The idea, which wouldn't take effect until 2020, calls for the U.S. to pay rates closer to what other countries pay for the same drugs.
President Donald Trump floated an idea Thursday to reduce the amount of money Americans spend on prescription drugs by tethering Medicare Part B rates to the prices paid by other developed nations.
But the prior administration's plan "simply couldn't be more different than what we're talking about here," Health and Human Services Secretary Alex Azar said Friday during an appearance at the Brookings Institution. Azar described the Obama administration's failed initiative as an across-the-board cut that understandably drew opposition from hospitals and physicians. "That's not what we're doing here," he said.
Trump outlined the new plan Thursday alongside Azar, arguing that the time has come for the U.S. to get a fair deal on drugs.
"For decades, other countries have rigged the system so that American patients are charged much more—and in some cases much, much more—for the exact same drug. In other words, Americans pay more so that others can pay less," Trump said. "It's wrong. It's unfair."
"The world reaps the benefits of American genius and innovation while American citizens and especially our great seniors, who are hit the hardest, pick up the tab—but no longer," Trump added.
The price for 27 of the most expensive physician-administered drugs is 80% higher in the U.S. than it is in other wealthy countries, according to an HHS reportreleased Thursday. Under an international pricing index, however, the U.S. prices would be benchmarked against 16 other nations: Austria, Belgium, Canada, the Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the United Kingdom.
The end goal would be to push drugmakers to charge Americans less. But these companies could respond in less-than-desirable ways, such as by simply raising their prices in other countries or pulling out of some geographic regions, according to Peter B. Bach, MD, MAPP, director of Memorial Sloan Kettering's Center for Health Policy and Outcomes.
"This is NOT a proposal to lower drug prices, it is to lower reimbursement coupled with an expectation that lower reimbursement force[s] price lowering," Bach wrote in a tweet. "This is a bet, not a sure thing."
In addition to the international index, the idea calls for hospitals and physicians to be reimbursed for drugs at a flat rate, rather than receiving a percentage-based add-on. This is designed to remove any incentive providers may have to maximize their reimbursement by prescribing more-expensive drugs.
The administration said it is mulling the possibility of formally proposing this ideawith a proposed rule next spring and a potential start date in spring 2020. The idea calls for a pilot program through the CMS Innovation Center, which was established by the Affordable Care Act, to be phased in over five years. It would apply to only about half of the country and save taxpayers and patients a projected $17.2 billion over five years, HHS said. In the meantime, the administration is collecting comments on the idea.
"Help us make it work," Azar said to stakeholders Friday.
Business World Skeptical
Bernstein investment analyst Ronny Gal wrote in a note to clients that the proposal "should be taken in stride" in light of how much clout the drug industry wields and how often the Trump administration has begun with a firm policy position only to soften during negotiations, as Politico reported.
Despite the administration's tough rhetoric, investors have been skeptical that the proposals will actually come to fruition and have a significant impact on drugmakers.
"Our first impression on Trump's Part-B plan is that it is a political tactic ahead of mid-terms, with low probability of meaningful actual changes," BMO Capital Markets analyst Alex Arfaei said in a note to clients Thursday, as Bloomberg reported.
The three drug companies likely to be among the hardest hit are Roche, Amgen, and Regeneron, but Johnson & Johnson, Bristol-Myers Squibb, and Eli Lilly would be affected as well, according to Gal's analysis.
Even so, drugmaker advocacy groups signaled that they are ready for a fight.
"The administration is imposing foreign price controls from countries with socialized health care systems that deny their citizens access and discourage innovation," Pharmaceutical Research and Manufacturers of America (PhRMA) President and CEO Stephen J. Ubl said in a statement contending the plan would harm American patients by reducing access to lifesaving drugs.
Biotechnology Innovation Organization President and CEO James C. Greenwood argued the plan could hinder research and development efforts.
"Adopting foreign price controls on American innovation puts America's patients last and diminishes their hope for a better future," Greenwood said in a statement. "Contrary to the president's repeated promises to end 'foreign free-loading,' this proposal embraces it and exacerbates its harmful effects. By adopting foreign price controls on the very small number of innovative medicines that make it to market, this proposal will severely chill investment in new cures and therapies for America's seniors."
Where Business Meets Politics
The idea has drawn lukewarm and even some positive responses from groups that have consistently opposed the Trump administration's healthcare policymaking.
