Joe Biden’s health care policies

The former vice president has rolled out plans to eliminate copayments for primary care, expand Medicaid, end surprise billing and control drug prices.

By Jeff Atkinson | Reform Recap | Summer 2020

 

Former Vice President Joe Biden favors maintaining and expanding the Affordable Care Act (ACA). In his campaign for president, Biden invokes the image of him standing at Barack Obama’s side in 2010 when the ACA was signed into law. Biden promises to build on the ACA by giving Americans more choice and reducing health care costs.

No copayments for primary care

Under Biden’s plan, costs will drop for individuals and families by reducing copayments and increasing subsidies for insurance. There would be no copayments for primary care.

Tax subsidies for health insurance currently are available on a sliding scale for families earning up to 400 percent of the poverty level (about $51,000 for a single person and $105,000 for a family of four).

Under current law, the amount an eligible family has to pay for health insurance is limited to 9.86% of income. Biden would reduce that limit to 8.5% of income, and he would eliminate the eligibility criteria of 400% of poverty level. He estimates that under his plan, a family of four earning $110,000 per year would save $750 per month on health insurance. People with high income, such as above $250,000 per year, likely would not receive a tax credit for insurance because their insurance costs probably would not exceed 8.5% of income.

Expanding Medicaid and Medicare

The ACA allows states to increase the number of people covered by Medicaid, with most of the cost of expansion paid by the federal government. About three-quarters of the states took advantage of that incentive. Fourteen states, however, did not. Biden would modify federal law to expand Medicaid in those states, thus covering approximately 4.9 million adults who currently do not have insurance.

In addition, Biden would lower the age of Medicare eligibility to 60 and offer “a public health insurance option.” This proposal is similar to Pete Buttigieg’s plan of “Medicare for All Who Want It.” If a person was not satisfied with the insurance offered by his or her employer or other sources, the public option would be available.

Unlike senators Bernie Sanders and Elizabeth Warren, Biden does not favor a mandatory single payer system, such as Medicare for All.

Ending surprise billing

Surprise billing arises most often when a patient receives care from a provider who is out of network, such as in an emergency department or when a patient goes to an in-network hospital but is seen by a specialist there not in the patient’s insurance network.

A policy statement from Biden says his plan “will bar health care providers from charging patients out-of-network rates when the patient doesn’t have control over which provider the patient sees (for example, during a hospitalization).”

Controlling drug prices

Controlling drug prices is as an issue on which the Democratic candidates for president shared common approaches. All candidates, including Biden, favored allowing Medicare to negotiate prices with drug companies. Regarding the current provision in the law prohibiting the federal government from negotiating prices with drug companies, Biden says, “There’s no justification for this except the power of prescription drug lobbying.”

Biden also would allow consumers to buy prescription drugs from other countries, including Canada.

For pricing of new specialty drugs that do not have competition, Biden says he would establish “an independent review board to assess their value” and “recommend a reasonable price.”

Additional issues

Other health care issues Biden has addressed include:

Parity for mental health care. Increasing funding to promote access to mental health care and greater parity between physical and mental health care.

Reproductive rights. Codifying Roe v. Wade; eliminating many state laws that limit a woman’s right to have an abortion; and restoring federal funding to Planned Parenthood.

Opioid crisis and substance abuse. Spending $125 billion over 10 years for research, prevention, professional education and treatment, including ensuring that communities have sufficient supplies of Naloxone (also known as Narcan).

Rural areas and community health. Doubling spending for community health centers and care in rural areas.

Equity issues. Increasing research on diseases affecting minority populations with particular attention to lower life expectancies and maternal mortality rates of African Americans.

Antitrust enforcement. Increasing government regulation of health care mergers and acquisitions that concentrate market power and drive up prices.

Funding for new programs

Most of Vice President Biden’s proposals will increase the government costs for health care. The primary source of funding would be increased taxes on people with high incomes. The current top federal income tax rate of 37% would return to the pre-Trump tax rate of 39.6%.

Biden also would require those earning more than $1 million per year to pay the top tax rate on long-term capital gains rather than the current 20% long-term capital gains rate.

