last month, saying it could lead to excess spending without benefiting patients.
“Direct-to-consumer telehealth services … appear to expand access, but at a potentially significant cost and without evidence of improved quality,” the commission’s chairman, Dr. Francis Crosson, said in a letter to the Centers for Medicare & Medicaid Services (CMS). “Due to their greater convenience, these services are at risk of misuse by patients or provider.”
Congress has shied away from expanding the use of telemedicine in Medicare — even as it has become commonplace among private insurers — because of concerns about higher spending. Budget hawks worry that rather than replace comparatively expensive in-person visits, extra telemedicine billings would add to them.
Lack of coverage — except in rare circumstances — means fewer than 1 percent of the 50 million Medicare beneficiaries use telemedicine services each year.
Federal law forbids Medicare from paying for telemedicine services that replace in-person office visits, except in certain rural areas. That’s why CMS called the new benefit a check-in using “virtual” or “communications technology,” said Jacob Harper, who specializes in health issues at the law firm Morgan, Lewis & Bockius.
In addition to the check-in call, CMS has proposed starting to pay physicians to review photos that patients text or email to them to evaluate skin and eye problems, as well as and other conditions. It also has proposed paying physicians an unspecified fee for consulting electronically or by phone with other doctors.
“Innovative technology that enables remote services can expand access to care and create more opportunities for patients to access personalized care management as well as connect with their physicians quickly,” said CMS Administrator Seema Verma when announcing the proposal.
CMS said it hopes to enact the changes in 2019. Officials will announce their final rule after evaluating public comments on the plan.
Verma and other CMS officials say they believe the change would end up saving Medicare money by reducing unnecessary office visits and catching health problems early, before they become more costly to treat.
But in its detailed proposal, CMS acknowledges the telehealth service will increase Medicare costs. CMS said the telehealth will result in “fewer than 1 million visits in the first year but will eventually result in more than 19 million visits per year, ultimately increasing payments under the [Medicare physician pay schedule] by about 0.2 percent,” or eventually about $180 million per year. Because the change must be budget-neutral, CMS is paying for this by decreasing some other Medicare physician payments.
CMS doesn’t expect rapid adoption of the telehealth service, partly because doctors can get paid from $35 to $150 for an in-person visit. “Because of the low payment rate relative to that for an office visit, we are assuming that usage of these services will be relatively low,” CMS said in its proposal.
The virtual check-in can be conducted by physicians or nurse practitioners or physician assistants working with a doctor.
Only patients who have established relationships with a doctor would be eligible for the service. Doctors also would not be allowed to bill for the check-in service if it stems directly from an in-person visit or is followed by an appointment with the doctor, according to the CMS proposal.
Dr. Michael Munger, a family physician in Overland Park, Kan., and president of the American Academy of Family Physicians, said many doctors routinely check on patients by phone. Still, he applauded the effort to increase physician pay.
“Anytime you can tie payment to what many of us are already doing is good,” he said.
Mercy, a large hospital system in St. Louis, has been offering telehealth services even without reimbursement because it helps patients access care and lowers costs in the long run, said Dr. J. Gavin Helton, president of clinical integration at Mercy Virtual.
“We are already on this path, and this will help to continue to grow our programs and make them financially sustainable,” he said.
Still, Helton said the “check-in” fee from Medicare won’t be enough to motivate providers to start telehealth services.
He said the new reimbursement signals that Medicare wants to pay for services to keep patients well rather than just treat them while they are sick.
Other physicians were more skeptical, particularly while Medicare has also proposed reducing some fees for in-person office visits.
In a letter to CMS, Dr. Amy Messier, a family medicine doctor in Wilmington, N.C., raised concerns about the effect this could have on patients’ expenses.
“I worry about implementation of this from the patient perspective now that we are charging patients for this previously free service and they have to pay their portion of the charge,” she said.
“Patients will be less likely to engage their physician outside of the office visit and more likely to seek care face-to-face at more expense, when perhaps that visit could have been avoided with a phone call which they will no longer make because it comes with a charge,” she said.
Dr. Todd Czartoski, chief executive of telehealth at Providence St. Joseph Health in Renton, Wash., predicts most doctors won’t use the proposed telehealth service.
“It’s still easier for a doctor to go room to room with patients lined up,” he said. “It’s a step in the right direction, but I don’t think it will open the floodgates for virtual care.”
KHN’s coverage of these topics is supported by
John A. Hartford Foundation and
The SCAN Foundation
For years, most pharmacists couldn’t give customers even a clue about an easy way to save money on prescription drugs. But the restraints are coming off.
