More drugs on the fast track

The FDA uses multiple processes to bring high-value drugs to market more quickly.

By Jeff Atkinson | Reform Recap | Summer 2019

 

In the last 20 years, the number of drugs that have been granted Fast Track status by the federal Food and Drug Administration has increased by more thAn five-fold. The program, which began in 1998, granted Fast Track designation to 21 drugs in its first year and 108 drugs in Fiscal Year 2017.

The program was authorized by Congress in 1997 through the Food and Drug Administration Modernization Act. In the words of the statute, the program is designed to expedite development and review of drugs “for the treatment of a serious or life-threatening disease or condition” when the drug company demonstrates the drug’s “potential to address unmet medical needs for such a disease or condition.”

The goal is to get important new drugs and biologics to patients more quickly.

Origin during AIDS crisis

The impetus for the Modernization Act was the AIDS/HIV crisis, during the early stages of which there were no effective treatments. The first accepted Fast Track product was the AIDS drug Efavirenz.

Determination of whether a drug is eligible for the program involves consideration of multiple factors, including the drug’s likely impact on survival, day-to-day functioning, and the degree to which the condition, if left untreated, will progress to a more serious condition.

The FDA provides examples of such conditions: AIDS, cancer, heart failure, Alzheimer’s and severe bacterial and fungal infections. Diabetes, depression, and epilepsy also can be considered serious.

Methods of expediting approval

Drug companies can apply for Fast Track designation at any time during the process of drug development, including at the time of submission of the Investigational New Drug (IND) application. Under the Modernization Act, the FDA is directed to act on a drug company’s request for the designation within 60 calendar days of receipt of the request. In recent years, between 70 and 80 percent of Fast Track applications have been granted.

Once an application has been granted, the drug becomes eligible for different types of special treatment from the FDA. The FDA will meet more frequently with drug companies regarding Fast Track products than products that are not Fast Track designated.

In addition, drug companies can submit completed sections of a New Drug Application (NDA) or Biological License Application (BLA) and obtain prompt review rather than waiting for the entire application to be complete. This process is referred to as a “rolling review.”

The Fast Track program is one of four related processes for expedited review of certain categories of drugs.

Lists of approvals for New Drug Applications and Biologic License Applications are available at fda.gov.

Balancing speed and safety

Although getting new drugs to market promptly is desirable, the process must be balanced with the need for safety. The archetypal case of the need for caution is Thalidomide, which was used to treat nausea and difficulty sleeping in the 1950s and 1960s.

Thalidomide was widely used in Germany, but a drug reviewer for the FDA did not approve its use in the U.S. out of concern that there was not enough evidence about the drug’s safety. Thalidomide caused approximately 10,000 children, mostly in Europe, to have severe congenital deformities (phocomelia).

More recently, in 2012, Ponatinib was granted Fast Track status for treatment of chronic myeloid leukemia (CML). Within one year, the drug was found to cause a high frequency of serious adverse vascular events. Approval of Ponatinib was withdrawn, although it was later reintroduced for a much narrower class of patients for whom there were no alternative treatments.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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The challenges of medical marijuana laws

State laws have become more liberal while federal laws are strict. Physicians should be aware of professional guidelines for prescribing marijuana.

By Jeff Atkinson | Reform Recap | Spring 2019

 

Within the last year, 12 or more states have revised their marijuana laws or are considering doing so. As of 2018, 31 states, as well as the District of Columbia, Guam and Puerto Rico, had “comprehensive public medical marijuana cannabis programs.” The criteria for a comprehensive program, as specified by the National Conference of State Legislatures and other organizations, are:

  1. Protection from criminal penalties for using marijuana for a medical purpose
  2. Access to marijuana through home cultivation, dispensaries or some other system that is likely to be implemented
  3. Allowing access to a variety of strains, including those more than “low THC”
  4. Allowing either smoking or vaporization of some kind of marijuana products, plant material or extract

In addition, 15 states allow use of low THC, high cannabidiol (CBD) products for medical reasons or allow limited defenses. These 15 states are not considered to have “comprehensive” programs.

Recreational use

Nine states and the District of Columbia have legalized recreational use of marijuana: Alaska, California, Colorado, Massachusetts, Maine, Nevada, Oregon, Vermont and Washington.

The liberalization of state marijuana laws corresponds with public opinion. A 2018 poll by Quinnipiac University indicates that 93 percent of American voters favored legalization of marijuana for medical purposes, and 63 percent favored legalization of marijuana without additional restraints.

Federal laws are more restrictive

Although state laws regarding marijuana use have become more permissive, federal laws have not. The federal Controlled Substances Act, passed in 1970, is still on the books. That law was passed as part of President Richard Nixon’s War on Drugs. Under the law, marijuana is a Schedule I drug, which means, from the perspective of the federal government, marijuana “has a high potential for abuse” and “the drug or other substance has no currently accepted medical use in treatment in the United States.”

For a period during the Obama administration, however, the federal government relaxed enforcement of marijuana laws.

