The current regulations are valuable but shouldn't be mandatory, the Trump administration says, outlining a new rule and new guidance.
A set of administrative requirements that the Obama administration imposed in 2015 on state Medicaid programs would be rescinded under a new proposed rule, the Centers for Medicare & Medicaid Services said Thursday.
Under the current regulatory framework, states are required to develop access monitoring review plans (AMRP), submit them to CMS, and update them at least every three years. Many states have complained that the AMRP requirements are burdensome and may not accurately reflect the access to care provided by a state's Medicaid program, according to the Trump administration.
"While we believe the process described in the current regulatory text is a valuable tool for states to use to demonstrate the sufficiency of provider payment rates, we believe mandating states to collect the specific information as described excessively constrains state freedom to administer the program in the manner that is best for the state and Medicaid beneficiaries in the state," CMS said in the proposed rule.
The agency said it will use its new proposed rule and related guidance documentation to continue working with states to ensure that beneficiaries have sufficient access to care.
"From my first day at CMS, the agency has made it a priority to partner with States so they have the flexibility they need to implement their Medicaid programs in the best way possible for their beneficiaries," CMS Administrator Seema Verma said in a statement. "Rather than micromanaging State programs through complex federal mandates, CMS is easing the administrative burden on States while focusing on holding them accountable for delivering high-quality, accessible care to beneficiaries."
The administration abandoned its proposal to reduce prescription drug costs by curbing the rebates negotiated between PBMs and drug makers.
An ambitious proposal that threatened to kill the rebates pharmacy benefit managers (PBM) negotiate with drug manufacturers has instead been left for dead.
President Donald Trump decided to withdraw the rebate rule after a thorough review, a White House spokesperson told The Wall Street Journaland other news outlets Thursday morning. While the PBM lobby panned the proposal as "poorly conceived," some patient advocacy groups praised the idea, which was a major piece of the administration's drug pricing blueprint released last year.
"We're very much eliminating the middlemen," Trump said from the White House lawn, with Health and Human Services Secretary Alex Azar by his side, when the blueprint was unveiled.
Unwilling to take a purely defensive position, however, the Pharmaceutical Care Management Association (PCMA), an industry group that represents PBMs, responded to the proposal with a public relations counteroffensive. In light of the decision to withdraw the controversial rebate rule, PCMA President and CEO JC Scott issued a subdued statement Thursday.
The Campaign for Sustainable Rx Pricing (CSRxP)—a coalition that claims PCMA, America's Health Insurance Plans (AHIP), the American Hospital Association, and other major industry groups as members—issued a more celebratory statement.
"This decision is a huge win for America's seniors and a huge loss for Big Pharma," CSRxP executive director Lauren Aronson said. "We applaud the administration for seeing through Big Pharma's blame game and making the right call to withdraw this controversial rule."
Dropping the rebate rule will allow the White House and Congress to work together on solutions that will lead to lower drug prices, Aronson said.
The administration's reversal is likely to be welcomed by major PBMs, which include Cigna's Express Scripts, CVS Health's Caremark, and UnitedHealth Group's OptumRx—which saw their stock prices rise Thursday morning.
Rule's Proponents Miffed
Not everyone, of course, is pleased. Lindsay Bealor Greenleaf, director of policy at the pharma and life sciences consulting firm ADVI Health, said the administration is missing a major opportunity to lower the prescription drug costs shouldered by patients.
"This is very disappointing, and means pharmacy benefit managers and other middlemen in the supply chain will continue to inflate prescription drug prices," Greenleaf said in a statement. "Interactions with middlemen throughout the supply chain is why manufacturers retain less than 60% of total spending on prescription drugs."
"Of all the policies proposed in Washington right now, this was the only proposal that would provide immediate savings at the pharmacy counter, instead of only saving the government or insurance companies money," the PhRMA spokesperson said in a statement. "It is disappointing that despite support from policymakers on both sides of the aisle and from a wide array of consumer, patient, pharmacist and provider groups that they have decided to backtrack."
"It is deeply disappointing the administration succumbed to the same old scare tactics we see from the insurance industry whenever policymakers aim to address the discriminatory tactics insurers use against patients," Greenwood said in a statement. "The president has promised to rein in the role of middlemen and ensure patients directly benefit from the significant rebates biopharmaceutical companies provide, but today that promise was broken."
