Healthcare’s 5 Biggest Stories, Week of April 29, 2019 | The Healthy Muse
Healthy Musers — Congratulations!! You’ve made it to the 20th official Healthy Muse post. Keep it up, fam.
In other news, Warren Buffett is pounding Cokes and eating McDonald’s 3 times a week.
Healthcare’s 5 Biggest Stories, Week of April 29, 2019
1. CMS Inpatient Payment Proposal Released
Inpatient payments boosted by 3.7%. Site neutral payment phase-in.
This week, the Centers for Medicare and Medicaid (AKA CMS) released its (their?) proposed 2020 ruling for the Inpatient Prospective Payment System (IPPS). The IPPS designates Medicare payments to hospitals and other providers for inpatient care. Note that this ruling is just the proposed changes to Medicare payments — the final ruling comes out later in the year. Still, the proposed changes give insight into what CMS wants to incentivize for inpatient providers. From Beckers, major highlights from the proposed ruling included the following:
- 3.2% increase for acute care hospitals that report quality data metrics to CMS and use their electronic health records in a meaningful way;
- 3.7% total estimated rate increase for all inpatient providers, when taking into account all new payment policies and uncompensated care;
- About a 2.6% increase in hospital DSH payments (we’ve covered this before in our January 11 edition — 5th story — payments for hospitals that have a higher proportion of charity care patients);
- Site neutral payment adjustments for hospital outpatient departments, which could have much broader implications on health system consolidation (FYI, hospitals are NOT pleased about this change) in addition to decreased physician employment by hospitals.
Rural hospital relief.
Among the more interesting changes, CMS seems to be extending a lifeline to rural hospitals, making adjustments to the wage index adjustment in addition to the floor payment that rural hospitals may receive.
2. Healthcare Stocks Bounce Back
That didn’t take long.
Eased by strong healthcare earnings reports from the likes of Centene, UnitedHealth, Anthem, Encompass, and others, healthcare stocks came roaring back this week.Last week, we covered the dramatic sell-off of these same stocks. The existential risk stemming from Medicare for All once again resurfaced after the proposed system was admonished as a “disruptive” threat to the economy onUnitedHealth’s Q1 earnings call.
Buy the dip.
Healthcare analysts were unperturbed, though, calling it a baseless selloff. Remember that healthcare sold in droves (paywall — WSJ) before the 2016 election, too. People don’t like uncertainty, and healthcare has quite a bit of that.
Current legislation is not without its effects on public and private healthcare companies. This week, S&P released its global healthcare credit ratings report, which lists a few risks facing the industry this year. S&P expects policy changes this year in the areas of balance billing and drug pricing rebates, which would affect physician services companies like Envision and MedNax, and pharmacy benefit managers like Express Scripts, CVS, and UNH, respectively. Funnily enough, S&P has no faith in healthcare reform, at least for now: of all the current legislation and policy proposals out there, the firm lists ACA repeal and Medicare for All as extremely unlikely to happen within the next few years. It makes sense, given the current administration and the Senate makeup.
3. State of Washington Bill Restricts Nurse’s Shifts
A Hot Amendment Mess.
SHB 1155 was intended to be a bill that would help nurses out — mandating that nurses working in hospitals would be given uninterrupted breaks during their shifts. But the bill took a drastic turn when a senator proposed a wild amendment that suddenly morphed SHB 1155 into an entirely different beast — changing nursing shifts from 3, 12 hour shifts a week to 5, 8 hour shifts a week (what’s the grammatically correct way to structure that sentence, anyway? Someone PLEASE let me know). Now, hospitals and nurses alike are banding together (a rare occurrence, really) to oppose the bill.
Backlash from the Bill’s passage.
The Washington State Hospital Association (AKA the WSHA) had some strong words to say on the bill: “If SHB 1155 passes as amended, I am confident that hospitals will not be able to meet the care needs of their communities. Patients will suffer especially in emergencies. This would be terrible for the patients of Washington state.” It’s interesting to note that the WSHA opposed the bill, too. Now, the association ironically has the support of nurses across the state of Washington as they try to maintain their 3 day work weeks, an amenity that nurses greatly enjoy.
