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The Weekly Scan

April 26, 2019

Last Updated: 1:00 PM EST

Medicare & Medicaid

  • On Monday, the Medicare Board of Trustees released their annual report for Medicare’s two separate trust funds -- the Hospital Insurance (HI) Trust Fund, which funds Medicare Part A, and the Supplementary Medical Insurance (SMI) Trust Fund, which funds Medicare Part B and D. The report found that the HI Trust Fund will be able to pay full benefits until 2026, the same as last year’s report.  For the 75-year projection period, the HI actuarial deficit has increased to 0.91% of taxable payroll from 0.82% in last year’s report. The change in the actuarial deficit is due to several factors, most notably lower assumed productivity growth, as well as effects from slower projected growth in the utilization of skilled nursing facility services, higher costs and lower income in 2018 than expected, lower real discount rates, and a shift in the valuation period. The Trustees project that total Medicare costs (including both HI and SMI expenditures) will grow from approximately 3.7% of GDP in 2018 to 5.9% of GDP by 2038, and then increase gradually thereafter to about 6.5% of GDP by 2093. The faster rate of growth in Medicare spending as compared to growth in GDP is attributable to faster Medicare population growth and increases in the volume and intensity of healthcare services. (CMS.gov)

 

  • Also on Monday, HHS Secretary Alex Azar and CMS Administrator Seema Verma announced the CMS Primary Cares Initiative, a new set of payment models that will transform primary care to deliver better value for patients throughout the healthcare system. Building on the lessons learned from and experiences of the previous models, the CMS Primary Cares Initiative will reduce administrative burdens and empower primary care providers to spend more time caring for patients while reducing overall health care costs. The models were developed by the Innovation Center under the leadership of Adam Boehler and are part of Secretary Azar’s value-based transformation initiative.The five payment model options are:

    • Primary Care First (PCF)

    • Primary Care First – High Need Populations

    • Direct Contracting – Global

    • Direct Contracting – Professional

    • Direct Contracting – Geographic (CMS.gov)

 

  • On Tuesday, the Trump Administration proposed a new rule that would update Medicare payment policies for hospitals under the Inpatient Prospective Payment System (IPPS) and the Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year 2020 and advances two key CMS priorities, “Rethinking Rural Health” and “Unleashing Innovation,” by proposing changes to the way Medicare pays hospitals. CMS is proposing to increase the wage index of low wage index hospitals. This change would ensure that people living in rural areas have access to high quality, affordable healthcare. CMS is considering several ways to implement this change, and the agency "looks forward to comments on the different approaches." (CMS.gov, FederalRegister.gov)

 

  • On Wednesday, the CMS sent a letter to State Medicaid Directors inviting states to partner with CMS to test innovative approaches to better serve those who are dually eligible for Medicare and Medicaid.  Many of the 12 million dually eligible beneficiaries have complex healthcare issues, including multiple chronic conditions, and often have socioeconomic risk factors that can lead to poor outcomes. CMS and states spend over $300 billion per year on the care of dually eligible individuals, yet still do not achieve acceptable health outcomes. The letter opens new ways to address those complex needs, align incentives, encourage marketplace innovation through the private sector, lower costs, and reduce administrative burdens for dually eligible individuals and the providers who serve them. Approaches discussed in the State Medicaid Directors letter include the Capitated Financial Alignment Model, the Managed Fee-for-Service Model, and State-Specific Models. (CMS.gov)

Litigation

  • The Department of Justice announced on Thursday that two more pharmaceutical companies – Astellas Pharma US Inc. and Amgen Inc. – have agreed to pay a total of $124.75 million to resolve allegations that they each violated the False Claims Act by illegally paying the Medicare copays for their own products, through purportedly independent foundations that the companies used as mere conduits. “According to the allegations in today’s settlements, Astellas and Amgen conspired with two copay foundations to create funds that functioned almost exclusively to benefit patients taking Astellas and Amgen drugs,” said United States Attorney Andrew E. Lelling. “As a result, the companies’ payments to the foundations were not ‘donations,’ but rather were kickbacks that undermined the structure of the Medicare program and illegally subsidized the high costs of the companies’ drugs at the expense of American taxpayers. We will keep pursuing these cases until pharmaceutical companies stop engaging in this kind of behavior.” (Justice.gov)

 

