Plans Ponder Singling Out Specialty Drug Coupons to Enforce Formulary Compliance

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

December 7, 2012  Volume 13 Issue 23

UnitedHealth Group’s UnitedHealthcare unit will soon implement a novel initiative aimed at limiting the use of manufacturer-offered copay coupons through its specialty pharmacy network, while Blue Cross & Blue Shield of Rhode Island reportedly attempted a similar strategy but was forced to loosen its restrictions due to patient pushback. Such moves indicate a growing trend in the ongoing battle against copay offset programs, as several other companies say they are considering ways to target the use of specialty drug coupons as early as 2013, but are still grappling with some of the logistics.

Starting Jan. 1, UnitedHealthcare is targeting copay assistance cards to discourage members from using non-preferred specialty drugs in cases where there is a lower-tier agent on its preferred drug list. How are they doing this? The insurer’s network specialty pharmacies will no longer accept coupon cards when a member calls to fill a prescription for one of six drugs: Extavia (interferon beta-1b) and Gilenya (fingolimod) for multiple sclerosis, CellCept (mycophenolate mofetil) for patients receiving transplants, Humira (adalimumab) for rheumatoid arthritis, and Victrelis (boceprevir) and Peg-Intron (peginterferon alfa-2b) for hepatitis C. The action does not impact needs-based assistance programs.

The six drugs were chosen because of the “availability of therapeutically equivalent options that would provide patients a more affordable option,” United spokesperson Daryl Richard tells DBN’s sister publication Specialty Pharmacy News. The elimination of these coupons is estimated to impact less than 0.1% of members currently taking one of these drugs, he adds. An analysis of United’s pharmacy claims shows that 75% of members on a Tier 3 drug are using a copay coupon, and 45% of members take a Tier 3 specialty drug even when a Tier 1 or Tier 2 option is available.

Meanwhile, Navitus Health Solutions, LLC, tells DBN it is at the point of making a decision in the coming weeks on whether to start disallowing certain copay cards through its specialty pharmacy network. The Wisconsin-based PBM has already had conversations with its specialty pharmacy vendors, which expressed that they’d be willing and able to block the use of the cards on select medications if the PBM instructed them to do so.

“We as a company believe that copay cards have a potential benefit and also a detriment, so there’s kind of a double-edged sword when it comes to these cards,” says Brett Kelly, senior director of industry relations. On the plus side, when the card is used on a preferred agent, the member pays less for access to their drugs and is thus more likely to take them, he explains.

“The negative aspect is when they’re for non-preferred agents, what it does is it typically lowers the cost for the member but the health plan typically pays more,” he continues. “And that’s not always the case, but in most instances we have a reason or a rationale for why we decided to make these agents preferred and non-preferred and we have the clinically appropriate, lower-net-cost products in preferred tiers. So what it does in our minds is undermines the use of our preferred agents, and in the end leads to higher costs for our health plans and employer groups.” As a result, Navitus’s program would target only certain non-preferred agents with cards that are actively being promoted.

Challenges Exist in Tackling Cards

One dilemma in designing such a program is differentiating between a widely available discount card and something that’s being used because of financial need. “If in fact it qualifies their use because of financial struggles, then we deem that a copay card associated with a needs-based copay assistance card. But some of these supposed needs-based assistance cards really don’t have strong stipulations on who can actually use those cards,” asserts Kelly. “There’s no enforcement mechanism for most of them.”

According to The Zitter Group, over two-thirds of biologics, which are generally free from significant generic competitive pressure, offer copay offset programs. And at least 19 drugs in orphan disease categories have discount programs in place, reports the business intelligence firm.

Navitus recently conducted its own survey of the coupon market and sent requests to the manufacturers of the PBM’s top 20 most utilized drugs, including both specialty and traditional, asking if they had copay cards currently in effect, when those promotions started, and whether they intend to continue offering the cards. Of those 20, it was determined that only two did not have a copay card in place. Kelly adds that Navitus has been implementing various strategies to address the coupons overall, not just in the specialty realm, and plans to release a white paper next spring on the issue.

