Category: Uncategorized

Billy Wynne's May of 2014 prediction of "The Coming Storm Over the 340B Prescription Drug Discount Program" was certainly correct. Even if the challenges to the 340B Prescription Drug Discount Program have been slow growing, we are now in what may be the health care finance version of the meteorological "bomb cyclone" phenomenon. The Administration's decision to implement a plan involving a 28.5 percent cut in all reimbursement for prescription drugs under this program is certainly rocking hospital land, as well it should, as an estimated 45 percent of all  hospitals in the United States participate in this program.

Section 340B of the Public Health Service Act has been in place since 1992 as a way to help safety net providers with prescription drug acquisition costs.  A program designed to offer acute care hospitals that disproportionately serve Medicaid and low-income Medicare beneficiaries by offering a highly reduced acquisition price for certain prescription drugs used at these facilities has morphed somewhat since its 1992 introduction, however.  More and more hospitals and affiliated health care facilities came to participate — driven by both the changing nature of health care delivery from in-patient to out-patient settings and by the Affordable Care Act's expansive reading of eligible covered entities.  No wonder health care facilities, including  some of those serving more affluent communities,  have been seemingly magnetized to the program, the discounts could be very significant (sometimes bringing participating entity acquisition cost below the actual co-insurance amount the entity would charge the patient), enforcement was predominantly on a honor system, and the participating facility could acquire prescription drugs at the 340B discounted price but bill the patient/insurer at the non-discounted price or co-insurance amount, using the spread for any purpose the facility sought fit. It has been noted that the 340B program generates quite a subsidy for safety net providers but one that is not directly derived from taxpayer funds.

Any major shock to hospital finance is interesting but the 340B program is also an important illustration of the crudeness of cross-subsidization in American health care.  The subsidy inherent in the 340B program goes to the "covered entity" and does not attach to the patient, hence no requirement for the facilities to dedicate the funds pocketed from the spread to low income income populations. Even more sobering, as not every prescription drug is a 340B prescription drug, the program appears to have created incentives for participating facilities to steer pharmaceutical choices in treatment practices and clinics towards those prescription drugs that offer the highest spread or net gain for the facility.  Rena Conti's important research on how this works out for infusion therapies in cancer treatment is instructive.  340B participant facilities appear to treat  Medicare beneficiary patients with the same cancer diagnoses far more expensively and  considerably more intensively than non-340B participant facilities, for example.  

The reach of 340B prescription drug discounts in cancer treatment, in addition, appears to have provided a mechanism for hospital-based oncology programs using these heavily subsidized prescription drugs to drive community oncology practices from the marketplace. We are seeing the delivery of this kind of care being increasingly driven back to the hospital out-patient clinic or hospital affiliate, the higher priced venues for much of this treatment, as a result.  Those of us concerned about increasing hospital concentration of ownership over may different parts of the health care system and its implication for health care pricing should be concerned.

Seen from this perspective, the hospitals' challenge to the proposed plan was doomed to failure.  A few days ago, Judge Rudolph Contreras  declined to prevent the January 1, 2018 implementation of the new reimbursement rule. The dispute, of course, might still be decided differently on the merits but the Court acknowledged that it would be challenging to reverse the powerful forces of hospital and clinic finance that will re-align with the implementation of the Administration's plan. 

It is possible to see this decision as a blow for transparency and accountability. It is also possible to see it as a striking attack on a whole system of inter-connected subsidies and cross-subsidies that are the hallmark of our jury-rigged health care system where we so often use sleight of hand to subsidize those we would not like to be publicly identified as subsidizing. If the new plans works as projected, some important expensive prescription drugs could become less expensive (lower co-insurance) for the insured. And, it might make some important expensive prescription drugs less expensive for the uninsured by focusing the program on this population.  Whatever was cross-subsidized by the 340 spread, however, is quite likely to increase in cost and, in some cases, cease to be an offered service. You see, in hospital land, infusion-based therapies in oncology can be a real money maker but some other services in desperate under-supply for the low income — mental health services, infectious disease treatment, etc. — are notorious money losers. The great reckoning of the new plan will be to uncover where the 340B spread funds have been spent.

