The nation's big drug and health insurance lobbies are blaming each other for rising healthcare costs.
They're at it again!
The nation's largest drug and health insurance lobbies are blaming each other for rising healthcare costs that are footed ultimately by consumers.
The longstanding feud between the two powerful players reignited this week when America's Health Insurance Plans (AHIP) launched what it is calling "a major new advertising campaign" that "calls out how Big Pharma spends millions pointing fingers at others in the healthcare system to distract Americans from manufacturers' soaring drug prices – attempting to deflect blame, limit competition, and undermine patients' bargaining power.
"Over the past 20 years, pharmaceutical companies have earned more than $18.6 billion in total worldwide revenues on new prescription drugs that only cost them around $1.8 billion to develop," the ad says. "In fact, more than 22 cents of every premium dollar you pay goes into the pockets of Big Pharma to pay for prescription drugs—more than any other expense.
"And costs keep rising. The Wall Street Journalrecently reported on a new generation of therapies that cost patients as much as $3 million each year for treatment."
AHIP says ad campaign "will blanket broadcast, social media, and direct placements in targeted outlets in Washington, D.C.," AHIP says.
Robert Traynham, a spokesman for AHIP, alleges that "Big Pharma continues to deceive and divert attention from real solutions and the root cause of high drug prices – Pharma's anti-competitive, price-gouging tactics."
"Manufacturers keep prescription drug prices high and undermine the evidence-based, market-driven tools we use to lower prices and provide more choices in quality care for Americans. Consumers, businesses, and taxpayers are stuck paying excessively high costs. Big Pharma's dishonest distractions have to stop," Traynham says.
PHRMA Slaps Back
It took about one day for the Pharmaceutical Research and Manufacturers of America (PhRMA) to respond.
Spokesman Robby Zirkelbachsays the AHIP campaign comes as federal regulators are examining the role of pharmacy benefits managers in rising drug costs.
"If we needed any more proof that the health insurance and pharmacy benefit manager (PBM) industries are one and the same, look no further than a new ad campaign by AHIP," Zirkelback says. "With PBMs facing increasing scrutiny on Capitol Hill, AHIP is hitting the airwaves to deflect any responsibility for the high cost of medicine many people face.
Zirkelbach dismisses the payers' lobby claims that PBMs are negotiating for lower drug prices on behalf of patients.
"They claim that all they do is negotiate savings for patients, but if that were true, then why are they facing lawsuits, investigations and regulation by state attorneys general, state legislatures, the Federal Trade Commission and United States Congress for their role in rising healthcare costs?," Zirkelbach says.
"The fact is insurance companies don't want anyone to look under the hood at the broken PBM business model that now makes up the majority of their profits," Zirkelbach says. "That's right: big insurers now generate more profits from their PBM business than they do delivering insurance coverage. But that's not the only thing the insurance industry doesn't want the public to see.
PBMs charge fees tied to the price of medicines, which means they make more money when the price of medicine goes up. The FTC has warned this "may shift costs" and "ultimately increases patients' costs." They say they want lower prices, yet they often deny or limit coverage of lower-cost generics and biosimilars.
In 2021, the net price for medicines – the price after rebates, discounts, and other payments from manufacturers – grew just 1%. The government's inflation data reveals that the prices for medicines grew less than 3% over the last year.
"With so much to hide, it's not surprising AHIP is trying to avoid any responsibility for the high drug costs many people face," Zirkelbach says. "We hope lawmakers will hold insurers and middlemen accountable with real reforms that rein in abusive insurance tactics and lower out-of-pocket costs at the pharmacy for patients."
Tele-behavioral health was important to 95% of employers and 65% were satisfied around these services.
A new survey of more than 200 large employers finds near-universal recognition of the need for effective mental healthcare in their employee health plans, but also widespread dissatisfaction with the quality of and access to that care.
The survey, conducted in March by the National Alliance of Healthcare Purchaser Coalitions and HR Policy Association, found that while 99% of employers agreed that timely and effective access to mental healthcare is important, only 31% of the 221 respondents are satisfied with mental healthcare access in their company health plans, which combined cover 10 million people.
