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This Week in Health Care Reform - September 18th, 2015

New evidence connects health care dollars saved to the increased use of telehealth; year-to-year spending growth on prescription drugs tops the list of major health care expenditures; a government audit determines just how much money was wasted on contractors; and, the effort to protect small- and medium-sized businesses from a harmful new provision of the health care law continues to draw Congressional support.


Week in Review

Telehealth Savings: Concern over the mounting costs associated with the delivery and provision of care in our country is inescapable.  Whether it’s the pace of development, fostering innovation, or enhancing access, the price of these advancements seems to overshadow our health care system’s every step forward – which is why it’s so important to draw our attention to those instances when these developments lead to actual, realized cost savings.  In the case of telehealth, evidence continues to mount that the investment in introducing technology into the health care transaction is paying dividends, most recently in Medicare, where the widespread use of telehealth in extended care facilities has not only saved money but improved care coordination.  As providers, plans, and stakeholders across the spectrum embrace the digital revolution underway throughout our health care system, it’s no surprise that an uptick in telehealth adoption rates has also been noticed, a trend that’s only going to continue as the barriers impeding its progress are overcome.

Rx Spending Growth:
Unfortunately, the inverse of what’s being seen in the telehealth market – and presently rampaging across our health care system – is the wild and unsustainable price inflation coming out of the pharmaceutical industry.  The trajectory of the problem indicates one of orders of magnitude, rather than of incremental increases, particularly in one area.  Despite representing only 2 to 3 percent of all prescriptions, specialty drugs actually account for approximately one-third of all medication costs.  And, with those prices rising 15 percent a year, it’s projected that specialty drugs will make up half of the total pharmaceutical spend by 2018, to the tune of $235 billion.  Beyond this class of drugs, however, medicines aimed at treating much larger populations are also starting to cause turbulence as they make their way to market.  With some of these drugs ranging in the hundreds of thousands of dollars (at least in this country), it’s no surprise that spending on prescription drugs tops the list of year-over-year price growth for a wide range of health categories. Cost: A new government audit puts a pricetag on the amount of money that was spent on the contracts to build and oversee the largely troubled launch of the website nearly two years ago.  In addition to being poorly trained, the audit also blames the employees in charge of the project for sloppy record-keeping and for failing to identify the delays and problems that ultimately led to $600 million in waste and cost overruns.  In seeking to develop the vast and interconnected web portal that would allow consumers to shop for, and purchase, coverage on the insurance exchange market, the Centers for Medicare & Medicaid Services (CMS) contracted with a number of private companies.  According to the report released by the agency’s inspector general, the lapses in oversight of those contractors began well before the website initially launched on October 1st, 2013.  The audit targeted the 20 contracts that had the most to do with the website’s operations.  Those contracts went out to eight companies, with 70 percent of those contracts already having been paid out.

Small Group Support:
Last week, we covered the efforts in the House of Representatives to roll back the impending expansion of the small group market called for by the Affordable Care Act.  (In fact, a new analysis from the nonpartisan Congressional Budget Office (CBO), estimates that the House bill would actually increase federal revenues by $400 million over the next decade.)  This week, a pair of Senators continued to make the case for eliminating the provision, advancing the bipartisan bill they’ve already proposed to protect small- and mid-sized employers from the harmful effects of the expansion.  In an opinion piece published this week in inside-the-Beltway publication The Hill, Sens. Tim Scott (R-South Carolina) and Jeanne Shaheen (D-New Hampshire) spoke of the disruption that would occur should this provision of the health care law be allowed to go into effect, increasing premiums for these businesses, while leading to destabilization of the small group market.

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