Meanwhile, Aetna Inc. tells Specialty Pharmacy News that it is considering employing some kind of strategy targeting specialty drug coupons. “We do not have a current policy regarding copay assistance cards although we are evaluating a number of strategies to ensure that we balance the needs of our members and the often inappropriate usage of these programs,” says Robert Galle, head of Pharmacy Benefit Management.

And while WellPoint, Inc. has no concrete plans to disallow specialty drug coupons, the insurer tells DBN it does have some concerns about their use and has begun exploring potential solutions. “It’s not something that we do today but we do recognize our competitors are blocking select coupons with certain manufacturers,” states Laurie Amirpoor, vice president of pharmacy operations.

“Our big concern is that there are unintended consequences associated with specialty drug coupons. We understand that the financial impact is very great on these members, but at the same time they have adverse effects in that they drive members to a product that may not be appropriate first line or at the time that the member’s diagnosed.” Amirpoor adds that these concerns exist regardless of cost. “Some of these newer agents are just not intended to be used as a first line of therapy,” she stresses.

As a result, WellPoint has mentioned to its specialty vendors that it would like to start exploring ways to curb the coupons’ use. “We haven’t really gotten into the details because part of the challenge is that the specialty pharmacies are the ones that get the reimbursement back from the manufacturer for these coupons, so we have to understand and they have to be willing to share with us how exactly do they get these reimbursements for the coupons, and are they willing to give that up?” explains Amirpoor.

WellPoint’s PBM partner, Express Scripts Holding Co., says it supports the use of copay coupons in certain instances where “brand manufacturers will offer a coupon to increase access to an otherwise price-prohibitive medication,” but generally opposes the use of the coupons if they’re costing the payer more.

Specialty Drugmakers Have More to Lose

One major difference between a specialty drug coupon and a traditional copay card is that there’s a much bigger return on investment for makers of specialty drugs, suggests Kelly. “If the cost of therapy is $100 a month and you give them $15 off, it takes a while to really make up for that, but if the cost of the drug is $1,500 a month and it costs you only $15 or $20, it doesn’t really take very many copay cards to make the card program pay for itself,” he explains.

“When you look at the specialty copay cards versus the traditional copay coupons, it’s a little different because drugs like Lipitor and Solodyn [which have copay cards associated with them] have direct generic alternatives, but in specialty there isn’t going to be an exact generic alternative,” adds Amirpoor. “Then there’s more open-mindedness as long as they’re promoted correctly. But ultimately, this is going to impact the member if not now, later. These costs will eventually get pulled into the premium, so there are long-term effects of using these coupons and we will use other utilization management tools to try to control the use of these drugs.”

WellPoint already has step therapy edits in place for certain classes such as rheumatoid arthritis, where use of a preferred specialty agent — which typically falls on a plan’s third tier with a $40 or $45 copay or a coinsurance with a maximum dollar amount of $150 to $300 per prescription — would be required before stepping up to a non-preferred agent.

Navitus employs similar step edits on specialty drugs, and Kelly says those can be a fairly effective way to enforce formulary compliance. If the company finds that technique is sufficient to naturally deter use of the cards and that taking things a step further wouldn’t make much of a financial impact on its clients, then those would be two reasons why the company decides not to go through with disallowing the cards.

After Court Decision, All Eyes on States

Year in Review

By Emily P. Walker, Washington Correspondent, MedPage Today

Published: December 23, 2012

Our Year in Review series highlights the major medical news stories of 2012. While the Supreme Court upheld most of the Affordable Care Act in a landmark ruling in late June, its ruling also complicated the law's Medicaid expansion. Here is the original article, published on July 2. In a companion article, you'll find out what has happened with it since.

WASHINGTON -- Following last week's Supreme Court ruling upholding the Affordable Care Act (ACA), the focus is now on the states and how they'll react to the law's Medicaid expansion and health insurance exchanges.

"States are now Ground Zero for health reform: the law puts enormous pressure on states to act quickly and decisively," Paul Keckley, executive director for Deloitte Center for Health Solutions, wrote in a Friday memo. "Should they implement an insurance exchange, or default to a federally run alternative? Should the state's Medicaid program be expanded per the law?"

State Medicaid Decisions Looming

In terms of the ACA's Medicaid provisions, although the Supreme Court's 5-4 decision upheld most of the ACA, it essentially allowed states to opt out of a crucial piece of the law -- the provision that expands Medicaid to cover nearly all people under age 65 with household incomes at or below 133% of the federal poverty level. That provision is set to go into effect in 2014.

