Week of 6/10/2013

HRI regulatory center weekly newsletter

This week’s regulatory and legislative news

For hospitals, focus shifts to regulations – not legislation

After an active spring, which saw CMS release proposed rules for hospital payments, quality improvement programs, and more, providers now await additional clarity on rules that direct everything from the requirements to participate in Medicaid and Medicare to unique medical identifiers. Hospitals contested a CMS proposed rule that modifies the conditions of participation in Medicare that require each hospital to have its own distinct medical staff. Since CMS defines hospitals by provider agreement, the proposal would require most hospitals—even those that are part of multi-hospital systems—to have their own medical staff. It could also result in multi-hospital systems registered under a single provider agreement to have one unified medical staff across all hospitals, according to the American Hospital Association. FDA has also readied a final rule that would establish a unique identification number for medical devices. Hospitals broadly support the measure and have pressed FDA to include virtually all medical devices.

HRI impact analysis: Health organizations should be aware that there are still a slew of proposed rules and regulations that will affect billions of industry dollars. Proposed payment rules for home health, inpatient psychiatric facilities, and long-term care providers are expected in July. The additional payment rules have taken on a new importance, especially as hospitals seek new partnerships with post-acute care providers such as home health companies. This summer, CMS will also release guidance on state implementation of exchanges; guidance on Medicaid eligibility, enrollment changes, and an appeals process; and rules on the verification of employer-sponsored coverage. Analysis of proposed and final rules is available on HRI’s regulatory center website.

Contraception decision could lead to new class of drugs

A prolonged battle over access to emergency contraception for women is nearing its end, but the outcome could have future ramifications for how the FDA approves drugs that don’t require a prescription. Some groups that advocated for improved availability of the products remain concerned that access will be limited to more expensive branded versions. Often, drugs that were once prescribed by doctors are later approved to be sold over-the-counter, such as seasonal allergy remedies. As drugmakers seek to sell more complex products over-the-counter, the FDA has voiced concerns about the ability of consumers to properly use the medications without a physician’s supervision. Some have suggested that a new category of products kept behind the counter and dispensed by a licensed pharmacist could help patients better understand a drug’s risks and benefits. Some medications already fall into this category, such as cold medications that contain pseudoephedrine. 

HRI impact analysis: Placing drugs behind the counter could breathe new life into products whose patents are expiring and face competition. The new category could give drugmakers the means to sell medications in a retail setting that are currently deemed too risky for over-the-counter sales. In these cases, manufacturers would need to develop new pricing and marketing strategies to ensure customer loyalty and prolong a product’s revenue stream in the face of generic competition. Campaigns that once targeted physicians because of their power to prescribe would shift to price-sensitive consumers who value convenience and transparency. For more information on consumer expectations in healthcare, see HRI’s report on Top Health Industry Issues for 2013. 

Improving economic health with genomics

The potential of genomics appears to go beyond diagnosing and treating diseases. The emerging scientific field also contributes heavily to the nation’s economic well being according to a new report by the advocacy organization United for Medical Research. Genomics refers to the branch of molecular biology concerned with the structure, function, evolution, and mapping of genomes. According to the report, federal investment in mapping human genomes has generated: $65 billion in U.S. economic output, 152,000 jobs, and $19 billion in personal income. In HRI’s 2012 consumer survey, 69% of respondents agreed that pharmaceutical and biomedical research is an important economic engine for the country.   

HRI impact analysis: The economic impact study follows last week’s news that the NIH has joined a global alliance of research organizations that will share genetic and clinical information. The continued investment of public money could help private companies develop diagnostic tests that identify gene mutations and create more targeted treatments, such as the BRCA gene that is associated with breast and ovarian cancer. As companies invest more in personalized medicine, new questions are emerging regarding intellectual property rights. Yesterday, the Supreme Court ruled that human genes cannot be patented, which may clear the way for other companies to develop tests and treatments.  

