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S&P Sings The Blues Of Hospitals – But Here Is the Other Side Of The Story

Financial firm and rater S & P Global is bemoaning the potential impact of Medicare Advantage (MA) on hospitals. It says in a new report that extended utilization increases could force MA plans to further rein in payments to providers. It also notes that the further expansion of MA hurts hospitals and providers too due to prior authorization (PA) and claims payment delays and practices. Thus, provider margins will be under pressure. And while the provider lobbies got a huge win when the Centers for Medicare and Medicaid Services (CMS) directed MA plans to follow traditional inpatient admission rules, S & P says MA plans could seek to recoup the costs with further restrictions.

I do not take issue with S &P’s assessment per se, but there was another report recently that I found very interesting. A Third Way report suggests that more than half of hospitals make money on Medicare and one-third make money on Medicaid. Thus, it is a myth that hospitals cannot make money on government programs at current rates. It is more an issue of hospital bloat and not using revenue effectively. Hospitals need to reform. The bloat allows hospitals to demand obscene rates from the commercial sector – supposedly to make ends meet.

Hospitals have lived off of the excess and unaccountability of the traditional Medicare program, with no prior authorization or utilization controls. I will go into great detail on this in a blog next week.

And while S & P sings the blues of the hospitals, Modern Healthcare had a good article today about all the pressures faced by MA, some caused by the industry and others by outside forces.  They include:

• The new PA restrictions from CMS.
• The new risk adjustment formula phase-in from CMS.
• The rise of utilization post COVID.
• Contentious payer-provider relationships, where hospitals could term MA plans.
• Major pharmacy trends.
• The cyberattack fallout.

Third Way Report: https://www.thirdway.org/report/tale-of-two-hospitals-why-some-hospitals-succeed-and-others-do-not

Additional article: https://www.modernhealthcare.com/insurance/medicare-advantage-costs-rising-factors

(Some articles may require a subscription.)

#medicareadvantage #hospitals #medicare #medicaid

https://www.fiercehealthcare.com/providers/medicare-advantages-growth-bad-omen-hospitals-sp-global-warns

Insurtech Devoted Health Has Major Financial Raise

Medicare Advantage (MA) insurtech Devoted Health raised $112 million in its Series E funding round. Devoted has over 227,000 members, up from 142,000 in December 2023. Its Star rating averages 4.6. It is in 13 states and almost 300 counties.

Devoted is one of the tech-based startups doing well in MA, along with Clover Health and Alignment Healthcare. Each seems to be bucking the major financial pressures seen by the Big 7 MA national plans. Thus, Devoted has filed to expand into seven new states and will double its county penetration. This doesn’t mean, though, that it won’t rein in benefits due to the erosion of MA rates. It likely will do so to protect its long-term financial health.

#medicareadvantage #devotedhealth #insurtechs

https://www.fiercehealthcare.com/payers/payer-roundup-devoted-health-raises-112m-la-care-eliminates-prior-auth-codes

McKinsey & Company Releases Three Briefers On Medicare Advantage’s Future

McKinsey and Company has three important briefers on the future of Medicare Advantage. This is a must read. Among the recommendations in the extremely thorough document include:

• Star measures have increased over the last decade and enrollees are attracted to higher-performing plans. But Star measures will get harder.
• Star performance focus areas are shifting and clinical and pharmacy performance become key.
• Partnering with providers to maximize performance, lower costs, and ensure member satisfaction is key. Value-based arrangements can pay dividends.
• Health equity is a key theme for Medicare in the future and focusing on social determinants is key.
• MA plans have huge opportunities in the Special Needs Plan (SNP) world.
• There are major rate and regulatory pressures hitting plans.
• A focus on member experience is critical.

Briefers here: https://www.mckinsey.com/industries/healthcare/our-insights/the-future-of-medicare-advantage

#medicareadvantage #partd

https://www.beckerspayer.com/payer/3-things-payers-need-for-great-ma-star-ratings-in-2025-and-beyond-mckinsey.html

Harris Economic Plan Includes Continuation of Biden Healthcare Priorities And More

In a major economic speech today, Democratic presidential nominee and Vice President Kamala Harris promised to lower drug prices, maintain enhanced premium subsidies in the Exchanges, and curb and retire medical debt. She would expand the Medicare drug price negotiation program to expand insulin and out-of-pocket drug cost-sharing caps to the commercial world. She also promised to combat pharmacy benefits managers’ (PBMs) unfair practices.

Additional articles: https://thehill.com/policy/healthcare/4832005-kamala-harris-level-up-biden-admin-health-care-programs/ and https://insidehealthpolicy.com/daily-news/harris-economic-policy-plan-echoes-biden-s-health-cost-agenda

(Some articles may require a subscription.)

#healthcare #elections2024 #harris

https://www.modernhealthcare.com/politics-policy/kamala-harris-health-plan-aca-drug-prices

Biden Administration Announces First 10 Negotiated Medicare Drug Prices

In a coup for the Biden administration, all manufacturers of the ten drugs subject to negotiation for 2026 either agreed to prices or decided to stay in the Medicare prorgam when a price was imposed. The administration and the Centers for Medicare and Medicaid Services (CMS) say that, if the new prices had been in effect last year, Medicare would have saved an estimated $6 billion, or approximately 22 percent, across the ten selected drugs. The negotiated prices range from 38 to 79 percent discounts from list prices.

About nine million people with Medicare use at least one of the ten drugs. In addition to government savings, Medicare beneficiaries with prescription drug coverage will see savings of $1.5 billion in their personal out-of-pocket costs in 2026.

The drugs accounted for $56.2 billion in Medicare spending, or about 20 percent of total Part D gross spending in 2023.