Did Azar Lose?
Azar, who used to be president of drug maker Eli Lilly's domestic division, has publicly touted the rebate proposal as one way to tackle an indispensable component of the goal to curb drug spending.
"Any approach to drug pricing that does not tackle the issue of rebates—whether through our proposed approach or otherwise—will not deliver the results we need on any of those fronts," Azar said in a speech earlier this year.
Behind the scenes, however, Azar has been at odds with senior White House advisers who sought to weaken the proposal or delay it, as the Journal's Stephanie Armour reported, citing four unnamed sources "familiar with the discussions." (This news comes less than a month after Politico reported White House officials "have soured" on Azar.)
The decision to back away from the rebate rule wasn't the first blow this week to the administration's drug pricing policy agenda. A judge on Monday vacated a rule that would have required drug makers to disclose prices in direct-to-consumer TV ads.
This story has been updated to include statements from PhRMA and BIO.
Healthcare CEOs are looking to their peers for potential strategies on how to succeed in the midst of the industry's transformation.
The challenges facing senior healthcare executives vary from one hospital or health system to the next, but the growing pains they feel across an industry in transition have quite a few things in common.
Those commonalities naturally rise to the top of a conversation whenever CEOs gather to speak freely in a group with their peers about the challenges, opportunities, and tactics they see in their respective markets. In recent conversations, HealthLeaders CEO Exchange participants have highlighted several of the current pain points they share.
Here are two of the topics the CEOs cited:
1. Controlling Costs Through Clinical Consistency
Healthcare provider organizations are constantly looking for ways to deliver care more consistently and cost-effectively across the board.
"In my prior role and in my current role, one of the top topics of conversation across the health system is what we call clinical variation reduction," Keith Alexander, a regional vice president for Universal Health Services, based in King of Prussia, Pennsylvania, said during a recent conference call.
Alexander, who served previously as a systemwide senior vice president and regional president at Memorial Hermann Health System in Houston, said each organization tends to have its own nuanced interpretation of what the phrase "clinical variation reduction" means, but senior healthcare leaders everywhere are looking for success stories to find solutions that deliver real-world results.
While each organization has its own approach, they are all pursuing that goal in the context of business models that are shifting—to one degree or another—away from fee-for-service arrangements and toward value-based payment models. That shifting context may determine in large part which strategies are successful, said Russell M. Howerton, MD, FACS, senior vice president of Wake Forest Health Network and health system chief medical officer, during the call.
"Variation reduction, in my opinion, would have two forms," Howerton said.
The first form would be directly related to costs in situations when providers have a margin, such as with diagnostic related grouping (DRG) payments, he said. The second form would be when providers have some upside/downside risk with a payer, such as with risk-based contracts.
"They're kind of different animals," he added.
2. Connecting With Consumers Amid Disruption
Another major pain point CEOs cite is the competitive threat posed by potential disruptors, especially as that threat plays out in an increasingly consumer-centric healthcare environment.
Incumbent leaders are closely watching how CVS Health's massive Aetna acquisition, the Amazon-backed healthcare venture Haven, and other major developments could soon restructure the relationships among providers, payers, and patients.
When asked about the threat these potential disruptors pose, more than two-thirds (68%) of executives surveyed said they expect the CVS-Aetna deal to have "a major impact on the competitive landscape among U.S. healthcare providers within the next three years," according to the HealthLeaders Intelligence Report "Navigating the M&A Landscape" published earlier this year. About half (49%) said they expect Haven to have such an impact.
Although the CVS-Aetna deal is still awaiting final approval from a federal judge and Haven has yet to outline precisely how it hopes to quell what Berkshire Hathaway Chairman and CEO Warren Buffet described as healthcare's "hungry tapeworm" effect on the U.S. economy, healthcare leaders are already grappling with a trend toward consumerism that's well underway.
Howerton said health systems are adapting by making themselves more available to consumers. That includes on-demand scheduling, walk-in access for certain services, more convenient hours of operation, a proliferation of telehealth offerings, and care management that differs from the traditional evaluation and management (E/M) visits and procedures, he said.
