Volume 32
#1 Medicare Finally Gets a Seat at the Table
The federal government has unveiled the initial group of 10 medications for which Medicare can negotiate prices starting in 2026. This list includes a diverse range of drugs with varying price points and patient populations. Some medications are widely used and come with relatively lower annual costs, while others command six-figure price tags and cater to a more niche patient demographic. Collectively, these selections show how high drug prices affect a range of patients and insurers and how exorbitant prices reduce access to essential medications. Even for Medicare beneficiaries who do not use these medications, negotiations will have an impact. That’s because Congress has leveraged the anticipated $99 billion 10-year savings to institute a $2,000 annual cap on their out-of-pocket expenses.
So What’s The Big Deal? The government's plan to negotiate drug prices is critical in addressing the longstanding issue of high U.S. drug costs for patients and taxpayers. By targeting a diverse array of medications, these negotiations aim to alleviate the financial burden on patients and mitigate the adverse effects of high drug prices. Additionally, the cost savings generated will be pivotal in enhancing affordability for Medicare beneficiaries, ensuring they have more predictable and manageable out-of-pocket expenses. This development highlights the ongoing efforts to reform pharmaceutical pricing and make healthcare more accessible and affordable for all Americans. For more, check out my op-ed in Medpage Today called “Drug Prices Are Too Damn High”.
Your BIG Thoughts: What impact will Medicare price negotiations have on the drug market overall? Did Medicare pick the right list of drugs?
#2 Medicare Shared Savings Program Saves $1.8B
In 2022, the Medicare Shared Savings Program achieved remarkable savings of $1.8 billion. Last year was the sixth in a row of savings. Accountable Care Organizations (ACOs) within the Shared Savings Program are collaborative groups of healthcare providers, including doctors and hospitals, focused on delivering high-quality, well-coordinated care to Medicare beneficiaries. They aim to provide appropriate care at the right time, thereby avoiding unnecessary services and medical errors. In the last decade, the Shared Savings Program has evolved into one of the nation's largest value-based purchasing initiatives, which tie provider payments to their performance.
So What’s The Big Deal? The expansion and success of the Shared Savings Program's ACOs highlight the increasing prominence of value-based healthcare purchasing programs. These programs reflect a paradigm shift by linking reimbursement to the actual quality and efficiency of care. Centers for Medicare and Medicaid Services (CMS) hopes to expand the program - and why shouldn’t it? ACOs have demonstrated improved metrics over baselines. CMS also has set a goal that 100% of people with traditional Medicare will be part of an accountable care relationship by 2030, meaning we will continue to see a greater shift in how providers are compensated an
d incentivized.
Your BIG Thoughts: Any reasons why CMS should not expand this program? What does the government program march toward value-based care mean for the market?
#3 Medicare Advantage Fines Due to Tech Failures
CMS imposed fines on three Medicare Advantage plans for overcharging members. While the fines were relatively modest considering insurance company revenues, they may have broader implications. These penalties make it clear to insurers that regulatory compliance and a robust IT infrastructure are necessary to avoid run-ins with the feds.
So What’s The Big Deal? CMS's decision to fine Medicare Advantage plans highlights a growing emphasis on technology-driven efficiency and compliance within the healthcare industry. These penalties, although relatively small in monetary terms (some call it “budget dust”), serve as a potent reminder to insurers regarding the importance of addressing technological shortcomings that can inadvertently burden beneficiaries with excessive costs.
Your BIG Thoughts: Will these modest fines be sufficient to compel insurers to beef up their IT infrastructure?
#4 Cross-Market Mergers: More Scrutiny Comes
Between 2010 and 2019, cross-market mergers constituted 55% of hospital M&A activity. They have been responsible for at least nine significant mergers since June 2021. A recent Kaiser Family Foundation report highlighted the impact of these mergers on healthcare systems, shedding light on potential consumer cost changes and the need for antitrust regulation. Traditionally, antitrust agencies have focused on mergers within the same geographic market. The Federal Trade Commission has never formally contested a cross-market merger, and there are no established evaluation guidelines. As cross-market mergers become increasingly common, however, policymakers and regulators are expected to give them more attention.
So What’s The Big Deal? Pricing and competition. As these mergers become more common, regulatory bodies will likely develop a framework for evaluating their potential effects on consumers and the healthcare system more broadly. Investors should monitor these developments closely since they may have far-reaching consequences for the industry's competitive dynamics, vertical integration, and the cost of care.
Your BIG Thoughts: How can the federal government get this right? What is the best, first step toward better oversight?
#5 Primary Care at Home? Humana Hopes So.
CenterWell, a Humana company focused on senior care, is expanding its services by bringing in-home primary care to Medicare Advantage beneficiaries. This move, introduced through the Primary Care Anywhere program, initially targets seniors in select locations across Georgia and Louisiana. Leveraging the capabilities of Heal, a recent acquisition by Humana, this program allows patients to access various healthcare services, including blood draws, vaccinations, and prescription management, from the comfort of their homes, avoiding the need for clinic visits. The goal is to ensure patients receive the same level of care, whether at home or in a clinical setting, with consistent copayment structures.
So What’s the Big Deal? Humana's decision to provide in-home primary care to seniors aligns with a broader trend in healthcare, driven by convenience and patient-centered care. By expanding its services beyond traditional clinic settings, Humana aims to enhance the patient experience, particularly for seniors who may have mobility or transportation limitations. Additionally, this initiative may help improve health outcomes by ensuring consistent access to essential services.
Your BIG Thoughts? How quickly will we see in-home care move beyond the senior population? Are Americans ready to re-embrace house calls?