Drug companies would lose tax deductions for advertising expenses. Biden said that drug companies spent $6 billion on advertising in 2016—an increase of more than four-fold since 1997. “Taxpayers should not have to foot the bill for these ads,” he says.

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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Proposals to control drug costs

Lawmakers propose a variety of solutions as drug prices rise faster than the rate of inflation.

By Jeff Atkinson | Reform Recap | Spring 2020

 

The prices of drugs for which Medicare spends the most money have increased substantially more than the rate of inflation—in some cases by more than nine times.

In 2016-17, the Kaiser Family Foundation reported that 60 percent of all drugs covered by Medicare had list prices that increased more than the rate of inflation. Medicare enrollees who did not receive low-income subsidies spent, on average, about $500 out of pocket on prescriptions. More than 1 million enrollees who needed specialty drugs or other expensive drugs spent more than $3,200 per year out of pocket.

With the mounting burden of drug prices, pressure grows on lawmakers and candidates to ease the burden. The main proposals are as follows.

Allowing Medicare to negotiate prices

The Medicare Modernization Act of 2003 prohibits Medicare from negotiating prices of drugs paid by Medicare.

Several bills before Congress would change that. House Resolution (H.R.) 3, introduced by Rep. Nancy Pelosi (D. Calif.), would repeal the noninterference provision and direct the secretary to negotiate prices on at least 25, but no more than 250, brand-name drugs without generic competitors. The drugs initially subject to negotiation would include the ones on which the government spends the most money. The Congressional Budget Office projects that this measure would save the government $345 billion over a six-year period.

Using international benchmarks

H.R. 3, along with several other proposals, would direct the government to set prices with reference to the prices paid by leading industrialized countries. H.R. 3 specifies six countries: Australia, Canada, France, Germany, Japan and the United Kingdom.

In general, the “maximum fair price” for a drug under the act would not be more than 120 percent of the average price for the drug in the six designated countries. Other proposals use different reference points, such as the average price for the drug in other countries or the lowest price paid by any of the designated countries.

A variation on using prices charged to other countries would be to restrict price increases to the rate of inflation. Some proposals also would lower costs by allowing consumers to purchase drugs from other countries, provided the FDA has certified the source is safe.

Taxes on excess profits

To help enforce the new price regime, H.R. 3 and other proposals would place a tax on drug company profits if the companies charge in excess of the benchmark price. Such taxes could be up to 95 percent of the “excess” profits. In addition, civil monetary penalties could be imposed up to 10 times the difference between the “maximum fair price” and the price that was charged. Related proposals would eliminate or limit tax deductions by drug companies for expenditures on marketing.

Caps on out-of-pocket payments

Another way to ease the burden on patients is to limit their out-of-pocket payments. Currently, the amount a patient would have to pay for drugs under Medicare is open-ended, although catastrophic coverage reduces the burden after the patient has paid approximately $8,500. (The precise amount varies with the health plan and types of drugs purchased.)

H.R. 3 would limit out-of-pocket expenses to $2,000. Bernie Sanders’ Medicare-for-All would set the limit at $200.

Loss of patent protection

Rep. Lloyd Doggett (D. Texas), Sen. Sherrod Brown (D. Ohio) and more than 100 other Democrats are sponsoring bills to alter patent protections for pharmaceutical companies in the event drug prices are not considered fair to Medicare beneficiaries and taxpayers (H.R. 1046 & S. 377). The Secretary of Health and Human Services would be authorized to issue licenses to companies other than the original manufacturers to allow manufacture of generic versions. This presumably would have the effect of dropping prices for the drugs.

Panel with power to limit prices

Another proposal is to create a federal panel with the power to set drug prices. Factors the panel would consider in setting drug prices include: research and development costs, costs of production, size of the market, and availability of alternatives for the drug.

Major reform of drug policies is unlikely in 2020. Results of the election will determine the likelihood of future legislative reforms.

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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Measles vaccinations and exemptions

As outbreaks increase, pressure mounts to eliminate exemptions from vaccinations based on religious or philosophical beliefs.