While the court found the Medicaid expansion is constitutional, it ruled that the provision in the law that gives the Secretary of Health and Human Services (HHS) the authority to financially penalize states that don't comply with the expansion -- by withholding federal Medicaid matching funds -- is not constitutional.

Robert Laszewski, a consultant and former insurance executive, said in a statement that the major focus is going to turn to the states that opposed the ACA.

"Now, conservative governors who said they wanted no part of a Medicaid expansion shoved down their throats from Washington have the ability to opt out of it without a penalty," he said. "That puts those conservative governors and their legislatures on one big hot seat. Whether or not their state gets a Medicaid expansion is now entirely up to them. It's put up or shut up time for conservative governors and state legislators who said the ACA was an onerous expansion of federal powers over their states."

Put another way, without fear of being penalized, will states that oppose the ACA be compelled to expand their Medicaid programs?

Health policy experts are betting yes, they will.

Refusals Seen as Unlikely

Taylor Burke, an attorney and associate professor of health policy at George Washington University's School of Public Health and Health Services here, said he finds it hard to believe that states would choose not to expand their Medicaid programs given that the federal government will cover 100% of a state's cost of the expansion starting in 2014, and gradually decrease to 90% in 2020 and in the subsequent years.

"I have to believe that with 100% coverage of the expanded Medicaid population, it would be quite shocking, I think, that a governor and a state Medicaid director, purely on political and ideological lines, would say, "'We will not expand and we will not take this money from the government.'" Burke told MedPage Today. "That would be a tough political sell."

During oral arguments, Justice Elena Kagan also appeared incredulous that any state would turn down what she called "a boatload of money."

Colin Roskey, a partner at the Washington law firm Alston & Bird, also said it would be unlikely that governors would turn down those federal dollars.

"I think it would take a very, very hard state legislature or a hard-nosed governor to say 'No, we're not taking that,'" he said during a Friday panel discussion at the National Press Club.

Not All Costs Covered

The 26 states that sued the federal government over the law argued that expanding their Medicaid programs would break their state budgets.

Currently most states' Medicaid programs only cover pregnant women and children who are very poor, as well as certain low-income, disabled adults.

Although the federal government will pay for nearly all of the cost of expanding the program to cover everyone with an income that is 133% of the federal poverty level (which is $30,657 for a family of four), that federal assistance is just for paying Medicaid claims, not for the cost of setting up the expansion, administrative tests, and for implementing state-level fraud detection programs, Burke pointed out.

For some states with very limited Medicaid programs, the 133% expansion could still come with significant costs, he said. Not to mention that there is no guarantee that future congresses will continue to support the federal government footing most of the bill, he said.

Matt DeCamp, MD, PhD, an internist and Greenwall Fellow in Bioethics and Health Policy at Johns Hopkins University, said when he learned of the court's decision, he was immediately worried about what would happen to Medicaid if states chose not to expand their programs.

The Congressional Budget Office estimates that under the ACA's Medicaid expansion, an additional 16 million currently uninsured, low-income people will be covered.

"Some clinicians, including myself, will worry that populations otherwise in need of care might not get it," he said. "A day-to-day practicing clinician often sees those patients who don't qualify for Medicaid but are unable to afford insurance ... the hope that a lot of people had is that in bringing Medicaid up to 133% of the federal poverty level, many of those individuals would gain access to care."

On a Friday afternoon press call, an official with the Centers for Medicare and Medicaid Services said he was confident that all states would take Medicaid money. He likened it to the creation of the Children's Health Insurance Program (CHIP), which was resisted by some states at first. After 2 years, all 50 states participated in CHIP.

Health Exchange Decisions Due

Meanwhile, the deadline for states to apply for federal grants to assist them in setting up their health insurance exchanges came and went on Friday. In a call with reporters that day, HHS Secretary Kathleen Sebelius said the agency still hadn't heard from some states.

As of Friday, 34 states and the District of Columbia had received approximately $850 million in exchange grants, Sebelius said.

