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The Insanity of Drug Pricing and Shortages: A Christmas Story

After what I went through, I asked Santa to bring me a rational drug pricing system for Christmas . But not even the great St. Nick can sort this mess out. Drug shortages or supply disruptions are in the news of late, with serious concerns over the availability of critical cancer and other life-saving drugs. While my drug supply story is not nearly as serious, I write about it today as I have been dealing with it over the Christmas holiday and it shows the pure insanity of our drug supply and pricing system in America. I am withholding the names of the pharmacies and the pharmacy benefits manager (PBM) as not doing so would be unfair to an individual drug chain or PBM. What we see here occurs across the drug supply chain. I am disclosing the drug manufacturers as this helps make clear the complexity of drug pricing.

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Are Health Plans’ Relationships With Owned Entities Fair? Will They Open Up More Regulatory Scrutiny?

A late November bipartisan letter from Sens. Elizabeth Warren, D-MA, and Mike Braun, R-IN, to the Health and Human Services (HHS) Office of Inspector General (OIG) has many wondering if lawmakers and policymakers will open up a new regulatory front that will bring heightened scrutiny of health insurers’ finances and internal contractual relationships. Let’s give some history first before diving deeper into the issue. With this set up, what does the letter say? Warren and Braun want the HHS OIG to open an investigation on MLR gaming. They are reacting to a recent Brookings Institution analysis and Wall Street Journal (WSJ) report showing the extent of contracting by major insurers with their own subsidiaries and the impact that could have on costs in the healthcare marketplace, especially for consumers. The letter alleges that certain insurers are using these arrangements to evade the minimum MLR rule. In effect, they say insurers

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National Healthcare Expenditure Data Issued for 2022: What Does It All Mean?

One of my Christmas traditions is to write about the release of the Centers for Medicare and Medicaid Services (CMS) Actuary’s National Healthcare Expenditure Data (NHED) for a given calendar year.  This usually is released in the first half of December each year for the prior year.  It literally takes CMS about a year to capture, calculate and categorize all the data for a year given the size and labyrinthine complexity of our healthcare system.  Each year as well, usually in the first half of June, the CMS Actuary updates healthcare spending projections for ten outyears. Why is this so important?  First, it is the main comprehensive source of data for calculating the history and future of healthcare spending.  Most other studies rely on the CMS Actuary’s NHED reports in some way.  Second, it is a treasure trove of data that helps explain the inner workings of the healthcare system.

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PBM Transparency And Reform Is A Big Trend In The American Healthcare System

The push for lower drug prices in general and reform of America’s Pharmacy Benefit Management (PBM) industry specifically are major focuses of Capitol Hill and state and federal regulators. With these trends taking center stage, I thought it would be interesting to lay out where the impetus for reform is coming from and what the future likely holds. I don’t pretend this is an exhaustive piece, but it is meant to set the table for future discussions and blogs. It is clear to me that the push for reform substantially is coming from outside the industry, but there are clear trends even within the drug and PBM industry toward change. What is the current status? It is critical to recognize that PBMs alone do not set prices in American healthcare. We have a tremendously opaque drug supply channel that begins with drug makers. The below walk-through is simplified and does

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New Poll Shows Americans Want To Work To Improve The Current Healthcare System Not Replace It

In my last blog on December 7, I argued that former President Donald Trump gave Democrats an issue to run on in 2024 when he stated on two occasions that he wanted to repeal the Affordable Care Act (ACA). I argued that the Republican party has a “compassion gap” and Trump signaling he would repeal the ACA widens that gap and gives a leg up to the Democrats. A recent Kaiser Family Foundation (KFF) poll showed that the ACA was a very important issue for about half of those surveyed and that about a third of Republican voters felt that way. In general, on healthcare issues, the poll underscored that voters may trust the Democrats more. As I noted, my blog was published on December 7 and later that day a new poll was published that underscores my views. The poll had 2,000 respondents and was conducted by the Partnership

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Republicans Have a Compassion Gap But Trump Gives Democrats Momentum on Healthcare Anyway

