|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Worrisome courtroom drama in New Orleans
It was, in the words of one close observer of the healthcare legal scene, a “tough day in court” for defenders of the Affordable Care Act (ACA). In New Orleans on Tuesday, the Fifth Circuit Court of Appeals heard arguments in the ongoing Texas vs. Azar case, in which 18 Republican state attorneys general are contending that the ACA should be held unconstitutional in the wake of the 2017 tax reform, which zeroed out the penalty for violating the ACA’s “individual mandate”. Based on their questioning during the 90-minute session, judges seemed likely to uphold a lower court ruling that the mandate is unconstitutional and seemed sympathetic to the argument that the entire 2010 health reform law should fall along with the mandate. The appellate ruling is expected within the next couple of months and will almost certainly be appealed further to the US Supreme Court, no matter the outcome. As unlikely as it seems, if the ACA is struck down entirely, there will be nearly catastrophic repercussions across the healthcare industry and beyond. Along with the individual mandate would go the individual and Medicaid coverage expansions, consumer protections against lifetime coverage limits and out-of-pocket spending caps, protection for Americans with pre-existing conditions, and many other provisions that have become deeply interwoven into the healthcare economy. The case could have significant political implications as well, with a final outcome possible next year—right in the thick of the 2020 Presidential campaign. Keep a close eye out for further developments.
“The kidney has a very special place in the heart”
President Trump signed an Executive Order on Wednesday aimed at overhauling care for patients with kidney disease, instructing federal agencies to change how doctors are paid for caring for those patients, take steps to make more kidneys available for transplant, and increase education and treatment to reduce the incidence of the disease. Millions of Americans suffer from chronic kidney disease, and about 7 percent of Medicare’s annual budget is spent on treating patients with end-stage renal disease (ESRD). To support the President’s announcement, the Centers for Medicare & Medicaid Innovation (CMMI) announced five new payment reform models, designed to delay the need for dialysis, encourage transplantation, and move dialysis into patients’ home. Of particular note is the ESRD Treatment Choices (ETC) model, which is intended to increase use of in-home dialysis. Only 12 percent of kidney patients in the US currently get dialysis at home, compared to 80 percent or more in other countries. The new models will create incentives for doctors to reduce referrals to costly dialysis centers, which are mostly operated by two large, for-profit kidney care companies. The Executive Order was hailed by kidney specialists as a long-overdue step to modernize care for ESRD patients, although some observers noted the irony of the Administration turning to CMMI to pilot payment reforms in the same week as it argued in court that the Affordable Care Act (ACA), which authorizes the agency to conduct such pilots, should be declared unconstitutional. Nevertheless, the President’s new kidney care initiative brings welcome focus to a sector of healthcare that has been ignored for far too long, leading to expensive, inconvenient and underperforming care for millions of patients.
Twin setbacks on the effort to address rising drug spending
Two pillars of the Trump Administration’s plans to control rising drug prices toppled this week. On Monday, a Federal judge struck down a new rule which would have compelled drug companies to provide the wholesale list price of drugs in television ads, asserting that the Department of Health and Human Services (HHS) lacks authority to issue the rule. (The court didn’t address drug companies’ arguments that the rule violated their First Amendment rights.) Then on Wednesday, the Administration announced it was backing off its proposal to ban rebates issued by pharmacy benefits managers (PBMs) in Medicare and Medicaid. The now-dead proposal would have forced PBMs to take a flat fee for their services, and pass along any rebate savings directly to consumers. The reversal highlights the internal conflicts within the Trump Administration on the issue, with HHS Secretary Alex Azar championing the rule, and other officials worried it would raise drug prices $180B over ten years, and drive up Medicare premiums. In the near term, action on drug prices may be more likely to come from Congress, with Senator Chuck Grassley (R-IA) announcing this week that a bipartisan bill aimed at curbing drug prices will be released “very soon”. The collapse of these two major initiatives is a major setback for the Administration, which is now left without a strategy to address drug costs, an issue that resonates with consumers and will continue to gain momentum in the run-up to the 2020 elections.
A closer partnership built around broader patient access
This week Downers Grove, IL-based Advocate Aurora Health announced a new partnership with One Medical, a national, membership-based primary care group. The partnership extends the relationship between one of the nation’s largest nonprofit health systems, serving 3 million people across Illinois and Wisconsin, and the innovative medical practice, operating more than 70 primary care offices in nine major metropolitan areas. Advocate Aurora had already included One Medical as part of its clinically-integrated physician network, and it will now become the preferred health system partner in Illinois for the practice, opening new cobranded care sites and tightening specialist and hospital referral ties. We’ve long been fans of One Medical’s access-forward, telemedicine-enabled primary care model, and we’re especially intrigued to see the practice integrate more tightly with system partners like Advocate Aurora, Mount Sinai Health System in New York, and UC San Diego Health in California. Advocate Aurora’s strategy of partnering across access channels—including with Oak Street Health (for Medicare patients) and Walgreens (for retail clinics)—has allowed the system to expand access for a range of different patient populations. The closer partnership between the two is certainly worth watching closely.
New roles for two key healthcare leaders
Two key leaders in the Centers for Medicare and Medicaid Services (CMS) will be moving into new positions in the midst of a leadership reshuffle in the Department of Health and Human Services (HHS). Adam Boehler, currently the head of the Center for Medicare & Medicaid Innovation (CMMI) has been nominated by President Trump to lead the International Development Finance Corporation. Boehler, who came to CMMI last year after a career as a healthcare entrepreneur, led the development of several new payment and delivery reform pilots in Medicare and Medicaid, including efforts to shift more accountability for cost and quality to physician practices, rationalize drug purchasing in Medicare, and the newly-announced pilot to overhaul kidney care for Medicare beneficiaries. We had the good fortune to meet with Boehler shortly after he took the CMMI posting and found him to be pragmatic and results-oriented. His departure is a loss for the healthcare industry. Meanwhile, Paul Mango, who served as chief of staff at CMS for the past year, has been promoted to deputy chief of staff for HHS, charged with planning and coordinating policy. Mango is a well-known healthcare leader, having been a senior advisor to healthcare organizations for many years at McKinsey & Co. before joining CMS. We’ve enjoyed getting to know him across the past year as well, and we’re looking forward to his continued thought leadership in his new posting. Congratulations to both on their level-headed impact in the midst of an often-turbulent Administration.