HealthCare Roundtable e-News – Feb. 17, 2017

CMS Proposes Revisions to Exchanges

The Centers for Medicare & Medicaid Services (CMS) has proposed a set of changes to the health insurance exchanges aimed at “stabilizing the individual and small group health insurance markets to help protect patients.”

The ACA, which was passed in 2010, created state-level exchanges – also known as marketplaces – that were launched in 2014 in which people who do not have access to affordable group coverage can buy insurance, in many cases using income-dependent tax credits. States were not required to establish exchanges, but the federal government created one in any state that did not.

President Donald Trump and congressional Republicans have vowed to repeal and replace the ACA, but have not yet developed a plan to do so. In the meantime, uncertainty about the law’s future appears to be contributing to departures of insurers from the exchanges, threatening the coverage of millions of Americans. The administration was recently reported to be considering implementing several measures requested by the insurance industry to encourage insurers to continue participating in the exchanges in the short-term, and some of those changes have now been officially announced by CMS.

The agency’s proposed rule would, among other things, cut the open enrollment period for 2018 in half, so it would run from Nov. 1 to Dec. 15 of this year; lower by 2 percentage points the minimum actuarial value standard for health plans in the exchanges; and further restrict the ability of consumers to sign up for coverage outside the open enrollment period, in part by “requiring supporting documentation where practicable.”

The administration appears to have decided not to move forward with several other proposals that it was reportedly considering, including allowing insurers to charge older customers up to 3.49 times as much as younger ones. The law limits the ratio to 3:1, and the administration reportedly considered arguing that, since 3.49 rounds down to 3, it would comply with the rule.

“This proposal will take steps to stabilize the marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options,” CMS Acting Administrator Patrick Conway said. “They will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”

CMS is accepting comments on the proposal through March 7.

Insurers will start submitting bids for 2018 to state regulators in April, so the administration faces a short timeline for increasing confidence among those companies. Humana has already announced that it is pulling out of the exchanges after this year and Aetna CEO Mark Bertolini, while not commenting on whether his company will continue to participate, echoed Republican criticisms by saying that the exchanges are in a “death spiral.”

During the 2017 open enrollment period, which ended Jan. 31, 9.2 million people signed up for coverage in the 39 federally-run exchanges, a 4 percent decline from 9.63 million a year ago.

The IRS, meanwhile, in a reversal, announced that it will process tax returns – and issue refunds where appropriate – even if taxpayers do not affirm that they have health coverage or claim an exemption or pay a fine for not being insured. While this does not revoke the individual mandate – the penalty for not having coverage is still in effect – it does appear to undermine the primary enforcement mechanism.

The IRS announcement is one result of an executive order signed by President Donald Trump on the day he took office that directed federal agencies to take actions aimed at “minimizing the economic burden” of the ACA.

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House GOP Discusses Health Care Reform Outline

Republican leaders of the House of Representatives on Feb. 16 provided some broad outlines of their plan to replace the Patient Protection and Affordable Care Act (ACA).

The GOP-controlled House voted dozens of times during the Obama administration to repeal all or part of the ACA. With Republicans controlling both the House and Senate and with Donald Trump in the White House, that goal is now within reach. However, the GOP does not have a replacement plan ready, and many Republican lawmakers are wary of enacting legislation that will result in 18 million people losing health insurance within the first year, with that number climbing to 32 million within a decade, according to the Congressional Budget Office.

Speaker of the House Paul Ryan, R-Wisc., said that Republicans plan to “introduce legislation to repeal and replace Obamacare” after Congress returns from its weeklong Presidents’ Day recess.

The New York Times reported that, although the GOP still does not have a fully formed proposal, Ryan and other party leaders told Republican House members that the legislation will, among other things:

  • Offer tax credits to help people buy insurance
  • Provide incentives for people to save money in accounts for medical expenses
  • Allow consumers to buy insurance plans in other states
  • Sharply reduce funding for the ACA’s expansion of Medicaid

In addition, Republicans want to move the entire Medicaid program toward a block-grant model in which each state receives a flat amount of funding from the federal government to run the program.

“We need to rescue people from this collapsing law, and we need to replace it with a true patient-centered system, one that gives every American access to quality, affordable coverage,” Ryan said. “That means more choices and lower costs. It means real protections and peace of mind. And it means returning your care to your control. Patients and doctors should be making the big decisions – not government bureaucrats.”

Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., said that he and other senators are working with members of the House to develop a “consensus document” on health care reform, the Times reported.

The House proposal outline did not include any cost or coverage estimates.

Health and Human Services Secretary Tom Price told Republicans that the White House will not propose a health care plan, according to Bloomberg. Shortly before taking office in January, Trump said that his team was “down to the final strokes” in the development of its own health care reform proposal. While he offered no details, he said that it would provide “insurance for everybody” and “much lower deductibles” than under the ACA. Trump also vowed that, under his plan, there would be no Medicare cuts and pharmaceutical companies – who he said have been “getting away with murder” – would have to negotiate with the federal government over the prices of drugs covered by Medicare.

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Health Care Spending to Grow by 5.6% Annually Through 2025: CMS

Nominal national health care expenditures are expected to grow by 5.6 percent a year through 2025, according to the Centers for Medicare & Medicaid Services (CMS).

The growth in spending is projected to outpace the expansion of gross domestic product, so by 2025, health care will account for about 20 percent of the nation’s economy, up from just under 18 percent in 2015.

“Growth in national health expenditures over this period is largely influenced by projected faster growth in medical prices compared to recent historically low growth,” CMS stated. “This faster expected growth in prices is projected to be partially offset by slowing growth in the use and intensity of medical goods and services.”

Prescription drug spending is expected to grow by 6.4 percent a year through 2025, while Medicare spending increases by 7.1 percent a year and Medicaid spending goes up by 5.7 percent a year.

“There is considerable uncertainty regarding how the nation’s health care will be delivered and paid for going forward,” a Health Affairs article on the projections by officials from the CMS Office of the Actuary stated. “This analysis finds that under current law and following the recent significant period of transition associated with coverage expansions, health care enrollment and spending trends are projected to revert to being fundamentally driven by changes in economics and demographics.

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Generics Group Adopts New Name

The trade association for generic drug manufacturers has rebranded itself as the Association for Accessible Medicines (AAM).

The AAM, which had been known as the Generic Pharmaceutical Association, stated that it changed its name “to communicate its mission to make more medicines more accessible to more people who need them.” At the same time, it launched a campaign called “Keeping Medicines in Reach” that relates stories of patients who have been helped by generic drugs.

“The association’s new identity will improve recognition that the generic and biosimilar medicines industry is one of the nation’s great health care success stories, and that competition from generics and biosimilars lowers the cost of medicine,” AAM President and CEO Chip Davis said.

Some companies have drastically increased the price of old generics for which they are the sole provider – most recently, Marathon Pharmaceuticals, which is now selling a drug for Duchenne muscular dystrophy for $89,000 a year that had been available for $1,200 a year. This has pulled generics into the debate over high drug prices and created a public relations problem for an industry that has long prided itself on being known as a provider of low-cost alternatives to brand-name drugs. Still, though, the AAM notes that generics account for 89 percent of all prescriptions filled in the United States, but only 27 percent of all drug costs.

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