New analysis finds demographics of uninsured relatively unchanged by ACA

In a recent Health Affairs article, Harvard researchers predict what the US uninsured population will look like after the ACA’s major coverage expansions kick in. The researchers found that while the ACA will significantly reduce the number of uninsured, it will still leave 30 million Americans without healthcare coverage. And according to the study, those individuals will look remarkably similar to the currently uninsured—mostly white, low-income, of working age, and US citizens. This raises questions of how—and why—so many individuals will remain uninsured despite the ACA’s massive expansion of coverage, and what can be done to encourage uptake of insurance.

HRI impact analysis: According to the Health Affairs analysis, nearly 60% of the remaining uninsured will fall within 100% to 400% of the federal poverty level, meaning that many will likely be eligible for subsidies to purchase coverage on the new health insurance marketplaces. With so many uninsured individuals, health insurers should start thinking creatively about outreach strategies, including partnerships with provider systems that also stand to benefit from more insured patients. For more strategies on exchanges and to see the latest breakdown of state Medicaid and exchange decisions, visit HRI’s website.

Health insurers improve medical loss ratio compliance 

A new study by the Kaiser Family Foundation reveals that health plans on the individual market are becoming more compliant with medical loss ratio (MLR) requirements. The study shows that insurers are paying out fewer rebates to consumers. Kaiser estimates that individual plan consumers saved an average of $204 per person in 2012, a combination of premium savings and rebates. MLRs for small and large group markets, which were already in compliance prior to the ACA, have stayed relatively consistent.

HRI impact analysis: Fewer than half of all individual plans were in compliance with MLR thresholds in 2010, but that number has been steadily rising during the past few years. The rapid increase may indicate plans are streamlining administrative functions and improving efficiency. Some have challenged the report’s optimistic analysis, however, noting that effects from the economic recession may have overinflated its estimation of the MLR rule’s impact.

Safety net hospitals fret over proposed DSH cuts

Hospitals that treat a large number of the nation’s uninsured are concerned they could lose a greater amount of federal payments for uncompensated care under back-to-back proposed rules released by CMS this spring. The reductions to Medicare and Medicaid’s disproportionate share hospital (DSH) payments are part of the ACA, and some hospitals have raised concerns over how the Medicare DSH cuts will be calculated and dispersed. For more information, see HRI’s new Spotlight on the topic.

Upcoming events & deadlines

  • June 17-21 – CMS releases qualified health plan application results for the federally facilitated exchange, and health plans submit revisions.
  • June 25 – Comments due on the hospital inpatient payment rule, which includes Medicare’s proposed DSH reductions, new quality measures, and clarity on the definition of an inpatient stay.  
  • June 28 – Comments due on the proposed rule revising the requirements for the Medicare Incentive Reward program and provider enrollment.
  • July 12 – Comments due on the proposed rule implementing the methodology for reducing Medicaid DSH allotments.
  • July 22 – Comments due on the interim final rule setting payment rates for healthcare services provided to individuals in the Pre-Existing Condition Insurance Plan (PCIP). 
  • July 30 – Comments due to the FDA on new models of antibacterial drug development.
  • July 31 – CMS receives state recommendations and final reviewed plan data for state partnership exchanges.

Quote of the week

“Employers can increase productivity, cut healthcare costs, and reduce the burden of heart disease, cancer, stroke, diabetes, and other health problems in their workforce by making it easier for employees to be physically active, eat healthy foods, and not smoke,” said Tom Frieden, CDC Director, about the National Healthy Worksite Program, the agency’s new initiative funded by the ACA Prevention and Public Health Fund aimed at assisting small- and mid-sized employers in building successful workplace wellness programs.

In the news

An article by the Wall Street Journal takes a look at how healthcare reform helped to motivate one employer, the Cumberland Gulf Group, to expand workers’ schedules, re-classifying them as full-time employees and making them eligible for company-sponsored health insurance.     

Factually correct

33% – the percentage of Massachusetts’ acute care hospitals that have been involved either in a merger, acquisition, or partnership since 2007. To learn more about Massachusetts’ experience with healthcare reform, read HRI’s analysis here.

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