HealthCare Roundtable e-News – April 21, 2017

GOP Still Trying to Save Health Care Proposal

Republicans are continuing to insist that their health care plan is not dead and is getting better.

In March, GOP leaders of the House of Representatives withdrew the “American Health Care Act” (H.R. 1628) from consideration just before a scheduled vote when it became clear that, despite having a significant majority of the chamber’s members, they lacked the support needed for passage. This thwarted the fulfillment of one of the Republican Party’s top goals for the past seven years – repeal of the Patient Protection and Affordable Care Act (ACA) – after it seemed since November, when Donald Trump was elected president and Republicans held on to their majorities in both the House and Senate, to be a sure thing.

Intraparty negotiations have been ongoing since then, with moderates, who were concerned about projections that the proposal would increase the number of people without insurance by 24 million within a decade, and conservatives, who disparaged the bill as “Obamacare Lite, trying to find common ground.

Politico reported that the latest version of the proposal would, among other things, allow states to opt out of ACA requirements establishing “essential health benefits,” provided they had established “high-risk” pools; allow insurers to charge higher premiums based on a person’s health status; and increase the additional amount that insurers can charge older people – the ACA limits it to three times the premiums charged younger beneficiaries. In addition, the GOP proposal, while eliminating the requirement that individuals have health coverage, would impose a 30 percent surcharge on the premiums of people who do not maintain coverage. The revised proposal would allow states to decline to implement that surcharge.

While insurers would still be prohibited from denying coverage based on pre-existing conditions, critics say that the Republican plan would allow them to make coverage for sick individuals so unaffordable that it would be equivalent to a denial.

The most recent changes may appeal to conservatives, who opposed the bill as a block in March, but there appears to be little that would sway moderates. Rep. Charlie Dent, R-Pa., the chairman of the Tuesday Group, a gathering of centrist Republicans, said that the revised proposal “doesn’t do anything to change my position on the health care bill. This amendment seems too much about meeting an artificial 100-day timeline.”

While there had been talk that the House would try to schedule a vote on the measure in time to give President Donald Trump a partial legislative victory before the 100th day of his administration on April 29, that appears unlikely, given that many lawmakers have not yet seen the latest proposal and Congress must pass at least a stopgap spending bill by April 28 to avoid a partial government shutdown.

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Not Paying Subsidies Could Cost Government More Than It Saves: Report

Refusing to pay cost-sharing subsidies to companies that participate in health insurance exchanges, as President Donald Trump has threatened to do, could actually end up costing the federal government more money, according to a report from the Kaiser Family Foundation.

The Patient Protection and Affordable Care Act (ACA) provides for federal payments to insurers – about $135 billion over the next decade – to bring down costs for lower-income beneficiaries in the health insurance exchanges created by the ACA. Trump has hinted that he may stop the government from making those payments unless Democrats “start calling me and negotiating” health care issues.

The Kaiser study found that not making the payments would initially reduce federal spending by $10 billion in 2018. However, the government provides tax credits for most exchange consumers with incomes of up to 400 percent of the federal poverty level, and Kaiser concluded that the absence of subsidies would result in higher premiums, which, in turn, would increase spending on those tax credits by $12.3 billion.

Over the next decade, the combination of not paying the subsidies and providing higher tax credits would increase federal spending by $31 billion, according to Kaiser.

The report stated that the additional spending that would be needed next year if the subsidies are eliminated could be even higher than the projected $2.3 billion.

“We believe the resulting 23% increase in federal costs is an underestimate,” the report stated. “To the extent some people not receiving cost-sharing reductions [CSR] migrate out of silver plans [the mid-tier plans in the exchanges], the required premium increase to offset the loss of CSR payments would be higher. Selective exits by insurers (e.g., among those offering lower cost plans) could also drive benchmark premiums higher. In addition, higher silver premiums would somewhat increase the number of people receiving tax credits because currently some younger/higher-income people with incomes under 400% of the poverty level receive a tax credit of zero because their premium cap is lower than the premium for the second-lowest-cost silver plan. We have not accounted for any of these factors.”

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.

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, 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.

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Senate Chairman Seeks Answers on Medicare Advantage Overpayments

A senior Republican senator is once again pressing the Centers for Medicare & Medicaid Services (CMS) to do more to address overpayments in Medicare Advantage.

Medicare Advantage offers managed care plans through private companies, which receive a fixed amount of money from the federal government per beneficiary each month. About 18 million people – roughly one-third of all Medicare beneficiaries – are in Medicare Advantage.

Payments for a given beneficiary are based on an individualized “risk score” and are higher for patients who are identified as being sicker and, thus, more demanding of health care services. Audits have found that, in some cases, insurers appear to have exaggerated the ailments of their beneficiaries, overbilling CMS for potentially billions of dollars.

Senate Judiciary Committee Chairman Charles Grassley, R-Iowa, wrote to CMS Administrator Seema Verma about the issue on April 17, noting that the agency recovered just $3.4 million of the $128 million in overpayments that it had identified from 2007. He asked Verma to submit answers to several questions, including what CMS is doing to prevent insurance companies from “fraudulently altering risk scores” and why the percentage of funds that have been recovered is so low. “The difference in the assessment and the actual recovery is striking and demands an explanation,” he stated.

“By all accounts, risk score gaming is not going to go away,” Grassley wrote. “Therefore, CMS must aggressively use the tools at its disposal to ensure that it is efficiently identifying fraud and subsequently implementing timely and fair remedies. The use of these tools is all the more important as Medicare Advantage adds more patients and billions of dollars of taxpayer money is at stake.”

Grassley also noted in the letter that reporting by the Center for Public Integrity has estimated Medicare Advantage overpayments to have been about $70 billion between 2008 and 2013.

In May 2015, Grassley wrote to CMS and the Department of Justice about potential risk score fraud, referencing the Center for Public Integrity report and stating that, “if the reports of abuse are true, CMS should increase its auditing practices.”

Sen. Claire McCaskill, D-Mo., sent a similar letter to CMS a week later.

The Government Accountability Office (GAO) concluded in an April 2016 report that CMS is not doing enough to recover improper payments in Medicare Advantage (MA).

“Our analyses of these processes and plans suggest that CMS will likely recover a small portion of the billions of dollars in MA improper payments that occur every year,” GAO stated in its report. “Shortcomings in CMS’s MA contract selection methodology may result in audits that are not focused on the contracts most likely to be disproportionately responsible for improper payments.”

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FDA Approves 5th Biosimilar

The Food and Drug Administration (FDA) has approved the fifth biosimilar for sale in the United States.

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 are expected to offer lower-cost alternatives to brand-name products, as generic versions of traditional drugs do.

The FDA announced on April 21 that it had approved Renflexis (infliximab-abda) from Samsung Bioepis and Merck as a biosimilar to Johnson & Johnson’s Remicade (infliximab), an arthritis and psoriasis drug.

Although the FDA has only approved a handful of biosimilars, this is already the second one to Remicade. The first was Inflectra (infliximab-dyyb) from Celltrion and Pfizer, which was approved in April 2016.

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