 

X-posted on PrawfsBlawg 

 

 

Policy analysts at the CDC in Atlanta have apparently been given a list of words not to use in budget documents on the grounds that they are too controversial.    The forbidden words are “vulnerable,” “entitlement,” “diversity,” “transgender,” “fetus,” “evidence-based” and “science-based.” I know, I know. This is the continuation of the kind of linguistic or is it cognitive cleansing behind the banning of the phrase "climate change"  at the U.S. Department of Agriculture as well.  

I find the inclusion of "vulnerable" on this list particularly poignant.  Vulnerable is a word with meaning beyond the budgetary context (not unlike many of the other terms on the list)  usually understood to mean something like easily hurt or open to attack, harm, or damage. We must be living in a post-vulnerability society to have no need of programs that explicitly target the vulnerable among us. And, if we use this term, I suppose  there is also the risk attendant on us acknowledging our own vulnerabilities, a necessary step, it seems to me, in learning about empathy.   The interesting thing about banning the use of the word vulnerable in the budgetary context might be its implicit acknowledgement that few choose vulnerability.  It is an uncomfortable word. It might make us want to change things. 

Are some words in broad standard  usage so politically freighted in the political or budgetary context that new words for the same phenomenon need to be invented?  Or is the very existence of the phenomenon itself what offends? It appears to be some of both.  Some terms or phrases were offered as substitutes, the alternative offered for evidence-based: Instead of “science-based” or ­“evidence-based,” the suggested phrase is “CDC bases its recommendations on science in consideration with community standards and wishes."  So, science can only be mentioned in the same breath as community standards as scientific analysis alone must be profoundly alienated from our communal lives.

 

 

 

 

 

 

The claim that all chronic care  delivery will be miraculously transformed by the Anthem-CVS merger (and inevitable "me too" mergers between other drugstore chains/PBMs and other health insurers) requires a skeptical view.

I get the claim, that re-aligning the incentives in chronic care so that PBMs/drug stores are on the same side for chronic disease management and not in a war of treatment modalities will produce better chronic disease management.  But, will it?

The way the story goes, diabetics will turn to (you guessed it!) CVS-branded minute clinics for diabetes management counseling, for example,  and so have better cheaper access to this care.  What kinds of things will be discussed in the counseling: diet? exercise? the risks of unmonitored polypharmacy? the need for group diabetes education and support, sometimes called diabetes self-management education? 

Think again.

Have the people proposing this ever even been to a CVS minute clinic? Continuity of care is not  their watchword.  Or, perhaps they are talking about the CVS minute clinic of the future, analogous to the CVS-V.A. alliances being piloted in Arizona or elsewhere, complete with electronic medical record information sharing. 

In the meantime, minute clinics work on a business model that skims the easier less complex cases from primary care.  These easier cases are the antithesis of the complex individualized analysis required for a diabetic not under tight control for example.  Now, I know this is where CVS hopes to grow its business so that it can then also supply this population with all diabetes medications and testing materials.  

But would the combined Anthem-CVS turn its CVS housed minute clinics into Diabetes diagnosis and prevention centers targeting the real challenges of individuals with diabetes in the community?  After all, wouldn't that be what it would take to create those synergies of better chronic disease management for diabetes in the post-merger world?

Well, it depends on how the business would be structured and how the services would be reimbursed. Color me skeptical in a world where one of the newest CMS posted-regulations guts or undermines some of the most promising outcome-based bundled reimbursement experiments ever proposed. 

 

 

 

 

 

 

 

I don't get it. 

Does anyone who really understands pharmaceutical pricing or compensation systems in commercial health insurance really think that health care hasn't had plenty of "blurred lines" for quite some time — try decades?  Or, does the New York Times mean that the blurriness that has long been present has finally risen to the surface? 

Like Austin Frakt, I do not lament the apparent beginning of the end for the stand-alone pharmacy benefit manager (PBM) industry but, unlike Austin Frakt, I am not optimistic that  migrating all that stand-alone PBM power into the hyper concentrated drug store and health insurance industries is necessarily going to benefit consumers. If the data on concentration in complementary industries in health care teaches us anything, concentration in ownership has not produced efficiencies  that have trickled down to the health care consuming public.  If the problems are little choice, no transparency, and conflicts of interest, how will this re-arrangement of the deck chairs change anything? 

I guess it is a good thing that we appear to be on the verge of a revival of interest in vertical mergers, if that is what is going on in the  AT&T – Time Warner challenge.  