When the cash price for a prescription is less than what you would pay using your insurance plan, pharmacists will no longer have to keep that a secret.
President Donald Trump was scheduled to sign two bills Wednesday that ban “gag order” clauses in contracts between pharmacies and insurance companies or pharmacy benefit managers — those firms that negotiate prices for employers and insurers with drugstores and drugmakers. Such provisions prohibit pharmacists from telling customers when they can save money by paying the pharmacy’s lower cash price instead of the price negotiated by their insurance plan.
The bills — one for Medicare and Medicare Advantage beneficiaries and another for commercial employer-based and individual policies— were passed by Congress in nearly unanimous votes last month.
“Americans deserve to know the lowest drug price at their pharmacy, but ‘gag clauses’ prevent your pharmacist from telling you!” Trump wrote on Twitter three weeks ago, shortly before the Senate voted on the bills. “I support legislation that will remove gag clauses.” The change was one of the proposals included in Trump’s blueprint to cut prescription drug prices issued in May.
Ronna Hauser, vice president of payment policy and regulatory affairs at the National Community Pharmacists Association, said many members of her group “say a pharmacy benefit manager will call them with a warning if they are telling patients it’s less expensive” without insurance. She said pharmacists could be fined for violating their contracts and even dropped from insurance networks.
According to research published in JAMA in March, people with Medicare Part D drug insurance overpaid for prescriptions by $135 million in 2013. Copayments in those plans were higher than the cash price for nearly 1 in 4 drugs purchased in 2013. For 12 of the 20 most commonly prescribed drugs, patients overpaid by more than 33 percent.
Yet some critics say eliminating gag orders doesn’t address the causes of high drug prices. “As a country, we’re spending about $450 billion on prescription drugs annually,” said Steven Knievel, who works on drug price issues for Public Citizen, a consumer advocacy group. The modest savings gained by paying the cash price “is far short of what needs to happen to actually deliver the relief people need.”
After the president signs the legislation affecting commercial insurance contracts, gag order provisions will immediately be prohibited, said a spokesman for Sen. Susan Collins (R-Maine), who co-authored the bill. The bill affecting Medicare beneficiaries wouldn’t take effect until Jan. 1, 2020.
But there’s a catch: Under the new legislation, pharmacists will not be required to tell patients about the lower cost option. If they don’t, it’s up to the customer to ask.
The Pharmaceutical Care Management Association, a trade group representing pharmacy benefit managers, said gag orders are increasingly rare. The association supported the legislation. Some insurers have also said their contracts don’t include these provisions. Yet two members of Congress have encountered them at the pharmacy counter.
At a hearing on the gag order ban, Collins said she watched a couple leave a Bangor, Maine, pharmacy without their prescription because they couldn’t afford the $111 copayment and the pharmacist did not advise them about saving money by paying directly for the medicine. When she asked him how often that happens, he said every day.
“Banning gag clauses will make it easier for more Americans to afford their prescription drugs because pharmacists will be able to proactively notify consumers if a less expensive option may be available,” she said last week.
When Rep. Debbie Dingell (D-Mich.) went to a Michigan pharmacy to pick up a prescription recently, she was told it would cost $1,300. “After you peeled me off the ceiling, I called the doctor and screamed and talked to the pharmacist,” she recalled during a hearing last month. “I’m much more aggressive than many in asking questions,” she admitted, and ended up saving $1,260 after she learned she could get an equivalent drug for $40.
While the legislation removes gag orders, it doesn’t address how patients who pay the cash price outside their insurance plan can apply that expense toward meeting their policy’s deductible.
But for Medicare beneficiaries there is a little-known rule — not found in the “Medicare & You” handbook or on its website —that helps people with Medicare Part D or Medicare Advantage coverage. If they pay the lower cash price for a covered drug at a pharmacy that participates in their insurance plan and then submit the proper documentation to their plan, insurers must count it toward patients’ out-of-pocket expenses.
The total of those expenses are important because that amount affects the drug coverage gap commonly called the “doughnut hole.” (This year, the gap begins after the plan and beneficiary spend $3,750 and ends once the beneficiary has spent a total of $5,000.)
And beneficiaries don’t have to wait until the gag order ban takes effect in two years.
The Medicare rule also says that if a senior asks about a lower price for a prescription, the pharmacist can answer.