American Medical Association President Barbara L. McAneny, MD, said her organization needs to better understand how the international pricing index model could impact patients, physicians, and the overall healthcare delivery system. "We look forward to working constructively with the Administration as it seeks feedback," McAneny said in a statement.
Families USA, which has frequently blasted the Trump administration, struck a positive note in response to the plan.
"Medicare Part B is the perfect example of misaligned incentives, and this proposed rule, if implemented, could pilot significant new ways to pay for drugs that align incentives so that patients get the highest value care, they have the best outcomes possible, and costs come down," said Families USA Executive Director Frederick Isasi in a statement.
Isasi noted, however, that this week's plan hasn't been formally proposed and comes less than two weeks before the midterm elections, as healthcare is the top-ranked issue on voters' minds.
"We hope this move to leverage the power of the federal government to reduce prescription drug prices is more than just election year posturing, and that it reflects a broader shift to using federal negotiating power to get unsustainable prescription drug prices under control for everyone," Isasi said.
And the president's usual panel of political opponents argued the plan should not be seen as terribly concrete.
"It's hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election when they have repeatedly advocated for and implemented policies that strip away protections for people with pre-existing conditions and lead to increased health care costs for millions of Americans," U.S. Sen. Chuck Schumer, D–New York, said in a statement.
The bill slated to be signed Wednesday includes several provisions that could directly affect stakeholders in the business side of healthcare.
President Donald Trump is expected to sign a sweeping package of opioid-related bills into law on Wednesday after Congress overwhelmingly passed the measures earlier this month.
The legislation aims to expand the availability of medical treatment to opioid users after the U.S. saw a record 72,000 overdose deaths last year.
Health and Human Services Secretary Alex Azar acknowledged the grim 2017 figure but struck an optimistic note, saying Tuesday during his speech at the Milken Institute Future of Health Summit in D.C. that "the number of drug overdose deaths has begun to plateau."
Citing provisional data from the Centers for Disease Control and Prevention, Azar said the trend began turning in late 2017 and early 2018, though there's still much progress to be made.
"Plateauing at such a high level is hardly an opportunity to declare victory. But the concerted efforts of communities across America are beginning to turn the tide," he said, touting the Trump administration's disbursement of treatment and recovery grants last month and inpatient addiction treatment Medicaid waivers granted to 11 states.
The administration also released a new modelTuesday designed to help new mothers and their infants dealing with opioid use disorder.
The bill slated to be signed Wednesday includes several provisions that could directly affect stakeholdersin the business side of healthcare:
IMD Exclusion: The measure partially repeals Medicaid's prohibition on covering inpatient treatment for certain patients at facilities with more than 16 beds. Opening up access to so-called Institutions for Mental Disease could expand access to addiction treatment.
Telehealth options: The legislation directs the Centers for Medicare & Medicaid Services to issue guidance to states on what their options are to provide telehealth services under Medicaid to address disorders related to substance abuse.
Drug management programs: The law will speed up the use of drug management programs for at-risk Medicare beneficiaries by making such programs mandatory for all prescription drug plans by 2022.
The rare show of bipartisan cooperation has drawn praise from a variety of stakeholder groups, though some remain skeptical that the law will prove as revolutionary as it aims to be.
"The recent opioid legislation that passed has the potential to make a small difference, but its potential effectiveness will depend on how the legislation is implemented," Dr. Lynn Webster, vice president of PRA Health Sciences and a past president of the American Academy of Pain Medicine, told CNN. "I think it is premature to celebrate victory when we experienced a record number of 72,000 drug-related deaths last year."
Major changes in the way innovation waivers are vetted could set the stage for federal subsidies of non-ACA-compliant plans.
A drastic overhaul of the way the federal government handles innovation waivers under the Affordable Care Act opens the door for states to offer skimpier health plans with federal subsidies, potentially incentivizing a migration out of the markets for ACA-compliant plans.
Each state's waiver application would still need specific approval from the Centers for Medicare & Medicaid Services, but the Trump administration's announcement Monday that states will have far greater flexibility under the ACA's Section 1332 waivers than they have in the past signals a willingness to consider proposals the prior administration would have rejected.
Matthew Fiedler, PhD, a fellow with the Brookings Institution Center for Health Policy who served as chief economist of the Council of Economic Advisers during the Obama administration, said the changes outlined in the new guidance document could enable states to redirect federal subsidy dollars from ACA-compliant plans to cheaper alternatives that offer less coverage.