"Our study found a strong employer consensus on what is critical and significant variation in health plan and vendor performance," says Michael Thompson, National Alliance president and CEO.
"Many of the services provided, particularly in managing network access, continue to fall short of employer expectations. While there are bright spots, as an industry we still have a long way to go to meet the needs of employees and their families," he says.
The findings were presented Tuesday at a Path Forward mental healthcare meeting of employers, business health coalitions, mental and behavioral health service providers and health plans, and other stakeholders.
The survey asked employers to rank the importance in specific areas and their satisfaction with their service providers' performance.
The survey found that:
While 99% agreed that effective and timely access to in-network behavioral health is important; 31% were unhappy with efforts to identify and address gaps in network access.
Tele-behavioral health was important to 95% of employers and 65% were satisfied around these services.
Only 34% of employers agreed that their behavioral health directories were an accurate reflection of available providers.
While 54% were satisfied with the promotion of standardized measurement for behavioral health services, only 33% were satisfied with engagement and reporting of behavioral health outcomes.
84% agreed that it was important that plans support integration of behavioral health into primary care, but only 28% were satisfied.
64% agreed that early identification using tele-behavioral health can mitigate the severity of mental health issues.
Achieving high engagement in workplace behavioral health programs was important to 92%, but only 39% were satisfied.
Only 27% of employers were satisfied that their service providers evaluate and tailor behavioral health services to diverse communities.
Only 14% of employers were satisfied with service provider support of whole person program integration through data and process coordination.
The responses to this most-recent survey are depressingly similar to responses given in a similar survey five years ago, which found disparities for access to behavioral health when compared to physical health services. "While some progress is evident, many of the issues we cited in 2018 have persisted and we must double down on industry commitment and accountability to address these issues moving forward," Thompson says.
That figure does not include hundreds of millions of dollars spent for patients' months-long recovery costs.
Gun violence in the United States was responsible for nearly 49,000 deaths in 2021, about 30,000 inpatient hospital stays, and 50,000 emergency department visits, generating more than $1 billion in medical costs, according to a new report from the Urban Institute.
In addition, the report notes that gun deaths generated $290 million in costs, about $6,400 per patient, with Medicaid and other government payers picking up the cost. Survivors of gunshot wounds are left with huge medical bills that average about $2,495 per person per month in the year after the injury.
The Centers for Disease Control and Prevention says the 49,000 firearms death in 2021, in the midst of the coronavirus pandemic, was up from the 45,000 deaths reported in 2020. No other advanced industrialized country comes close. Firearms accounted for 10.4 deaths for every 100,000 people in the U.S. in 2019, five times greater than in the countries with the second- and third-highest death rates, France (2.2) and Switzerland (2.1).
The Urban Institute report also notes that:
Women are significantly more likely to be killed by a firearm in the U.S. than in other high-income countries.
The U.S. is the only high-income country where the number of civilian-owned guns exceeds the total number of people.
Medicaid, the program for low-income Americans that disproportionately enrolls people of color, pays most of the costs associated with hospital care for firearm injuries.
While Blacks comprise about 14% of the U.S. population, they accounted for 53% of firearms-related, inpatient hospital stays in 2016-17, and 50% of the hospital costs that year.
The ACP this week published a policy paper that recommends new evidence-based recommendations for audio and video telehealth.
As telehealth use increases, the American College of Physicians is calling for an evaluation of performance metrics used in virtual care,
"Over the course of the COVID-19 public health emergency we have seen a marked increase in telemedicine visits with our patients," says ACP President Ryan D. Mire, MD, MACP.
"Telemedicine can be a significant benefit to patients, increasing access to care and allowing care to be provided more efficiently," he says. "However, as we begin to develop performance measures to evaluate how physicians are doing in performing those services we need to make sure the measures are appropriate."
Mire's comments come as the ACP this week publishes a policy paper in the Annals of Internal Medicine that details new evidence-based recommendations for audio and video telehealth visits in ambulatory venues.
