Friday, June 29, 2012
U.S. Department of Health & Human Services
FOR IMMEDIATE RELEASE
Friday, June 29, 2012
Obama administration and states move forward to implement health care law
Administration makes resources available to help states implement Affordable Insurance Exchanges
Health and Human Services Secretary Kathleen Sebelius announced today a new funding opportunity to help states continue their work to implement the health care law -- the Affordable Care Act. When the law is fully implemented in 2014, the affordable insurance exchanges will provide people and small businesses with one-stop shops to find, compare and purchase affordable, high-quality health insurance. Today’s announcement makes more funding available to build all models of affordable insurance exchanges available to states. HHS also issued further guidance today to help states understand the full scope of activities that can be funded under the available grant funding as they work to build exchanges.
“The federal government and our state partners are moving forward to implement the health care law,” Secretary Sebelius said. “This new funding opportunity will give states the resources they need to establish affordable insurance exchanges and ensure Americans are no longer on their own when shopping for insurance.”
The funding opportunity announced today will provide states with 10 additional opportunities to apply for funding to establish a state-based exchange, state partnership exchange, or to prepare state systems for a federally facilitated exchange. To date, 34 states and the District of Columbia have received approximately $850 million in Exchange Establishment Level One and Level Two cooperative agreements to fund their progress toward building exchanges.
Under the new announcement, states can apply for exchange establishment cooperative agreements through the end of 2014. These funds are available for states to use beyond 2014 as they continue to work on their exchanges. This ensures that states have the support and time necessary to build the best exchange for their residents.
The guidance HHS issued today provides information on the exchange-building activities that states can fund with establishment cooperative agreements. The guidance can be found at: http://cciio.cms.gov/resources/factsheets/hie-est-grant-faq-06292012.html.
HHS will conduct regional implementation forums in coming months to assist states and stakeholders on the work to be done in building exchanges, and to address their questions. HHS will also engage with tribes, tribal governments, and tribal organizations on how exchanges can serve their populations.
By Allison Bell
June 27, 2012
In one of the most anticipated rulings of the century, the Supreme Court has announced its decision on the Patient Protection and Affordable Care Act of 2010.
The text of the opinion, in National Federation of Business vs. Sebelius, Case Number 11-393, is available here.
The court has ruled 5-4 that Congress has authority under the Commerce Clause of the U.S. Constitution to require individuals to own a minimum level of insurance but does have the authority to use its taxation authority to impose a coverage mandate.
The court has narrowed the scope of a provision dealing with state Medicaid program expansion requirements, forbidding the government from taking existing Medicaid funding away from states that fail to comply.
State attorney generals and others have been arguing that a provision in PPACA that calls for most individuals to own a minimum level of health insurance starting in 2014 or else pay a penalty is unconstitutional, and that Congress has no authority to make individuals buy a commercial insurance product.
Chief Justice John Roberts has written in an opinion for the majority that the Commerce Clause of the Constitution gives Congress no more authority to require the purchase of health insurance than to require the purchase of broccoli.
According to the Obama administration, a requirement that citizens buy health insurance is different from a requirement that they broccoli because “[h]ealth insurance is not purchased for its own sake like a car or broccoli; it is a means of financing health-care consumption and covering universal risks,” Roberts writes.
The connection between mandated insurance purchases and future use of insured health care is too remote for the goverment to use the Commerce Clause to justify the PPACA mandate, Roberts says.
But, Roberts says, "boccoli are no more purchased for their 'own sake' than health insurance. They are purchased to cover the need for transportation and food."
But the Constitution does give Congress the authority to "lay and collect Taxes," Roberts says.
The Obama administration and congressional PPACA supporters have avoided calling the penalty to be imposed on taxpayers who fail to meet individual health insurance ownership requirements a tax, but, under one Obama administration theory, "the mandate is not a legal command to buy insurance," Roberts says. "Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax. The question is not whether that is the most natural interpretation of the mandate, but only whether it is a 'fairly possible' one."
Imposition of a tax "leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice," Roberts says. "The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness."
Of the Medicaid expansion requirements in PPACA, Roberts writes that, "Permitting the Federal Government to force the States to implement a federal program would threaten the political accountability key to our federal system.“
The PPACA Medicaid expansion requirements would change the nature of Medicaid, not merely expand it, turning it into a comprehensive national plan, not just a safety net for the neediest, Roberts says.
Congress could give states more Medicaid funding and require the states to use the money to expand the program, Roberts says.
