- CMS Revises Rules for Exchanges
- Trump Hints at Not Paying ACA Subsidies
- Roundtable Member Weighs in on Biosimilar Interchangeability Guidance
- Researchers Warn of Possibility of ACOs ‘Gaming’ Finances
The Centers for Medicare & Medicaid Services (CMS) has issued a final rule for the health insurance exchanges “to help lower premiums and stabilize individual and small group markets and increase choices for Americans.”
The Patient Protection and Affordable Care Act (ACA), which was passed in 2010, created state-level exchanges that were launched in 2014 in which people who do not have access to affordable group coverage can buy insurance, in many cases using income-dependent advance premium tax credits (APTCs). States were not required to establish exchanges, but the federal government created one in any state that did not.
With the Republican-controlled Congress so far unsuccessful in fulfilling the GOP goal of repealing and replacing the ACA, the Trump administration must continue to manage exchanges and other parts of the law.
The final rule would, among other things:
- Cut the open enrollment period for 2018 in half, so it would run from Nov. 1 to Dec. 15 of this year
- Require individuals who enroll outside of the open enrollment period to submit “supporting documentation” to confirm eligibility
- Allow insurers to require individuals to pay any past due premiums before enrolling in a new plan
- Lower by 2 percentage points the minimum actuarial value standard for most plans in the exchanges’ “tiers” of coverage (platinum, gold, silver and bronze)
CMS acknowledged in the rule that changing the actuarial value requirement “may reduce the value of coverage for consumers, which can lead to more consumers facing increases in out-of-pocket expenses, thus increasing their exposure to financial risks associated with high medical costs.” It argued, though, that, “providing issuers with additional flexibility can help stabilize premiums over time, increase issuer participation and ultimately provide more coverage options at the silver level and above, thereby attracting more young and healthy enrollees into plans at these levels.”
The agency estimated that the actuarial value change will reduce premiums by an average of 0.75 percent.
CMS noted that, if premiums are reduced, this will lower the benchmark for tax credits that are provided to individuals with incomes of from 100 to 400 percent of the federal poverty level, which could actually increase costs for some people. (The benchmark is based on the cost of the second-lowest cost plan in the exchanges’ “silver” tier.)
“Lower financial assistance in the form of APTCs is likely,” the rule stated. “The premium reduction measures total premium reductions not the effects of lower APTC on net premiums for subsidized enrollees. With a decrease in the benchmark premium and therefore the APTC, enrollees, particularly subsidized enrollees who purchase plans with premiums less than the second lowest cost silver plan, could have higher net premiums than in prior years.”
The press release announcing the rule made clear that CMS is taking a starkly different approach toward the ACA under its new leadership. While, during the Obama administration, CMS offered a relentlessly positive view of the law, this press release noted several negative ACA statistics related to low insurer participation in some areas and increased premiums.
“While these steps will help stabilize the individual and small group markets, they are not a long-term cure for the problems that the Affordable Care Act has created in our health care system,” CMS Administrator Seema Verma said.
President Donald Trump is threatening to withhold subsidies to insurance companies in order to pressure Democrats in Congress to negotiate on health care.
The Patient Protection and Affordable Care Act (ACA) provides for federal payments to insurers – about $135 billion over the next decade – to bring down deductibles and out-of-pocket costs for lower-income beneficiaries. A federal judge last year ruled, in a case filed by House Republicans, that the Obama administration’s payment of the subsidies was unconstitutional because, although they were included in the ACA, the Republican-controlled Congress had not appropriated the funds for the payments. The judge who issued the ruling, though, put it on hold, pending an appeal by the government. It is unclear how the Trump administration will handle the case.
Trump, who frequently seeks to use uncertainty and information imbalances to strengthen his negotiating position, told The Wall Street Journal that, “Obamacare is dead next month if it doesn’t get that money.” He did not clarify, however, if his administration would allow that death to occur, instead saying, “I don’t want people to get hurt. What I think should happen and will happen is the Democrats will start calling me and negotiating.”
Democrats did not respond well to the comments.
“President Trump is threatening to hold hostage health care for millions of Americans, many of whom voted for him, to achieve a political goal of repeal that would take health care away from millions more,” Senate Minority Leader Chuck Schumer, D-N.Y., said “This cynical strategy will fail.”