#6 Another "No Surprises Act" Fail
The Texas Medical Association (TMA) won another important legal case in its campaign against the No Surprises Act (NSA). The decision marks the TMA’s fourth victory over the Biden administration's implementation of the NSA. In the most recent ruling, U.S. District Judge Jeremy Kernodle agreed the NSA’s qualified payment amount (QPA) unfairly favored health insurers over physicians in payment disputes. As a result, CMS has halted the dispute arbitration process until it “can provide additional instructions.”
So What’s The Big Deal? Two Things: One, implementing the arbitration process has been a disaster for providers. While providers are stacking up legal wins more than a year after implementation, the delays and money lost have created headaches and financial hardships. Insurers are simply sitting back, holding onto revenues, and avoiding payment. Second, the ruling seems to affirm that payers have artificially lowered the QPA (the median rate an insurer would pay for the service if it were in-network) using “ghost” rates. It’s unclear how CMS and the U.S. Department of Health and Human Services will respond to clarify the regulation. It’s also unclear if Congress will step in.
Your BIG Thoughts: What can Congress and regulators do to undo the harm of the NSA?
#7 Revenue Cycle Management Firm Survey
Modern Healthcare released the results of its most recent revenue cycle management (RCM) survey, which asks hospital executives about their use of RCM services now and in the future. Here are the key findings:
100% of RCM firms processed claims denials and accounts receivable performance services.
Hospitals needed the most help with “cumbersome” payer claims processing and new federal policies.
Revenue cycle spending has increased.
Value-based care isn’t creating increased demand for RCM services.
Hospitals are using and having a greater interest in AI.
So What’s the Big Deal? Costs and quality. The COVID-19 pandemic has acted as a catalyst, propelling substantial shifts in healthcare dynamics, especially within RCM. Healthcare institutions are still grappling with the intricate task of revenue fluctuations, cash flow reduction, elevated service costs, and diminished productivity. With rising costs of RCM services, hospitals may seek lower-cost solutions with greater business process outsourcing and AI utilization. With hospitals expressing this need, RCM firms should identify opportunities to reduce costs and increase automation.
Your BIG Thoughts: What are the best ways for providers to cut RCM costs?
#8 Rite Aid Filing for Bankruptcy?
Rite Aid is reportedly considering a Chapter 11 bankruptcy filing as a strategic move to tackle its extensive legal challenges. With as many as 1,000 federal and state lawsuits pending, including many related to improperly filling opioid prescriptions, the company faces mounting legal pressures and costs. The proposed bankruptcy filing would encompass Rite Aid's substantial debt of $3.3 billion and the pending legal claims, potentially offering a path to consolidate and address these legal challenges more effectively.
So What’s the Big Deal? Rite Aid's potential bankruptcy filing reflects the increasing financial strain faced by healthcare organizations entangled in opioid-related lawsuits. Unlike other pharmacies like CVS, Rite Aid does not have the portfolio diversity, or the pharmacy benefit managers, insurers, home health services, and clinics that could help bear the company’s costs. While the company had attempted mergers with Albertson and Walgreens, both fell through.
Your BIG Thoughts: What are the care implications of a potential Rite Aid bankruptcy? Will another company scoop up Rite Aid?
#9 Trust Remains Challenged with Medical Professionals and Professional Organizations
A recent Kaiser Family Foundation survey highlights the widespread exposure to health misinformation, encompassing false claims related to COVID-19, reproductive health, and gun violence. The survey underscores that a significant portion of the population, approximately four in 10 individuals, report encountering each of the ten specified false claims. Americans aren’t buying the falsehoods, however. Only a relatively small proportion, ranging from 3% to 18%, indicated a definitive belief in false claims.
So What’s The Big Deal? Misinformation continues to plague the U.S. healthcare system due to a healthy diet of celebrity endorsements, political tribalism, and siloed news organizations. (I recently wrote about this problem in MedPage Today, citing Kim Kardashian’s post about full-body elective MRI scans.) The prevalence of health misinformation, as revealed by this survey, is a concerning phenomenon that has implications for public health and healthcare organizations. It underscores the challenges in disseminating accurate information to the public and combating the spread of false claims, which can have serious consequences for individual health decisions and behaviors. Healthcare leaders and policymakers must recognize the urgent need for targeted efforts to address health misinformation, enhance health literacy, and promote evidence-based information sources. Effectively countering misinformation is crucial not only for addressing ongoing health crises but also for fostering trust in healthcare institutions and science.
Your BIG Thoughts: Americans are so far skeptical of the most egregious healthcare claims. What are the best tools to keep it that way?
#10 AI and Pain Medications
As artificial intelligence becomes increasingly integrated into various aspects of U.S. society, including healthcare, concerns about bias, accuracy, and the ability of government regulation to effectively oversee rapidly advancing technology are on the rise. One area where these concerns are coming into focus is opioid-prescribing data. Experts have questioned whether there has been enough independent testing conducted on AI systems, particularly beyond the purview of the companies that created them. This lack of transparency and independent scrutiny raises uncertainties about the reliability and functionality of these systems. As a result, patients could be treated inappropriately by the AI’s recommendations.
So What’s The Big Deal? Concerns about bias, accuracy, and transparency cannot be understated, especially given the potential consequences of decisions made by AI systems in healthcare. This situation also underscores the broader challenge of regulating rapidly advancing technology. Government bodies face the daunting task of keeping pace with the evolving landscape of AI, which often outpaces the development of appropriate regulatory frameworks. The call for independent testing and evaluation of AI systems reflects a commitment to ensuring these technologies meet rigorous standards for fairness, accuracy, and transparency, ultimately contributing to safer and more reliable healthcare practices.
Your BIG Thoughts: Will AI exacerbate healthcare inequality? If so, what measures can the ecosystem take to police itself, since Congress and the federal government may take awhile?
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