By Jeff Atkinson | Reform Recap | Winter 2020

 

The number of confirmed cases of measles in the United States in 2019 exceeded 1,000. The Centers for Disease Control and Prevention (CDC) reported that this is the largest number of cases since 1992 and since measles was declared eliminated in the U.S. in 2000.

States with the most outbreaks as of June 2019 include New York, Washington, Oregon and California.

Prior to initiation of the measles vaccination program in 1963, 3 to 4 million people in the U.S. contracted measles each year.

Worldwide, there also has been an upsurge in measles, particularly in Madagascar, Ukraine, India, Philippines, India and Nigeria. The World Health Organization reports that in 2016 approximately 7 million people were infected by measles and 89,780 died.

Failure to vaccinate

The reason for measles outbreaks is failure to vaccinate. In the U.S., a significant number of parents have chosen not to vaccinate their children for religious or other reasons. In an ultra-orthodox Jewish community in Brooklyn, for example, several hundred cases have been reported, and the city closed seven orthodox schools that did not comply with vaccination requirements. Some conservative Muslim and Christian groups also oppose vaccinations.

The anti-vaccination movement was fueled by a 1998 article in The Lancet by Andrew Wakefield and his colleagues that linked the measles, mumps, rubella (MMR) vaccination with autism. The article was based on cases of 12 children. The Lancet later retracted the article, stating that “several elements” of the article are “incorrect [and] contrary to the findings of an earlier investigation.”

Wakefield lost his license to practice medicine after the British General Medical Council found that he falsified data and acted unethically in the treatment of the children. In addition, Wakefield did not disclose that his research was funded by lawyers who were suing vaccine manufacturers.

The CDC and multiple other organizations have concluded that MMR vaccinations do not cause autism.

State laws on vaccination

All states have laws requiring students to have vaccinations, including for MMR, but the scope of exemptions from the requirement varies from state to state. The National Conference of State Legislatures reports that all states allow medical exemptions. Medical exemptions include allergy to the ingredients of the vaccination and immune suppressed conditions.

A controversial issue in the vaccine debate is whether exemptions should be granted for religious or philosophical reasons. As of June 2019, most states grant exemptions for religious reasons, and 15 states allow exemptions for philosophical reasons.

States that to not allow either religious or philosophical exemptions include California, Maine, Mississippi, New York and West Virginia.

Medical organizations weigh in

In light of the measles outbreaks, there has been pressure to eliminate exemptions based on religious or philosophical reasons. Both the American Medical Association and American Academy of Pediatrics strongly support elimination of non-medical exemptions for students entering school.

The American Academy of Pediatrics said: “To protect those who cannot be vaccinated, community or ‘herd’ immunity requires at least 90 percent of the population to be immunized (95 percent for highly contagious diseases such as measles and pertussis).”

President of the AMA Barbara McAneny, M.D., issued this statement: “[W]hen individuals are not immunized as a matter of personal preference or misinformation, they put themselves and others at risk of disease. …We are also reminding physicians to talk with their patients about the health risks associated with not being vaccinated and make a strong recommendation for vaccinations, unless medically inadvisable.”

Court rulings

Legal issues regarding vaccinations are not new. In 1905, a case involving smallpox vaccinations came before the U.S. Supreme Court (Jacobson v. Massachusetts). In the early 1900s, smallpox was prevalent and increasing in Cambridge, Massachusetts. Acting under authority of a state statute, the city’s Board of Health ordered vaccination of all inhabitants of the city.

The vaccinations were available at no cost to the recipient. The penalty for not being vaccinated was a fine of $5. Henning Jacobson refused the vaccination, was found guilty of a criminal offense, and was fined.

Jacobson appealed to the Supreme Court, arguing that the statute was an unconstitutional infringement of his liberty. The Court upheld the statute as a legitimate use of the state’s “police power” to “protect the public health and safety.”

The Court acknowledged that, at that time, medical professionals differed about the value of vaccinations. The Court nonetheless said that the legislature and health boards had the power to weigh the evidence and impose vaccination requirements as long as the governmental units did not act in an arbitrary or oppressive manner.