Many incumbent provider organizations are still dependent upon traditional revenue sources, such as technical fees, procedure fees, and E/M visits, so they are keeping a close eye on how potential disruptors might interfere in their relationships with the patient populations they serve, Howerton said. Even if a competitor sticks to low-acuity care settings, such as retail clinics and urgent care centers, disruption at a health system's proverbial front door could have broader consequences, he added.
"We cross-subsidize a lot of things, and we have a wide funnel to get people in the traditional doors," Howerton said. "But these disruptors, I believe, have the perception that if they can get the touch on the patient, they can turn us into price-taking commodity providers."
Conversations to Come
Healthcare executives will convene September 25–27, 2019, for the HealthLeadersCEO Exchange at the Stein Eriksen Lodge, Deer Valley, in Park City, Utah, where they will discuss these and other topics in a roundtable format with their peers.
The CEO Exchange is one of six healthcare thought-leadership and networking events that HealthLeaders holds annually. While the events are invitation-only, qualified healthcare executives, director-level and above, will be considered. To inquire about the HealthLeaders Exchange program, email us at exchange@healthleadersmedia.com.
Participation would be mandatory for certain geographic areas during the model's projected five-year timeline.
A new episode-based payment model for cancer treatments may come as soon as January 1, with mandatory participation in certain parts of the country.
The Centers for Medicare & Medicaid Services announced Wednesday that it is proposing to launch a radiation oncology model that would make prospective payments to cover radiotherapy services, in 90-day episodes, for patients diagnosed with 17 types of cancer.
The model would link payment to quality metrics and would require participation in randomly selected geographic areas, CMS said. It would also qualify as an Advanced Alternative Payment Model (APM) and Merit-based Incentive Payment System (MIPS) APM under the Quality Payment Program (QPP).
The goal is to test whether issuing episodic payments in a prospective and site-neutral fashion would reduce the amount Medicare spends on radiation services while maintaining or even improving quality, according to a CMS fact sheet.
Payments would come in two parts: a professional component to cover the radiotherapy services that may be furnished only by a physician and a technical component to cover equipment, supplies, personnel, and related costs that are not furnished by a physician, according to the fact sheet.
Health and Human Services Secretary Alex Azar had indicated last fall that the Trump administration—which had previously shied away from mandatory models—was "actively exploring" possible models for radiation oncology and other services.
Paul Harari, MD, board chair for the American Society for Radiation Oncology (ASTRO), said in a statement that the CMS proposal is "a step forward in allowing the nation's 4,500 radiation oncologists to participate in the transition to value-based care" to improve cancer patients' health outcomes.
"We believe that once implemented with modifications, the model will incentivize higher quality, more convenient radiation treatments for patients and support their journey toward a cure," Harari said.
The ASTRO statement suggested the group has reservations about required participation, which echoes a concern raised last fall by ASTRO CEO Laura Thevenot.
The proposed five-year model outlined Wednesday, which is projected to begin either January 1 or April 1 next year and run through 2024, would be managed by the CMS Innovation Center, under legal authority established by the Affordable Care Act.
The agency released a draft of the proposed rule that is being processed for publication in the Federal Register. Public comments on the proposal will be accepted for 60 days.
The arrangement would put the growing Detroit-area health system in a position to compete on the other side of Lake Erie, within portions of Ohio.
Two nonprofit health systems in the Great Lakes region announced Tuesday that they are thinking about combining their enterprises, which represent a total $6.1 billion in annual revenues.
Beaumont Health, based in Southfield, Michigan, and Summa Health, based in Akron, Ohio, said they have signed a letter of intent to develop a strategic partnership. Under the deal, Summa would maintain its own local leadership and local board but ultimately become a wholly owned subsidiary of Beaumont, the organizations said.
"One of our strategic goals is to become a regional health care leader," said Beaumont board chair John Lewis in a statement. "The planned addition of Summa Health allows us to take one step closer to achieving this key strategic priority."
Beaumont is an eight-hospital system centered in southeast Michigan with $4.7 billion in annual net patient revenues, and Summa is a four-hospital system with $1.4 billion in annual revenues, according to their announcement. Combined, they employ about 45,000 people.
One factor that makes this potential deal especially interesting is the way the combined system would find itself toe-to-toe with another major player, says consultant Allan Baumgarten, a long-term observer of healthcare industry trends.
"It puts Beaumont basically in direct competition with the Cleveland Clinic," Baumgarten tells HealthLeaders.