Rep. Buddy Carter (R-Ga.), a pharmacist who sponsored the Medicare gag order bill, said he wasn’t surprised by the bipartisan support for the legislation. “High prescription drug costs affect everyone,” he said.
KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.
STUART, Fla. — Dr. Christopher Rao jumped out of his office chair. He’d just learned an elderly patient at high risk of falling was resisting his advice to go to an inpatient rehabilitation facility following a hip fracture.
He strode into the exam room where Priscilla Finamore was crying about having to leave her home and husband, Freddy.
“Look, I would feel the same way if I was you and did not want to go to a nursing home, to a strange place,” Rao told her in September, holding her hand. “But the reality is, if you slip at home even a little, it could end up in a bad, bad way.”
After a few minutes of coaxing, Finamore, 89, relented and agreed to go into rehab.
Keeping patients healthy and out of the hospital is a goal for any physician. For Rao, a family doctor in this retiree-rich city 100 miles north of Miami, it’s also a wise financial strategy.
Rao works for WellMed, a physician-management company whose doctors treat more than 350,000 Medicare patients at primary care clinics in Florida and Texas. Instead of being reimbursed for each patient visit, WellMed gets a fixed monthly payment from private Medicare Advantage plans to cover virtually all of their members’ health needs, including drugs and physician, hospital, mental health and rehabilitation services.
If they can stay under budget, the physician companies profit. If not, they lose money.
Dr. Christopher Rao, a family doctor at WellMed in Stuart, Fla., comforts Priscilla Finamore about seeking inpatient rehabilitation care.(Phil Galewitz/KHN)
This model — known as “full-risk” or “global risk” — is increasingly used by Medicare plans such as Humana and UnitedHealthcare to shift their financial exposure from costly patients to WellMed and other physician-management companies. It gives the doctors’ groups more money upfront and control over patient care.
As a result, they go to extraordinary lengths to keep their members healthy and avoid expensive hospital stays.
WellMed, along with similar fast-growing companies such as Miami-based ChenMed, Boston-based Iora Health and Chicago-based Oak Street Health, say they provide patients significantly more time with their doctors, same-day or next-day appointments and health coaches. These doctors generally work on salary.
ChenMed doctors encourage their Medicare patients to visit their clinic every month — for no charge and with free door-to-door transportation — to stay on top of preventive care and better manage chronic conditions. If patients are not feeling well after-hours, ChenMed even will send a paramedic to their home.
“We can be much more creative in how we meet patient needs,” said Iora CEO Rushika Fernandopulle. “By taking risk, we never have to ask … ‘Do we get paid for this or not?’”
A Way To ‘Provide Less Care’
Some patient advocates, pointing to similar experiments that failed in the 1990s, fear “global risk” could lead doctors to skimp on care — particularly for expensive services such as CT tests and surgical procedures.
“At the end of the day, this is a way to keep costs down and provide less care,” said Judith Stein, executive director of the Center for Medicare Advocacy.
Dr. Brant Mittler, a Texas cardiologist and trial attorney who has followed the issue, said Medicare Advantage members should be suspicious.
“Patients don’t know that decisions made on their behalf are often financially based. There may be pressure on doctors to cut corners to save money and that may not be in the best interests of a patient’s health,” he said.
The insurers and physician groups disagree. They said limiting necessary care would only exacerbate a patient’s health problems and cost the doctors’ group more money.
Noting that Medicare members stay with Humana an average of eight years, Roy Beveridge, the insurer’s chief medical officer, said the plan would be unwise to skimp on care because that would eventually leave the company with sicker patients and longer hospitalizations.
“It makes even less sense for physicians at financial risk to skimp on care because patients are typically with their physicians much longer than they are with a health plan,” he said.
A study that examined care at ChenMed, published last month in the American Journal of Managed Care, found health costs were 28 percent lower among patients who had more than double the number of typical visits with their primary physician. The study was conducted by researchers at ChenMed and the University of Miami.
To offer more personal care, ChenMed doctors typically see only about a dozen patients per day — about half as many as is usual for a doctor who gets paid for each individual service.
Medicare beneficiaries, who can choose a private health plan during the open-enrollment period that runs from Oct. 15 to Dec. 7, generally have no idea if their health plan has ceded control of their care to these large doctors’ groups.
After choosing a Medicare Advantage plan, they generally sign up for a medical group that is part of their health plan’s network, often because doctors are close to where they live or because the doctors offer extra benefits such as free transportation to appointments.
Eloy Gonzalez, 71, of Miami, said that before switching to ChenMed a couple of years ago his doctors always seemed to be in a hurry when he saw them. He’s happy with his ChenMed physicians.