 

When Roll Call puts out a breaking news update to announce Alex Azar's nomination at HHS but twins it with a large picture of former Secretary Don Price, are they trying to tell us something? I'm going to have to think about that for a while. 

 

No, I am not talking about Maine as a bellwether state for presidential elections. I am talking about Maine as a kind of bellwether state on using the ballot initiative process to adopt ACA Medicaid expansion. The ballot measure passed. Now, the issue is the funding for the estimated $50 million Maine will need to draw down an estimated ten times that much in Medicaid dollars. That makes all eyes turn to the Maine legislature, where the funding battle will be fought. But will they  have to fight fast because Maine has a very part time legislature?  

No. If the initiative requires spending beyond available state funds and does not provide a funding mechanism, the effective date of the initiative can be delayed until 45 days into the following legislative session. Question 2 was written to give the Department of Health and Human Services (DHHS) 90 days after its effective date to submit a plan to the federal government and 180 days to begin expanded coverage. So, maybe they get to continue to fight slow in Maine, after all.

We are told Utah and Iowa are watching this ballot measure approach.  They need to know this would  be a long slow slog. After all, even the wording of the ballot question and its official summary contained within it a microcosm of the entire debate over ACA Medicaid expansion: is it health care insurance or is it welfare?  The actual voter information in Maine eventually adopted the "coverage" compromise but, make no mistake, the fight over the characterization of the Medicaid expansion does not end in Maine.

They must have heard me talking at CVS because, yes, now there is talk of same day or next day delivery for Rx drugs. 

If you have seen the New York Times article disclosing that CVS is in talks to acquire Aetna, you have a pretty good sense of Aetna's urgency to try and insulate itself from pressure from bigger players in the health insurance world. That much seems apparent after the failure of the proposed Aetna-Humana merger. But, why would CVS want to merge with Aetna in that they already have Aetna's PBM business tied up in a long-term contract?

It is reported that a prescription drug and PBM behemoth like CVS might see acquisition of Aetna as insulation from a new entrant into the world of retail pharmaceutical drugs: Amazon.   CVS must fear quite an entry by Amazon for this to be genuine for it is CVS that is feared by almost everyone else in these spaces. But Amazon's entry might well involve the re-invention of what is now called "mail order" pharmacy — a lucrative younger sibling to brick and mortar pharmacies.

Imagine this: pharmaceutical drugs delivered to your home or your Amazon locker with the speed of Amazon Prime. Pharmaceutical drug pricing transparency that would allow you to both order online and to calculate whether it would be more cost effective to order out-of-pocket or through an insurer for a given prescription.  Perhaps, more sincere HIPAA compliance and privacy than is currently found in the CVS Drugs brick and mortar pharmacy encounter where, in an open space standing at a register with a line beginning only inches behind you, CVS now requires you to call out your correctly spelled name and your date of birth.  After all, the third ingredient for identity theft — your social security number — is apparently not difficult to guess once location and date of birth are known. Many list location of birth and date on open access Facebook pages. 

Whether all of this is just wild speculation about what Amazon might bring to prescription drugs only time will tell, but I have no doubt that a significant part of CVS's interest in Aetna is in girding its loins for an eventual CVS-Walgreens showdown. We watch consolidation in all aspects of the prescription drug industry: wholesale, PBMs, retail, mail order, specialty pharmacy, and in-store clinics that have prescribing authority while acknowledging that the retail clinic is now the primary care provider for many Americans.

The CVS-branded encounter must surely be considering outpatient surgery centers next.

Nope, a little sunshine would not help promote higher quality acute care hospitals. Not at all.  Those hospital inspection reports performed by private accrediting agencies are "not set in any context to promote public understanding" according to the American Hospital Association.

You see, knowing almost nothing about what the accreditation report by the private accrediting agency says about a facility's quality is definitely a way to enhance public knowledge about accreditation and the role of the Joint Commission in oh-so-rarely calling acute care facilities to account.

The Equifax data breach has generated a certain amount of astonishment that the credit rating bureau obtained and retained far more data than many people were aware. They're not the only data collection entity with untold resources, however.  The Medical Information Bureau is a membership organization that collects and stores health related underwriting information for health, life, disability, long-term care and other kinds of insurance.

Happy thought indeed.