There are two major hospitals in Akron, he explains. Summa Health owns one, and Cleveland Clinic owns the other. If this deal were to be finalized, Baumgarten says it would give Beaumont Health a chance to demonstrate that it can deliver high-quality care while controlling costs, perhaps persuading patients and payers to pick Beaumont's facilities over Cleveland Clinic's.
Beaumont Health CEO John Fox said his organization and Summa Health are each already strong and successful.
"By welcoming Summa into the Beaumont family, both organizations will share expertise, invest in each other and continue to thrive as the industry evolves," Fox said in a statement. "As we expand into Ohio, we will continue to invest in our Michigan employees and operations."
Beaumont plans to launch 30 new urgent care centers this year, and its plan to build a new mental health hospital and three new outpatient campuses are ongoing, Fox added.
Summa Health CEO Cliff Deveny, MD, said multiple health systems from not only Ohio and Michigan but also other states reached out after Summa Health announced last year that it is looking for a potential partner.
"Our board believes Beaumont Health would position our leadership, physicians and employees for continued success and enhance the quality of care provided to our patients in Akron and Northeast Ohio," Deveny said in a statement.
"Beaumont understands and supports our commitment to the communities we serve and will invest in our future growth in Ohio," he added.
Summa Health board chair Anthony Lockhart said the organization began looking for a partner to make sure the organization could continue to thrive in a shifting healthcare landscape.
"We looked at many potential partners and believe Beaumont Health is the best fit because of this organization's support for our strong cultural values and alignment with our mission to provide compassionate, quality care," Lockhart said in the statement.
The announcement notes, also, that Summa's insurance product SummaCare would be able to expand into new Ohio markets and that Summa's experience in risk-based insurance contracts and services could benefit Michigan employers, too, if this deal is finalized.
By many measures, Beaumont has demonstrated its ability to reap the benefits of major M&A activity, says Baumgarten, the consultant. Beaumont had been a successful three-hospital system that dominated a portion of the Detroit suburbs, he said, then it merged five years ago with Oakwood Health System and Botsford Health Care (after scrapping earlier plans to merge with Henry Ford Health System).
"They've been financially reporting very good results since that large merger, and they've also been expanding both their ambulatory and their inpatient facilities," Baumgarten says.
Although leaders from Beaumont and Summa cite some familiar goals for their potential union, there's always cause for skepticism in light of past performance of M&A activity among healthcare providers, Baumgarten says. Merging systems often say they expect to improve quality, expand access to specialty services, and reduce costs, he says, but increases in market power are often used more for the financial benefit of the combined system than for the local communities, employers, or others who pay for the healthcare the system provides.
A three-judge panel heard oral arguments in the high-stakes dispute over the Affordable Care Act.
The future of the Affordable Care Act was up for debate Tuesday afternoon at the Fifth Circuit Court of Appeals in New Orleans, where a three-judge panel heard from attorneys representing the U.S. Department of Justice, the House of Representatives, and a majority of the nation's 50 states.
The appellate judges are reviewing U.S. District Judge Reed O'Connor's decision late last year to declare the entire ACA invalid in light of Congress zeroing out the individual mandate's tax penalty. Although the DOJ originally argued that most of the ACA should remain intact even if the law's mandate were struck down, the DOJ has since shifted its legal position to agree generally with O'Connor's decision.
In addition to the merits of the dispute, the judges—Carolyn King, Jennifer Elrod, and Kurt Engelhardt—are considering whether the House and a California-led coalition of state attorneys general have standing to intervene in the case. If the interveners lack standing, then there might not be a live dispute between the Texas-led plaintiffs and the federal defendants.
Below is an audio recording of the hearing, as released by the court:
Less than one-third of those subject to the new rules had demonstrated compliance by the deadline, stoking concerns the policy could decimate coverage.
On what had been the deadline for certain beneficiaries in New Hampshire to demonstrate that they complied last month with the state's new Medicaid work requirements, officials temporarily suspended their rollout of the new rules Monday, acknowledging concerns over the number of people who may lose coverage.
In a letter to state legislative leaders and Gov. Chris Sununu, New Hampshire Department of Health and Human Services Commissioner Jeffrey A. Meyers outlined his rationale for the delay, which was authorized by a bill Sununu signed into law late last month. The new state law also expanded exemptions to the work requirements.