"Naturally, the more money the state redirects, the more money the healthier people in the short-term market have to work with and, correspondingly, the larger adverse impacts on the ACA-compliant market and people with greater health care needs," Fiedler told HealthLeaders in an email, warning that an exodus of healthy people from ACA-compliant plans would drive up premiums for those left behind and could result in a complete collapse of the ACA-compliant markets.
CMS Administrator Seema Verma described a similarly dire scenario in which healthier people leave a given market, driving up premiums for those left behind. But she attributed the problem to health insurance premiums being too high.
"Eventually, if rising costs prompt enough healthy people to leave the market, insurance becomes unaffordable for everyone," Verma wrote in a blog post. "This is what insurance actuaries call a death spiral."
The Solution? Reinterpretation
Chris Sloan, a director with Avalere who supports health plans and providers on public policy issues, said the Trump administration's changes to the 1332 waiver process rely on broader definitions of several key terms in the ACA.
"They have given states substantially more authority to request changes to their individual market and to use federal funds to do so, and that [includes] promoting and potentially subsidizing the expansion of short-term plans and association health plans," Sloan told HealthLeaders.
Under the 2015 guidance—which Monday's announcement replaced immediately—a state had to demonstrate that its 1332 waiver proposal met four statutory guardrails, as the Center on Budget and Policy Prioritiesexplained last year:
The waiver had to provide benefits that were at least as comprehensive as the ACA's "essential health benefits;"
The waiver had to provide cost-sharing protections and coverage at least as affordable as those in the ACA exchanges;
The waiver had to ensure that at least a comparable number of people would continue having coverage as they do under existing law; and
The waiver could not increase the federal budget deficit.
"That was sort of a foundational bedrock of 1332s all throughout the Obama administration," Sloan said.
Under the new guidance, however, the Trump administration has reinterpreted comprehensive coverage as including association health plans and short-term limited-duration options. And the requirement that a comparable number of people must continue having coverage under the waiver now means that a comparable number of people must continue having access to coverage, regardless of whether they actually purchase it.
"That's a huge change," Sloan added.
Incentivizing Short-Term Plans?
It would be possible, Sloan said, for some states to offer short-term plans with premiums fully subsidized by the federal government to low-income or even some higher-income beneficiaries.
"Now that's just an idea," he added. "But it's a real possibility because of how cheap some of these plans can be."
"Because they count as coverage, states are going to have some incentive to enroll people in those plans." Sloan said. "The money goes further but obviously because the plan covers fewer things and medically underwrites its enrollees."
Although some have described short-term plans categorically as "junk insurance," Sloan disagreed with that characterization. It's generally a good idea to have comprehensive coverage, rather than the less-generous offering of most short-term plans, but the real concern is consumers simply not understanding the terms of the coverage they're buying, he said.
"Some people buy them and want them because it fits what they want out of their healthcare, but it's really important to note that it's not a substitute for comprehensive care," Sloan said.
Impacts to Come
Including skimpier options within the definition of what constitutes coverage could result in an increase in coverage rates, even if consumers migrate to plans with less-generous benefits.
A spokesperson for CMS did not respond to a question from HealthLeaders on whether the administration would separately track enrollment in ACA-compliant plans for the purpose of measuring net gains or losses in coverage in light of the expanded definition.
As far as business opportunities are concerned, some insurers are planning to push into the newly expanded market for short-term options, though the magnitude of the opportunity will vary from state to state, Sloan said.
"It remains to be seen whether this will have a material impact because obviously states have to apply for this, and they have to be approved for their applications," he added.
"The impact of this will depend on whether states apply for it and whether they go all the way," Sloan said, "but it is unquestionably a substantial departure from previous approaches by the Obama administration to 1332s."
An updated CMS document gives governors greater power to authorize innovation waivers under the ACA, and it loosens the definition of 'coverage' to include association health plans and short-term options.
The way the Centers for Medicare & Medicaid Services evaluates and approves state innovation waivers under the Affordable Care Act will change dramatically under a revised guidance documentreleased Monday.
The changes, which override 2015 guidance by the Obama administration, are designed to give states greater flexibility in pursuing so-called Section 1332 waivers. These waivers have been used several times this year to authorize state-run reinsurance programs, but the Trump administration said its new direction will restore flexibility for the states as originally intended by the law.