Health insurance exchanges -- which were mandated by the ACA and are meant to act as a one-stop shop where residents in each state can go to purchase insurance on their own -- were not challenged directly in the lawsuits considered by Supreme Court.

Under the law, states must either set up their own insurance exchange, or else defer to the federal government to do it for them.

The exchanges must be up and running by Jan. 1, 2014, but states that oppose the ACA have delayed moving forward on setting up exchanges while waiting for the Supreme Court to rule.

A day after the ruling, Sebelius announced it was making 10 new grants available to states to set up their health insurance exchanges.

The new grants will be available to all states "no matter where they are in the process of setting up their marketplace" and whether they want to run it themselves or partner with the federal government. Sebelius also said meetings across the country are planned this month in order to bring together states and HHS officials to discuss exchange implementation.

 Up

Emily P. Walker, MedPage Today Washington Correspondent, covers Congress, FDA, other health agencies in Washington. She also covers an array of healthcare events in the nation’s capital, focusing on intersection of policy and medicine. After earning a BA in journalism and political science at Western Michigan University, she worked at the Kalamazoo Gazette, Congressional Quarterly, and wrote for several medical newsletters.

Health Care Payment Reform Could Save U.S. $200 Billion-$600 Billion over Coming Decade

According to a new working paper by UnitedHealth Group's Center for Health Reform & Modernization, care provider payment reform could slow U.S. health spending by between $70 billion and $1.01 trillion cumulatively over the coming decade, with more likely savings in the $200 billion to $600 billion range. Around half of these savings might accrue to Medicare and Medicaid.

Underlining the size of the opportunity, the report also finds that U.S. physicians say that care costs could be cut by an average of 18 percent without any impact on quality, and 59 percent of physicians report there are meaningful differences in the quality of care provided by doctors in their local areas - although only 44 percent of consumers are aware of them.

The federal government projects that national health spending will rise from $2.8 trillion to $4.8 trillion over the coming decade, accounting for nearly 20 percent of the U.S. economy.

Source: UnitedHealth Group's Center for Health Reform & Modernization
http://www.unitedhealthgroup.com/newsroom/news.aspx?id=39c1c804-5228-40ae-bfba-bb6c19da7b74

'Fiscal Cliff' Bill Passes, Medicare Cuts Averted

By David Pittman, Washington Correspondent, MedPage Today

Published: January 01, 2013

WASHINGTON -- The 26.5% cut in Medicare reimbursement mandated by the sustainable growth rate (SGR) formula was averted in a literal 11th hour vote Tuesday in the House of Representatives. The House vote to pass the "fiscal cliff" bill ok'd earlier by the Senate delays the SGR cuts for a year and pushes back another 2% cut for two months.

The bill cleared the House by a vote of 257-167; senators had passed the same bill in an 89-8 vote just after 2:00 a.m. vote.

Between the SGR and sequestor, doctors were facing a 28.5% in Medicare payments scheduled to take effect Tuesday.

The SGR "fix" faced was included in negotiations as part of a broader deal to avert the so-called "fiscal cliff", a series of dramatic spending cuts and sharp tax increases.

The bill passed Tuesday was only a partial solution, however, aimed primarily at averting tax increases on the middle class. The agreement leaves tax rates as they are for families earning more than $450,000 and extends a number of other tax breaks.

President Obama was expected to sign the bill quickly. Vice President Joe Biden worked with Senate Republicans to craft the agreement.

Speaking from the White House just after Tuesday's House vote, Obama said reducing government spending -- including in entitlement programs like Medicare -- is the next step he and Congress must address.

Earlier in the day, he praised the Senate's action. "I believe we have got to find ways to reform that program [Medicare] without hurting seniors," Obama said.

In the coming months, lawmakers must still deal with raising the nation's borrowing limit and long-term government spending. Those controls on long-term spending could include changes to Medicare. Ideas included raising the Medicare eligiblity age and forcing the wealthy to pay higher premiums.

Congress will pay for the nearly $30 billion SGR patch by, among other measures, cutting payments to hospitals. It lowers "disproportionate share" payments to facilities that care for largely poor populations and lowers the baseline for payments for inpatient stays. It also rebased bundled payments for end stage renal disease patients and reduced risk-adjusted payments to Medicare Advantage plans.