But Congress cannot "penalize States that choose not to participate in that new program by taking away their existing Medicaid funding," Roberts says.
Justices Clarence Thomas, Antonin Scalia, Samuel Alito and Anthony Kennedy opposed the ruling and joined to write a dissenting opinion.
President Obama signed PPACA, the main bill in the two-bill Affordable Care Act package, March 23, 2010. He signed the other bill, the Health Care and Education Reconciliation Act of 2010, March 30, 2010.
Obama and Democrats started the process of crafting PPACA with strong Democratic majorities in both the House and the Senate and polls showing that Americans supported the idea of reforming the health care system. As time went on, their majority in the Senate weakened, and they lost their majority in the House.
Democrats unveiled drafts that were hundreds or thousands of pages long just hours before the committees with jurisdiction were supposed to review the drafts. Once the bill reached the Senate floor, Republicans maneuvered to force much of the debate and many of the procedural votes and other votes into the wee hours of the morning.
The Senate voted to pass PPACA, for example, at 7:16 a.m. Dec. 24, 2009 -- on Christmas Eve.
Perhaps due in part to the rushed schedule and the complicated efforts to round up the votes needed for passage, the final version included especially controversial provisions, such as the individual mandate provision, and left out the kind of "saving clause" that can keep a multi-part law in force if courts throw out other sections.
In the case of PPACA, the Medicaid expansion funding is still available, just to more states, so the provision is not really invalid, Roberts says.
Even if the provision were invalid, "when a court confronts an unconstitutional statute, its endeavor must be to conserve, not destroy, the legislation," Roberts concludes.
Some had suggested that the federal Anti-Injunction Act, a law that keeps taxpayers from suing to block new taxes before the taxes are in place, could have given the Supreme Court an excuse to defer action on PPACA.The PPACA label of the individual mandate penalty as a penalty, rather than a tax, does not control whether an exaction is within Fongress's power to tax, but it "is fatal to the application of the Anti-Injunction Act," the court says in a syllabus summarizing the ruling.
June 28, 2012
The Supreme Court today upheld all parts of the Patient Protection and Affordable Care Act.
The decision was written by Chief Justice John Roberts, who joined the court’s four liberal justices in upholding the law.
The key was support for the provisions which require everyone to buy insurance or pay a tax.
“Our precedent demonstrates that Congress had the power to impose the exaction in Section 5000A under the taxing power, and that Section 5000A need not be read to do more than impose a tax,” Justice Roberts said in the opinion. “This is sufficient to sustain it,” Justice Roberts said.
The decision did allow states the option not to go along with the expansion of the Medicaid insurance program for low-income people.
George Patton, an appellate lawyer with Bose McKinney & Evans LLP, of Washington, D.C. and Indianapolis, said under the decision, states can choose to expand Medicaid to 133%, but they are not required to.
Congress cannot “penalize States that choose not to participate in that new program by taking away their existing Medicaid funding,” Roberts said in the majority opinion.
The Medicaid provision is projected to add nearly 30 million more people to the insurance program for low-income Americans.
Ruling specifics aside, industry officials and analysts caution that the ultimate decision will be left to the voters. They also caution that even if President Obama wins re-election, implementation of the health exchanges, a key component of the law, could be delayed, perhaps by a year.
Beth Mantz-Steindecker and Ira Loss of Washington Analysis, said, “Despite the settlement of the constitutional question, the ultimate fate of the health care reform law remains to be seen, which will be determined in large part by the outcome of the November elections.”
And, the states are caught in the middle.
Perhaps only half have begun to prepare to implement the exchanges.
And there is a conflict within the hierarchy of the National Association of Insurance Commissioners.
The NAIC weighed in with a pledge to “continue to work to give regulators the tools they need to ensure a stable health insurance marketplace in the states.”
The statement added that, “Where the ACA provides states with latitude, regulators will continue to work with insurers, consumer groups and the public to provide the best regulatory framework going forward."
However, while signing on to the NAIC statement, NAIC president Kevin McCarty implied that he might have difficulty getting the Florida legislature to act to implement the exchanges and other provisions of the law.
The state was a hotbed of opposition to the decision, and a federal court in Pensacola was the only federal court to declare the law unconstitutional, a ruling which today’s Supreme Court decision reversed.
McCarty said that, “With the affirmation of the Affordable Care Act, I remain concerned about the potential for increased health insurance premiums and continued disruption to the stability of the marketplace for many Floridians.