"States know much better than the federal government how their markets work," CMS Administrator Seema Verma said in a statement. "With today's announcement, we are making sure that they have the ability to adopt innovative strategies to reduce costs for Americans, while providing higher quality options."
More authority for governors: Although the ACA requires states to enact a law to authorize the implementation of a Section 1332 waiver, the added flexibility under the new guidance will empower governors to authorize waivers in certain circumstances. If there's an existing state law authorizing the enforcement of ACA provisions and the state waiver plan, then adding a state regulation or executive order may satisfy the requirement going forward, according to a CMS fact sheet.
Looser definition of coverage: Although the new guidance continues to require states to ensure that their waivers do not significantly reduce the number of people who have coverage, it also expands the definition of "coverage" to include association health plans and short-term limited-duration options.
A nod to preexisting condition protection: The press release CMS published Monday mentions preexisting conditions three times. In each case, it emphasizes that states will have the discretion to protect consumers with preexisting conditions:
"Under this new policy, states will be able to pursue waivers to … ensure that people with pre-existing conditions are protected."
"The new flexibilities available to states include [allowing] … states to provide consumers with plan options that best meet their needs, while, at the same time, ensuring people, including those with pre-existing conditions, retain access to the same level of coverage available today without the waiver."
"The Departments [of Health and Human Services, Labor, and the Treasury] are committed to empowering states to innovate in ways that will best protect people with pre-existing conditions, strengthen their health insurance markets, expand affordable choices of coverage, target public resources to those most in need, and meet the unique circumstances of each state."
This comes as Republicans campaigning for next month's midterm elections have been touting protections for those with preexisting conditions—a popular provision of the ACA—despite pushing for years to repeal the law.
"To be clear, nothing in this new guidance reduces protections for people with pre-existing conditions," Verma added in a blog post. "This Administration remains firmly committed to maintaining protections for all Americans with pre-existing conditions."
What Verma doesn't mention is that this administration has asked a federal judge to block the ACA's preexisting condition protections as having been rendered unconstitutional by the tax reform package President Donald Trump himself signed into law late last year. A spokesperson for CMS did not respond to follow-up questions from HealthLeaders.
Senate health committee Chairman Lamar Alexander, R-Tennessee, praised HHS for the revised guidance.
"In four bipartisan health committee hearings I chaired last fall, virtually every witness told our committee that waiver application is too cumbersome, inflexible, and expensive for states to use," Alexander said. "I tried to fix this problem in Congress, but Democrats have elevated Obamacare to the 67th book of the bible and refused in March to fix even a word of the law's waiver provision."
"I will continue working in Congress to help undo the damage Obamacare has done while protecting patients with pre-existing conditions," he added.
Matthew Fiedler, PhD, a fellow with the Brookings Institution Center for Health Policy who served as chief economist of the Council of Economic Advisers during the Obama administration, described the policy change as resembling the long-stalled effort to repeal and replace the ACA legislatively.
"The combination of the changes to the coverage, comprehensiveness, and affordability guardrails will open the door to many new types of waivers, including waivers that shift costs from healthier people to sicker people and from higher income people to lower income people. That would allow states to implement approaches to the individual market similar to what Congress contemplated during last year's ACA repeal debate," Fiedler told HealthLeaders in an email.
States could essentially do away with the existing market for ACA-compliant plans by switching from the current premium tax credit to an alternative that may be used to buy short-term plans, Fiedler added.
"Healthy people, including healthy people who currently stay in the ACA-compliant market to access subsidies, would gravitate toward short-term plans. That would drive premiums for ACA-compliant plans higher until only the very sickest people wanted to buy coverage, likely causing the ACA-compliant market to collapse outright," he said. "If the ACA-compliant market did collapse, that would sharply increase costs for people with greater health care needs."
States could take steps to mitigate the negative effects experienced by populations with greater healthcare needs, and the federal government could require states to take these mitigating steps; but it remains unclear whether this would happen, especially since covering these higher costs would likely require some state funding as well, Fiedler said.
More information on the Section 1332 waiver process is available on the CMS website.
Editor's note: An earlier version of this story included a link to a tweet by Matthew Fiedler. The reference to his tweet was removed and replaced by a more-thorough explanation Fiedler provided via email.
Leaders for the Michigan-based health systems are in the process of selecting the number and locations of their new retail clinics.
McLaren Health Care, based in Grand Blanc, Michigan, inked a deal last week with Walgreens to hand over 14 of its pharmacy locations to the national chain and open a still-undetermined number of McLaren retail clinics inside Walgreens stores.