There has been talk about paying for the so-called "doc fix" by ending a provision of the Affordable Care Act that mandates paying Medicaid primary care providers at the higher Medicare rates for the next two years.

The American Medical Association applauded the temporary SGR fix, but stressed that more needs to be done. "This patch temporarily alleviates the problem, but Congress' work is not complete; it has simply delayed this massive, unsustainable cut for one year. Over the next months, it must act to eliminate this ongoing problem once and for all," the association said in a statement.

Hospital groups spoke out against the way Congress paid for the fix.

"While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals' ability to care for seniors and their communities," Rich Umbdenstock, president and chief executive of the American Hospital Association said in a statement Tuesday. "That's why we are very disappointed at the approach taken in this measure."

The mandatory spending cuts under the Budget Control Act also averted Tuesday demanded a 9.4% cut in most parts of defense spending and an 8.2% cut for most nondefense agencies in fiscal 2013.

Those cuts left lingering questions for federal health agencies on how they would absorb such reduced funding. For now, those questions are delayed until Congress takes further action.

David Pittman is MedPage Today’s Washington Correspondent, following the intersection of policy and healthcare. He covers Congress, FDA, and other health agencies in Washington, as well as major healthcare events. David holds bachelors’ degrees in journalism and chemistry from the University of Georgia and previously worked at the Amarillo Globe-News in Texas, Chemical & Engineering News and most recently FDAnews.

CMS NEWS: States move forward to implement health care law, build health insurance marketplaces

Health and Human Services (HHS) Secretary Kathleen Sebelius today announced that three more states are on track to implement the health care law and establish health insurance marketplaces, or Exchanges, in their states. HHS issued the first conditional approval of a State Partnership Exchange to Delaware and Minnesota and Rhode Island are conditionally approved today to operate a State-based Exchange.

Today’s conditional approvals follow those issued last week to Colorado, Connecticut, the District of Columbia, Kentucky, Massachusetts, Maryland, New York, Oregon, and Washington to operate State-based Exchanges.

The conditional approval provided to Delaware today is the first of its kind and shows the progress Delaware has made ahead of the Feb. 15, 2013, deadline to apply to operate a State Partnership Exchange.   The State Partnership Exchange model is an option provided to states that want to manage part of the Exchange in 2014. A Partnership Exchange allows states to make key decisions and tailor the marketplace to local needs and market conditions. In addition to Delaware, Arkansas, Illinois, Iowa, and North Carolina have also expressed early interest in establishing a State Partnership Exchange.

“States across the country are working to implement the health care law and build a marketplace that works for their residents,” said Secretary Sebelius. “In ten months, consumers in all fifty states will have access to a new marketplace where they will be able to easily purchase quality health insurance plans.”

Because of the Affordable Care Act, consumers and small businesses in every state will have access to a new marketplace starting in 2014 where they can access quality, affordable private health insurance. These are similar to those choices that will be offered to members of Congress.

Consumers in every state will be able to buy insurance from qualified health plans directly through these marketplaces and may be eligible for tax credits to help pay for their health insurance.

To learn more about Exchange conditional approvals, visit: http://cciio.cms.gov/resources/factsheets/state-marketplaces.html

To view Exchange letters from states, visit: http://www.healthcare.gov/law/resources/letters/index.html