“Nevertheless, we will work with the Florida Legislature and Gov. Scott to implement the Supreme Court’s decision and develop an implementation strategy that minimizes market disruption and allows Florida’s health insurers and HMOs to continue to provide coverage in our state,” McCarty said.
Ken Crerar, president of the Council of Insurance Agents and Brokers, said that, “In a victory for the Obama Administration, and despite initial media reports to the contrary, the Affordable Care Act has been upheld by the Supreme Court. The basic import here is that all litigation is done and that the law proceeds.”
Crerar said the ruling was “mixed, in that Chief Justice Roberts joined the left-leaning four justices in determining that the individual mandate is in fact a tax and within the powers of Congress.”
Crerar said that, the “ruling appears to limit the ability of the federal government to withhold Medicaid funding to states; it is somewhat unclear at this moment what the implications of this will be.
“However, it is clear that the architecture of the Affordable Care Act is not going to be overturned by the Supreme Court,” Crerar said.
Andrew C. Harris, president of the National Association of Professional Insurance Agents, called the decision “unfortunate,” saying the bill “has been widely criticized by the public and the insurance industry.”
At the same time, he said that, “The nation’s professional independent insurance agents remain committed to providing their customers with professional advice and choices regarding their health insurance. We urge all states to now deal with the issue of insurance exchanges in a manner that guarantees the right of insurance consumers to rely on the expertise of licensed professionals as they make important decisions about their health insurance coverage.”
Eric T. Schneiderman, New York attorney general, said, “The Supreme Court's decision to uphold the Affordable Care Act is an historic victory for the tens of millions more Americans who will be covered by health insurance.”
He said the law's effects will be significant in New York, where over two million people are uninsured.
“Over a million uninsured New Yorkers will soon have access to affordable coverage. This law will continue to provide a spectrum of key consumer protections including keeping young adults on their parents' plans, ending pre-existing condition restrictions, and increasing consumer information about health care choices,” Schneiderman added.
Ethan Rome, executive director of Health Care for America Now, a liberal group, said, “Today, the Supreme Court ruled that the debate over the Affordable Care Act is over. Obamacare is here to stay. The days of health insurance company price-gouging and denials of care are over.”
Rome said that, “Every family and small-business owner who worries about health care and their future can breathe a sigh of relief.” Rome said that the ruling “clears the way to move full steam ahead on implementing Obamacare. The court has spoken, and the constitutional debate is done. This ruling tells every anti-Obamacare Republican governor it’s time to move forward with full implementation and end the political nonsense.”
American Benefits Council President James A. Klein said that “For the nation’s major employers, who provide health coverage for tens of millions of Americans, today’s decision by the Supreme Court means that their sights are set on the challenges that lie ahead, especially as they prepare to meet the law’s core provisions that become effective in 2014.”
Klein added that, “Throughout the legal challenges to the law, the vast majority of employers remained focused on meeting their obligations under the law. Whatever steps Congress and the Administration take from today forward must clarify — not complicate — employer responsibilities. If both branches of government focus on scoring political points, rather than helping employers and health insurers meet their obligations, then the majority of Americans who rely on employer-sponsored coverage will suffer,” said Klein.
Edward Fensholt, a principal of the compliance Services Group of Lockton Brokerage’s Health Reform Advisory Practice, said the Supreme Court decision “didn’t derail the law, or even send it down another track. It’s now ‘full speed ahead’ toward full implementation of the law’s signature provisions in 2014.”
Mark Holloway, another principal at the Lockton Group’s health reform advisory practice added that, “Employers who were sitting on the fence, not entirely embracing all the changes and strategic thinking required by reform, will have to engage … quickly. Employers will need to begin making significant, strategic decisions within the next several months.”
Fensholt also said that with the road to the law’s key components — the individual and employer mandates, and the health insurance exchanges — now wide open, regulatory activity will accelerate significantly. “Regulations, particularly on the employer mandate, will be very complex,” Fensholt says, “and we can expect a crush of complex guidance compressed into a very short time.”
Karen Ignagni, president and CEO of America’s Health Insurance Plans, said that, “Maintaining the link between market reforms and universal coverage is essential to avoiding significant cost increases and loss of choice for consumers and employers.”
Ignagni added that, “As the reform law is implemented, health plans will continue to focus on promoting affordability and peace of mind for their beneficiaries.”