On a recent visit, he spent nearly 20 minutes with Dr. Juana Sofia Recabarren-Velarde talking about keeping his blood pressure and lung condition under control. She also showed him exercises to manage back and shoulder pain.
“If she thinks she needs to see me once a month to monitor my blood pressure and see if anything else is happening, it’s OK with me,” said Gonzalez, who pays nothing for the office visits or generic drugs under his Humana Medicare Advantage plan with ChenMed.
A Growth Spurt
Nearly one-third of the 57 million Medicare beneficiaries are covered by private Medicare Advantage plans — an alternative to government-run Medicare — and federal officials have estimated that the proportion will rise to 41 percent over the next decade. The government pays these plans to provide medical services to their members.
The “global risk” system has been used in South Florida and Southern California since the late 1990s and nearly half of Medicare Advantage members in those regions get care in the model. The use has spread further in the past two years as large physician companies have become more common, and about 10 percent of Medicare Advantage plan members across the nation are in them now, health consultants say.
In addition, new information technology allows these groups to better track their patients. With mixed results, Medicare Advantage insurers for years offered doctors bonuses to meet certain quality care standards, such as getting members vaccinated against the flu or controlling diabetes and other chronic diseases.
Under the “global risk” arrangements, the health plans give the physician companies the bulk of their Medicare funding when they take on the mantle of being financially responsible for all patient care.
For the doctors’ groups, the arrangement means they get paid a large amount of money upfront for patient care and don’t have to worry about billing or having to get insurers to always preapprove treatments.
Because the “global risk” arrangements are designed to reduce plans’ costs, they potentially allow the companies to lower premiums and attract more customers, said Mark Fendrick, director of the University of Michigan’s Center for Value-Based Insurance Design.
“I see this trend continuing to grow as clinicians will be accountable for the first time for the care they provide,” he said.
But Ana Gupte, a securities analyst with Leerink Partners in New York, noted providers can also lose money if not successful.
That’s what happened in the late 1990s when some physician-management companies such as FPA Medical Management and PhyMatrix took on financial risk from insurers only to later go bankrupt, interrupting care to thousands of patients.
Health insurers say they now trust only doctors’ groups that have shown they can handle the financial risk. They also retain varying levels of control. Insurers set benefits, handle member complaints and review which doctors are allowed in its network.
Martin Graf, a partner with consulting firm Oliver Wyman, said the old financial arrangements failed because provider groups did not manage the risks facing their patients.
“Now they know physician groups must be vigilant about their patients — whether they are in the office or not,” he said. “Everyone is aware of the failure of the past.”
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One of the nation’s largest dialysis providers will pay $270 million to settle a whistleblower’s allegation that it helped Medicare Advantage insurance plans cheat the government for several years.
The settlement by HealthCare Partners Holdings LLC, part of giant dialysis company DaVita Inc., is believed to be the largest to date involving allegations that some Medicare Advantage plans exaggerate how sick their patients are to inflate government payments. DaVita, which is headquartered in El Segundo, Calif., did not admit fault.
“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said U.S. Attorney Nick Hanna in announcing the settlement Monday.
Medicare Advantage plans, which now enroll more than 1 in 3 seniors nationwide, have faced growing government scrutiny in recent years over their billing practices. At least a half-dozen whistleblowers have filed lawsuits accusing the insurers of boosting payments by overstating how sick patients are. In May 2017, two Florida Medicare Advantage insurers agreed to pay nearly $32 million to settle a similar lawsuit.
The DaVita settlement cites improper medical coding by HealthCare Partners from early 2007 through the end of 2014. The company, according to the settlement agreement, submitted “unsupported” diagnostic codes that allowed the health plans to receive higher payments than they were due. Officials did not identify the health plans that overcharged as a result.
One such “unsupported” code was for a spinal condition known as spinal enthesopathy that was improperly diagnosed in patients in Florida, Nevada and California from Nov. 1, 2011, to Dec. 31, 2014, according to the settlement. The agreement did not say how much health plans took in from the unsupported codes.
The company also contracted with a Nevada firm from 2010 through January 2016 that sent health care providers to visit patients in their homes, a controversial practice that critics have long held is done largely to inflate Medicare payments. These house calls also generated “unsupported or undocumented” diagnostic codes, according to the settlement.
Officials said that DaVita disclosed the practices to the government. It acquired HealthCare Partners, a large California-based doctors’ group, in 2012. They said the government agreed to a “favorable resolution” of the allegations payment because of the self-disclosure.
