Navvis Right Now: Issue 22 – May 4, 2019

May 4, 2019

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ACA Hearings and Administration

Politico reported that the Justice Department and 18 GOP-led states on Wednesday night urged an appellate court to uphold a federal judge’s ruling to throw out the health law. Their argument, in Texas v. United States: that the entire law must be scrapped because the individual mandate — which they say is central to the Affordable Care Act — is no longer constitutional after the penalty for skipping coverage was eliminated in the GOP’s 2017 tax cut. The biggest surprise in the filing? Its tortured legal reasoning, according to University of Michigan law professor Nick Bagley, who detailed the oddity of the plaintiffs both agreeing with the ruling to eliminate the entire law but then trying to limit its impact. “The Trump administration wants the entire ACA invalidated— except, apparently, the parts criminalizing health-care fraud,” Bagley told PULSE, surmising that the administration is worried about jeopardizing other cases. “But you can’t have it both ways.”

Takeaway: Republicans filed the initial lawsuit in 2018 and there was a lot of speculation after the mid-term election that their campaign platform to repeal and replace the ACA is what caused the party to lose a lot of seats over trying to repeal Obamacare. The move this week confounded many people in Washington, including Republicans.   Democrats and advocates reiterated their years-long argument: Striking down the ACA without a clear replacement will harm tens of millions of Americans who depend on the law and are fighting it with a growing coalition. The Amicus briefsare due next week which will advise the court of relevant, additional information or arguments that the court might wish to consider. The coalition lead by California Attorney General Xavier Becerra is expected towards the end of the month and oral arguments in the Texas lawsuit are scheduled for the week of July 9th. Bottom line is this will be debated in courts for months and ultimately in the Supreme Court. As previously discussed, if Congress reinstated a new individual mandate tax for any amount, the ‘lynchpin’ that has centered on ‘invalidating’ the ACA is removed. However, gaining bipartisan support to do this could be extremely difficult.

‘Medicare for All’ has an Official Moment and CBO Report

Medicare for all” got its first congressional hearingon Tuesday, albeit in one of the House’s tightest meeting rooms, in an area of the Capitol off limits to the scores of people who assembled in Washington to show support. The hearing was to discuss a recent bill introduced by Representative Pramila Jayapal, Democrat of Washington, that would move the nation to a single, government insurer in two years. Although the bill has more than 100 Democratic co-sponsors in the House, it is not expected to advance even to the House floor. The hearing allowed the idea to have its moment without necessarily moving it any closer to becoming law. And yet, despite its largely symbolic nature, the debate over the bill was substantive. Members of the committee, which does not specialize in health policy, courteously asked questions about the effects of a single-payer system on national health spending, on hospital finances and on patients’ access to care. Last week the Congressional Budget Office (CBO) released a paperon the cost of a single-payer system, but it did not offer concrete projections such as the cost of a single-payer price tag. The paper contains ‘key design components and considerations for establishing a single-payer health care system.’ In the 34-page paper, it considers seven components of a single-payer system: administration, eligibility and enrollment, covered services and cost sharing, role of current systems, provider roles and rules, payment rates, cost containment and financing.  The CBO is a non-partisan office and looked at how the U.S. could devise such a system, outlining the cost and policy effects of a wide range of choices, its challenges and how different it would be from any other single-payer country. The NYT noted it offered ‘snippets’ likely to be picked up by single-payer devotes and detractors.

Takeaway: As previously discussed, there is no single ‘Medicare for All’ option being proposed, but increasing affordable coverage is a common theme and the topic will remain in the headlines through the 2020 elections. This week presidential nominee Joe Biden announced his joining the race and he supports a ‘public option’that would allow all Americans the choice of buying into Medicare.  To gain an appreciation for the complexity of trying to design an affordable single-payer plan, read The Washington Post’sarticlethat is catching attention on the Hill, ‘Why Vermont’s single-payer effort failed and what Democrats can learn from it.’

AHA Asks DOJ to Halt Centene-WellCare Merger

The American Hospital Association urged the Trump administration on Wednesday to halt Centene’s $17.3 billion acquisition of WellCare Health Plans, claiming it will reduce competition in Medicaid managed-care and Medicare Advantage services. Centene and WellCare are both major players in government-sponsored health plans, with both having a presence in Medicaid and on the Affordable Care Act’s exchanges. All told the two insurers would cover nearly 22 million people in Medicare, Medicaid and the exchanges. The insurers’ markets overlap in several states, the AHA said in its letter, and they control over half of the Medicaid market in Florida, Georgia and Illinois. “More and more states are moving towards a managed care model for their Medicaid programs in an attempt to control costs,” the lobbying group wrote. “Accordingly, DOJ must carefully scrutinize the transaction’s present and future competition between the parties to win state contracts.” “There is no service more important to American consumers than healthcare, and vigorous competition among health insurance companies is necessary to ensure that consumers receive high quality at affordable rates,” the AHA wrote.

Takeaway: While the companies previously said the merger should clear antitrust reviews because Medicaid rates are set by the states, the AHA said that shouldn’t negate DOJ’s scrutiny of the deal. Preliminary reports speculated that certain markets will need to be exited and sold to ensure there is enough competition.  Centene CEO Michael Neidorff appeared on CNBC and offered his thoughts about the state of the American health care systems and moves that Centene are making in a short interview.  My favorite quote was, ‘health Care must be about policy not politics.’

Civica Rx will Allow Hospital Members to Use Wholesalers

Generic-drug company Civica Rx pledgedthat it will deliver drugs to member hospitals and will accommodate hospitals if they use wholesalers to purchase the products. So far more than 800 U.S. hospitals have joined the organization founded by Intermountain Healthcare, SSM Health, Trinity Health and Ascension, which has since left the group. The company is expected to have its first generic drug on the market this year. Civica Rx CEO Martin VanTrieste said the organization will deliver the generic drugs it makes directly to the member hospitals. “We will not use the standard middleman approach,” he said. However, Civica Rx will accommodate a health system if it still wants to use a wholesaler to get the drug if that could be more convenient. “Our member will know what price we charge the wholesaler,” VanTrieste said, adding that the price it charges a wholesaler would be the same as a hospital. “If a wholesaler takes a container that I sell for $1 and at the end of the system it comes out at $3 then the health system knows that they paid $2 for that convenience,” said VanTrieste, a former executive with the pharmaceutical manufacturer Amgen. “We will force transparency.”

Takeaway: Civica Rx is providing transparency into the markup of pharmacy benefit managers (PBMs). This has traditionally been a ‘black box’ which is what prompted the Congressional hearings with PBMs last month over their part in marking up drug costs. Civica Rx is targeting 14 hospital-administered generic drugs that are in short supply. Civica Rx hasn’t announced what drug will go to market first or which drug will be the first to reach the market.

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.