She said the law expands coverage to millions of Americans, a goal health plans have long supported, but major provisions, such as the premium tax, will have the unintended consequences of raising costs and disrupting coverage unless they are addressed.
Elizabeth Festa contributed to this report.
“I think members respond to certain incentives, but it has to be kept at a pretty simple level for them so that they can comprehend it and know what behavior the plan sponsor’s looking for. An eight-tier formulary, for example, sounds like a communication nightmare.”
— Brian Bullock, president and CEO of The Burchfield Group, Inc., told AIS’s Drug Benefit News.
— Brian Bullock, president and CEO of The Burchfield Group, Inc., told AIS’s Drug Benefit News.
By Jill Brown, Executive Editor
June 28, 2012
Although the Supreme Court upheld the reform law’s individual mandate as a tax — and thus the provisions’ effect on the commercial insurance market — its ruling on Medicaid could have the effect of maintaining a class of uninsured people who have income too high to qualify for Medicaid but too low to afford commercial insurance on exchanges, even with subsidies.
The high court said the individual mandate “may reasonably be characterized as a tax. Because the constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” And with that ruling, the court upheld all the elements of PPACA that could be said to hinge on the individual mandate, including the exchanges, guaranteed issue, modified community rating, medical loss ratio minimums, employer penalties and other provisions.
After months — and, for some stakeholders, years — of having a dual focus on both complying with the law’s myriad requirements while contemplating how to unwind them if the law is struck down, implementation now starts in earnest.
But the court found that the law did go too far in allowing HHS to withhold all Medicaid funding from states that don’t expand program eligibility by 2014 to adults with annual incomes up to 133% of the federal poverty level. The high court rejected HHS’s ability to withhold all Medicaid funds, terming this “economic dragooning that leaves the States with no real option to but acquiesce in the Medicaid expansion.”
Today, “many States now cover adults with children only if their income is considerably lower, and do not cover childless adults at all,” the decision noted. And that may remain the status quo, as many states, facing budget deficits, would be free to decline to further expand Medicaid. That’s because the high court ruled that the constitutional violation “is fully remedied by precluding the Secretary from…withdraw[ing] existing Medicaid funds for failure to comply with the requirements set out in the expansion.”
The law calls for the federal government to pay 100% of Medicaid expansion costs from 2014 to 2016, with the contribution level gradually dropping to no less than 90%. Mark Lutes, a member of Washington, D.C., law firm Epstein Becker Green, says that “red states have some interesting choices — one is, do you take Medicaid expansion money while it lasts and trust Congress to make you whole when the ACA support for it dries up?”
But Alan Weil, executive director at the National Academy for State Health Policy, predicted that “most states will go ahead” with the coverage expansion. “Even without the stick [of withholding all Medicaid funding], there’s still a very strong carrot” in the form of a “very favorable match rate. And I think providers and citizens will find it hard to understand why a state would leave all these people uninsured if they have an opportunity to provide them with coverage at no state taxpayer cost.”
Monday, June 25, 2012
Posted by Sarah Kliff on June 22, 2012
Mark Bertolini has a pretty busy day job: As Aetna’s chief executive, he manages one of the country’s top five health insurance plans.
Lately, his evenings have gotten busy, too. Bertolini has started spending some evening hours working with the Gang of Six, the bipartisan group of six senators that tried (and failed) to push a major deficit reduction plan through Congress.
He has come away from the bull sessions thinking the Supreme Court verdict on the Affordable Care Act does not matter much for the future of health care — or for his business. With our without the health law, he sees a country staring down a deficit driven by health-care cost growth — and a pressure on private industry to turn that around.
“The Supreme Court ruling does not matter for our business strategy,” Bertolini says. “It’s a political event. Whether or not the Supreme Court impacts the Affordable Care Act in some way, we still have to keep moving forward to impact the cost of care in America.”
Bertolini and I had a chance Thursday to talk about how he sees the health insurance industry changing. He (like everyone else) sees costs going up — and thinks that’s bad for business. That goes back to 2005, when the company did a “deep dive” looking at where their various products were headed.
“We saw an individual market in inexorable decline and, on the small group side, fewer were offering benefits and costs were rising. We knew we had to change something,” Bertolini said.
It was around then that Aetna began testing out ways to deliver better health care, for a lower price. There have been 57 pilot programs in total, big and small, scattered across the country. It is now participating in 10 accountable care organizations, where it bands together with doctors and reimburses them on the quality of their work, rather than quantity. Seventeen more of those are in the pipeline.