Intertwining their operations gives Walgreens an opportunity to expand its partnerships with prominent local and regional health systems as its competitors vie for market dominance through mergers and acquisitions, and it gives McLaren a chance to deepen ties to the communities it serves.
This possible deepening of ties with consumers is forefront in the minds of McLaren's leaders as they begin the process of selecting the number and locations of retail clinics to be opened in the near term, says Barton P. Buxton, EdD, president and CEO of the McLaren Health Management Group.
"If we do what we call a 'global gateway' offering, we want to make sure we can care for that patient to whatever end they need care," Buxton tells HealthLeaders. "So making sure that we have our locations in such a place that they match the clinical offerings is important."
"My sense—and it's just that, it's my sense—as we look at this, I'm thinking we're probably going to start out with about 10-15 at first," Buxton adds.
Since the healthcare market is constantly shifting, it's tough to predict how many retail clinics McLaren will open over the longer term, but Buxton says the plan is to see how the market responds, fine-tune the strategy accordingly, and likely roll out more clinics in Walgreens stores over the coming years—perhaps adding as many as 30-60 more sites within the next decade.
Filling Primary Care Gap
When the deal was first announced, McLaren President and CEO Philip Incarnati said the underlying strategy was part of an effort to better connect with younger patients.
These retail clinics could offer an ideal setting in which to provide lower-acuity care to these consumers, since more than 60% of those who filled prescriptions at Walgreens stores did not have a relationship with a primary care doctor, Buxton says, citing information from Walgreens. That means these patients were not managing their own health through a traditional model.
"They were managing it more through an urgent care model," Buxton says. "That was very provocative to us because ultimately, as those populations get older, they have no connections to traditional health systems."
Aside from funneling clinic patients into higher-acuity care settings when needed, the investment in these retail clinics provides McLaren with a touchpoint that could advance its other business objectives.
"We're not just an integrated health system that has 14 hospitals. We have a very large component of our business that is an insurance business as well," Buxton says. "We deliver our insurance product in two different states."
Pharmacy Tradeoff, Broader Strategy
McLaren will surrender all 14 of its existing pharmacies to Walgreens, which will own and operate some and simply file-transfer the others, Buxton says.
Rather than characterize this arrangement as McLaren "giving up" its pharmacies to gain clinic sites, Buxton describes the swap as "strategically synergistic," with Walgreens better-equipped than McLaren to maximize the pharmacies' potential.
"When you run those as a component part of a business, versus that's what you do [exclusively], there's a challenge in really competing in the retail space," Buxton says. "Their platform, their footprint is much bigger than ours. Their capacity is bigger than ours."
Even the niche areas in which McLaren pharmacies have served patients should improve under Walgreens control, Buxton says.
In much the same way that health systems must grow accustomed to providing care through telemedicine in response to rising consumer demand, organizations like McLaren cannot afford to ignore retail clinics as strictly somebody else's business, Buxton says.
"I think that retail is becoming part of the health system offering," he says.
There are several ways, of course, to incorporate retail clinics into a health system. You don't have to hitch your wagon to Walgreens to have an effective strategy. McLaren's leadership, in fact, seriously considered whether it would be better to pass up the partnership opportunity and compete directly with Walgreens instead, Buxton says.
"We looked at the players in the market. We looked at doing it ourselves," he says. "There's a concept of 'build it or buy it,' and in this situation, we decided the best way to go for us was to partner with somebody that already was well-positioned in the retail space and somebody who did something that wasn't exactly what we did but was still in healthcare."
Walgreens was deemed to be not only the best possible partner in the state of Michigan but also, Buxton says, a good partner to have for McLaren's potential development outside the state.
The breach and consequent outage should not negatively affect open enrollment, the CMS administrator said.
The files of about 75,000 people were exposed recently in a data breach on the federally facilitated health insurance exchange, the Centers for Medicare & Medicaid Services revealed Friday evening.
The breach, which was declared last Tuesday, occurred in the direct enrollment pathway for agents and brokers, CMS said.
Officials deactivated the accounts involved in the suspicious activity and temporarily shut the pathway down. The downtime, which is expected to last a week or less, does not affect other enrollment channels, including the marketplace call center and HealthCare.gov.
"We will continue to work around the clock to help those potentially impacted and ensure the protection of consumer information," CMS Administrator Seema Verma said, adding that open enrollment will not be negatively affected by the breach.