In a later court case not related to vaccinations, the Supreme Court (Prince v. Massachusetts, 1944) commented: “The right to practice religion freely does not include liberty to expose the community or the child to communicable disease or the latter to ill health or death.”

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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Medicare for all

The likelihood of expanding Medicare to cover all Americans in the near future is close to zero, but the proposal will be prominent.

By Jeff Atkinson | Fall 2019 | Reform Recap

 

“Medicare for All” is the banner under which a variety of Democrats present their plans for reforming the health care system. Sen. Bernie Sanders (I-Vt.) was among the earliest and most prominent advocates of universal health care. In the 201718 Congress, he introduced the Medicare for All Act. Earlier this year in the House of Representatives, Rep. Pramila Jayapal (D-Wa.) and more than 100 cosponsors introduced another bill for Medicare for All.

Four-year phase-in

Sanders’ plan for expanded Medicare would be phased in over a four-year period. The program would cover all residents of the United States. The U.S. Secretary of Health and Human Services would issue regulations regarding who is eligible as a “resident.”

Medicare for All would cover all treatment that is “medically necessary or appropriate.” Unlike the current traditional Medicare program, Sanders’ proposal also would cover oral, audiology and vision services, as well as prescription drugs.

To help make sure that the government health plan is truly universal, insurance companies and employers would be prohibited from offering coverage that duplicated coverage under the act.

The act provides there shall be “no cost-sharing, including deductibles, coinsurance, copayments, or similar charges” for benefits under the act. Some exceptions are allowed, including for prescription drugs and biological products, provided the purpose of the exception is to encourage use of generic products and the cost-sharing does not exceed $200 per person per year (adjusted for inflation).

Effect on physicians’ pay

Physicians and other providers who enter into a “Participation Agreement” with the government would be prohibited from making any charges to patients for covered services other than for payments authorized by the act.

Compensation for physicians and other providers would be likely to drop under Medicare for All. The government would set the payment rates, and Medicare rates are usually less than payments currently paid by insurance companies. On the other hand, compensation for treating patients who had been covered under Medicaid probably will increase since Medicare rates generally are higher than Medicaid rates.

Funding for the program

Under Sanders’ proposal, funding for the program will come from existing health care dollars, plus an undetermined amount of new taxes. Payments that would have been made to the existing programs for Medicare, Medicaid, Federal Employees Health Benefits, and other federal health programs will be deposited into a new Medicare Trust Fund.

Since the new program covers all U.S. residents and not just the current Medicare population, additional revenue will be necessary. Sources of that revenue could include an increase in the Medicare tax or higher income taxes.

Advocates of Medicare for All project substantial savings in some categories of expenditures compared to the current system. Estimates of savings have ranged from $1.5 to $5 trillion over 10 years.

Since there will be a single payer rather than hundreds of payers, administrative costs will be much less. In addition, under the Sanders proposal, the government will negotiate (or dictate) the amount it is willing to pay for pharmaceutical and medical supplies, thus dropping the cost for drugs.

On the other hand, the shift of more than 155 million people who are currently covered by employer-based health plans to a government health plan could increase federal spending by at least $32 trillion over 10 years, according to the AMA.

Level of public support

A survey by the Kaiser Family Foundation found public support for the broad concept of Medicare for All. The labels used in the surveys affected the level of support. “Medicare for All” drew the most positive response (62%); “national health plan” received a 57% rating. When the term “single payer” was used, support dropped to 48 percent.

If respondents to the survey were given more information about tradeoffs for the added coverage—such as higher taxes and increased government control—support dropped further.

Multiple industry groups oppose Medicare for All. Those groups include insurance companies, pharmaceutical companies, some hospital groups, and the AMA. A statement from the AMA said basing payments on Medicare rates and global budgets “raise significant questions as to whether physicians and other health care providers would be able to sustain their practices under Medicare for All.”

As long as Republicans have control of the Senate, the House, or the White House, passage of Medicare for All is very unlikely. The issue, along with alternative proposals, will be prominent in the coming campaigns.

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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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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