Other pilots have tried different models that could be replicated elsewhere: When the health insurance company paid for case managers to work with 20,000 diabetes patients in Pennsylvania, it saw their acute sick days in the hospital drop by 31 percent.
As the Supreme Court’s decision has neared, Aetna’s experimentation has not slowed: It announced today the launch of a new health insurance plan it will co-own with a hospital chain in Northern Virginia, one of the first such ventures in the nation with unusual features aimed to at reducing costs while improving care (you can read more about that here).
Aetna has a strong business reason to create a cheaper insurance product: Namely, getting more people to buy it. That motivation stays in place regardless of what happens with the Supreme Court this month.
“We’re really working right now on the underlying cost of health care,” he says. “These investments we’re making are about finding a different way to make models work. We’re committed to fixing that, and feel like we need to fix that.”
Friday, June 22, 2012
MedPAC Reviews Blending Medicare and Medicaid
In its June 2012 Report to the Congress, the Medicare Payment Advisory Commission (MedPAC) included an examination of current options and activity with respect to programs that integrate – or have the potential to integrate – Medicare and Medicaid services and financing for those individuals with coverage from both programs, often referred to as dual eligibles. While the term "integration" does not have a single meaning in health policy discussions, in this context it generally refers to efforts to bring both Medicare and Medicaid dollars and Medicare and Medicaid services into a single system of care, so that the individuals using the services do not have to pay attention to whether they are from Medicare or Medicaid. It is believed that "integrating" the programs can both improve the quality of health care services people receive and lower the cost of providing that care.
The Center for Medicare Advocacy has been working on issues affecting those who are dually eligible since its creation in 1986. We have often joined forces with national and state-based advocates working to affect the design of programs to improve care for dual eligibles – a vulnerable population whose voice and needs should be heard in discussions about how best to provide their care.
The MedPAC Report
The MedPAC Report looks at cost and quality experience (as well as some other elements of experience) of Programs of All Inclusive Care for the Elderly (PACE) and Medicare Advantage Special Needs Plans, then examines the emerging state proposals, currently before the Medicare and Medicaid Coordination Office (MMCO) for review, to create new delivery systems and financing structures for their dual eligibles.
The Report notes, first, the great heterogeneity of the dual eligible population, which includes individuals with multiple chronic conditions, difficulties with activities of daily living, cognitive impairments such as dementia, physical disabilities, developmental disabilities and severe mental illness. It also includes healthy individuals who are dually eligible mostly because they are 65 or older and are poor.
The Report then notes the high costs, on average, of providing care for this population. While comprising about 18% of traditional Medicare enrollment, they account for about 31% of traditional Medicare spending. While comprising about 15% of Medicaid enrollment, they account for about 40% of Medicaid spending. Because Medicaid spending is shared between the state and federal government and all Medicare spending is federal, estimates suggest that about 80% of all spending on dual eligibles is federal.
Programs of All Inclusive Care for the Elderly (PACE)
PACE is a program in Medicare and an optional program in Medicaid (meaning that a state can choose to have a PACE program or not) and generally operates as an integrated system through which individuals receive both Medicare and Medicaid services. It is available to individuals age 55 and older who need a nursing home level of care. PACE programs generally operate through day-care centers. Individuals enrolling in PACE must use a PACE physician and thus generally need to give up their existing physician. The program is designed to keep people out of nursing homes. PACE programs are paid a monthly fee per enrollee (capitated rate) and accept the risk of providing nearly all services for that fee.
PACE programs have a statutory waiver that allows them to use Medicare dollars for non-health care supplies or services, if those services are identified as necessary by the enrollee's interdisciplinary team in the enrollee's care plan.
With respect to quality, MedPAC notes that PACE programs report on measures such as rate of routine immunizations, grievances and appeals, disenrollment, hospital readmissions, emergency care, unusual incidents, deaths, falls or traumatic injuries resulting in death or hospitalization, infectious disease outbreaks and acquisition of pressure ulcers. But, it notes, these quality measures are not publicly reported by the Centers for Medicare & Medicaid Services (CMS), which receives the reports from the programs.
Without access to the quality measures themselves, MedPAC reviewed the literature and found that PACE programs generally performed better on measures regarding hospitalizations, nursing home use and mortality compared with the experience of comparable beneficiaries in traditional Medicare. However, differences between the two populations decreased, with respect to hospitalizations and nursing home use, when looked at after 18 months and after 24 months.