Specifically, ACP wants performance metrics used to evaluate telemedicine visits to adhere to the same criteria as in-person visits. In addition, the physicians' college calls for existing in-person metrics to be reexamined to determine if they're appropriate for telemedicine visits.
The policy paper stresses that telemedicine visits be incorporated into electronic health records, so that those visits do not become standalone encounters of fragmented care.
Before any care metrics are adopted, ACP calls for rigorous testing to ensure that the new metrics are reliable and valid for telehealth, and can be delivered at the appropriate clinical venue, whether that's an individual physician, group practice, health system or health plan.
Lastly, ACP wants to develop metrics that evaluate the effect of telehealth on poorer communities that may lack digital access.
"The same principles that we apply to quality measurement for in-person care should also be applied to the development of measures for telemedicine," Mire says. "The goal in all of our patient interactions is to provide high-quality care. Telemedicine can be an important tool in doing so and we need to make sure that measures encourage that high-quality without unnecessary burden, particularly for under-resourced communities and patients."
Two physicians allegedly involved in the scheme to defraud Medicare, Medicare, TRICARE and other government payers will also pay a combined $750,000.
Covenant Healthcare System paid $69 million in 2021 to resolve whistleblower allegations of a decade-long scheme that provided illegal kickbacks to physicians in exchange for referrals, a violation of the False Claims Act, federal prosecutors revealed this week.
The kickbacks, a violation of the Stark Law against physician self-referrals, went to eight physicians and the physician-owned Covenant Physician Investment Group between 2006 and 2016, and led to false claims submissions to Medicare, Medicaid, TRICARE, FECA, and other government programs, Dawn N. Ison, U.S. Attorney for Eastern Michigan, says in a media release.
Two of these physicians, neurosurgeon Mark Adams, MD, and electrophysiologist Asim Yunus, MD, will pay $406,551 and $345,987, respectively, to resolve allegations related to their role in the scheme, Ison says.
The settlement with Saginaw, Michigan-based Covenant was finalized in 2021 but held under seal until the settlement with Yunus and Adams was finalized, Ison says.
Covenant did not respond Thursday afternoon to a request for comment from HealthLeaders.
The federal government collected $67.1 million, the state of Michigan collected $1.8 million, and whistleblower Stacy Goldsholl, MD, received $12.3 million, DOJ says.
"Improper financial relationships and kickbacks undermine the integrity of federally funded healthcare programs by influencing physician decision making," Ison says. "This outcome emphasizes our commitment to pursuing justice against parties on both sides of those relationships—the hospital seeking to influence the physician via certain compensation schemes and the physician accepting the compensation."
According to DOJ:
Between 2006 and 2016 Covenant had contracts with Yunus, Kimiko Sugimoto, MD, Sujal Patel, MD, Sussan Bays, MD, Guy Boike, MD, and Thomas Damuth, MD, to serve as "medical directors," whose referrals did not meet the exemption requirements of the anti-kickback statute.
From June 1, 2006, to December 14, 2009, Covenant employed Adams in an improper financial relationship that did not meet Stark Law exemptions.
From January 21, 2009, through July 31, 2013, Covenant rented office space to Ernie Balcueva, MD. But didn’t charge him rent, which DOJ called an illegal kickback paid in exchange for referrals.
Covenant let Covenant Physician Investment Group buy medical equipment that the group would lease to Covenant "through non-arm’s-length negotiations" to induce referrals.
Billions of dollars at stake as high court takes up central tenets of the FCA.
In a rare, if not unprecedented, display of unity, the nation's largest payer, provider, medical device, and drug lobbies are aligned and urging the U.S. Supreme Court to uphold an appeals court's rulings that critics argue will defang the whistleblower penalties in the False Claims Act.
The high court on April 18 will hear arguments in the combined appeals of United States v. Supervalu Inc. and v. Safeway Inc., the main arguments for which SCOTUSblog describes as "whether and when a defendant's contemporaneous subjective understanding or beliefs about the lawfulness of its conduct are relevant to whether it 'knowingly' violated the False Claims Act."