The Congressional Budget Office (CBO) estimated $100 billion in savings over 10 years from drug negotiations, and a $3.7 billion savings in the first year. So the first-year negotiations could save more.

The journey for Medicare drug price negotiations (passed as part of the Inflation Reduction Act) continues with CMS selecting up to fifteen more drugs covered under Part D for negotiation for 2027 by February 1, 2025. This will continue with up to fifteen more drugs covered by Part B or Part D for 2028, and up to 20 more Part B or Part D drugs for each year after that.

The real issue is while savings from the list prices are between 38 and 79 percent, what will the net savings be? Because prices are now set, brand drug makers will no longer give rebates to the pharmacy benefits managers (PBMs) at the level they did before if at all. But based on estimates of rebates, the final pricing is still a substantial savings. Before the announcement, analysts at JPMorgan suggested the negotiated prices could be on average 40% lower, which is greater than the 22 percent announced by CMS. Still, PBMs often keep portions of rebates, consumers don’t see the rebate relief at the point of sales, and this provides for a much more transparent model more along the lines of generic drugs.

Other concerns revolve around whether pharmacy benefits managers could restrict access to the drugs in favor of others with rebates. CMS says it will use a comprehensive formulary review process to prevent this abuse that would undermine patient access.

CMS announcement materials: https://www.cms.gov/newsroom/press-releases/negotiating-lower-drug-prices-works-saves-billions and https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price-negotiation-program-negotiated-prices-initial-price-applicability-year-2026 and https://www.cms.gov/files/document/fact-sheet-negotiated-prices-initial-price-applicability-year-2026.pdf

Additional articles: https://www.modernhealthcare.com/politics-policy/biden-medicare-drug-price-negotiations-pharmaceutical-costs-abbvie-merck-amgen and https://www.healthcaredive.com/news/medicare-drug-price-negotiations-results/724320/ and https://www.beckershospitalreview.com/pharmacy/cms-negotiated-drug-prices-12-notes.html and https://thehill.com/homenews/4829155-medicare-drug-price-negotiations/ and https://thehill.com/policy/healthcare/4828633-medicare-negotiations-6-billion-savings/ and https://www.managedhealthcareexecutive.com/view/questions-remain-about-whether-negotiated-drug-prices-will-save-money and https://www.managedhealthcareexecutive.com/view/hhs-releases-prices-for-medicare-negotiated-drugs and https://insidehealthpolicy.com/daily-news/cms-drug-negotiations-beat-cbo-expectations-price-cuts-38-79-percent

(Some articles may require a subscription.)

#ira #drugpricing #branddrugmakers #medicareadvantage #partd #pdp #cms

https://www.fiercehealthcare.com/regulatory/cms-negotiated-drug-prices-would-have-saved-medicare-6b-last-year

Politico Raises Issue Of CMS Premium Stabilization Demonstration For Medicare Part D PDPs

The mainstream media is finally covering the potential October Surprise for Democrats. There are possible huge increases in standalone Medicare Part D (PDP) premiums due to the transfer of costs to plans from the government and member out-of-pocket cost reductions in the Inflation Reduction Act (IRA). The Politico article lays it out well.

The Centers for Medicare and Medicaid Servies (CMS) created a last-minute demonstration to blunt the impacts and the GOP is accusing Democrats of using the U.S. Treasury for political purposes. I continue to doubt that CMS has the authority to do this.  It usurps Congress’ control. I raised this issue in two blogs several weeks ago (July 24 and July 25) here: https://www.healthcarelabyrinth.com/will-democrats-be-victim-of-an-october-surprise-of-their-own-making/ and https://www.healthcarelabyrinth.com/part-d-premium-woes-due-to-the-inflation-reduction-act/ .

In addition to the PDP premium hikes, Medicare Advantage (MA) plans are expected to have benefit cuts for a number of reasons, including the IRA changes and rate reductions.

Additional article: https://www.beckerspayer.com/payer/the-perfect-storm-facing-medicare-recipients-during-enrollment-season.html

#election2024 #medicareadvantage #partd #pdp #ira

https://www.politico.com/news/2024/08/13/biden-adiminstration-medicare-drug-premiums-spike-00173308

AHIP To Go On Offensive On Medicare Advantage

With Medicare Advantage (MA) facing huge financial difficulties due to lower rates and crippling government regulatory changes, AHIP, the health plan lobby, is underwriting a seven-figure lobbying and advertising campaign to call attention to the challenges, obtain higher rates, and explain the major benefits for Medicare enrollees.

Additional article: https://subscriber.politicopro.com/article/2024/08/top-health-insurance-group-outlines-plans-to-protect-medicare-advantage-00173713

(Some articles may require a subscription.)

#medicareadvantage

https://www.beckerspayer.com/payer/payers-plan-medicare-advantage-lobbying-blitz.html

PhRMA Attacks FDA Licensing Affordability Proposal

PhRMA, the brand drug manufacturer lobby, is attacking the National Institutes of Health’s (NIH) proposal to tie its licensing process to drug affordability in the United States once products hit the market. The proposal would tie U.S. prices to those in other developed countries.

PhRMA argues that it would discourage collaboration by the private sector with NIH. “History demonstrates that placing unreasonable terms on licensing agreements diminishes willingness to engage in public-private partnership,” PhRMA said.

But there is nothing wrong with the government tying affordability to any collaboration with the government. So much of what the drug industry eventually markets is tied to government innovation and funding.  The proposal is not unlike march-in rights on patents, which is something to consider as well. It also ties to Medicare drug price negotiations.

Let’s remember: the drug market is not a free market and needs reform.

(Article may require a subscription.)

#drugpricing #nih #fda #branddrugmakers

https://insidehealthpolicy.com/inside-drug-pricing-daily-news/phrma-nih-s-plan-limit-price-licensing-will-chill-collaboration