Insurers and health care providers are urging the administration to make the payments. An April 12 letter from America’s Health Insurance Plans, the American Medical Association, the U.S. Chamber of Commerce and five other groups identified the payment of the subsidies as the “most critical action to help stabilize the individual market for 2017 and 2018.”
With the Republican effort to repeal and replace the ACA having stalled amid intra-party disagreements, some ACA opponents have advocated using regulatory measures – such as not paying the subsidies – to kill the law. Many Republicans are wary of this approach, though, worrying that voters would hold the GOP responsible for causing Americans to lose coverage. The New York Times noted that congressional Republicans “have repeatedly promised a smooth transition” from the ACA and Speaker of the House Paul Ryan, R-Wisc., said, “We don’t want to pull the rug out from under people.”
A Public Sector HealthCare Roundtable member told the Food and Drug Administration (FDA) that it is “concerned with some aspects” of recently issued guidance on biosimilar interchangeability.
Biologic drugs are highly advanced medicines derived from biological, rather than chemical, processes. They are among the most innovative of drug treatments and, as such, are also among the most expensive, potentially costing tens, even hundreds, of thousands of dollars each year for a single patient. Generic biopharmaceuticals, known as biosimilars, offer lower-cost alternatives, as with generic versions of traditional drugs. The FDA has approved four biosimilars so far.
The FDA in January released guidance on demonstrating biosimlar interchangeability with a brand-name reference product. If a drug is designated as “interchangeable” with its reference product, pharmacists may substitute it when a doctor prescribes the reference product. The interchangeability issue is more complicated with biologics than it is with traditional, chemical drugs because biologics involve living material, so a biosimilar can never be an exact copy of the original biologic.
In comments on that guidance, the Ohio Public Employees Retirement System (OPERS) requested four things from the FDA:
- Reduce the expectation that clinical studies are the best way to reduce residual uncertainty regarding interchangeability, given that non-clinical analytical techniques offer higher sensitivity and continue to advance
- Modify design requirements for switching studies so they are not too burdensome in either the length of time required to conduct and review or in added costs for the manufacturer seeking the interchangeability designation
- Not require manufacturers to use a U.S.-licensed reference product in a switching study
- Not require manufacturers developing a product for licensure as an interchangeable to be limited to seeking licensure for the same presentation but to retain the focus on no clinically meaningful differences
“Biosimilar and interchangeable product competition is a necessary part of OPERS’ long-term strategy to manage the growth of its health care expenditures and increase patient access to affordable, high quality biological drugs,” OPERS stated in its comments. “These innovative biological medicines do and will continue to have the potential to revolutionize medical care in the future, but only if plan sponsors and consumers can afford to cover and purchase them.”
The FDA is accepting comments on the guidance through May 19.
A study of physicians in Medicare accountable care organizations found a high turnover rate and warned of possible “gaming” of finances by ACOs.
Medicare ACOs, which were created by the 2010 Patient Protection and Affordable Care Act, are intended to encourage health care providers to coordinate care for patients in a way that improves quality, cuts costs and moves providers and patients away from the traditional fee-for-service payment model. As long as quality standards are met, ACOs and Medicare share the cost savings that result from coordinating care.
Researchers, according to an article published in Health Affairs, discovered in a study of one ACO that, during the 2012-14 contract period, 41 percent of physicians joined, while 18 percent of them left.
They also found that, in that same ACO, patients tended to come and go with their doctors. As a result, about half of ACO beneficiary growth resulted from new physicians affiliating with the ACO, while the rest joined after switching physicians. And those beneficiaries tended to be fairly healthy, on average, raising the question of whether ACOs might carefully select physicians as “a relatively simple mechanism to ‘game’ the risk pool.”
“These findings may help explain the muted financial impact ACOs have had overall, and they raise the possibility of future gaming on the part of ACOs to artificially control spending,” researchers stated. “Policy refinements include coordinated and standardized risk-sharing parameters across payers to prevent any dilution of the payment incentives or confusion from a cacophony of incentives across payers.”
More broadly, the researchers noted in the article, ACO beneficiaries represented, on average, just 5 percent of a physician’s patient load.
“This limited ACO penetration at the physician level could mitigate the ACO’s potential to achieve its financial targets,” they stated.