Compared with another program that also integrates Medicare and Medicaid, the Wisconsin Partnership Program (WPP), PACE programs did better on reducing hospital and Emergency Room utilization. Differences in the two programs include that WPP does not operate through day care centers, enrollees keep their original physician and the interdisciplinary team in WPP is smaller than that in PACE and does not include the enrollee's physician.
Another evaluation compared PACE programs in one state with that state's program of offering long-term care services in the community (generally referred to as home and community based services, or HCBS), rather than in institutions. It found that PACE enrollees had a lower risk of dying and greater stability in physical functioning. In this situation, the comparison is not exact because the HCBS program is only paying for the Medicaid services; there is no integration with Medicare. MedPAC notes that the state paid the PACE program more than it paid the HCBS program.
With respect to Medicare spending on PACE (the report includes little information about Medicaid spending), MedPAC notes that rates paid to PACE programs continue to be based on a system that pre-dates the Affordable Care Act, which changed the payment system for Medicare Advantage (MA) plans. Moreover, PACE rates include an adjustment related to dementia and an adjustment for frailty, neither of which is factored into payments for Medicare Advantage plans. These adjustments are to compensate for the relatively higher costs associated with individuals who need a nursing home level of care.
MedPAC believes that changes to the payment system will save Medicare money and result in more accurate payments to PACE providers. It recommends that PACE programs be paid on the same basis as Medicare Advantage plans, with more refined adjusters to take into account multiple conditions and functional status. PACE programs would also participate in the MA bonus payments system for plans with a certain number of stars in the quality rating program.
MedPAC also recommended, with respect to PACE, that enrollment be open to individuals under the age of 55 who require a nursing home level of care MedPAC also recommended that payment be available for less than a full month, to allow programs to enroll individuals as the need for long-term care services arises. It also recommended that Congress establish outlier protection for the first three years of a program's operation, to account for exceptionally high cost beneficiaries.
Medicare Advantage Special Needs Plans (MA SNPs)
MedPAC reports that about 500 SNPs are currently serving 1.4 million Medicare beneficiaries. While not all of those individuals are dually eligible for Medicare and Medicaid, a very high proportion of them are. Dual-Eligible SNPs (D-SNPs) enroll about 1.16 million dual eligibles (they cannot enroll beneficiaries who are not dually eligible). SNPs for people with chronic conditions (C-SNPs) and for people needing a nursing home level of care (Institutional SNPs or I-SNPs) include dual eligibles in their enrollments, but these numbers are not broken out from overall enrollment numbers. Because these are all Medicare plans, even if they serve dual eligibles, they are generally only offering Medicare services.
A subset of D-SNPs are called FIDE-SNPs, or Fully Integrated Dual Eligible SNPs. These plans, as their names suggests, integrate Medicare and Medicaid services together. MedPAC notes that, using a FIDE-SNP definition that includes coverage of all Medicaid primary, acute and long-term care services, fewer than 20 such plans, enrolling about 23,000 beneficiaries, existed in February 2012.
Using existing data sources (and noting their limitations), MedPAC concluded that D-SNPs performance was mixed. On five measures, the D-SNPs outperformed non-SNP MA plans; on 11 there was no difference and on 29, D-SNPs performed worse than non-SNP plans. FIDE-SNPs performed better than both regular D-SNPs and non-D-SNP plans on the specific measures that SNPs are required to report.
With respect of spending, MedPAC notes that SNPs are paid, on average, four percent higher than the cost for comparable beneficiaries in traditional Medicare and FIDE-SNPs are paid eight percent more.
MedPAC raises the question of whether SNPs should be permitted to use Medicare dollars for non-Medicare covered services, as PACE programs can, to promote keeping individuals out of institutions. It makes no recommendations on either payment levels or use of Medicare dollars for non-Medicare services.
CMS Demonstrations on Integrated Care
MedPAC devotes five pages of its report to comments on the demonstration initiatives currently underway under the auspices of the Medicare and Medicaid Coordination Office (MMCO) of the Centers for Medicare & Medicaid Services (CMS) to integrate service delivery and financing of Medicare and Medicaid services for dual eligibles. After describing the initiatives and the authority for them, MedPAC raises issues and concerns as falling into three areas: the large proposed scope of the demonstrations, the standards for the plans that participate in the capitated (per-member-per-month fee for covered services) models and passive enrollment. It notes that these characteristics could have negative effects on dually eligible beneficiaries' access to and quality of care.