President Obama’s Deputy Attorney General, James Cole, wrote a “guidance” memo to United States Attorneys noting the changes in state laws and directing a more hands-off approach by the federal government “[i]n jurisdictions that have enacted laws legalizing marijuana in some form and that have also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of marijuana.”

Cole said, “[E]nforcement of state law by state and local law enforcement and regulatory bodies should remain the primary means of addressing marijuana-related activity.”

Return to the rule of law

In early 2018, Attorney General Jeff Sessions issued his own memo, rescinding the Cole Memo.

The Department of Justice said it was “announcing a return to the rule of law,” adding that “Congress has generally prohibited the cultivation, distribution and possession of marijuana.” U.S. Attorneys were directed “to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities.”

Although Sessions has followed the Trump administration’s approach of undoing initiatives of the Obama administration, the federal government is not expected to markedly increase prosecutions of marijuana offenses.

IOM Report

The Institute of Medicine, part of the National Academies of Sciences, Engineering and Medicine, issued a report in 2017 on “The Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research.”

The report stated there was evidence to support use of cannabis or cannabinoids for treating multiple conditions.

On the negative side, the report said evidence suggested “cannabis use is likely to increase the risk of developing schizophrenia, other psychoses, and social anxiety disorders, and to a lesser extent depression.”

Guidelines for recommending marijuana

Among the organizations issuing guidelines to physicians on the topic is the Federation of State Medical Boards. These guidelines were adopted in 2016 and have much in common with general medical standards:

  • Document an appropriate physician-patient relationship
  • Collect and document relevant medical history, including substance abuse and addiction
  • Discuss risks and benefits of marijuana treatment
  • Review other measures attempted to ease suffering
  • Make recommendations for marijuana consistent with current standards of practice as well as with state laws and regulations
  • Set a specific duration of treatment not longer than 12 months
  • Where available or required, register with appropriate oversight agency and check state Prescription Drug Monitoring Program
  • Make referrals, as needed, for substance abuse disorders or mental health issues
  • Do not have an office in a dispensary or have a compensation arrangement with a dispensary or cultivation center

Physicians should consult licensing boards and professional organizations for standards that may be applicable to them.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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Changes in the market for health insurance

The employer-based insurance market has been stable for the last few years, but public exchanges less so. Physicians’ fees may be affected.

By Jeff Atkinson | Reform Recap | Winter 2019

 

Open Enrollment. Workplace of a doctor. Stethoscope on wooden desk.

Most Americans receive health insurance through employer-sponsored programs. That market has been stable in recent years. For the last six years, the increase in the cost of employer-sponsored insurance has been “relatively modest” according to the 2017 Employer Health Benefits Survey conducted by the Kaiser Family Foundation and the Health Research & Educational Trust.

In 2017, the typical annual premium increase was 3 percent, and the average premium for family coverage was $18,764. Although the total cost of insurance has remained stable, more of the cost has shifted to workers. In 2012, workers paid 14 percent of the cost of family coverage; in 2017, workers paid 32 percent of the cost.

Generally, people covered by small companies pay more to cover their families than people covered by large companies. The difference is $1,550 per year according to the Kaiser survey. The cost difference results from the proportion of premiums paid by employers and from the deductibles that are paid by employees and their families.

Insurance exchanges

President Trump did not succeed in repealing the Affordable Care Act (ACA), often referred to as “Obamacare.” President Trump and Republicans, however, have pursued multiple policies that undermine the ACA, including the insurance exchanges that offer health coverage for people who do not have access to health insurance through employers, Medicaid or Medicare.

Under the ACA, a penalty was assessed against people who didn’t acquire health insurance. President Trump has directed that penalties no longer will be assessed. The tax penalties, which were upheld by the U.S. Supreme Court in 2012, served as incentive for all people to obtain insurance. That broadened the risk pool and helped reduce the cost of insurance per person.

When people are no longer mandated to acquire insurance, some people will not—particularly if they view themselves as healthy and less likely to need insurance. That leaves sicker people in the insurance pool, and the cost of insurance per person goes up.

Increases in premiums

Health care premiums for policies on the exchanges are increasing. The Congressional Budget Office estimates average increases of 15 percent for 2019, and a Kaiser Foundation survey shows increases in a range of 7 to 36 percent, depending on the market.

Under the ACA, persons with income of less than 400 percent of the poverty level were partially protected from increases in the cost of health insurance by subsidies to help pay for insurance. (In 2018, 400 percent of the federal poverty level for a family of four in the 48 contiguous states was $100,400.)

Many Republicans would like to eliminate or reduce subsidies. If that were to happen, insurance would become more unaffordable for persons with moderate to middle income, and the number of people without insurance likely would increase.

Extension of short-term policies

Where Americans get their health insurance

The Trump administration says it can hold down insurance costs and promote choice in the health insurance market by encouraging use of short-term policies. The trouble is short-term policies often will not cover the care a patient needs.

