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This Week in Health Care Reform - May 29th, 2015

A generational overhaul is proposed for the Medicaid managed care program; with anxiety growing over escalating drug prices, a new push seeks to tie costs to efficacy; small steps in digital technology point the way to savings in health care delivery; and, all eyes turn to the Supreme Court and their much-anticipated ruling.


Week in Review

Proposed Overhaul: As expected, the Centers for Medicare & Medicaid Services (CMS) this week released its long-anticipated regulatory package aimed at overhauling the Medicaid managed care program.  The proposal, the first such set of updates in over a decade, seeks to align the rules governing Medicaid managed care with those seen in the private marketplace.  Despite the enormity and complexity of the so-called ‘mega-reg’, reaction was swift, particularly in regards to certain pieces of CMS’ proposal.  For instance, the proposed introduction of a medical loss ratio (MLR) to Medicaid managed care, which would require plans to spend a certain percentage of the money they’re paid on care rather than on administrative costs, was met with immediate opposition.  While its application in the commercial space continues to draw fire, experts warn that in the context of Medicaid managed care, the emphasis is placed on care management, thereby preventing beneficiaries from accumulating large medical bills.  Under the MLR, the border circumscribing this devotion to managing costs for enrollees gets blurred.  Nevertheless, despite the more problematic elements of the sweeping changes, there are proposals that should find easy, ready support.  And, if anything, it’s hard to deny that the program – serving upwards of 46 million Americans – is long overdue for modernization 

Cost v. Efficacy: Last week, the House Energy & Commerce Committee unanimously approved its 21st Century Cures Act, which seeks, amongst other things, to create a more efficient and patient-centered research and regulatory system.  One of the ways the law would help bring this about is by requiring the FDA to streamline its review process for drugs to be approved for additional uses.  Whether or not it’s implied, that the issues surrounding prescription drugs in this country is forefront on lawmakers’ minds is hard to deny.  And, it’s easy to see why.  As covered in last week’s newsletter, a new study released by pharmacy benefit manager Express Scripts analyzed drug spending trends in this country.  According to their analysis, more than half a million Americans had drug bills in excess of $50,000 last year.  As more families struggle to reconcile the widening disparity between the medications they need and what they can reasonably afford, it’s hardly surprising to find that many sufferers of chronic illness find themselves further stressed by the growing issue of soaring drug costs.  To help patients (and our health care system) alleviate some of the burden, there’s a growing push to tie how well a drug works to what its manufacturers should be able to charge for it.  Insurers and pharmacy benefit managers, like Express Scripts, are looking to make so-called pay-for-performance deals, maintaining that they should pay less when drugs don’t work well for certain patients.  Whether or not this “indication-specific pricing” model finds any sort of long-term traction, it’s clear that something has to be done before our health care system gets completely overwhelmed by the unsustainable trend currently underway in drug pricing.

Digital Savings:
Even as telehealth continues to gain support across the care delivery spectrum, a new report from the American Telemedicine Association (ATA) shows just how far our system still needs to go.  Tellingly, in grading states’ coverage and reimbursement, the ATA gave just five states and the District of Columbia A-grades, while two states, Connecticut and Rhode Island, received Fs.  Still, progress often comes in small steps.  And, as telehealth continues to help our health care system realize savings through its increased practical application, there’s reason to hope that more states will find themselves on the ATA’s honor roll.

With so much at stake in next month’s expected Supreme Court ruling in the King v. Burwell case challenging the exchange subsides offered to consumers via the federal exchange, it’s no surprise that more than a few anxious eyes have turned to see what the Justices ultimately decide.  Should the court rule in favor of the plaintiffs, invalidating the subsidies granted through the federal exchange, experts caution that the fallout could be “ugly.”  Beyond the repercussions that would ripple across the health care landscape, the resultant political upheaval would make it difficult to identify winners and losers.

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It’s projected that almost half of the state exchanges are likely to struggle financially in the not-too-distant-future, prompting some lawmakers to call for better oversight of their administration. 

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