In a statement, DaVita said the settlement “reflects close cooperation with the government to address practices largely originating with HealthCare Partners.” DaVita said the settlement will be paid with escrow funds set aside by the former owners.
“This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review — all for the purpose of boosting the bottom line,” reads the government’s statement.
The settlement also resolves allegations made by whistleblower James Swoben that HealthCare Partners knew that many of the diagnostic codes were unsupported, but failed to report them. The company reported only cases in which it deserved higher reimbursement, while ignoring codes that would slash payments, a practice known as “one-way” chart reviews.
Swoben, a former employee of a company that did business with DaVita, will receive just over $10 million for the settlement of the “one-way” allegations, under the federal False Claims Act, which rewards whistleblowers who expose fraud.
(From left) Julie Rovner, Joanne Kenen, Alice Ollstein and Anna Edney(Courtesy of The Texas Tribune Festival)
President Donald Trump’s proposed rule that would make it more difficult for immigrants to gain permanent status if they use government aid programs could have a major impact in Texas, with its large immigrant population.
Texas is also ground zero for the health debate in this year’s midterm elections. Texas Attorney General Ken Paxton is the lead plaintiff in a case filed by 20 GOP state officials arguing that the entire Affordable Care Act is now unconstitutional in light of last year’s tax bill, which canceled the penalties for people who fail to obtain health insurance. The Trump administration does not agree that the whole law should fall, but says the parts protecting people with preexisting health conditions should be struck down. A federal district court judge in Fort Worth is expected to issue a decision in the case soon.
This week’s panelists for KHN’s “What the Health?,” are Julie Rovner of Kaiser Health News, Joanne Kenen of Politico, Anna Edney of Bloomberg News and Alice Ollstein of Politico. Technical difficulties prevented us from bringing you the discussion taped Sept. 27 before a live audience in Austin as part of the 2018 Texas Tribune Festival. So, the panelists, back in D.C., joined Rovner, still in Austin, for a redo Sept. 28.
Among the takeaways from this week’s podcast:
The latest version of the new “public charge” regulations proposed by the Trump administration could penalize immigrants who use food stamps, Medicaid, housing assistance or Medicare prescription drug subsidies. But unlike an earlier version of the proposal, it would not take into account immigrants’ use of subsidies under the Affordable Care Act.
With less than six weeks to go before the critical midterm elections, federal protections for people with preexisting health conditions has become the top campaign health issue in many states, in many races eclipsing concerns about prescription drug pricing and other out-of-pocket health costs.
As hearings continued on the nomination of federal Judge Brett Kavanaugh to serve on the Supreme Court, a three-judge appeals court panel heard arguments on a case he decided earlier this year concerning the right of minor immigrants to obtain an abortion.
Increases in premiums for insurance under the Affordable Care Act appear to moderating, and some states are reporting decreases for plans that start Jan. 1, 2019. The Trump administration is now trying to take credit for “fixing” the ACA’s marketplaces. However, state insurance officials have noted that premiums are moderating in spite of, rather than because of, the administration’s actions.
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On orders from Congress, Medicare is easing up on its annual readmission penalties on hundreds of hospitals serving the most low-income residents, records released last week show.
Since 2012, Medicare has punished hospitals for having too many patients end up back in their care within a month. The government estimates the hospital industry will lose $566 million in the latest round of penalties that will stretch over the next 12 months. The penalties are a signature part of the Affordable Care Act’s effort to encourage better care.
But starting next month, lawmakers mandated that Medicare take into account a long-standing complaint from safety-net hospitals. They have argued that their patients are more likely to suffer complications after leaving the hospital through no fault of the institutions, but rather because they cannot afford medications or don’t have regular doctors to monitor their recoveries. The Medicare sanctions have been especially painful for this class of hospitals, which often struggle to stay afloat because so many of their patients carry low-paying insurance or none at all.
In a major change to its evaluation, the federal Centers for Medicare & Medicaid Services (CMS) this year ceased judging each hospital against all others. Instead, it assigned hospitals to five peer groups of facilities with similar proportions of low-income patients. Medicare then compared each hospital’s readmission rates from July 2014 through June 2017 against the readmission rates of its peer group during those three years to determine if they warranted a penalty and, if so, how much it should be.