Short-term policies traditionally were intended for short-term use, such as by people between jobs or early retirees waiting for Medicare coverage. Some in the Trump administration favor more open-ended use of short-term policies as well as reducing the requirements of what health insurance must cover. Gone would be the “essential health benefits” required under the ACA.

Many short-term policies, for example, do not cover prescription drugs, mental health, substance abuse, maternity care or preventive care. Short-term policies also may have dollar limits on the amount of coverage, including lifetime limits or limits during the period of the policy.

In addition, there are Republican proposals to eliminate the requirement (at least for some policies) that insurance companies cannot discriminate on the basis of preexisting conditions when issuing or pricing policies. A person with a preexisting condition may be excluded from the market or find that coverage is unaffordable.

The same could happen to people who work in occupations considered by an insurance company to be risky. Prior to the ACA, occupations that were considered by some insurers to be a basis for declining coverage included iron worker, professional athlete, meat packer, taxi cab driver and security guard. Recreational activities that could result in denial of coverage included scuba diving, rock climbing, skydiving and mountain biking.

Impact on fees for physicians

As the market for short-term or alternative policies grows, the impact is likely to be felt by physicians as well as patients. Physicians (as well as patients) may find that the insurance company is not willing to pay for a service, even if the service is medically necessary.

In addition, the same insurance companies that are trying to hold down costs by issuing discount insurance policies to patients also may try to squeeze physicians by having physicians sign network provider agreements at reimbursement rates that are much lower than those paid by other insurers, including Medicare.

Physicians and their billing companies should carefully examine proposed contracts to avoid entering into arrangements that turn out to be unacceptable.

Predictability in the market

The insurance exchanges had problems before Trump came along. Large insurers, including UnitedHealth, Humana and Aetna dropped out of most of the exchange markets, and that left fewer choices for people seeking insurance. For the companies that stayed, rates went up and the market became more predictable.

The Trump administration’s plans to alter subsidies, coverage requirements and rules for short-term policies will increase unpredictability again.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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Congress renews Children’s Health insurance program

CHIP is funded primarily by the federal government; states operate the program following federal guidelines.

By Jeff Atkinson | Fall 2018 | Reform Recap

 

Concept of insured house, family and car

Congress renewed the Children’s Health Insurance Program (CHIP) for an additional six years in January. The program provides free or low-cost insurance for 8.9 million children in low- and moderate-income families. Those families earn too much to qualify for Medicaid, but have difficulty affording or accessing private insurance.

The Medicaid program covers 26.8 million more children. At the states’ option, CHIP also can provide coverage to pregnant women.

Bipartisan support

CHIP was enacted in 1997 during the Clinton presidency with strong bipartisan support. The program helped reduce the percentage of children in the United States without health insurance from 14 to 4.5 percent.

Although both Democrats and Republicans support CHIP, the program became a bargaining tool in 2017 and early 2018 as members of Congress fought over other issues including immigration, Obamacare and the federal budget. Long-term funding of CHIP was suspended for more than three months before the six-year deal was reached.

Federal funding

CHIP is primarily funded by the federal government with some contribution from the states. In fiscal year 2016, the federal government spent $14.8 billion on the program; $2.1 billion came from other sources.

States manage CHIP, including eligibility requirements. A state’s programs can be freestanding, folded into the Medicaid program, or a combination of both. In 46 states, CHIP is available to families with income up to 200 percent of the poverty level; 24 of those states provide coverage up to 250 percent of the poverty level or higher. The federal government will give a state matching funds for coverage up to 300 percent of the poverty level.

For a family of four, 200 percent of the federal poverty level in the contiguous 48 states and D.C. is $50,200. The poverty level dollar amounts are higher in Alaska and Hawaii.

In most states, there is no waiting period to enroll a child in CHIP. Federal regulations allow states to impose a waiting period of up to 90 days, and 15 states have exercised that option. An advisory commission to Congress has proposed eliminating waiting periods in all states.

Scope of benefits

The federal government established guidelines for what must be covered and then gives states leeway regarding additional details of coverage. Services that must be covered include: routine checkups, doctor visits, immunizations, prescriptions, dental care, vision care; inpatient and outpatient hospital care; laboratory, X-ray and emergency services.

Routine well-child visits and routine dental visits must be available at no additional charge to families, but states may require copayments or deductibles for other services, provided the total amount for those charges and premiums do not exceed 5 percent of a family’s income for a year.

To determine the details of coverage, states are directed to use what the federal government calls “benchmark coverage.” The benchmarks are: the standard Blue Cross/Blue Shield preferred provider option service benefit plan offered to federal employees; state employee coverage plan; or the HMO plan that has the largest commercial, non-Medicaid enrollment within the state. In addition, a state can provide coverage that is “actuarially equivalent” to the benchmarks, or the state can ask the Secretary of the U.S. Department of Health and Human Services for a waiver to provide a different type of coverage.