In both cases, the whistleblowers alleged that the retail chains knowingly overcharged Medicare and Medicaid for the cost of prescription drugs that they sold to customers at a discount.
In split rulings, the U.S. 7th Circuit Court of Appeals in Chicago sided with retailers in both cases, noting that the "usual and customary price" definition in the law that was relied on by the plaintiffs was vague and subject to interpretation.
The high court's ruling is expected to have a profound effect on whistleblower suits. Violators could still be punished, but it could prove harder for prosecutors and whistleblowers to demonstrate that the defendants knowingly broke the law, and thus would be subject to triple damages lawyers' fees, and other court costs.
With billions of dollars at stake, heavy hitters on both sides of the case have taken notice and filed amicus briefs.
"The FCA is the government's primary civil anti-fraud tool, and it has been wildly successful, with more than $72 billion recovered on behalf of taxpayers since the statute was revamped in 1986," TAFEF writes in its brief. "The Seventh Circuit's rule threatens this success by giving defendants with subjective knowledge of their own wrongdoing a get-out-of-liability-free card, which they or their lawyers can play at any time."
"If adopted by this court, the rule would not only rewrite the FCA's knowledge standard, but would also severely hamstring the United States' ability to protect taxpayer dollars from fraud."
AHIP / AHA Moment
In their joint amicus brief, AHIP and the AHA acknowledge their unusual alliance, noting that they "may not always share the same opinion on matters of litigation and policy, (but) we agree that the current regulatory landscape and construction of the False Claims Act creates an untenable situation for healthcare providers and health insurance providers."
"Medicare and Medicaid are vital public health programs that can operate only with the participation of private parties like our members," AHA/AHIP write, "but participation in these programs also entails navigating some of the most complex statutory, regulatory, and sub-regulatory requirements in existence."
Because of that AHA/AHIP write that the government's argument "causes us great concern."
"The government would impose criminal or civil FCA liability even though it admits that it cannot 'feasibly address in advance every potential ambiguity' in its thousands of statutes of regulations. The rule it proposes would create a Wild West of ramifications for any well-intentioned and legitimate hospital or insurance provider that seeks to serve Americans in partnership with the government," AHA/AHIP write.
"If the government's argument is accepted, our members will be forced to spend more on litigation and less on patient care," the amicus brief states.
Payers counter that removing exemptions for all site-neutral payments could save taxpayers $471 billion over 10 years.
Medicare patients who receive outpatient care at hospitals tend to be sicker and poorer than Medicare patients accessing independent physician offices and ambulatory surgical centers, according to a new report commissioned by the American Hospital Association.
The findings, compiled by KNG Health Consulting, "underscore the reasons why compensating hospitals and health systems under Medicare the same amount as IPOs and ASCs could put patient access to care at risk," AHA says in a media release.
The Balanced Budget Act of 2015 mandated Medicare site-neutral payments for care at newer off-campus hospital outpatient departments (HOPD), restricting them from charging Medicare more than charges at other care settings. However, HOPDs that were operational in 2015 were grandfathered in and allowed to charge the same higher rates as at hospitals.
Hospitals have long argued that their adverse patient mix and their requirements to provide 24/7 emergency care for all, regardless of their ability to pay, put them at a competitive disadvantage when compared with IPOs and ASCs.The AHA has previously claimed that the federal government reimburses hospitals 84 cents for every dollar spend on Medicare beneficiairies.
"Hospitals and health systems provide around-the-clock care — including emergency services — to all who come to us. This includes the sickest patients and those left behind economically in our communities," says AHA President / CEO Rick Pollack. "Medicare already reimburses hospitals, which have more comprehensive licensing, accreditation and regulatory requirements than independent physician offices and ambulatory surgical centers, less than the cost of providing care."
Using data from 2019-2021, the study compared 511,000 medical claims for 263,000 Medicare beneficiaries using HOPD with 203,000 ASC claims from 127,000 Medicare beneficiaries. The data does not include Medicare Advantage beneficiaries.