"We are working to identify the individuals potentially impacted as quickly as possible so that we can notify them and provide resources such as credit protection," Verma said.
Hospitals suing over the delayed tweaks to the drug pricing program have asked a judge to force the Trump administration to enforce the Obama-era regulation.
Since taking office last year, the Trump administration has repeatedly delayed implementation of a rule finalized in the last few weeks of the Obama administration.
Amid a legal challenge from several prominent hospital groups, the administration abruptly reversed course this week, assuring the plaintiffs and the court that the matter would soon be resolved to everyone's satisfaction. The hospitals aren't buying it.
At issue, the plaintiffs say, are regulations designed to protect hospitals from being overcharged by drug manufacturers. The delays are causing significant financial harm to the nearly 2,500 hospitals nationwide that participate in the 340B Drug Pricing Program, they allege.
The rule in question, which is authorized by the Affordable Care Act, was supposed to implement tweaks to the 340B program effective March 6, 2017. But the Trump administration postponed that date several times, citing a variety of reasons.
Most recently, in June, the administration pushed the rule's effective date back a full year, to July 1, 2019, saying the delay would "allow a more deliberate process of considering alternative and supplemental regulatory provisions and to allow for sufficient time for any additional rulemaking."
In response to that delay, the American Hospital Association, America's Essential Hospitals, the Association of American Medical Colleges, and 340B Health filed a lawsuit accusing HHS of arbitrary and capricious rulemaking. The organizations were joined in the suit by three hospitals: Rutland Regional Medical Center in Vermont, Genesis HealthCare System in Ohio, and Kearny County Hospital in Kansas.
The administration had until this past Monday to respond. Rather than argue that the judge should deny the plaintiffs' request, however, the administration asked the judge to put the entire proceeding on hold. Why? The department expects to issue a rule "that could moot this case or narrow the issues to be resolved," government attorneys wrote.
There's a proposed rule currently being considered by the Office of Management and Budget, and HHS "intends" to issue a notice of proposed rulemaking by November 1 that would hasten the implementation by six months, the HHS filing states.
"Implementing the 340B Pricing Rule by January 1 would effectively provide plaintiffs with all of the relief they have sought in their Complaint," the filing claims.
"Even if there were lingering disputes after the 340B Pricing Rule goes into effect, the issues before the Court would be narrower, as the Court would not have to decide, for example, whether the challenged rule delaying implementation of the 340B Pricing Rule until July 1, 2019 was warranted or not," the HHS filing adds.
The plaintiffs, however, see the situation differently. They responded Thursday afternoon, arguing that the administration should be forced to move forward with implementation and not given the benefit of the doubt—especially since odds are slim that HHS will manage to hit its new January 1 target date, in light of the detailed regulatory process.
"They argue that their proposed rule 'would effectively provide plaintiffs with all of the relief they have sought,'" the hospitals wrote in their response opposing HHS' request. "But in fact … if the stay is granted there is a significant, and potentially high, risk that plaintiffs will receive none of the relief they seek."
The hospitals said they have waited more than eight years, since the ACA was passed, for the benefit of regulations that Congress required to protect hospitals from overcharging by drugmakers.
"Defendants' submission to OMB of a proposed rule—without any assurance that the Final 340B Rule will actually be implemented by January 1, 2019—is not a basis for a stay, and Defendants' other arguments for delay are meritless," the hospitals wrote.
Rather than grant the HHS request, the judge should order the government to respond to the pending motion for summary judgment within 7-10 days, so the case can be resolved expeditiously, the hospitals argued.
Judge John D. Bates in the D.C. District Court had yet to issue a ruling as of Friday morning.
The idea behind this collaboration and other deals involving national pharmacy chains is to better meet the shifting demands of consumers.
The nationwide pharmacy chain Walgreens has struck a deal with McLaren Health Care, based in Grand Blanc, Michigan, to interlock their pharmacy and health service offerings.
The integrated health network will open new care sites within Walgreens stores, and Walgreens will take over on-site McLaren pharmacies, buying up the system's prescription files and pharmacy inventory, the organizations announced Wednesday. Their strategic collaboration is part of each entity's efforts to compete in a rapidly consolidating market by making healthcare delivery more efficient.