For more information on Exchanges, visit: http://www.healthcare.gov/exchanges

# # #

Follow HHS on Twitter @HHSgov and sign up for HHS Email Updates

FOR IMMEDIATE RELEASE Thursday, December 20, 2012  Health and Human Services (HHS) Secretary Kathleen Sebelius today announced that three more states are on track to implement the health care law and establish health insurance marketplaces, or Exchanges, in their states. HHS issued the first conditional approval of a State Partnership Exchange to Delaware and Minnesota and Rhode Island are conditionally approved today to operate a State-based Exchange. Today’s conditional approvals follow those issued last week to Colorado, Connecticut, the District of Columbia, Kentucky, Massachusetts, Maryland, New York, Oregon, and Washington to operate State-based Exchanges. The conditional approval provided to Delaware today is the first of its kind and shows the progress Delaware has made ahead of the Feb. 15, 2013, deadline to apply to operate a State Partnership Exchange.   The State Partnership Exchange model is an option provided to states that want to manage part of the Exchange in 2014. A Partnership Exchange allows states to make key decisions and tailor the marketplace to local needs and market conditions. In addition to Delaware, Arkansas, Illinois, Iowa, and North Carolina have also expressed early interest in establishing a State Partnership Exchange. “States across the country are working to implement the health care law and build a marketplace that works for their residents,” said Secretary Sebelius. “In ten months, consumers in all fifty states will have access to a new marketplace where they will be able to easily purchase quality health insurance plans.” Because of the Affordable Care Act, consumers and small businesses in every state will have access to a new marketplace starting in 2014 where they can access quality, affordable private health insurance. These are similar to those choices that will be offered to members of Congress. Consumers in every state will be able to buy insurance from qualified health plans directly through these marketplaces and may be eligible for tax credits to help pay for their health insurance. To learn more about Exchange conditional approvals, visit: http://cciio.cms.gov/resources/factsheets/state-marketplaces.html To view Exchange letters from states, visit: http://www.healthcare.gov/law/resources/letters/index.html For more information on Exchanges, visit: http://www.healthcare.gov/exchanges

CMS OKs Ohio as Third Duals-Program State; Senate Hearing Generates More Debate

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care.

By James Gutman, Managing Editor

December 20, 2012Volume 18Issue 24

The form of the big CMS demonstration program for Medicare-Medicaid dual eligibles crystallized some more Dec. 12 as the agency’s duals office approved an Ohio initiative calling for relatively modest savings. That is consistent with the Massachusetts initiative approved this summer as the first to get the agency’s blessing — and funding (MAN 9/6/12, p. 1). Moreover, the following day, Melanie Bella, the director of the duals office (technically the Medicare-Medicaid Coordination Office), furnished additional details about CMS’s approach on the demo in an hour and a half of testimony before the Senate Finance Committee.

The need for the initiative and Bella’s work on it drew widespread support from the committee in the hearing, but several members — mostly Democrats — raised specific concerns about aspects of the initiative. As previously, the strongest critic was Sen. Jay Rockefeller (D-W.Va.), who helped develop the duals-office concept in the health reform law but dislikes its initiative’s scope and the plans for its rapid implementation.

Perhaps the best indicator of where the initiative is going for health plans, though, lies in what has been approved on capitated proposals (the second approval, for Washington state, was only on managed fee-for-service so far), and Ohio sheds additional light on this. The estimated savings from the program as spelled out in the Memorandum of Understanding (MOU) between CMS and the state, notes securities analyst Brian Wright of Monness, Crespi, Hardt & Co., Inc., are 1% in the first year, 2% in the second and 4% in the third. State Medicaid Director John McCarthy says the program should save the state $243 million by the end of 2016.

Wright says that the “quality payment withholding percentages” for plans in the Ohio initiative also are “modest,” at 1% in the first year, 2% in the second and 3% in the third. “We believe these parameters are reasonable and achievable,” he asserts in a Dec. 13 research note, adding that “this should significantly reduce the operational risk associated with the expansion opportunity.”

Also consistent with the previous MOUs is slight slippage in the initially proposed implementation dates. The Ohio initiative, which will serve 115,000 duals, according to CMS, will be phased in during October, November and December 2013, depending on the region, compared with a phase-in start of April 2013 in Ohio’s proposal.

Ohio already has selected the plans for its program, based on their scores in the state’s evaluation of their proposals (MAN 7/19/12, p. 1) and a requirement that no plan may serve more than three of the state’s seven regions.

The accomplishments of Bella and the duals office drew praise from the Senate Finance Committee’s ranking minority member, Sen. Orrin Hatch (R-Utah). Commending what he called Bella’s “pragmatic” approach, he told the hearing that duals offer an area “in which we can achieve bipartisan agreement,” which he described as a different outlook than on other major topics being discussed in Washington these days.

And in her testimony Bella seemed to emphasize noncontroversial areas, reporting, for instance, that “CMS now has an integrated Medicare-Medicaid data set” and that the duals office is integrating the appeals process.