4. PBMs Taking Advantage of Medicaid?
Drug Pricing Contagion.
A new report from 46 Brooklyn analyzed various generic specialty drugs covered by pharmacy benefit managers (PBMs) under Ohio’s managed Medicaid program (i.e., Ohio essentially lets insurance companies run Medicaid for them). After matching state drug utilization data against PBM drug cost data, the 46 Brooklyn report found that PBMs appeared to be marking up generic specialty drugs (a practice known asspread pricing) by a total of almost $11 million in one quarter alone by controlling the specialty pharmacy market. As a result, Ohio’s Medicaid program probably way overpaid for these drugs, and cost the state’s taxpayers big bucks.
If it’s happening in the Ohio managed Medicaid program, it’s probably happening elsewhere, too. The report concludes by stating SOME transparency in healthcare (specifically, drug pricing) is not enough. 46 Brooklyn called for a 100% transparent system to spur competition and bring to light the secretive pricing practices that PBMs seem to engage in.
The PBM Defense.
As Axios reported, the Pharmaceutical Care Management Association (AKA pro-PBMs) gave a strong response to the analysis. The PCMA claimed that the data was ‘cherry-picked’ questioned the reliability of its data sources, and stated that the analysis did not take into account rebates, discounts, or overall plan outcomes.
A new primary care path forward.
This week, HHS and CMS announced new initiatives designed primarily to lower administrative costs and consequently allow physicians more time with patients.
Tell me about these initiatives.
The proposal will have five payment models under 2 different systems — Primary Care First, and Direct Contracting. Primary Care First (PCF) seems to be more or less a value-based (i.e., patient outcome-driven) capitation type model — where a physician will receive monthly lump payments adjusted for his or her patient base’s acuity levels.
What about the Direct Contracting model?
While the PCF models are more focused on individualized primary care practices, Direct Contracting (DC) models will be focused more-so on patient populations. DC models will partner with ACOs, managed care plans, and other population health managers to give these plan providers various “risk” options. Based on the level of “risk” they choose, the DC model will reimburse them fixed monthly payments of varying amounts. For instance, if an insurer chose a “riskier” payment option, the insurer would receive a higher fixed payment up front from Medicare, but they would also be on the hook if catastrophic disease rampaged their population/covered lives. It all depends on how these participants manage financial risk versus receiving fixed, predictable revenue streams.
These new models were introduced in an attempt to reduce overall healthcare costs and to see whether these types of models would produce better outcomes for patients. We’ll see!
In other primary care news, Humana announced the launch of its new virtual care model, partnering with Doctor on Demand to form its On Hand health plan. In its press release, Humana touted the plan’s capabilities to lower healthcare costs and lower monthly premiums.
Civica Rx opened its headquarters this week in Lehi, Utah. The nonprofit generic drug initiative plans to address drug shortages in over 900 hospitals, with ambitious plans to supply up to 14 generics in its first year in operation. Alexandria Ocasio-Cortez made someperplexing comments about the Veterans Affairs’ healthcare system this week. Amid nationwide political action and backlash, Walgreensraised the minimum age of purchasing tobacco products to 21.
Here’s something you don’t hear every day. MD Anderson kicked out 3 Chinese scientists over fears of data/intellectual theft. So much for collaboration! Amazonstarted to market its direct-to-consumer pharmaceutical business, PillPack (something we touched on in our2nd story Feb. 11 edition), with free delivery for Prime members. Speaking of tech companies, Google is continuing to try tocrack into healthcare by looking for new ways to implement its AI technology.
The Chinese are coming for our drugs market (paywall — WSJ). Home Health Care News had agreat piece on LHC Group this week on how the company is leveraging its Accountable Care Organization in its business strategy and population health management. You’re more likely to die in thegood ‘ole South. And Anthem and UnitedHealth areabout to spar over the acquisition of Magellan Health, a fellow managed care player.
And finally, the Washington legislature passes its emergency room surprise-billing law. Providers and payors will now be forced to arbitration for any out of network bills that patients receive. Keep an eye on Colorado too, as the statelooks to pass a similar bill.
Originally published at https://www.healthymuse.email on April 30, 2019.