Scope of Demonstrations
Noting that many states propose to enroll their entire dual eligible population into the demonstrations, MedPAC notes that this makes them appear to be large scale program changes, rather than demonstrations, though their effectiveness and quality has yet to be proven. It raises the question of whether plans will have the capacity to serve such large numbers of individuals. It notes that such a large scale would make it difficult to move people out of the program if the program proves ineffective. Moreover, MedPAC notes, the scale makes evaluation complicated. If all dually eligible beneficiaries are enrolled in the demonstration, no comparable group outside exists against which to compare the demonstration's performance.
Referring to its examination of FIDE-SNPs, it notes that only about 20 health plans have experience being capitated and at risk for all Medicare and Medicaid benefits. Those plans do not operate in all the states that have submitted proposals for the demonstrations, they do not even operate state-wide where they exist, and they do not serve all of the sub-populations within the disparate world of dual eligibles. MedPAC notes that few standards by which plans will be evaluated are publicly known and that those that are "preferred" by CMS may be changed in its negotiations with each state.
MedPAC states that plan participation standards should be transparent and should consider quality rankings, provider networks, plan capacity and experience with Medicare and Medicaid services for dually eligible enrollees. It also raises the question of whether states will have the resources required for the very necessary monitoring of access to, and quality of, care.
MedPAC describes the enrollment process that CMS and the states propose as "passive enrollment with an opt-out provision…Under this enrollment strategy, states will assign beneficiaries to a health plan through "intelligent assignment" unless the beneficiaries opt-out of the demonstration or select a health plan." (p. 88)
Noting that this strategy could be effective as a way to increase enrollment in integrated care plans with proven experience in serving the population with high quality care, MedPAC questions whether states have the resources to make effective assignments that will truly meet individuals' needs and whether, in fact, every plan in the demonstration will offer high quality care. It notes that beneficiaries will need good education about their choices and continuity of care. It questions whether these features exist as well as whether plans will have the capacity of undertake an assessment of each beneficiary's needs shortly after enrollment.
Finally, MedPAC notes additional issues it wishes to consider with respect to the demonstration projects: whether savings should be taken out upfront, by paying plans less than the current cost of serving the population (it raises the possibility that they should not); how risk adjustment should be made to the payments to account for the specific needs of the population being served; and how and what data will be collected and how demonstrations will be evaluated.
The MedPAC Report raises many issues about demonstration efforts to integrate Medicare and Medicaid. These issues have been raised for the past year in the advocacy community. A future CMA Alert will focus more specifically on these demonstrations.
Reprinted from DRUG BENEFIT NEWS, biweekly news, proven cost management strategies and unique data for health plans, PBMs, pharma companies and employers.
By Lauren Flynn Kelly, Editor
June 8, 2012 Volume 13 Issue 11
Although Walgreen Co. claims the mutual dismissal of a lawsuit filed by Express Scripts Holding Co. against its former network pharmacy has no bearing on future relations between the estranged parties, industry insiders predict another development in their year-long dispute may not be far behind.
Walgreens said June 1 that both parties agreed to dismiss the lawsuit, which was filed by Express Scripts last fall and alleged that Walgreens used false advertising to encourage Medicare beneficiaries to abandon Express Scripts (DBN 9/23/11, p. 8). Although Walgreen Co. claims the mutual dismissal of a lawsuit filed by Express Scripts Holding Co. against its former network pharmacy has no bearing on future relations between the estranged parties, industry insiders predict another development in their year-long dispute may not be far behind.
Walgreens said June 1 that both parties agreed to dismiss the lawsuit, which was filed by Express Scripts last fall and alleged that Walgreens used false advertising to encourage Medicare beneficiaries to abandon Express Scripts (DBN 9/23/11, p. 8). “These dismissals have no impact on the parties’ ability or inability to come to terms on a pharmacy agreement,” Walgreens stated.
“That lawsuit really had to do with Walgreens’ statements in marketing. It could indicate a slight thaw, but fundamentally, it’s really a distraction from the main story,” asserts Adam Fein, Drug Channels author and president of Pembroke Consulting, Inc.
The main story being that Walgreens backed away from contract negotiations a year ago (DBN 6/24/11, p. 1), losing 90 million prescriptions filed for Express Scripts customers, or about $5 billion in annual business. “They’ve suffered dramatic losses, and so any kind of settlement is going to be viewed as positive,” asserts Fein. “My personal view is regardless of who is right or wrong — and I don’t know who is right or wrong here — I do not believe Walgreens can win the battle. And even if they do sign, it’s going to take years for them to recover what they’ve lost and a lot of the customers are just gone forever.”