  • David Wallace and Timothy Stocksdale, two former executives of Arriva Medical, LLC, agreed to pay $500,000 each to settle the United States’ allegations that they had violated the False Claims Act, announced U.S. Attorney Don Cochran for the Middle District of Tennessee. Arriva is a mail-order diabetic testing supply company based in Coral Springs, Florida, which, at one point, had operations including a customer call center in Antioch, Tennessee. Wallace and Stocksdale co-founded Arriva and after its November 2011 sale to Alere, Inc., they remained employed as Arriva executives. The settlement resolves the United States’ claims that Wallace and Stocksdale caused Arriva to submit false claims to Medicare that were tainted by kickbacks paid to beneficiaries in the form of free or no cost home blood glucose meters or waived or uncollected copayments during the period from November 23, 2011 through August 30, 2013. The settlement also resolves the United States’ claims that Wallace and Stocksdale caused Arriva to bill Medicare for medically unnecessary home blood glucose meters during the same period. (Justice.gov)

 

  • A federal judge dismissed UPMC's lawsuit to block the Pennsylvania attorney general's efforts to force UPMC to keep its provider network open to Highmark Health and other health plans. U.S. District Judge John Jones ruled Wednesday that UPMC can't sue over Attorney General Josh Shapiro's statements about UPMC's provider network, since they have not led to action and his proposed rule is still under review in state court. The dispute stems from Shapiro's attempts to require UPMC to continue making its network available to Highmark Health enrollees after a five-year consent decree between the two systems expires June 30. UPMC sued in the Commonwealth Court in February and called Shapiro's actions "anti-competitive," "irrational" and in violation of UPMC's federal due process rights. The health system also sued in federal court seeking a declaration that Shapiro's proposed modifications to the consent degree were preempted by the Medicare Act, the Affordable Care Act, the Employee Retirement Income Security Act and the Sherman Act. (ModernHealthcare.com)

 

  • The state of Oklahoma is scheduled to go to trial at the end of May with claims that Johnson & Johnson and Teva are responsible for sparking a crisis of opioid abuse that, according to Oklahoma, will cost $10 billion to address. The trial, in which Oklahoma AG Mike Hunter will assert the single theory that deceptive opioid marketing created a public nuisance of drug abuse, will be heard by Oklahoma state court judge Thad Balkman rather than a jury. The trial will be the first courtroom test of pharmaceutical companies’ liability for widespread abuse of opiates – a crisis that could cost hundreds of billions of dollars to abate nationwide. In a final attempt to end the litigation before trial, Johnson & Johnson and its subsidiaries filed a motion for summary judgment on Wednesday. The Teva defendants, which deny Oklahoma’s allegations, also moved for summary judgment but their motion is not publicly available and a company representative did not respond to my request for a redacted version of Teva’s brief. (Reuters.com)

Legislation

  • The House Rules Committee will hold a hearing on "Medicare for All" legislation next week, a step forward for the legislation that is gaining ground in the progressive wing of the party. The hearing on Tuesday will examine a bill from Reps. Pramila Jayapal (D-Wash.) and Debbie Dingell (D-Mich.) that has over 100 co-sponsors in the House. According to the Rules Committee, the hearing will be the first ever that Congress has held on Medicare for All legislation. “It's a serious proposal that deserves serious consideration on Capitol Hill as we work toward universal coverage," Rep. Jim McGovern (D-Mass.), the chairman of the Rules Committee and a co-sponsor of the Medicare for All bill, said in a statement. Notably, the hearing will occur in a committee that is not one of the primary committees overseeing health care. The main health care panels, the Ways and Means Committee and Energy and Commerce Committee, have so far declined to commit to holding a hearing on Medicare for All, illustrating the divide among House Democrats over the legislation. (TheHill.com)

Research

  • A new study in JAMA analyzed over 15 million births, and compared birth outcomes in 18 states and the District of Columbia that expanded Medicaid with 17 states that did not. Although in difference-in-differences analyses, state Medicaid expansion was not associated with significant differences in rates of preterm birth (6.80% to 6.67% vs 7.86% to 7.78%) or low birth weight (5.41% to 5.36% vs 6.06% to 6.18%) overall, difference-in-difference-in-differences analyses showed that there were significant improvements in disparities for black infants relative to white infants for all 4 outcomes, including preterm birth, very preterm birth, low birth weight, and very low birth weight. These changes are critically important because of long-standing and persistent differences in infant mortality between black and white infants. This study adds to a growing literature demonstrating improved health outcomes associated with Medicaid expansion. (JAMANetwork.com)

 

 

 

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