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This Week in Health Care Reform: October 19th, 2018

A new rule is proposed requiring drug ads to include prices; Medicaid patients are found to receive better care, but gaps remain; hospitals fail to address costs; and, an overwhelming majority of voters support relief from the burdensome health insurance tax.

Week in Review

Drug Ad Rule: As anticipated, on Monday, the Administration announced new rules aimed at bringing greater transparency to drug prices.  In short, the proposed rules would require pharmaceutical manufacturers to disclose the prices of their drugs in ads.  Specifically, they would now have to list a product’s wholesale price for a month’s worth of treatment, or the cost for a typical course of treatment if that amount exceeds $35 for 30 days.  In announcing the proposal, Department of Health & Human Services (HHS) officials pointed to research showing how increased price transparency discourages drugmakers from raising prices.  Unsurprisingly, the rule met with strong resistance from PhRMA, the pharmaceutical industry’s lobbying arm, which argued that disclosing list prices of drugs without additional context is only misleading to consumers.  And, while there are still some lingering questions concerning the practical execution of the rule, stakeholders were optimistic, commending HHS’ announcement, highlighting the importance of arming patients with pricing information as a means of empowering them in their own care decision-making.

Medicaid Care: Evidence continues to mount establishing that one of the most effective ways in which we can reduce growing health care costs is by better managing chronic conditions – which, as has also been shown, is largely achieved by increasing access and through enhanced care coordination.  This holds especially true for Medicaid patients, who, historically, have not always been welcomed by physicians owing to low reimbursement rates and not insignificant administrative hurdles.  But, recent data suggests that this trend has abated, as groups have urged providers to accept these patients in order to keep them from seeking care in emergency departments.  Unfortunately, as stakeholders point out, access to this kind of care is still lacking in parts of the country, where, according to a new report from the Government Accountability Office (GAO) patients have some of the worst health outcomes.  The GAO report took a look at the 17 states that have not expanded Medicaid and found that nearly 20 percent of low-income people in those states passed on needed medical care because they couldn’t afford it, compared to the 9.4 percent of low-income people in the states that did expand the program.

Hospital Costs: A new report seeks to make the case that hospitals are failing to reduce costs where they’re needed most.  In identifying cost-cutting targets, 72 percent of respondents in the survey said that labor cost/productivity and the supply chain were areas of focus for their organizations.  But, as the study’s authors point out, realizing any savings in a market increasingly marked by disruption requires not just a new mindset, but a willingness to go beyond the conventional.  That includes everything from reducing clinical variation to better integrating the physician practices that so many health systems have accumulated in recent years.  Overall, the report determined that little progress has been made when it comes to cutting costs as fewer than one-in-five of the nearly 190 senior executives from hospitals and health systems surveyed cited cost reductions of more than 5 percent in any of their organizational priority areas.  Clinical variation was also highlighted as something hospitals need to examine in looking to drive down utilization of services and supplies.  Additionally, the aforementioned acquisition of physician practices – a defensive strategy adopted by many health systems in order to gain market share – has left many struggling with how to properly integrate these practices into their ecosystems.  And, finally, 70 percent of the executives cited the need to prepare for the transition to value-based care as their top cost transformation driver

Voters & the HIT:
An overwhelming majority of voters support the suspension or repeal of the health insurance tax (HIT), which threatens to drive up costs for hard-working middle-class families, small businesses, and seniors.  In a recent survey from Morning Consult, 73 percent of surveyed voters said they supported Congressional efforts to eliminate or extend the moratorium on the HIT – an issue of increasing importance, as highlighted in a separate analysis, which projected that the reimplementation of the onerous tax in 2020 – after its one-year suspension in 2019 – would result in $20.3 billion in increased costs to over 14 million Americans.      

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