"Consumers increasingly seek value and convenience when choosing a health care setting, and fewer—particularly younger adults—have a relationship with a primary care physician," McLaren President and CEO Philip Incarnati said in a statement. "Walgreens has a reputation for delivering outstanding service and customer experience, and we are proud to work with them to create these new clinics and give Michigan residents more options for quality, affordable care when and where they need it."
Walgreens will acquire 14 of McLaren's pharmacies in the deal, and McLaren will open an as-yet-undetermined number of retail clinics, urgent care centers, and primary care sites in Walgreens stores, according to a Walgreens spokesperson. Financial terms have not been disclosed.
"As the cost of healthcare continues to rise, patients' expectations are evolving around better value, convenience and simplicity, and a desire for instant, high-quality care," Pat Carroll, MD, Walgreens chief medical officer and group vice president of healthcare services and clinical programs, said in the statement.
"Our collaboration with McLaren, demonstrates our ongoing commitment to create neighborhood health destinations that provide retail health services and patient care across the communities we serve," Carroll added.
Where Walgreens Beats CVS
This is far from the first time Walgreens has partnered with local health systems and physician groups to operate cobranded clinics within its retail stores. Walgreens has at least 14 existing partnerships across 10 states. McLaren appears to be the first such partnership in Michigan.
Although CVS Health is the nation's frontrunner in the number of walk-in clinics, Walgreens is leading the pack in terms of cobranded sites, with more than 200 such clinics nationwide, according to Michelle La Vone Richardson, a market analyst with Decision Resources Group in Nashville. These cobranded clinics have risen in popularity in recent years as a tool for integrated delivery networks (IDN) to reduce costs, improve population health management, and keep patients from exiting the system to find lower-acuity care options, she said.
"If health systems can help patients manage their chronic diseases via check-ins with a nurse practitioner at the local Walgreens, as one example, they may be able to trend their cost curve downward and negotiate more competitive rates with insurers hungry for value," Richardson added.
What's more, partnering with a chain like Walgreens brings health systems a step closer to ubiquity, offering easy-to-access care sites with long hours, she said.
Providence St. Joseph Health, based in Renton, Washington, has been collaborating with Walgreens on cobranded clinics for a couple of years now. The arrangement brings the health system's reputation for high-quality care into the pharmacy chain's physical store, and it helps to expand the health system's patient funnel, especially since the clinic uses the system's electronic health records (EHR) system.
"I think it's been mutually beneficial as partners," Providence St. Joseph Health President and CEO Rod Hochman, MD, told HealthLeaders. "We're acquiring new patients, particularly younger, millennial patients coming through there."
Meeting Patients Where They Are
In addition to connecting with younger patients, the Walgreens partnership with McLaren will deliver geographic benefits as well, giving the system more touchpoints with the community, according to Tyler Dinwiddie, a Decision Resources Group senior analyst.
"McLaren is already a fairly advanced IDN, but cooperating with Walgreens will allow the IDN to plant its flag deeper in parts of its service area, which includes far-northern, central, and southeastern Michigan," Dinwiddie said. "So those are the areas where McLaren will benefit the most."
Richardson said this rising popularity of retail clinics is poised to keep going, especially since the individual mandate penalty expires on January 1 and states are implementing Medicaid work requirements, which is likely to drive demand for inexpensive and immediate care. All of that's on top of Walgreens' need to compete with the CVS-Aetna merger.
Without offering an affirmative stamp of approval, the Catholic leaders have confirmed that they will not stand in the way of the megamerger.
Shortly before two massive Catholic-affiliated health systems signed a definitive agreementnearly a year ago to merge into a 139-hospital combined system with $28 billion in annual revenue, Catholic leaders outlined their conditions for the deal.
Archbishop Samuel J. Aquila in the Archdiocese of Denver issued a nihil obstat—which is Latin for "nothing stands in the way"—outlining six conditions to ensure the arrangement would comply with Catholic moral teaching.
All six conditions have been met, including review by the Vatican's Congregation for the Doctrine of Faith, according to a statement the Archdiocese of Denver released Tuesday to HealthLeaders.
Vatican officials informed Aquila last month that, although they saw the planned merger between Catholic Health Initiatives (CHI) and Dignity Health as complex "with important canonical and legal implications," they would defer a decision on the matter to the bishops of the local U.S. dioceses where the merged system will operate, according to the statement.
Aquila informed CHI earlier this month that, as long as the conditions outlined in the nihil obstat continue to be met, Aquila will not stand in the way of the CHI–Dignity Health deal. This does not imply that the Catholic leaders affirmatively approve of the agreement, only that they do not view the proposal as morally or doctrinally objectionable, the statement noted.
