Healthcare’s Biggest Stories, Week of May 27, 2019 | Senators draft gigantic health reform bill, Direct to consumer primary care, Nonprofit hospital tax exemption called into question, & more | The Healthy Muse
Welcome back to the Healthy Muse, where I write about the latest healthcare stories and trends in a weekly newsletter. Here are the top 5 stories for the week!
But first, somebody get Mississippi under control…
1. Senators draft huge-ass bill aimed at big-time healthcare reform
They DO listen to us, sometimes.
The Senate released a bipartisan 165 page bill this Thursday called the Lower Health Care Costs Act. It’s designed to lower health care costs (ignore me).
Anyway, the bill is pretty comprehensive in its efforts to address all of the following hot-button issues:
Wiping Surprise Billing from the face of the earth with 3 proposed solutions:
1 — Independent, third-party arbitration to negotiate payments between insurers and providers (providers like this method);
2 — Payment caps/benchmarks for reimbursing out of network providers. This type of pricing method would target payments for services at a certain percentage of Medicare payments (e.g., “I’ll reimburse you at 200% of Medicare’s rate for that surgery”) or at the median in-network rate for those services, adjusted for the geographical region (insurers like this method);
3 — In-Network guarantee. This new proposal would require any hospital to guarantee/promise that anyone working there is also in-network with that patient’s health plan. The guarantee would also extend to laboratory and imaging testing, too (insurers like this method)
Interestingly, there’s no mention of bundled payments as a potential solution to surprise billing in the legislation. Originally, the Trump administration was pretty into tackling surprise billing via the bundled payment approach. It’s possible that bundled payments might get introduced in future bill iterations.
Also, here’s the general reaction from various healthcare trade organizations.
Other items from the bill included the following:
- An easier ability for generic drugs to get to market, which would increase the supply of generic drugs and hopefully lower costs;
- A stricter drug patent law, meaning that companies wouldn’t be able to hold onto exclusive ‘brand-name’ drug patents as long;
- Requiring PBMs to provide quarterly reports that would include information on drug costs, fees received, and rebates detail;
- Eliminating the drug rebate (i.e., requiring 100% of the discount to be passed along to patients);
- These changes are actually pretty dang substantial.
- Creating an entity to manage claims data (i.e., the details behind a hospital or physician visit — this would be a BIG first)
- Increasing vaccination education;
- Granting funding for infant mortality, postpartum treatment, and healthcare professional discrimination training; and
- Improving privacy laws concerning HIPAA info online.
The bigger picture.
As you can probably tell, there’s a ton of healthcare change packed into this one bill. So it’s more than likely a bit ambitious to think that all of this will get passed at once, especially with the presidential election looming in 2020 and other bills circulating. Still, it’s interesting to note how Congress is approaching these issues and the attention that healthcare is receiving overall.
Keep an eye on the expected vote date, which is expected to take place sometime in July. Also, there are a few other senators whipping up their own healthcare bill, so stay posted…
Trump’s Big Healthcare Stick
Not to be outdone by his colleagues in Congress, Trump and the dream team are planning an executive order on healthcare, which is a bit skimpy on details, but lays out changes to the system. Most people expect the order to include increased disclosures of cost data among insurers and providers along with tackling local health system monopolies that could be driving up prices in their markets.
2. Is Direct-to-Consumer the future of Primary Care?
Add that to my Netflix subscription.
Forget Trump: there’s yet another healthcare model making its way into headlines. Direct primary care is gaining traction among physicians in several states.
How it works.
Rather than working through insurance plans and billing indirectly for primary care services, direct primary care practices will charge patients a monthly membership fee up front. It varies from site to site, but that membership fee covers pretty much every ‘routine’ service — including various forms of testing.
According to the Wall Street Journal, cutting out the insurance plan and having patients deal directly with providers may help to lower drug costs, testing costs, and increase transparency. One flat fee — no billing, no co-pays.
