Navvis Right Now: Issue 15 – March 16, 2019

March 16, 2019

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Trump Proposes a Record $4.75 Trillion Budget

Which includes big increases in military funding and deep cuts to domestic spending, including reducing Medicare spending by $845 billion over 10 years compared to current law. The budget would curb the growth of Medicare and Medicaid by proposing to shave $818 billion from projected spending on Medicare over 10 years and cutting nearly $1.5 trillion from projected spending on Medicaid. In place of the open-ended federal contribution to Medicaid, Mr. Trump would give states “market-based health care grants” — lump sums of federal money or per capita allotments — totaling $1.2 trillion over 10 years. Mr. Trump also proposed new work requirements for working-age adult recipients of food stamps, federal housing support and Medicaid, a move the administration said would reduce spending on those programs by $327 billion over a decade because it would disqualify many who currently receive assistance. It also includes other provisions — such as medical liability reform and drug industry changes — that would indirectly affect Medicare and bring federal savings down to roughly $515 billion, Goldwein said. The vast majority of the Medicare changes are reductions in payments to providers that include a significant push towards site neutral payments, which already has several hospital groups up in arms. (Site neutral payments eliminate the differential in reimbursement between hospitals and independent physicians for similar services.)

Takeaway: the budget proposal is a starting point, which Congress will not pass, but it provides insights into the administration’s priorities and where we will see the President’s 2020 campaign focus. Where the Democrats oppose the budget and discuss preferred alternatives, it provides a roadmap for the democratic platform. We know already that the democratic platform will favor a type of Medicare expansion (e.g., Medicare for more or Medicare for All).

Energy & Commerce Committee Democrats Launch Investigation into Short-Term Health Insurance Plans:

The Hill reportedDemocrats are concerned that companies selling the plans are refusing to cover certain health care services and are misleading potential consumers about what the plans offer. “The Committee’s initial examination of these plans has yielded disturbing information about how insurance companies [short-term plans] discriminate against individuals with pre-existing conditions and put consumers at significant financial risk,” Chairman Frank Pallone (D-N.J.) and Reps. Diana DeGette (D-Colo.) and Anna Eshoo (D-Calif.) wrote in letters to the companies. The lawmakers asked the companies to provide information about how they market and sell, who is selling (brokers/agents), commissions paid to brokers and agents, percent of applicant denials, percent of applicants with pre-existing conditions, complaint tracking, and whether they do “post claims underwriting.” The letters were sent to Agile Health Insurance, Anthem, Arkansas Blue Cross Blue Shield, Blue Cross Idaho, Cambia Health Solutions, eHealth, Everest, Health Insurance Innovations, Healthcare Solutions Team, Independence Holding Company, National General Accident and Health and UnitedHealth Group. Read the letter to UHG here.

Takeaway:  Short-Term Limited Duration Health Insurance (STLDI) plans were approved under the Trump Administration as a less expensive alternative for health care coverage outside of the ACA’s Marketplace. The administration extended plans from 90-day coverage plan under the ACA and to provide three years of coverage. STLDIs are not subject to complying with the 10 essential health benefits under the ACA, which is why they are often called “skimpier” plans. The Democrats stated that they would investigate every action the Trump Administration has taken to weaken the ACA and this investigation is one of those steps. The Committee’s letter does contain three powerful examples where consumers thought they had coverage and were denied payments. Examples include denying payment for heart bypass surgery, $250,000 of prescription drugs for a stroke patient as well as $900,000 in cancer treatment when the diagnosis was made after the plan was in effect.

Trump Health Chief Reveals Talks with States on Medicaid Block Grants

Secretary of Health and Human Services Alex Azar revealed Thursday that his department is in talks with states about instituting block grants in Medicaid without congressional approval. “We have discussions with states where they will come in and suggest ideas,” Azar said at a Senate hearing in response to questions from Sen. Bob Casey (D-Pa.). “There may be states that have asked about block granting, per capita, restructurings around especially expansion populations… It’s at their instigation.” Imposing block grants in Medicaid has long been a major conservative goal for the health insurance program for the poor. Democrats fiercely oppose the idea, and a similar idea known as per capita caps, because both limit the amount of money going to Medicaid, which Democrats argue would require harmful cuts in the program. Republicans say the move allows for more state flexibility and is more fiscally sustainable.