Cost savings for families

A commission that advises Congress about CHIP, the Medicaid and CHIP Payment and Access Commission (MACPAC), notes that CHIP provides substantial savings for low- and moderate-income families. Using data from 2015, the commission said that the average premiums and cost-sharing per child under CHIP was only $158 per year, whereas the cost per child in an employer-sponsored plan was $891.

In addition, CHIP provides for more coverage for dental, vision and audiology services than most employer-sponsored plans.

Looking to the future, the commission advocates using CHIP funds to promote innovation, some of which may be similar to changes in health care for the adult population. Innovations might include focus on treatment of chronic conditions, obesity, managed care and alternative payment models. In addition, the commission urges more seamless coverage when children transition between different health insurance plans, including between CHIP and Medicaid.

Support from AAP and AMA

The American Academy of Pediatrics and the American Medical Association supported extension of funding for CHIP, both calling it a “vital program.” The Pediatric Academy’s policy statement would go a step further. The academy urged coverage not only for children through age 18, but added that all children, adolescents, and young adults to the age of 26 “should be covered by an affordable, quality health insurance plan that allows access to comprehensive essential care.”

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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Fraud and abuse issues facing physicians

The federal government is stepping up investigations of fraud and abuse. Physicians can take steps to reduce the risks.

By Jeff Atkinson | Reform Recap | Summer 2018

 

Security sign in the hand of the engineer.

A Texas internist with a home health care practice along with two others billed Medicare for more than $40 million in services, including for services that were not rendered or were not necessary.

A Detroit physician billed Medicare for unnecessary opioids and pain-killing back injections. The prosecutor said that over a three-year period, the doctor prescribed for a single patient 2,640 Norco, 100 Percocet, 2,138 Soma, 1,220 Valium pills, and 4,200 doses of Promethazine with codeine.

A New York City doctor took more than $25,000 in payments in exchange for referring patients to a particular laboratory.

Five physicians in a California cardiology practice were accused of performing nuclear stress tests without first determining whether the test were medically necessary (or at least not having a consultation appointment within 30 days of the tests).

For the first three cases, prison sentences were (or are likely to be) imposed. For the fourth case, the cardiologists agreed to settle the case for $1.2 million.

The cases are part of an increased focus by law enforcement on fraud and abuse in health care.

Coordinated enforcement

The federal government takes the lead on many investigations, but it has ample help from state investigators and from insurance companies that alert the government to suspicious billing. A formal structure has been established to facilitate the coordination: the Healthcare Fraud Prevention Partnership, which includes most major insurance companies as well as the FBI, the Department of Justice and the U.S. Department of Health and Human Services.

Federal laws used to fight fraud and abuse are criminal and civil. Criminal laws include the False Claims Act, health care fraud, mail fraud and wire fraud. In addition, civil laws are used to impose monetary penalties and to exclude providers from participation in Medicare, Medicaid and other federal health care programs.

Since 2007, the Medicare Fraud Strike Force has charged more than 3,000 individuals with fraud. In fiscal year 2016, the federal government collected $3.3 billion as a result of health care fraud judgments, settlements and administrative dispositions. The government says the fraud control program returned $5 for each dollar invested.

Exposure by whistle-blowers

Employees of health care providers also may be part of the mix. Whistle-blower laws give employees—often disgruntled ones—a percentage of the amounts recovered for improper billing.

For example, a nurse employed by a Houston surgical center reported that a gastroenterologist performed many colonoscopies in less than two minutes, failed to follow proper sanitation procedures, and failed to perform procedures necessary to catch cancerous lesions. The case settled for $1.6 million, and the nurse will receive part of the settlement.

Investigation techniques

One of the government’s tools for enforcement is data analysis, which may include looking for outliers (a process sometimes referred to as “anomaly-detection models”), such as providers who are ordering a substantially larger number of services than would be expected for similar providers. Investigators also study data from past fraud cases, then program their computers to look for similar patterns.

In addition, CMS applies a “social network analysis” on the “birds of a feather…” theory. Providers should be careful of who their friends are.

If reliable information of an overpayment exists, CMS has authority to suspend Medicare payments to a provider. In FY2016, CMS made 508 suspensions on that basis.

The inspector general says that the Fraud Prevention System (FPS) “is not as effective in preventing fraud, waste and abuse in Medicare as it could be.”

The report suggested the FPS identify aberrant providers more promptly because, by the time action is taken, more overpayments by the government have been made and the providers may have fewer assets from which to collect.

Preventing problems

Physicians, their office managers and billing services can take steps to prevent small problems from becoming big problems. If a government payer or insurance company wants more documentation regarding a claim, respond promptly.

For billing procedures, extra attention should be paid to high-value and high-volume procedures.

If CMS determines that a provider has received an overpayment and a refund to the government is due, payments should be made promptly (generally within 60 days).

If a physician is serving in an administrative or advisory position for a referral source or an entity to which the physician may make referrals, the agreement should be in writing, reflect fair market value, and not be a remuneration in exchange for a referral.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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An update on the opioid epidemic

As record numbers of Americans die, projects (and prosecutions) emerge.