Over the same three-year span, the study also examined 249,000 HOPD beneficiaries with 3 million claims, and compared them with 1.1 million IPO beneficiaries with 18.1 million IPO claims.
Among the findings:
HOPDs see nearly twice as many Medicaid dual-eligible patients (25%) compared with IPOs (13%), and 16% compared with 9% at ASCs.
HOPD Medicare patients are 1.6 times more likely to be enrolled through disability and/or end-stage renal disease (31%), compared with ASCs (19%).
Two thirds (63%) of HOPD Medicare patients have at least one complication/comorbidity, compared with 52% at IPOs, while 29% of HOPD patients have at least one major complication/comorbidity, compared to 16% at IPOs.
Medicare beneficiaries using HOPDs were twice as likely (31%) to have used the emergency department 90 days prior, compared with 15% of IPOs, and were more than twice as likely (16%) to have had a hospital stay in that period than IPO patients (7%).
HOPD Medicare patients were nearly three times more likely to have had emergency department visit in the 90 days prior (29%) compared with 10.5% of ASCs, nearly four times as likely (12%) to have had a hospital stay in that period than ASC patients (3.3%).
$471B in Site-neutral Savings
The Blue Cross Blue Shield Association recently issued a report claiming that $471 billion could be saved over 10 years if the federal government removed all exemptions and imposed site-neutral payments on all care delivery sites.
"Rising prices for medical care are one of the main drivers of the healthcare affordability crisis in this country," says David Merritt, BCBSA's SVP of policy and advocacy.
"Hospitals have strong financial incentive to continue purchasing physician practices, giving these new entities the upper hand when negotiating payment rates with insurers, resulting in higher costs for patients," Merritt says. "Congress must protect patients from these inappropriate billing practices by expanding site-neutral payment policies and cracking down on anti-competitive behavior among providers."
BCBSA recommends that the federal government eliminate the 2015 exemption for some HOPDs, and adopt site-neutral policies and lower payment rates for routine services delivered outside the hospital—excluding rural facilities.
Philip Ellis, president of Ellis Health Policy and a former Congressional Budget Office economist, says the disparity in situational Medicare payments also affects payment rates for private insurers "because they typically use Medicare's system as a basis for paying doctors and hospitals."
"BCBSA's proposals to adopt site-neutral payments would not only cut Medicare spending significantly but also would reduce private insurance premiums by $117 billion and yield another $152 billion in out-of-pocket savings for Medicare patients and enrollees in private plans," Ellis says, adding that expanding site-neutral payments "would pave the way for private insurance plans to also implement these payment policies, ultimately increasing access to high-quality and affordable care."
A new NORC interactive map provides state-level data on obesity rates and related chronic diseases.
Obesity rates have inched up over the past decade and now nearly half (42%) of adults in the United States are severely overweight, from a high of 51% in West Virginia to a low of 33% in Washington, DC, according to a new report from NORC at the University of Chicago.
"Millions of people in the United States live with the chronic, complex, but treatable disease of obesity," says Sarah Rayel, director of Health Care Strategy at NORC. "The latest analysis of obesity rates provides a better understanding of the prevalence of obesity in specific regions, while also highlighting that obesity is an issue in every state in the country."
A map funded by Novo Nordisk allows NORC researchers, policymakers, and the public to compare rates of obesity and obesity-related diseases across the United States, including demographics such as age, sex, race/ethnicity, urbanicity, and education level, across three time periods: 2013-2015, 2016-2018, and 2019-2021.
Obesity has long been linked to other chronic conditions that are among the leading causes of preventable, premature death.
The new interactive map also contains state-level estimates for rates of nine conditions associated with obesity: hypertension, arthritis, stroke, cardiovascular disease, coronary heart disease, heart attack, diabetes, high cholesterol, and kidney disease. NORC designed the new tool to show how obesity intersects with these nine conditions, illustrating the important relationship between obesity and other common, deadly diseases.
"As the number of adults living with obesity continues to rise, it is increasingly important for both researchers and policymakers to understand how obesity interacts with other conditions," Rayel says. "This new mapping tool provides the opportunity to do just that. The tool can also be used to better target treatment and policy solutions, which are crucial in improving health outcomes."