“I haven’t seen any indication that Express Scripts and Walgreens are making progress in their negotiations, although the resolution of legal issues is favorable,” adds Morningstar Inc. securities analyst Matthew Coffina.
Selling Season Could Bring Resolution
“I think it is likely that you will see some news soon: either a resolution or Walgreens explicitly walking away from the Medco business,” he predicts. Express Scripts acquired Medco Health Solutions, Inc. in April (DBN 4/6/12, p. 1). “We are getting into the heart of the PBM selling season, which is Walgreens’ best and last chance to exercise some bargaining leverage over Express Scripts.”
Neither Walgreens nor Express Scripts has disclosed when Medco’s existing contract with Walgreens expires, although sources speculate it could be the end of this year.
“The real test will be the selling season,” says Fein. “Will Express Scripts/Medco suffer from not having Walgreens in the network? My belief is they won’t suffer because they can offer clients a range of options: an option without Walgreens in an Express Scripts model, an option with Walgreens but with an explicit upcharge for the presence of Walgreens in their network or a traditional relationship via the Medco legacy contracts. This selling season Express Scripts has a lot of flexibility and Walgreens does not.”
Walgreens recently signed a new multiyear agreement with OptumRx, the PBM unit of UnitedHealth Group, which it announced with positive remarks from OptumRx. “This is a great opportunity to ensure our current and prospective customers have a broad range of options, including access to premier retail outlets like Walgreens, to help meet their health care needs,” said OptumRx CEO Dirk McMahon in a prepared statement.
“This [contract renewal] seems fairly routine, but Walgreens is obviously keen to show that some payers are still willing to work with it,” adds Coffina.
An Express Scripts spokesperson declined to comment on the future of Medco’s existing contract with Walgreens. “At this point, legacy Medco clients continue to have Walgreens within their pharmacy network,” he tells DBN. “We do not comment on rumors or speculation,” adds a Walgreen spokesperson.
Wednesday, June 20, 2012
By Jill Brown - June 19, 2012
Health insurers this morning are watching another upheaval in their pharmacy supply chain, as major retail pharmacy Walgreen Co. said it would buy a majority stake in Alliance Boots GmbH.
Health insurers’ pharmacy partners have been consolidating at a rapid rate. After the two largest PBMs, Express Scripts Inc. and Medco Health Solutions, Inc., combined earlier this year, many pharma watchers had been expecting Walgreens to make a major strategic move, in the continuing effort to stabilize earnings and retain customers during the run-out of its now-expired Express Scripts contract.
But rather than the merger with rival drug store chain Rite Aid Corp. that many had predicted, Walgreens instead is looking overseas. Walgreens said its combination with Alliance Boots, unveiled this morning, will “create the first global pharmacy-led, health and wellbeing enterprise.”
Translation: Walgreens agreed to invest $6.7 billion in exchange for a 45% equity ownership stake in Alliance Boots, with the option to acquire the remaining 55% of Alliance Boots in three years. The deal, valued at about $9.5 billion in cash and stock, is expected to be completed by Sept. 1, pending regulatory and other approvals.
In the states, Boots may be best known among U.S. tourists and exchange students to the United Kingdom who stock up on the brand’s No. 7 lipstick. (Now Boots has over-the-counter beauty supply sales at Target Corp. and other retailers, so there’s no need to bribe friends returning from overseas.) But as Drug Channels blogger Adam Fein notes, Alliance-Boots actually is a European powerhouse “formed when Alliance Unichem, Europe's biggest drug wholesaler, merged with Boots, the UK's largest pharmacy retailer.”
Put together, the entity would be “the world’s largest purchaser of prescription drugs and many other health and wellbeing products,” with more than 11,000 stores in 12 countries, along with 370 pharmaceutical wholesale and distribution centers serving more than 170,000 pharmacies and other providers in 21 countries, Walgreens said.Meanwhile, Walgreens’ domestic operations have suffered as a result of its Jan. 1 exit from the Express Scripts network, the result of a longstanding dispute over reimbursement levels. Walgreens had asserted that it would retain the majority of customers, but Express Scripts has reported that 95% of its accounts moved forward without Walgreens in their networks. Indeed, Walgreens today also reportedthat its fiscal third-quarter earnings fell almost 11% to $537 million from $603 million in the same quarter a year ago.