By Jeff Atkinson | Reform Recap | Spring 2018

 

Opioid pain killers

Approximately 64,000 people died in the U.S. in 2016 from opioid overdoses—a four-fold increase from 2000. That compares with 40,000 deaths in motor vehicle accidents in 2016. Drug overdoses are the leading cause of death of Americans under age 50.

The rate of deaths from opioid overdose has increased so much that it is responsible for a 2.5-month reduction of average life expectancy for Americans between 2000 and 2015 after several years in which average life expectancy was increasing.

According to data from the Centers for Disease Control and Prevention (CDC), the states with the highest death rates from opioids are in Appalachia, New England and the Southwest.

Precise, current data on drug overdoses is not possible to obtain because of the delays by medical examiners in determining the cause of death and submitting data to the CDC. Toxicology reports often take several months to process.

Blame for the crisis

Drug companies and the insurance industries have received part of the blame for the opioid crisis. Beginning in the 1990s, drug companies increased funding for organizations and CME programs to encourage the expanded use of opioids. Spending on opioids increased by more than 40 percent between 2006 and 2010.

Insurance companies often preferred to pay for comparatively cheap drugs rather than alternate therapies and interdisciplinary pain clinics.

Murder conviction for physician

In egregious cases, a physician’s involvement in opioid abuse can lead to criminal penalties. In 2016, a California general practitioner, Hsiu-Ying “Lisa” Tseng, was sentenced to 30 years to life in prison following her conviction for second-degree murder in the deaths of three patients. She also was found guilty on more than 12 counts of illegally prescribing drugs.

One of the patients who died of an overdose of drugs prescribed by Tseng traveled more than 300 miles with friends to obtain prescriptions from the physician.

The federal government is stepping up its effort to punish over-prescription of painkillers. In 2017, Attorney General Jeff Sessions announced funding for 12 experienced Assistant United States Attorneys who, for three years, will focus exclusively on fraud issues related to opioid prescriptions.

Law enforcement officials will examine whether physicians prescribe opioids far in excess of their peers.

Government initiatives

Federal and state governments have launched initiatives to combat abuse of opioids. Among the initiatives:

  • The federal 21st Century Cures Act has provided $1 billion in funding over two years to fight opioid abuse. More than $140 million is for opioid treatment medication (particularly Naloxone/Narcan) and training of first responders; $200 million will go to community health centers
  • The FDA is requiring drug companies to develop more post-market data on long-term impact of opioid use
  • In August 2017, President Trump declared that opioid addiction was “a national emergency,” though the statement was not promptly followed by a formal declaration and specific emergency actions
  • Approximately 20 states require physicians to check a prescription drug monitoring database before prescribing painkillers to a new patient
  • Some state licensing boards require physicians to receive training on controlled substance guidelines if the physician prescribes controlled substances

Medicaid coverage

State Medicaid programs provide coverage to more than 650,000 non-elderly adults with opioid addiction. The coverage is mostly likely to be available in the 32 states that expanded Medicaid coverage under the Affordable Care Act (Obamacare).

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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Growth in Medicare — and in proposals to change how it is funded

Congress is weighing proposals that include converting Medicare to a voucher system.

By Jeff Atkinson | Reform Recap | Winter 2018

 

Arrows up, increase and success business illustration
Medicare is a program undergoing significant growth, and there are several proposals on the table that could change it.

Two types of plans

Medicare delivers care through two main programs: Original Medicare (Part A and Part B) and the Medicare Advantage Plan (Part C). The original plan is fee-for-service with patients free to choose their physicians and hospitals (assuming the providers accept Medicare).

Under Medicare Advantage (MA), patients sign up with a private company approved by Medicare, and the plan is responsible for delivering care. Medicare Advantage plans generally are HMOs or PPOs where the patient’s choice of providers is more limited. A patient will pay a higher share (or potentially all) of the costs for out-of-network care. Medicare Advantage plans receive a fixed amount each month per enrollee from the federal government.

Medicare Advantage plans usually offer benefits to patients that are not available under original Medicare, such as coverage of vision and dental care. Enrollment in Medicare Advantage plans has increased more than 70 percent since 2010 to about 19 million, according to the Kaiser Family Foundation.

Infographic

Private contracting with patients

Among the proposals to change Medicare is to allow physicians who participate in Medicare to enter into contracts with patients to pay more than the Medicare rates. Under current law, physicians who participate in Medicare agree to accept the Medicare fee schedule and not balance-bill the patient for anything beyond the 20 percent copay that is paid by the patient or the patient’s supplemental insurance.

Physicians who opt out of Medicare are free to charge whatever they wish. Psychiatrists make up the largest portion of the opt-out group. Under current law, a physician who opts out must do so for all of the physician’s Medicare patients.

Proposals to change the law would allow physicians to obtain reimbursements at normal rates from Medicare and balance-bill the patient for an agreed additional amount. The additional payments could be determined on a patient-by-patient or service-by-service basis.