Takeaway:  the administration’s goal is to reduce Medicaid spending by replacing the current open-ended federal commitment to the program and transferring the liability to the states with a lump sum of federal money for each state in the form of a block grant, a measure that would essentially cap payments. The two sides of the debate is how do the states keep pace with rising health care costs with a fixed payment?  Will unsubsidized rising costs lead to future service or eligibility cuts and increase the number of uninsured? Or does it provide more flexibility for the states to allow the funds in the manner they best see fit? Block grants were proposed in 2017 and did not have the support. Expect the Democrats to strongly oppose any move towards a block grant again and the hospital associates to start lobbying against it as well. Technically states can use the existing waiver program today to move to a block grant funding model for states who see that as a better option. Expect this debate to continue through next year.

Two BCBS Plans Join to Create Regional Powerhouse

Forbes reported two large operators of Blue Cross and Blue Shield health insurance plans announced what they are calling a “strategic affiliation” that will merge key management and operational functions into a larger health insurance company with business on the East and West Coasts. Cambia Health Solutions and Blue Cross and Blue Shield of North Carolina Tuesday said they have formed a “a strategic affiliation” between the two companies with a goal of improving healthcare quality and lowering costs. The combined health insurer will have six million health plan enrollees and $16 billion in annual revenues. Patrick Conway, MD will become CEO of Cambia, while also maintaining his role as CEO of BBS-NC, and current Cambia CEO Mark Ganz will serve as Executive Chair of Cambia’s board.  “The strategic affiliation . . .  will maintain the separate health plans in five states, all locally led and regulated,” Cambia and Blue Cross NC said.

Takeaway: The two Blues partnered in 2016 to create Echo Health Ventures. Echo Health Ventures states they are “committed to a new approach to strategic investing – an approach that brings more than capital to the table, focused on developing deep, high-value relationships with our portfolio companies. Together with these companies, we’re identifying bold, new and original ways to meet the needs of tomorrow’s health care consumers in an economically sustainable way.” With BCBS NC clear goals to move all payments from FFS into value-based payments, the affiliation and direction positions the companies to expand outside of traditional health insurance to achieve these goals. Echo Health’s portfolio provides insights into the types of companies they are investing in that are heavily consumer-facing and mobile health technology, including Livongo, Phreesia, and Touchcare (a personal health care assistant).

OptumRx to Mandate Point-of-Sale Rebates in New Plans

Beginning in 2020, all new employer plans with UnitedHealth and its pharmacy benefit manager subsidiary Optum will be required to offer all drug discounts directly to members at the pharmacy counter, the insurer said. The insurer first announced it would expand its use of point-of-sale discounts a year ago and said in the announcement that it will reach 9 million members with these benefits in 2019. “Patients are seeing concrete benefits from UnitedHealthcare’s groundbreaking point-of-sale discount program,” Daniel Schumacher, president and chief operating officer of UnitedHealthcare, said in a statement. Already this year, the point-of-sale discounts have saved UnitedHealth plan members an average of $130 per prescription, the insurer said. In addition, for people enrolled in plans without deductibles or high out-of-pocket costs, these discounts have improved medication adherence between 4% and 16%.  Under pressure amid the ongoing debate over rising drug costs, insurers and PBMs have begun to turn to point-of-sale discounts instead of the traditional pricing rebates. Doing so addresses a major criticism from policymakers and drug companies: that PBMs and payers pocket many of the discounts on medications instead of passing them on to consumers.

Takeaway: OptumRx may be taking a proactive step that other PBMs may be required to follow. Politico reported this week that PBMs are the next in the hot seat following the pharmaceutical company hearings. Bipartisan leaders of Senate Finance called on five pharmacy benefit managers to testify at an April 3 hearing: Cigna, which recently purchased Express Scripts; CVS Health; Humana; OptumRx, and Prime Therapeutics. At a committee hearing two weeks ago, drug company executives blamed PBMs for high prices. The administration has proposed steps to remove the PBM rebates in Medicare Advantage plans and is discussing broadening its plans.


Disclaimer: This blog includes content gathered from other published sources, not authored by Navvis, and is presented as information only. As with any news story, this information may have changed since its publication date. Commentary included with the information is the opinion of its authors, and is not indented to provide legal or regulatory advice or guidance to the reader. Navvis does not represent the accuracy of or assume liability for the content presented herein.