|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
No surprise, lawmakers fail to reach a surprise billing compromise
It came as no surprise (pun intended) this week when Congress again failed to reach a compromise on legislation to address the surprise medical bills patients receive when they unknowingly see an out-of-network provider at an in-network facility. Last Sunday it appeared a bipartisan agreement had been reached to be included in year-end spending bills. This compromise would have patients’ insurance companies reimburse out-of-network providers at the median in-network rate for a region, allowing for exceptions in which providers can take larger bills to arbitration. Though the bill was based on a similar approach taken by a California law, it had been met with strong pushback from both physician staffing companies and the American Hospital Association, which held that the bill would create incentives for insurers to remove hospitals from their networks, and force artificially low reimbursement rates. Meanwhile on Wednesday, House Ways & Means Committee leaders announced the high-level outline of a new, separate proposal, and called for lawmakers to delay legislative action on the issue until 2020.
While the details of this new proposal remain unclear, a legislative summary describes a “reconciliation process”, which would consider payments made to similar providers for similar services in a local area, if providers and insurers cannot agree on payment for emergency or out-of-network care at in-network facilities. The losing side in the reconciliation process would pay a fee; additional fees would be levied on providers and plans who use the process too frequently. Despite this week’s stalemate, it’s likely we’ll see bipartisan movement on surprise billing at some point, as nearly 8 in 10 Americans support such legislation. Removing the ability to bill patients directly could reduce revenue and weaken the leverage providers have in bargaining with insurers over payment rates. Even in the midst of a charged political environment, we’d expect these pocketbook issues to continue to gain traction as lawmakers look to address public concerns over out-of-pocket spending for care.
Civica Rx ramps up delivery of critical drugs
This week Civica Rx, the nonprofit drug company formed by a coalition of health systems, announced it would deliver eight critical injectable pharmaceuticals by the end of the year for its member hospitals. The drugs are being manufactured through a partnership with Hikma Pharmaceuticals, one of three that the company has struck with drug manufacturers, in addition to laying the groundwork to produce its own medications. After launching in the fall of 2018, one of Civica’s medications first reached a patient in October, when the essential antibiotic Vancomycin was delivered at a hospital in Utah. The company’s membership has grown to more than 45 health systems representing more than 1,100 hospitals. Civica brings the potential to run directly at a generic drug market that has been in turmoil, with acquisitions and other efforts to reduce competition allowing drug companies to raise prices, and quality lapses increasingly common. With these deliveries, the company appears to be on track to deliver against that goal. As health systems look to build scale and compete with disruptors, Civica represents a prime example of how health systems at national scale can deliver value to the market—and do so through partnership rather than M&A.
The Azar-Verma feud comes to a head
Washington loves a good political soap opera, and it’s getting its money’s worth this week with the latest daily episodes of “As the Health Policy World Turns”, starring Secretary of Health and Human Services (HHS) Alex Azar and Center for Medicare and Medicaid Services (CMS) Administrator Seema Verma. Incredibly, by week’s end neither character has been written off the show, although Wednesday brought a Very Special Episode in which both Verma and Azar, who have, according to various press reports, been feuding for months, were called into a White House meeting convened by Vice President Pence aimed at resolving tensions. The rivalry between the two evidently extends back to their days in Indiana, when Pence was then governor, and have continued since Azar replaced former HHS Secretary Tom Price in the Trump cabinet. According to a recent Washington Post article that drew on interviews with more than a dozen current and former administration officials, the back-and-forth between Azar, Verma, and their respective allies has all but frozen meaningful progress on several key health policy initiatives, including the development of a full-scale proposal to replace the Affordable Care Act. Azar has reportedly complained that many of his ideas have been torpedoed by Verma in front of White House officials, while Verma accuses Azar’s team of engineering a series of damaging press leaks about her spending on image consultants and her reimbursement claim for over $47,000 worth of jewelry stolen during an official trip. In short, the feud is ugly and getting uglier—and is undoubtedly an unwelcome distraction in the midst of a re-election campaign in which healthcare features as a pivotal issue. Tune in next week…who knows what might happen next?