A report by the Kaiser Family Foundation notes three arguments in support of these changes:

  • Higher payments to physicians to offset what some view as unduly low payments from Medicare that do not keep up with practice costs.
  • Increasing the number of physicians willing to accept Medicare patients.
  • Reducing costs to patients who wish to see physicians who had opted out of Medicare since Medicare, under the new program, would pay part of the costs.

The Kaiser report also notes drawbacks to the proposal:

  • Costs would increase for patients who enter into such contracts with their physicians. Added payments may be unaffordable, especially for the half of Medicare enrollees who live on $24,000 or less per year.
  • If physicians decide to see only patients who are willing to pay more than the Medicare rates, access to physicians will be reduced.

Voucher plan

Another proposal is to convert Medicare into a system of “premium support”—also referred to as a “voucher” plan. Instead of having the government pay health care bills directly to providers, as is done under original Medicare, the government would provide a fixed dollar amount to Medicare beneficiaries who would use the money to purchase insurance in the private market or in the original Medicare program.

If the level of premium support does not cover the full cost of insurance (which is likely), the beneficiary would have to make up the difference. Some versions of the premium support proposal also would allow insurance companies to provide different levels of benefits. Under current law, all Medicare beneficiaries receive a base level of benefits.

Another uncertainty regarding the premium support proposal is the future of Graduate Medical Education (GME). The current Medicare program heavily subsidizes GME. The premium support plan does not specify how GME will be funded.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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Trump’s Plan to Cut Federal Health Care Spending

Proposals by President Trump and other Republicans would sharply reduce spending for Medicaid, health insurance subsidies and medical research.

By Jeff Atkinson | Fall 2017 | Reform Recap

 

Stethoscope wrapped around hundred dollar bills

The plans of President Trump and congressional Republicans for reducing health care spending are a work in progress. Republicans prioritized tax cuts for people with high incomes, as well as increased spending for defense and border protection. As part of the process, they looked for areas in which to reduce spending. Social services and health care are among the areas likely to take the biggest hits.

Medicaid spending

The largest potential reduction in health care spending is from the Medicaid program, which serves low-income people. Earlier this year, the American Health Care Act (introduced in the House) and the Better Care Reconciliation Act (introduced in the Senate) would cut Medicaid.

At the time of this printing, the Congressional Budget Office estimated that the most recently introduced act (the Senate version) would cut Medicaid spending by $772 billion over the next 10 years.

The reductions in Medicaid spending would result from having fewer people enrolled in Medicaid and from changes to the funding formula for Medicaid. Currently, federal payments to states for Medicaid are open-ended. The more a state spends insuring its people, the more the federal government reimburses the states.

Under the Republican plan, states would receive fixed amounts that would not increase based on the scope of coverage provided by state Medicaid plans. The fixed amount would either be in the form of a block grant to each state or a limit on how much the federal government would pay per enrollee. Additional reductions in Medicaid spending could come from allowing states to reduce the benefits that enrollees receive.

Subsidies for health insurance

The second largest reduction in federal health care spending would come from elimination of the subsidies that have helped people purchase non-group health insurance. The subsidies were provided under the Affordable Care Act (also known as Obamacare). The Congressional Budget Office estimated that eliminating subsidies under the Senate’s Better Care Reconciliation Act would reduce federal outlays by $408 billion over 10 years.

According to the Congressional Budget Office, 9 million people received subsidies for insurance in 2017.

Instead of directly subsidizing payment of health insurance premiums, the Trump plan would give people tax credits when they purchase insurance. The Kaiser Family Foundation analyzed the impact of eliminating insurance subsidies and substituting tax credits and found that government costs would increase.

According to Kaiser, when insurance companies lose revenue from lack of federal subsidies for insurance, the insurance companies will raise premiums by an average of 19 percent. The increase in premiums will result in higher tax credits for those who purchase insurance, and, thus, reduce tax revenue to the federal government.

Kaiser estimates that added cost to the government by shifting from subsidies to tax credits would be $2.3 billion in 2018.

Cuts at NIH

President Trump’s proposed budget for 2018 cut $5.8 billion from the National Institutes of Health (NIH). That amounts to an 18 percent cut of NIH’s $31.7 billion budget. Tom Price, Secretary of the Department of Health and Human Services, said the cuts will be for “indirect” costs of research, such as payments that the department makes to universities to cover the administrative costs of running research programs.

Congress is likely to push back on the proposed sharp reductions in research spending.

Risk pools

Establishment of high-risk pools for sale of insurance is among the reforms considered by some Republicans. The pools become particularly important if the mandate for individuals to have insurance is dropped and if insurance companies are allowed more flexibility on setting rates, including basing rates on an individual’s pre-existing conditions.

In that circumstance, the cost of insurance is likely to become quite high or not be available for some individuals. A high-risk insurance pool would be a market of last resort. If the insurance pool is funded only by the insured’s premiums, people seeking insurance may technically have “access” to insurance, but they probably will not be able to afford it.