In response to questions from committee Chairman Sen. Max Baucus (D-Mont.) about payment levels in the demo, Bella said, “We don’t expect to have a negotiation with plans” on pay rates. CMS will set those risk-adjusted rates, she explained, using input from the state Medicaid department involved, and based in part on assumptions about how much money the demo will save. She added that there is not a national savings target because the primary objective is to improve care, not cut costs.

Rockefeller Says Demos’ Size Is Too Big

Her responses did not satisfy Rockefeller. “Why is CMS pushing for an arbitrary savings target for duals in each state, and why is that driving the model?” he asked without waiting for a response. “Where is the robust evaluation plan” for the dual demos? he continued. Rockefeller contended that when the state demos are as large as the ones planned for duals, they cease to be demos and instead “it’s the inevitable formulation of policy.”

Bella responded that the duals office has an outside evaluator — RTI — working closely with demo participants to establish appropriate comparison groups to study demo results. “We have to have a rigorous evaluation,” she asserted, adding that no state’s proposal will be approved without it. “Cost is the elephant in the room,” said Bella, but it’s not the driver of the program.

Later on, Rockefeller complained that only nine of the 25 states proposing dual initiatives under the program planned to have “independent advocates” to help beneficiaries make decisions about whether to participate in the demo. And he protested what he called a “lock-in” of beneficiaries enrolled in the Washington state demo.

“There is no lock-in in these demonstrations,” Bella responded, pointing out that beneficiaries can exit them or change plans monthly. She added that “we have 73 pages that show what states have to prove” before they can start the demo, along with “milestones” they must accomplish before being allowed to enroll beneficiaries in the next phase. Moreover, she said, states are expected to use an “ombudsman” to aid dual-demo beneficiaries, and there is a provision to that effect in the Ohio MOU.

Sen. Charles Grassley (R-Iowa) raised a different concern in his questions. Why, he asked, are duals being treated differently from people who are only Medicare beneficiaries but have multiple chronic conditions and functional impairments? Grassley said that of the highest-cost Medicare beneficiaries, more than half are Medicare only rather than duals and that it makes no sense to apply the new demonstration only to duals.

Bella responded that while Congress created her office to focus only on duals, she hopes that “what we learn” from the duals initiative will be transferable to the 57% of highest-cost beneficiaries who are Medicare only.

Two senators focused on the problem of duals being transferred from Medicaid-paid nursing homes to acute care hospitals for purported needed treatments and then back to the nursing homes, where they then qualify for the higher Medicare payment rate for an extended period.

“This is the poster child” for the need for duals programs, replied Bella, contending that the current system furnishes incentives for such unneeded transfers. The way to avoid this, she suggested, is to enable patients to get all the care they need at the initial facility, so “we need more care resources available at the facility.” Furnishing community-based services is another way to avoid such situations for duals, she added.

Two senators complained about factors they said were preventing their states from participating in the duals initiatives. Sen. Ron Wyden (D-Ore.) praised Bella but told her Oregon concluded it was not financially viable for the state to participate in the duals demo because it has relatively low fee-for-service costs and high Medicare Advantage payments that would put it at a disadvantage in calculating the baseline used in the duals program.

The duals office knew when developing the standards for the demo, responded Bella, that “it wouldn’t work for all states.” She cited Minnesota as a state in a similar situation, and said the duals office is working with it on “alternative approaches.”

Sen. Richard Burr (R-N.C.) complained that because his state just wants to expand its current “community care” Medicaid initiative to duals, it is precluded from participation in the initiative. Bella replied that North Carolina has been unwilling to go at risk in the demo, wanting only to share in the Medicare savings from it, and she said the duals office is working with state officials to find a resolution. Burr then suggested that the duals office “put new things on the table,” and after that maybe North Carolina would be willing to go at risk.

View a webcast of the hearing at http://tinyurl.com/d6mbc4v. View a fact sheet about the Ohio approval at http://tinyurl.com/d28ktj8.

http://aishealth.com/archive/nman122012-02

Quote of the Day

“The feds [looking for Medicare overpayments] go where the money is and that usually is not the vendor. The government says ‘we get that the vendor did this thing but it was for your patient or for services provided at your facility so you are the one on the hook.’”

— Kevin Cornish, national director of the healthcare dispute, compliance and investigation practice at Navigant Consulting, told AIS’s Report on Medicare Compliance.