Former President Donald Trump recently brought up the possible repeal of the Affordable Care Act (ACA) and has put his (and my) party in a bind. Republicans suffered at the polls on the very issue Trump has resurrected. Why is he raising the status of the landmark act again? In a post on Truth Social on November 25, Trump declared: “The cost of Obamacare is out of control, plus, it’s not good Healthcare. I’m seriously looking at alternatives.” He clearly caught his party by surprise. You could hear the collective signs and groans coming from Capitol Hill Republicans who survived the issue in the past. After some criticism, Trump sought to clarify his remarks but actually reiterated his stand. On November 29 on Truth Social, Trump stated: “I don’t want to terminate Obamacare, I want to REPLACE IT with MUCH BETTER HEALTHCARE. Obamacare Sucks!!!” Fellow candidate and FL Gov. Ron

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Medicare Advantage Insurers Focusing On Special Needs Plans And Growth Shows It

While Medicare Advantage (MA) has seen huge increases in enrollment since the beginning of the decade, forecasts suggest that enrollment growth will be reduced moving forward.  Many things factor into the slowdown, including a new rate environment, poor Star performance, and reaching saturation in certain areas of the country.  Nonetheless, MA continues to be a strong program and the most-lucrative place to be if you are an insurer. One segment of the MA program, Special Needs Plans (SNPs), however, are destined to continue to grow significantly moving forward.  This is driven in part by policies from the Centers for Medicare and Medicaid Services (CMS) and the significant financial opportunity plans see. As of November 2023, SNP and related program enrollment stood at over 6.6 million.  That is a 15% growth since January 2023. There are three types of SNPs: (1) Institutional SNPs or I-SNPs (the individual is a resident of

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American Healthcare Is A Huge Outlier In Terms Of Costs and Outcomes

I am writing this blog from the United Kingdom on the occasion of the 75th anniversary of the National Health Service (NHS). The British newspapers this year, as they were five years ago for the 70th Anniversary, were filled with a curious mix of messages about the NHS. On the one hand, Britons defend the NHS and take pride in the system that has been built over the last 75 years.  The NHS is always at or near the top of the most important issues at election time. At the same time, Britons are frustrated with many elements of the system, including long wait times and the hoops that must be jumped through for certain services as well as notable staff shortages and other deficiencies.  Some blame privatization over the past few decades as well as the miserly increases given to the NHS during the conservative government’s tenure over the

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The Importance of Price Transparency In Healthcare Reform

While website postings of hospital and health plan negotiated prices may not seem of particular importance, the nation’s modest move toward price transparency should bear fruit over time. It is one of the more important initiatives we have seen in healthcare reform as of late. With interoperability of data, price transparency will finally give us some useful information on the inner workings (even machinations) of negotiations between health plans and providers. What are the price transparency requirements? Both health plans (effective July 1, 2022) and hospitals (effective January 1, 2021) have been required to post various pricing information on their websites. Hospitals must report all their gross and net charges in a machine-readable format as well as at least 300 shoppable services (cash and payer prices) in a consumer-friendly format. Health plans must report allowed amounts and contracted rates for hospitals and other provider services for all in-network covered services

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CMS’ Medicare Advantage Utilization Management Rule Sets A Terrible Precedent

I have mentioned the new 2024 Medicare Advantage (MA) Utilization Management (UM) rule in two of my blogs recently.  But here is a relatively short one to drive home the idea that the rule sets a terrible precedent. What does the rule do?  It takes external evidence-based criteria off the table in favor of the policies used in the traditional Medicare program. Unless a FFS policy is not fully established, an MA plan must rely strictly on the traditional FFS program criteria instead of outside evidence-based clinical criteria. “Fully established” is not well defined, but CMS likely will argue that the NCDs and LCDs are fully established except in some small and extreme circumstances. Let’s set my argument up with three points. First, the rule was a direct result of the aggressive lobbying by provider groups opposed to the growth of managed care in Medicare.  The Biden administration is sympathetic

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