If the government subsidizes the insurance pool, insurance may be affordable, but it will cost the government more money. In this scenario, the government will have closed down some programs, only to have opened others—a strategy that may or may not save money.

Jeff Atkinson is a professor for the Illinois Judicial Conference and has taught health care law at DePaul University College of Law in Chicago.

 

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Payments to Physicians and Hospitals Become Increasingly Quality-Based

Reform Recap | Summer 2017

 

Government and private insurers are adopting payment plans based more on service quality and less on service quantity. At the end of 2016, the Centers for Medicare & Medicaid Services (CMS) issued regulations implementing the new Quality Payment Program, which will increase Medicare payments if quality goals are met and reduce them if goals are not met.

Eligibility Requirements

The Quality Payment Program regulations apply to physicians who participate in the Medicare program, who bill Medicare for more than $30,000 per year and who provide care for more than 100 Medicare patients per year. Physicians who do not meet the eligibility requirements are not subject to the Quality Payment Program’s benefits or penalties.

The new regulations and the law that authorizes them add to the number of health care acronyms to keep track of. The law, which was passed by Congress in 2015, is the Medicare Access and CHIP Reauthorization Act (MACRA). The term “CHIP”—an acronym within an acronym—stands for the Children’s Health Insurance Program.

After passage of the law, CMS began drafting the rules to implement the law. CMS received more than 4,000 comments from people and organizations including physicians and professional associations. CMS then issued final rules that required more than 800 pages, including commentary on the rules.

The goal of the program, according to the rule, is to support “transitioning from fee-for-service payments to payments for quality and value.” The program replaces the prior systems—the Physician Quality Reporting System (PQRS) and the Sustainable Growth Rate formula (SGR). The SGR formula was the statutory provision that Medicare payments to physicians would be sharply reduced each year unless Congress stepped in to stop the reduction—which Congress did, although sometimes after the rate cuts took effect for a few months.

Two Tracks for Participation

The Quality Payment Program has two tracks that clinicians can choose from: Merit-based Incentive Payment Systems (MIPS) and Advanced Alternative Payment Models (APMs).

The MIPS apply not only to physicians, but also to physician assistants, nurse practitioners, clinical nurse specialists and nurse anesthetists. Data collection and reporting are the foundations of the program. Clinicians report data in multiple categories:

  • Quality performance (e.g., documentation of current medications in the medical record, colorectal cancer screening)
  • Improvement activities (e.g., care transition documentation practices improvement, collection and use of experience and satisfaction data on access)
  • Advancing care information (e.g., e-prescribing, public health record reporting)

CMS says the program offers a “flexible, pick-your-own pace approach to the initial years of the program.” Under the regulations, clinicians reporting for 2017 can report varying numbers of quality measures for periods between 90 days and one year. Those who want to participate fully should generally report data in six categories. Groups should report data in 15 categories covering one year. Data must be reported by National Provider Identification numbers tied to a Tax Identification Number.

Adjustments to Payments

Under MIPS, if an individual or group does not report any data for 2017, they will receive a 4 percent negative payment adjustment on Medicare reimbursements for the following year. If minimum data are submitted (for example, a physician submits one quality measure and one improvement activity for a 90-day period in 2017), a downward adjustment can be avoided. If a full report is made for the year, bonuses of up to 4 percent can be paid.

The penalty and bonus percentages increase in subsequent years—up to 9 percent in 2022.

The second track of the program, APMs, is designed for providers who are already part of an organization designed to save costs and promote quality, such as Accountable Care Organizations (ACOs) and Medicare Shared Savings Programs. Such organizations receive bundled payments for providing care for patients. For example, Medicare may pay a fixed sum for hip replacement or certain cardiac problems, covering the period of hospitalization and 90 days of follow-up care.

As with the MIPS, participants in APMs must submit quality data, which will determine whether payment rates will be raised or lowered.

More information on the Quality Payment Program, including specific measures for medical specialties, can be obtained from the CMS website, qpp.cms.gov.

Private Sector Initiatives

The private sector is also shifting to payments based on service quality rather than just quantity. UnitedHealthCare, Blue Cross and Aetna, for example, use a variety of initiatives to promote value-based care. These initiatives include ACOs, patient-centered medical homes, bundled payments and pay-for-performance, by which payments go up or down depending on quality measures.

A recent study reflects the cost savings that can come from the initiatives. The study, “Cost of Joint Replacement Using Bundled Payment Models” by Amol S. Navathe M.D., Ph.D., and others, appeared in the February 2017 issue of JAMA Internal Medicine. The researchers studied 3,942 patients who received joint replacement surgery and whose procedures Medicare paid for using bundled payments.

The average cost per procedure was reduced by 20.8 percent, from $26,785 to $21,208, when compared to traditional fee-for-service payments. The savings come primarily from reduced costs for implants, supplies and institutional care. The study said, “Patient illness severity remained stable.”

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.