Here's a state-by-state breakdown of obesity rates.
Despite the bad reviews, the bipartisan bill cleared the Senate Commerce, Science and Transportation Committee on Wednesday.
Rival lobbyists for pharmacy benefits managers and employer-sponsored health plans finally agree on something. Both sides hate the U.S. Senate's bipartisan Pharmacy Benefit Managers Transparency Act.
After that, agreement abruptly ends. PBMs say the bill goes too far. Employer groups say the bill doesn't go far enough.
Despite their opposition, the bill, co-sponsored by Senate Commerce, Science and Transportation Chair Maria Cantwell (D-WA), and Budget Committee ranking member Chuck Grassley (R-IA), cleared Cantwell's committee on Wednesday on an 18-9 vote.
The Congressional Budget Office has estimated that, if enacted, the bill would reduce the federal deficit by about $740 million in drug savings over the next decade.
Employers Prescription for Affordable Drugs, aka EmployersRx, in a letter to leadership on the Commerce, Science and Transportation Committee, says it has "grave concerns about the bill."
"While the bill includes PBM transparency language, it does not include the specific information that is needed and is focused on information related to reimbursement and payment to pharmacies," the letter states.
"Importantly, the legislation fails to specify the exact parameters of PBM responsibility," EmployersRx says. "There is inadequate oversight and regulation of PBM-owned pharmacies, and inadequate limitation on so-called ‘spread pricing.' The bill outlaws certain PBM practices but fails to address direct payments related to drug formulary placement."
"Reform is needed to ensure fairness to independent pharmacies and ensure that patients are treated fairly at PBM-owned pharmacies. However, transparency for the primary customers of PBMs--employers—is a critical aspect to reform and is completely missing in this bill," the letter states.
On the other hand, Greg Lopes, spokesman for the Pharmaceutical Care Management Association, says the bill "is contentious legislation that would expand the authority and jurisdiction of the Federal Trade Commission."
"The bill would grant the FTC unprecedented power to pick industry winners and losers, rather than maintaining the agency's focus on the consumer welfare standard," Lopes says in an email exchange with HealthLeaders.
"And (it) would set a precedent for allowing the FTC to regulate prices and dictate the terms of common business practices in any industry," Lopes says. "In addition, the legislation risks increasing prescription drug costs and would take away employers' choice and flexibility in designing pharmacy benefits that best fit the needs of their enrollees."
Instead of Cantwell's bill, Lopes says PBMs want the Senate to take up legislation recently approved by the Senate Judiciary Committee that "encourages greater competition and investment in more affordable options, like biosimilars, by eliminating common and egregious anti-competitive, patent abuse practices used by drug companies."
The public will have until May 22 to submit comments, which will be posted to Regulations.gov.
The Federal Trade Commission is asking stakeholders to chime in on competition and security among cloud computing providers in several sectors, including healthcare.
Specifically, the Request for Information query asks about “the competitive dynamics of cloud computing, the extent to which certain segments of the economy are reliant on cloud service providers, and the security risks associated with the industry’s business practices,” the FTC says in a media release.
"Large parts of the economy now rely on cloud computing services for a range of services," says Stephanie T. Nguyen, the FTC's Chief Technology Officer. "The RFI is aimed at better understanding the impact of this reliance, the broader competitive dynamics in cloud computing, and potential security risks in the use of cloud."
The extent to which segments of the economy are reliant on a small handful of cloud service providers;
Whether cloud customers can negotiate their contracts or are stuck with a take-it-or-leave it standard;
Incentives offered cloud customers to get more services from one provider;
The extent to which cloud providers compete on their ability to provide secure storage for customer data;
The types of products or services cloud providers offer based on, dependent on, or related to artificial intelligence; and the extent to which those products or services are proprietary or provider agnostic;
The extent to which cloud providers identify and notify customers of security risks.
The public will have until May 22 to submit comments, which will be posted to Regulations.gov.