Despite a broad public awareness campaign that included 11 public information sessions, radio and social media ads, more than 50,000 phone calls, and four separate letters to the state's Medicaid beneficiaries, officials have had a tough time communicating with those to whom the new rules apply, Meyers wrote. They still don't know whether nearly 16,900 affected beneficiaries complied with the work rules in June, which was the first month in which the requirements took effect. That's more than double the number of non-exempt beneficiaries who demonstrated compliance with the new rules.
Officials have begun door-to-door canvassing in an effort to track people down, targeting neighborhoods with high Medicaid enrollment but low response rates, as the New Hampshire Union Leader's Mark Hayward reported. Workers will reportedly knock on every door, not just those where Medicaid beneficiaries are believed to reside.
"No other state has taken the efforts, and I think the pains if you will, of making sure we are engaging with this population as aggressively as we can," Sununu said during a press conference Monday, as the Union Leader reported. "Making sure we get this right is absolutely paramount."
Sununu, a Republican, has joined the Trump administration in vocally supporting Medicaid work requirements. Proponents say the policies help beneficiaries climb out of poverty, while opponents contend they are an effort to cull the Medicaid rolls that expanded in many states under the Affordable Care Act.
The decision to delay New Hampshire's new work requirements comes as the Trump administration prepares to defend their approval in federal court. Some of the same groups that successfully persuaded a federal judge to block Medicaid work requirements in Kentucky and Arkansas are asking the same judge to block New Hampshire's requirements as well. A hearing is scheduled for July 23. (An appeal of the decision affecting Kentucky and Arkansas is pending before the U.S. Circuit Court for the District of Columbia.)
Dawn McKinney, policy director for New Hampshire Legal Assistance, which is one of the groups seeking to have the requirements tossed out, said Monday that she appreciates the delayed rollout but doesn't believe door-to-door canvassing or any other effort will render the requirements workable, as Holly Ramer reported for the Associated Press.
"I don't think we can outreach our way out of this situation," McKinney reportedly said. "We hope our state leaders will come to the realization that there isn't a way to do this where it will work or be legal."
About 40,800 people in New Hampshire have coverage under the state's Medicaid expansion, as the Union Leader reported. Nearly 16,000 of them were exempt in June from the new work rules, but only about 8,000 non-exempt beneficiaries complied with the reporting requirements by the previous deadline, which leaves nearly 16,900 non-exempt beneficiaries who failed to demonstrate their compliance with the policy.
The four-month delay means work requirements for non-exempt beneficiaries are slated to take effect this October, with a reporting deadline thereafter.
The cloud-based and AI-powered solutions will be deployed at a facility near the tech giant's headquarters in Redmond, Washington.
Providence St. Joseph Health, a nonprofit Catholic health system based in Renton, Washington, announced a partnership Monday with Microsoft that the organizations say will help to transform the clinical care experience through emerging technology.
The partnership calls for the health system to deploy cloud-based and artificial intelligence solutions at a Seattle hospital facility near Microsoft's headquarters in Redmond to "enable modern clinical and operational experiences for both patients and providers," according to the announcement.
Over the longer term, the stated goal is to roll innovations out across the entire health system, which operates 51 hospitals and other care sites across seven states.
Rod Hochman, MD, president and CEO of Providence St. Joseph Health, said in a statement that this partnership will continue the health system's journey toward healthcare transformation that makes the world a better place.
"We're excited to accelerate that journey by collaborating with Microsoft," Hochman said. "Together, we'll support doctors, nurses and all caregivers by equipping them with innovative tools and technology that make it easier to do the vitally important work of improving lives."
Microsoft CEO Satya Nadella said the partnership will bring together the clinical expertise of a large and respected health system with the technological prowess of a Silicon Valley giant.
"Our ambition is to accelerate Providence St. Joseph Health's digital transformation and to build new innovations together that are designed to improve health care delivery and outcomes," Nadella said in the statement.
The partnership calls for the health system to use Microsoft Azure as its preferred cloud computing platform. It also calls for the health system to have all of its 119,000 caregivers use Microsoft products for their day-to-day business and communications.
The board named the nonprofit's next top executive a full six months ahead of the planned transition.