A spokesperson for CHI, which is based in Englewood, Colorado, said Wednesday morning that the system was not yet ready to comment on Aquila's decision.
Catholic News Agency's Kevin Jones reported last year that, in addition to Aquila, Archbishop Salvatore Cordileone of San Francisco—where Dignity Health is based—would be among the Catholic leaders responsible for assessing the moral implications of the deal. Cordileone issued a nihil obstat of his own last December, a spokesperson told HealthLeaders.
Pushback from church leaders could thwart a planned deal or prompt health systems to overhaul their arrangement. That's happened in the past, especially when Catholic institutions sought deals with non-Catholic entities. For example, the sale of a Catholic hospital operated by St. Louis-based Mercy, to a for-profit company, fell apart under scrutiny from religious leaders and the Federal Trade Commission, as The Wall Street Journal reported in May.
In 2014, the Vatican issued new guidance on business deals involving Catholic healthcare organizations "to ensure that Catholic healthcare institutions neither cooperate immorally" with non-Catholic partners "nor cause scandal as a result of their collaboration with such other entities," as the Journal reported.
That guidance was updated in June, prompting some concern that the directives could complicate the CHI–Dignity Health deal. Others noted how the rising prominence of Catholic providers comes with restrictions on certain procedures the church deems to be immoral, such as services related to abortion or gender affirmation, as The New York Times reported in August.
Dignity Health announced Tuesday that it and CHI had selected a board of stewardship trustees for the combined system. The board will include the current CEO from each system, six existing board members from each system, and an additional member to be determined after the deal is complete.
"As we continue to face a shifting health care landscape, this team's diverse experience will help our new ministry innovateacross the continuum of care and create healthier communities," Dignity Health President and CEO Lloyd Dean said in a statement.
The statement notes that the deal, which is still subject to reviews by state regulators, is on schedule, with closing expected by the end of the year.
Editor's note: This story has been updated to include a comment from a spokesperson for Archbishop Salvatore Cordileone of San Francisco.
The former aide to Maine Gov. Paul LePage and former Maine Hospital Association lobbyist was picked by the Trump administration after she lost her bid to succeed LePage earlier this year.
A former hospital lobbyist who spent most of the past decade as Maine's health commissioner under Gov. Paul LePage has been tapped to lead Medicaid on the federal level.
Mary Mayhew earned a reputation in Maine as someone who, alongside LePage, championed additional limits on the public benefit programs she oversaw, reducing enrollment in the state's Medicaid program by 67,000 beneficiaries between 2011 and 2015 then opposing Medicaid expansion under the Affordable Care Act.
"I think she is someone who was antagonistic toward Medicaid, so she fits into a long line of Trump appointees who are antagonistic about the programs they are asked to oversee," Maine state Rep. Drew Gattine, a Democrat, told the Portland Press Herald.
Mayhew started Monday as a deputy administrator in the Centers for Medicare & Medicaid Services and director of Medicaid and the Children's Health Insurance Program. The hire, which was announced internally, comes as CMS considers whether to finalize a waiver request Maine submitted last year to authorize work requirements for Medicaid beneficiaries, as Politico reported.
In an interview last April with Maine Public Radio, Mayhew described her initiatives as state health commissioner as part of an effort to help beneficiaries climb out of poverty.
"There has been such a failure to fully appreciate that at the end of the day, the true compassion that has been core to our efforts, is that if you are on any of those welfare programsit means that you are living in poverty. What the governor said, what I said, is that's no way of life for anyone," Mayhew said at the time, as Maine Public reported.
That same sentiment has been cited by the Trump administration in its push for policies expected to result in fewer beneficiaries on public benefit programs.
"The purpose behind this is not about reducing the Medicaid rolls," CMS Administrator Seema Verma said of work requirement requests from 11 states during an American Hospitals Association webinar in January, "but it's really centered around helping individuals gain self-sufficiency, helping them to rise out of poverty."
Mayhew—who began her career as a Democrat in the 1980s before working as a lobbyist for the Maine Hospital Association—left her post as health commissioner last year then traveled the country touting a conservative approachto welfare in coordination with the Opportunity Solutions Network, as the Bangor Daily News reported.
Mayhew takes over for Tim Hill, who had been serving as acting director of Medicaid and CHIP since Brian Neale's resignation in January.