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THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
- Transparency rules go into effect for insurers and self-funded employers. Payers will now need to disclose negotiated rates for both in-network and out-of-network providers, bringing them in line with the rules which went into effect last year requiring hospitals to publish prices. Insurers and employers with self-funded plans are expected to comply at higher rates than hospitals because they face larger fines, up to $100 per-day, per-beneficiary, which could quickly amount to millions of dollars. The next phase of the transparency rules for insurers and employers goes into effect across 2023 and 2024, and will require payers to provide online cost estimation tools to enable individuals to get real-time cost sharing estimates for covered services.
The Gist: While these data are supposed to be published in easy-to-read formats on public-facing websites, they will likely still be of limited help to the average healthcare consumer shopping for high-value care—at least without the support of third-party tools that sort the information and enable comparisons. The new datasets do, however, have the potential to change the dynamics of contract negotiations between payers and providers, as employers begin to question whether their insurance providers are really getting them the most favorable rates for care.
- Democrats revive legislation to lower prescription drug prices. Senate Democrats have reached a deal to give Medicare the power to negotiate drug prices, starting next year. The legislation includes provisions similar to those in the Build Back Better (BBB) Act, such as capping seniors’ out-of-pocket drug costs to $2,000 per year and limiting how fast drugmakers can raise prices. This smaller package has support from moderate Senator Joe Manchin (D-WV), who blocked passage of the BBB last year. Manchin is reportedly open to using some of the estimated $1T in revenue from prescription drug negotiations to fund an extension of Affordable Care Act (ACA) insurer tax credits, which are set to expire this year.
The Gist: With a closely divided Senate and competing priorities, Democrats have been unable to pass significant healthcare reform since taking control in 2021. If all 50 Senate Democrats can coalesce around this deal, it could pass under reconciliation rules without Republican support, allowing the party to deliver on its longstanding promise to lower prescription drug prices. It would also help Democrats avoid a problematic “October surprise”: consumers receiving notices that their health insurance and drug plan premiums will be increasing just weeks ahead of the midterm elections.
- Primary care companies attract growing interest from insurers. Concierge primary care company One Medical is reportedly considering a sale after receiving interest from CVS Health, according to Bloomberg. While talks with CVS are no longer active, sources familiar with the situation say the company is weighing offers from other suitors. Also this week, there were rumors that Humana is interested in acquiring Florida-based Cano Health, which provides comprehensive care to over 200K seniors enrolled in Medicare Advantage plans across six states.
The Gist: We’ve long thought that the ultimate buyer for these primary care startups would be large, vertically integrated insurers, as many have struggled to achieve profitability while maintaining strong enrollment growth. Competition among insurers to acquire care delivery assets has intensified, as payers look to Medicare Advantage as their primary growth vehicle, and aim to amass primary care networks capable of managing their growing senior care businesses.
- Medicare proposes sweeping changes to ACO program. As part of the 2023 Physician Fee Schedule proposed rule, the Centers for Medicare & Medicaid Services (CMS) outlined major changes to the Medicare Shared Savings Program (MSSP), with the goals of increasing participation in the program and improving health equity. The agency hopes their revisions to the benchmarking methodology, which will advantage smaller accountable care organizations (ACOs) and those enrolling large numbers of underserved beneficiaries, will change the trajectory of the program. With participation among providers stagnating in recent years, the new rules represent a recognition from CMS that MSSP, in its current form, is likely to increase spending rather than generate significant savings. The rule also includes a 3.9 percent decrease in the “conversion factor” for physician payment, which has already drawn outrage from the American Medical Association and other physician groups.
The Gist: There is little reason to expect that these modifications—as significant as they are—will be meaningful to beneficiaries or to the Medicare program’s overall sustainability. Although it is heartening to see CMS admit that ACOs are on course to violate the statutory requirement that the program not increase spending, the proposed changes would net only $14.8B in savings over a twelve-year period—a rounding error for a program that spent $830B in 2020 alone.Meanwhile the 11M beneficiaries attributed to MSSP ACOs are dwarfed by the 28M enrolled in MA. For many health systems and physician groups—particularly those who are most progressive in managing risk—MSSP is now a sideshow to their Medicare Advantage (MA) strategies. The federal government has made two “bets” on how to lower health spending for seniors, and the dollars spent on enticing insurers to grow their MA businesses (in the form of subsidies) far outweigh the effort to encourage provider participation in ACOs—a clear sign of Medicare’s priorities. But with MA currently not generating savings compared to fee-for-service Medicare, cuts in per-beneficiary spending in MA will be necessary to achieve savings in the long term.
Plus–what we’ve been reading.
- Threats of prison time put gynecologists in impossible circumstances. In states with laws that criminalize performing abortions, physicians are facing the dilemma of having to wait until a pregnant patient’s death is imminent to perform a potentially lifesaving procedure. Reporting from STAT News reveals how these laws are disrupting care. A physician in Missouri, which outlaws all abortions unless the life of the mother is in danger, described having to spend hours getting clearance from a hospital ethics team to perform the procedure on a patient with an ectopic pregnancy. Even non-pregnancy care is being impacted. An arthritis patient taking methotrexate, which can also be used for abortion, was told by her doctor that all prescriptions for the drug are on pause due to legal uncertainty.
The Gist: Doctors and hospital legal counsel are dealing with a new legal landscape, marked by restrictive, ill-defined anti-abortion laws that fail to clarify what constitutes a medical emergency. Physicians are forced to interpret unclear laws, often written without help from medical professionals, and many feel compelled to wait until patients are in dangerous, life-threatening situations to provide care—the opposite of was instilled in them during years of training.
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