Keep an eye on the potential trend here. There are plenty of healthcare startups (not just in primary care) that are targeting direct-to-consumer strategies. Don’t forget though — there are plenty of growing pains with DTC healthcare.
3. The latest beef: are nonprofit hospitals getting too much of a break?
Tax Exempt in Limbo.
Add nonprofit hospital systems to the list of healthcare folks getting put under the microscope. Senators (specifically, Chuck Grassley if you care) noticed that the amount of dollars spent on charity care is decreasing, while hospital margins appear to be doing pretty well. Don’t tell that to Johns Hopkins, though, which decided to sue low income patients for medical debt.
You’re getting an audit.
As a result, the Senate is asking the IRS to investigate nonprofit hospitals. Specifically, they want the IRS to check into whether nonprofit health systems have enough oversight when it comes to their required charity care spending. What are those nonprofit health systems actually spending funds on? Hopefully patient care!
Arguably, nonprofit hospitals should, in theory, be doing better, relative to their for-profit brothers. Think about it — the tax cuts enacted a few years ago only benefited for-profit health systems, giving these profit-driven systems extra cash to work with in lieu of the income tax they were previously paying.
Anyway, the AHA (of course) had a prepared statement over the spat, arguing that hospital charity care more than covered the required amounts.
4. Google’s AI making healthcare headlines
Google is Verily excited about this.
Google’s healthcare AI platform, Verily, made headlines this week by announcing several partnerships with big-name pharmaceutical companies including Novartis and Pfizer. It’s the latest push by big-tech as the firms try to break into the stubborn healthcare space.
From the partnership, Verily and Google are looking to enter the business of clinical trials, including developing drug algorithms and aggregating E H R / wearable data to find new potential therapies and trial candidates.
On the other side of health IT, Google’s lung screening software showed serious promise in finding lung cancer, with a 94% success rate. The algorithm could turn into a very powerful tool at the hands of radiologists.
In other A.I. news, could robots be a boon to therapists when it comes to children with autism?
5. Healthcare Price Inflation Update
To the moon.
A recent report by Modern Healthcare highlighted healthcare inflation in various subsectors. Notably, healthcare services prices in April grew at a 2.3% rate, which was slightly above the rate of inflation. The real kicker here, though, was inflation in the health insurance sector. Over the past 12 months, health insurance prices grew at a whopping 10.7% rate.
This rate tells us how much insurers have been retaining (as profits, administrative cost, or re-distributions after factoring in the regulated medical loss ratio). If a managed care company does not meet the medical loss threshold, that company must issue rebates to their plan members to make up for ‘overcharging’ on premiums.
The hell happened?
Altarum, a consulting firm, thinks that premiums were much higher than expected claims for the year, which led to decreases in insurers’ medical loss ratios. Expected rebates that insurers must pay out are continuing to rise as managed care profits skyrocket.
State highlights: Colorado is becoming the first state to cap the price of insulin at no more than $100. Connecticut decided to follow Washington’s footsteps to develop a public insurance option. Kansas, in particular, is getting hit hard by rural hospital closures. California, like most states, is dealing with a physician shortage, but physicians might be the ones keeping it that way? On another physician note, they don’t really like to stay in rural areas.
The FDA just approved the most expensive drug on the planet. Haven, everyone’s favorite mysterious startup, just lost its COO. Speaking of Amazon joint ventures, the e-commerce giant is working on a device that can…read human emotions. I like to think that it’s a smart mood ring. We’re long overdue for one of those, aren’t we? The biggest healthcare brand name is UnitedHealth. Here’s the rest of the list.
Here’s a nice long-form piece from Fortune about CVS and the company’s vision for the future of healthcare. Right before Peloton Therapeutics (no, not the bike company) went public, Merck snatched the biotech startup for $2.25 billion in cash and future incentives. Did someone say snatching? In an interesting development, Blue Cross is taking a page from UnitedHealth’s book and scooping up physician practices nationwide. And the WSJ is bullish on healthcare stocks, citing cheap valuations (paywall).
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Originally published at https://www.healthymuse.email on May 29, 2019.