 

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The health care policies of President Trump

Many parts of the Affordable Care Act may be eliminated during Donald Trump’s presidency, but some popular features, including prohibiting discrimination based on pre-existing conditions, are likely to continue.

By Jeff Atkinson | Reform Recap | Spring 2017

 

During his campaign for president, Donald Trump proclaimed, “On day one of the Trump administration, we will ask Congress to immediately deliver a full repeal of Obamacare.” Trump’s disdain for Obamacare under the Affordable Care Act was echoed on the 2016 Republican platform, which said the ACA “imposed a Euro-style bureaucracy to manage its unworkable, budget-busting, conflicting provisions.” Thus, it is expected that President Trump and the Republican-controlled House and Senate are likely to dismantle many provisions of the ACA.

Dismantling Obamacare

High on the list of provisions to dismantle will be the ACA’s mandates that employers provide health insurance and that people without insurance either acquire it or face tax penalties.

In addition, the current requirement that insurance plans offer minimum-benefit packages is likely to be abolished. Insurance companies will probably offer a wider variety of policies, some of which will have minimal benefits. There may also be more insurance companies offering policies in a given state if Trump follows through on his promise to enact laws to allow sales of insurance across state lines.

Trump favors increased use of health savings accounts and allowing full deductions of health insurance premiums on individual tax returns. Such steps would be helpful to middle- and high-income families but would have little benefit for families who are in low tax brackets or pay no taxes.

Medicaid Block Grants

Under Trump’s plan, which is supported by many Republicans, the federal government’s role in Medicaid will also be reduced. Traditionally, the federal government has provided states with funds for Medicaid and issued detailed regulations about how the funds could be spent (although states could be granted waivers).

Under the new approach, the number of federal regulations will be much lower, and Medicaid funds may be lumped into block grants, perhaps including welfare payments, leaving the states to allocate the funds as they see fit. The amount of federal money to fund Medicaid will likely also be reduced. The Trump-Pence policy statement says, “The state governments know their people best and can manage the administration of Medicaid far better without federal overhead.”

Parts of Obamacare that may Remain

Although Republicans are eager to get rid of Obamacare, some parts of it may remain, particularly provisions that are popular with both Republicans and Democrats. Those provisions could be retained in a scaled-back ACA or incorporated into a Republican bill that replaces it.

There is widespread support to have a law that prohibits insurance companies from discriminating on the basis of a person’s pre-existing conditions. Such a law would prevent insurance companies from denying coverage or sharply increasing rates simply because of a person’s health problems. Such protection, however, may be restricted to those who have had continuous insurance coverage, thereby discouraging people from foregoing insurance until the need for it arises.

Other Obamacare provisions that draw bipartisan support include allowing adult children to remain on their parents’ insurance policies until age 26 and using health care payment systems that promote cost-effective care.

Future of Medicare

Republicans vary in their opinions on what the future of Medicare should be.

Some Republicans, including House Speaker Paul Ryan, favor significant changes in Medicare, including converting Medicare into a voucher or premium-support system by which the government would pay a certain amount for retirees’ health insurance, which could be obtained through government or private insurance. If the cost of insurance exceeds the amount the government would pay (which is likely), retirees would have to pay the difference. Ryan would also raise the eligibility age for Medicare from 65 to 67.

Impact on Physicians

The full impact of “Trumpcare” on physicians remains to be seen. It is likely that payments to physicians and other providers from government-sponsored programs will be reduced. Unless Republicans develop a way for those who gained coverage through the Obamacare exchanges to retain their insurance, many currently insured people will return to being uninsured or will be significantly under-insured by policies with stripped-down benefits.

Payments under Medicaid—which are already low in most states—will be lower still if the federal government reduces funding for Medicaid and allows states to use block grants for purposes other than health care. If a state chooses to fund its Medicaid program generously, payments to providers may not be cut, but in an era of tight state budgets, added payments to Medicaid providers do not seem likely.

If Trump follows through on his general promise not to change Medicare significantly, Medicare reimbursement rates may not be adversely affected. Additionally, regulations are likely to be reduced in the Trump administration, which may result in lighter burdens of medical records and other paperwork.

Paths to Change

There are multiple paths to implementing Donald Trump’s health care reform. Some actions can be taken quickly by issuing executive orders—no action by Congress required. Reforms that President Obama implemented by executive orders can also be eliminated by President Trump’s executive orders.

If the Republicans seek to repeal the ACA outright and replace it with a Republican plan, Democrats may be able to slow the process with a filibuster. Republicans have a majority of seats in the Senate, but, under current rules, they do not have the 60 votes necessary to cut off a filibuster.

On the other hand, if reforms are made through a budget reconciliation process, only 51 votes in the Senate are necessary. Budget reconciliation bills are intended to focus on budgetary matters, and under Senate rules, debate can be limited to 20 hours. When the ACA was amended six years ago, the budget reconciliation process was used to make the amendments.

Jeff Atkinson teaches health care law at DePaul University College of Law in Chicago.

 

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