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This Week in Health Care Reform - June 12th, 2015

The sweeping Medicaid ‘mega-reg’ puts states in a tough position; midsize businesses express concern with the small-group market expansion; a new study puts a pricetag on a handful of new breakthrough drugs; and, stakeholders continue to push for the expansion of telehealth.


Week in Review

Medicaid & the States: On the eve of celebrating its 50th Anniversary, the Centers for Medicare & Medicaid Services (CMS) announced sweeping updates to the Medicaid managed care program last month.  Known in policy circles as the ‘mega-reg’, the proposed changes seek to modernize the rules governing the Medicaid program administered by insurance companies for the first time in over a decade.  While reaction to the 653-page rule was swift, there’s growing concern amongst states that the amount of resources required to implement all the proposals will be significant.  Given the enormity of the rule changes being offered up, stakeholders have begun the intricate work of digging into the ‘mega-reg’ in earnest, recognizing that Medicaid finds itself at something of a defining moment. 

Small-Group Worries: As covered in a previous newsletter, one of the more contentious provisions of the Affordable Care Act calls for the expansion of the small-group market to include businesses with up to 100 employees.  At issue, the impact to small businesses, many of whom now find themselves struggling to manage the costs associated with the new set of standards.  One study projects that nearly two-thirds of workers in these small- to mid-size firms would face premium increases of as much as 18 percent if the expanded rules go into effect.  Luckily, their plight hasn’t gone unnoticed, as bills – such as the one introduced by Sens. Tim Scott (R-South Carolina) and Jeanne Shaheen (D-New Hampshire) – have been offered up to protect these businesses from the harmful effects of the small-group market expansion.  Other stakeholders have also weighed-in, offering their support for these legislative fixes as a way of maintaining the stability of the small-group market.

Breakthrough Rx:
The pervasive issue of rising drug prices has managed to work its way into every breath of the health care conversation.  At a recent meeting of the American Society of Clinical Oncology, the price of cancer drugs came under attack with oncologists urging for a frank evaluation of these drugs’ cost and value.  Separately, ahead of a scientific gathering of the American Diabetes Association, a new trend analysis was released in which medications used to treat diabetes were, for the fourth consecutive year, found to be the most expensive traditional therapy class of drugs when ranked by per-member-per-year spend.  As the public consciousness gets socialized to the shadowy and often nefarious means used by the pharmaceutical industry in their drug-pricing determinations, reports continue to surface of the tactics deployed by patients and stakeholders alike to combat this alarming and unsustainable trend.  And, it would seem, none too soon, as a new study released this week points to the coming onslaught of new drugs that could potentially bankrupt a health care system already veering dangerously close to the edge.  Compiled by health management consulting firm, Avalere, their analysis estimates that 10 new breakthrough drugs – including some that have yet to be approved by the FDA – will cost the government close to $50 billion over the next decade.  On its own, that figure is enough to make any health care economist reach for the panic button, but experts warn that with roughly 5400 drugs in the pipeline, that’s only the tip of the iceberg.

Telehealth Expansion:
Digital’s ability to bend the cost-curve is hard to overstate.  As our health care system undergoes a seismic shift from fee-for-service to value-based care, technology and its impact on the care transaction, are clearly on display.  In fact, new research from Accenture projects that the application of digital solutions in the health care space will yield $100 billion in savings over the next four years.  With each new advance nudging telehealth a little further down the road to widespread acceptance, stakeholders continue to weave its application into how (and when and where) they deliver care.

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Looking Ahead

With the Supreme Court’s decision in the King v. Burwell case expected in the coming weeks (if not days), scenario-planning, impact analysis, and rhetoric all kick into overdrive, as the law’s defenders urge Congress to be ready to step in should the Court invalidate the subsidies granted through the federal exchange. 

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