Kim Russel, who has been president and CEO of Bryan Health for more than a decade, will retire early next year and hand her title over to an internal successor, the organization announced Tuesday.
Russ Gronewold, who is currently chief financial officer for the nonprofit health system, based in Lincoln, Nebraska, will become Bryan Health's president and CEO when Russel retires in January.
At the same time, John Woodrich, who is currently president and chief operating officer for Bryan Medical Center, will become president and CEO of the medical center and executive vice president of Bryan Health.
"This leadership transition will provide a high level of continuity for Bryan Health," said Bryan Health board of trustees chair Bill Lester in a statement. "The board is committed to continuing Bryan Health's trajectory of positive growth and strong service to the community and to the state."
In naming a new CEO a full six months ahead of Russel's retirement, Bryan Health's board has clearly made succession planning a priority. That's a basic governance function that every board should undertake, but it's one that is often pushed to the back burner for one reason or another.
Kim Russel, Russ Gronewold, and John Woodrich (Provided/Bryan Health)
Russel, who is 60, says she is merely executing a vision that has been in the making for quite some time.
"Anyone that knows me well knows that I am a long-term planner, and early in my career I had always targeted 60 for a retirement goal," Russel told The Lincoln Journal Star in a statement Tuesday. "At the time of my retirement in January, I will be pushing 61."
Gronewold and Woodrich have each been in their current positions nearly a decade, since December 2009, according to Bryan Health's announcement.
Lester expressed appreciation for Russel's accomplishments, adding that Bryan Health's patient services have grown significantly under her direction.
"Perhaps Kim's most important legacy," Lester added, "will be the highly talented leadership team that she has developed over the years."
The judges gave the parties two more days to respond to follow-up questions about standing, but they shot down a request to postpone the highly anticipated hearing.
The panel of three appellate judges set to hear oral arguments next week on the constitutionality of the Affordable Care Act rejected a request Tuesday to delay the hearing.
The judges had asked the parties last week to file supplemental briefs by this Wednesday on whether the California-led coalition of states and the U.S. House of Representatives have legal standing to intervene in the appeal, as they did. Some proponents of the ACA took the Fifth Circuit judges' request as a possible bad omen for the future of the Obama-era law, though others were less certain.
In response, the Texas-led coalition of states that sued to invalidate the entire ACA asked Monday for more time to answer the judges' questions. They asked that the supplemental briefing deadline be bumped back 20 days and that oral arguments be postponed until after those briefs have been filed.
"These important and potentially dispositive questions merit a thorough response that represents the cohesive views of all Plaintiff-Appellee States and their respective Attorneys General," Texas Solicitor General Kyle D. Hawkins wrote Monday. "As of today, it appears unlikely that any such response will be completed by the Court's July 3 deadline."
The request was opposed by the House and the California-led coalition of states.
"Allowing this appeal to proceed on its current schedule will provide some measure of certainty about the ACA's future to States, the healthcare system (including providers and insurers), and ordinary Americans, and allow them to structure their affairs accordingly," attorneys for the intervening defendants wrote Monday.
The judges granted a two-day extension to the briefing deadline, which is now Friday, July 5, at 5 p.m. Central Time. But they rejected the request to delay oral arguments, which are still scheduled for Tuesday, July 9, when the three-judge panel will review a lower court ruling that invalidated the ACA in its entirety.
What makes the supplemental briefing request so interesting is how it puts the spotlight back on the Trump administration's shift in legal argument. At the District Court level, the U.S. Department of Justice had argued that only three portions of the law—the ACA's individual mandate, the community-rating provisions, and guaranteed-issue provisions—were rendered invalid when Congress zeroed out the tax penalty tied to the individual mandate. At the Fifth Circuit level, however, the DOJ shifted gears and began to argue that every single provision of the law is inseparable from the individual mandate and, therefore, invalid.
If the House and the California-led coalition don't have standing to intervene in the appeal, then there might not be any active dispute between the plaintiffs and defendants, since the Texas-led coalition and the DOJ agree the entire ACA should be invalidated. That's why the Fifth Circuit judges asked the parties for input on whether there's still "a live case or controversy between the plaintiffs and the federal defendants."
In other words, the appellate judges have signaled that oral arguments will cover not only the dispute over which provisions of the ACA, if any, can stand but also whether the entire conflict was mooted by the DOJ's shift.