|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Physicians push back on quality reporting mandates
A new Perspective piece published in the New England Journal of Medicine this week delivered a sharp critique of the Merit-Based Incentive Payment System (MIPS), a key part of the Quality Payment Program (QPP) being implemented by Medicare to link physician payment to performance on key quality metrics. The article reported the findings of a review conducted by the American College of Physicians (ACP), which concluded that only 37% of the ambulatory, internal-medicine focused metrics included in MIPS are valid. The study calls into question the rigor and usefulness of MIPS as a means of holding physicians accountable for quality performance, while criticizing the administrative and financial burdens created by the program. As the authors point out, US physician practices spend over $15B every year—more than $40,000 per doctor—reporting on quality metrics.
Shortly after the release of the NEJM piece, a broad coalition of physician specialty societies released a public letter to CMS Administrator Seema Verma, calling for the implementation of the MIPS program to be dramatically scaled back for 2018. The letter, along with the ACP study, adds to the growing chorus of criticism of the MIPS program, which has roiled the physician community since the passage of the Medicare Access and CHIP Reauthorization Act (MACRA) in 2015. Just last year, the Medicare Payment Advisory Commission called for the scrapping of MIPS, and its replacement by a simplified program. Whatever the ultimate fate of MIPS, it’s clear that the more physicians learn about it and begin to feel its financial and operational impact, the greater their concern. MACRA has fundamentally changed the outlook for physician practice in the US, and has sparked a realignment among hospitals, doctors and insurers as the industry grapples with its implications. Look for the debate over physician quality reporting to continue to intensify.
Medicare expansion becomes a rallying cry for Democrats
Democratic Senators Chris Murphy (CT) and Jeff Merkley (OR) introduced a new bill to allow individuals and businesses to buy into the Medicare program. The “Choose Medicare Act” would give under-65s on the Obamacare exchanges and businesses the option of purchasing Medicare coverage, rather than private insurance. It would create a new “Medicare Part E” program, which would include pediatric coverage and would put in place out-of-pocket spending caps for enrollees (something the current Medicare program doesn’t have). The Murphy-Merkley bill would also substantially raise subsidies for individuals purchasing their own insurance in the Obamacare exchanges. Premiums for the new Medicare Part E coverage would likely be lower than for traditional private insurance plans, taking advantage of Medicare’s favorable provider rates. The bill has not yet been evaluated by the Congressional Budget Office, and it’s unclear what impact it would have on the Federal budget—although the new coverage for under-65s would have to be self-financed through premiums.
The Murphy-Merkley bill is just the latest in a series of proposals by Democratic lawmakers and policy centers to expand Medicare coverage to the under-65 population. Most notably, Sen. Bernie Sanders (D-VT) has proposed a Medicare-for-all plan, while several other Senators have put forward bills allowing Medicare buy-in for people under 65. The conventional wisdom is that none of these proposals is likely to become law anytime soon given the difficult political dynamics in Washington, particularly with regard to healthcare. But the Murphy-Merkley bill is the latest signal that Democrats are eager to make healthcare coverage a marquee issue heading into this fall’s midterm elections. Following the unsuccessful Republican effort to “repeal and replace” Obamacare, and with growing public concern about healthcare costs, Democrats see an opening to re-engage in the politics of health reform. With Republican reform standard-bearer Rep. Paul Ryan (R-WI) retiring this year, we may be headed into yet another round of political debate about healthcare.
Another healthcare merger in the antitrust spotlight
Bloomberg reported this week that the proposed acquisition of pharmacy benefit manager Express Scripts by insurer Cigna would be reviewed for antitrust implications by the Department of Justice (DOJ). The Cigna-Express Scripts deal itself was announced after Cigna’s merger with Anthem was scuttled due to antitrust scrutiny, and Express Scripts was cut loose from its relationship with Anthem (which then announced plans to create its own drug plan). The proposed Cigna-Express Scripts combination is one of a number of major realignments unfolding across healthcare, with UnitedHealth Group’s Optum unit moving even further into care delivery, and retail pharmacy chain CVS making a play for Aetna’s insurance portfolio. The CVS-Aetna deal may also be reviewed by the DOJ’s antitrust enforcers.
Antitrust scrutiny of “vertical mergers”—involving two entities that don’t compete directly in the same business but seek to combine their operations to work across a broader market—has been relatively rare. It has historically been much more difficult for the government to make the case that vertical mergers reduce competition or raise prices. However the Trump administration’s antitrust boss at DOJ, Makan Delrahim—himself a former lobbyist for Anthem—has been much more vocal than expected with regard to vertical mergers. In particular, Delrahim has taken an aggressive stance against the proposed merger between media giants AT&T and Time Warner, challenging the combination in a landmark court case. As we’ve written elsewhere, the AT&T-Time Warner case—and the DOJ’s increasingly tough posture on vertical mergers—will have an enormous impact on the healthcare industry, either clearing the runway for more blockbuster deals, or chilling the current trend of big, cross-sector mergers.