The broader issue is whether medical providers that serve the poor can be fairly judged against those that care for the affluent. This has been a continuing topic of contention as the government seeks to accurately measure health care quality. It is particularly a concern in efforts to consider patient outcomes in setting pay rates for doctors, nursing homes, hospitals and other providers.
Overall, Medicare will dock payments to 2,599 hospitals — more than half in the nation— throughout fiscal year 2019, which begins Oct. 1, a Kaiser Health News analysis of the records found. The harshest penalty is 3 percent lower reimbursements for every Medicare patient discharged in fiscal year 2019. The number of hospitals and the average penalty — 0.7 percent of each payment — are almost the same as last year.
But the new method shifted the burden of those punishments. Penalties against safety-net hospitals will drop by a fourth on average from last year, the analysis found.
“It’s pretty clear they were really penalizing those institutions more than they needed to,” said Dr. Atul Grover, executive vice president of the Association of American Medical Colleges. “It’s definitely a step in the right direction.”
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Safety-net hospitals that will see their penalties cut by half or more include many urban institutions, such as Sutter Health’s Alta Bates Summit Medical Center in Oakland, Calif.; Providence Hospital in Washington, D.C.; and Hurley Medical Center in Flint, Mich. Sixty-five safety-net hospitals — including Franklin Medical Center in Winnsboro, La., Astria Toppenish Hospital in Toppenish, Wash., and Emanuel Medical Center in Swainsboro, Ga. — that had been penalized last year escaped punishment entirely this year.
Conversely, the average penalty for the hospitals with the fewest low-income patients will rise from last year, the analysis found.
Before the program began, roughly 1 in 5 Medicare beneficiaries were readmitted within a month. Hospitals were paid the same amount regardless of how their patients fared after being discharged. In fact, a readmission was financially advantageous as hospitals would be paid for the second hospital stay, even if it might have been avoidable.
Since the sanctions began, Medicare has evaluated each year rates for readmitted patients who had originally been treated for heart failure, heart attacks and pneumonia. And it has reduced its payments to more than half of hospitals based on those rates. The evaluations have since expanded to cover chronic lung disease, hip and knee replacements and coronary artery bypass graft surgeries.
Medicare counts patients who returned to a hospital within 30 days, even if it is a different hospital than the one that originally treated them. The penalty is applied to the first hospital.
Medicare exempts hospitals with too few cases, those serving veterans, children and psychiatric patients, and critical-access hospitals, which are the only hospitals within reach of some patients. In addition, Maryland hospitals are excluded because Congress lets that state set its own rules on how it distributes Medicare money.
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In its revised method this year, Medicare distinguished hospitals that serve a high proportion of low-income patients by looking at how many of the hospital’s Medicare patients were also eligible for Medicaid, the state-federal program for the poor. American Hospital Association officials say that while they considered this an improvement, it isn’t a perfect reflection of poor patients. For one thing, they say, hospitals in states with more restrictive Medicaid coverage do not appear through this formula to have as challenging patient populations as do hospitals in states with higher Medicaid eligibility.
Akin Demehin, the association’s director of quality policy, said CMS might consider linking its records to Census records that show income and education level of patients.
“It might give you a more precise adjuster,” he said.
The hospital industry remains critical of the overall program, saying that stripping hospitals of revenue because of poor performance only makes it harder for them to care for patients.
Congress’ Medicare Payment Advisory Commission in June concluded that the penalties from previous years successfully pressured hospitals to reduce the numbers of returning patients — and helped save Medicare about $2 billion a year.
In its analysis of the approach’s effectiveness, Congress’ advisory commission rejected some of the hospital industries’ complaints about Medicare’s Hospital Readmissions Reduction Program: that hospitals may have tried to get around the penalties by keeping patients under “observation status” and that discouraging rehospitalizations may have led to extra deaths.
The commission found that between 2010 and 2016 readmission rates fell by 3.6 percentage points for heart attacks, 3 percentage points for heart failure and 2.3 percentage points for pneumonia. At the same time, readmissions caused by conditions that do not factor into the penalties fell on average 1.4 percentage points, indicating hospitals were focusing on lowering unnecessary readmissions that could hurt them financially.
The commission wrote: “We conclude that the [penalties] contributed to a significant decline in readmission rates without causing a material increase in ED [emergency department] visits, a material increase in observation stays, or a net adverse effect on mortality rates.”
This fall, Medicare will attack the readmissions from another angle by issuing penalties on skilled nursing facilities that send recently discharged residents back to the hospital too frequently.
KHN’s coverage related to aging and improving care of older adults is supported in part by The John A. Hartford Foundation.