February 23, 2018
Consumers may soon be able to buy short-term limited duration insurance for 12 months or more thanks to a rule HHS proposed this week. If enacted, the rule would allow insurers to sell yearlong plans, potentially with streamlined renewals, that are exempt from many Affordable Care Act (ACA) requirements for policies sold to individuals. Those include the 2010 law’s prohibition on pricing based on health status, its ban on annual dollar limits, and mandated coverage for a list of essential health benefits. Insurers were allowed to sell these plans for up to 12 months until 2016, when the Obama administration shortened their allowed duration to less than three months.
HHS estimates 100,000 to 200,000 mostly healthy or young people would buy this coverage, and that its effect on the ACA exchange market would be to raise average monthly premiums for an older, sicker pool of unsubsidized consumers by about $70 a month. Higher premiums also would raise the value of government subsidies, resulting in an extra $96 million to $168 million a year in federal outlays. HHS didn’t estimate how the rule would affect specific ACA plans, or break down the premium increases by age or state. “The status quo is failing too many Americans who face skyrocketing costs and fewer and fewer choices. The Trump administration is taking action so individuals and families have access to quality, affordable healthcare that works for them,” HHS Secretary Alex Azar said in a statement. The proposed rule is open for public comment until April 23.
HRI impact analysis: The proposed rule comes a month after the administration proposed another rule that would expand access to association health plans, another type of coverage exempt from some ACA provisions. The administration has said these proposed regulations will give consumers, especially those earning too much to qualify for government premium subsidies, more choices for coverage. It also fulfills the administration’s goal of repealing and replacing as much of the ACA as possible through a more fragmented approach. Premiums for short-term limited duration plans can be as low as $124 a month and often don’t limit policyholders to specific networks of doctors or hospitals, according to HHS. Still, the coverage can be very limited, with high deductibles and other cost-sharing, lists of excluded services or treatments, annual limits on how much the insurer will pay, and premiums based on health status. HHS estimates that the number of consumers likely to purchase short-term limited duration insurance is relatively low—up to 200,000 in a nation of more than 320 million. But if association health plans take off, and the individual mandate penalty’s effective elimination after Dec. 31, 2018, has a significant impact, the number of consumers with limited benefits—or no coverage at all—could rise. Providers could experience an uptick in patients unable to meet their ACA-exempt plan’s cost-sharing obligations or pay bills that spill over the plan’s annual coverage cap. One note for tax filing season: These short-term limited duration plans don’t qualify as minimum coverage as the ACA requires, so consumers relying solely on them this year could have to pay a penalty next year when they file their 2018 taxes. After Dec. 31, the penalty shrinks to $0, thanks to a provision in the December 2017 tax law.
In response to Gov. C.L. “Butch” Otter’s call for more plan choice this year, an Idaho insurer has proposed five new individual health plans that don’t meet ACA requirements. If approved by the state department of insurance, Blue Cross of Idaho’s “Freedom Blue” plans could charge substantially lower premiums than the insurer’s ACA-compliant bronze-tier plans, according to a fact sheet released by the company. In exchange for the lower premiums, Freedom Blue plans to sidestep some ACA provisions, such as the prohibition on annual benefit maximums, pricing based on health status, and mandated coverage of essential health benefits. For example, the Freedom Blue Standard plan for an individual comes with a $1 million annual benefit maximum, a $12,000 out-of-pocket maximum for medical services, and a $6,500 out-of-pocket maximum for prescription drugs, according to the company. The plans, which cannot be purchased with ACA subsidies, were developed in response to Gov. Otter’s January executive order asking the state insurance department to create guidelines permitting health insurers to offer plans costing less than ACA plans. Gov. Otter has stated that he believes reducing the ACA’s individual mandate penalty to $0 under tax reform opens the door to widespread sales of noncompliant plans to individuals.
HRI impact analysis: Idaho’s move represents another channel for expanded sales of noncompliant individual health plans. Blue Cross of Idaho has said its aim is to help the state’s 110,000 uninsured residents afford insurance, but these plans also may prove attractive to residents struggling to afford coverage in the state’s ACA exchanges. However, fewer benefits could result in higher costs if a consumer should develop a serious medical condition. These new plans—along with association health plans and short-term limited-duration insurance—could modestly increase the number of patients who are unable to pay their prescription or medical bills. They also could siphon away healthier, younger consumers, leaving the ACA exchanges with a sicker, older population, which could lead to higher premiums. A coalition of 15 patient advocacy organizations is urging HHS to address Idaho’s insurance guidelines. Of the four insurers offering plans on the state’s ACA exchange in 2018, Blue Cross of Idaho—which said it will continue to offer ACA plans—is the first to offer coverage under the new guidelines.
Some Medicaid beneficiaries in Arizona and Indiana may soon be required to make copayments for ER visits in nonemergency situations, according to Section 1115 waivers that CMS recently approved. Maine also is seeking approval for a $10 copayment for ER use in nonemergencies. Arizona will charge some beneficiaries $200 in such cases; Indiana will charge all beneficiaries, regardless of income, $8 copayments for the first unnecessary visit and $25 each for subsequent ones. These requirements are part of a broader national movement to require some Medicaid beneficiaries to meet certain obligations, such as work, education, volunteering a specified amount of time, paying premiums or cost-sharing.
HRI impact analysis: Public and private payers are struggling with the rising costs of emergency room visits, with some taking measures to dissuade patients from using the ER for nonemergencies. The Health Care Cost Institute found that spending for emergency room visits increased 89 percent, between 2009 and 2015, primarily driven by price increases, not increased patient utilization. In some cases, the measures taken have resulted in consumers paying extremely high costs, even for those who are fully insured. Some insurers have started implementing alternative payment models to address rising ER spending, and some have seen significant savings for their efforts.
The FDA has proposed holding an unusual meeting to defend its decision not to approve an immediate-release (IR) opioid product for, among other reasons, fear that it’s too easy to abuse. According to the FDA, the rejected product was submitted through the 505(b)(2) pathway, which companies use to expedite approval of drugs that are chemically identical to an already-approved drug but are administered differently or have a different potency. Regulators said the company submitted insufficient data to show the drug was deterrent to abuse, particularly by injection. Under 21 CFR 314.200, the company has the right to appeal such a decision through a public hearing when it concerns “genuine and substantial issue of fact” or if the hearing would be “of public interest.” The company, which has until March 15 to respond, also may choose not to appeal the FDA’s decision.
HRI impact analysis: The FDA’s notice is extremely rare. The agency last offered to hold such a hearing in 2011, and before that, in 2000. It’s also an uncommon look into the FDA’s reasons for rejecting a product, which often are withheld from public view by federal law protecting trade secrets. The agency’s decision to reject the opioid product is evidence that the FDA is taking the issue of substance abuse seriously. Recent agency guidance said its goal is to “decrease the rate of new addiction, and thus any unnecessary legitimate and especially illicit use of opioids.” As the FDA presses to make more abuse-deterrent opioids available, it will be up to pharmaceutical manufacturers to make them, insurers and PBMs to reimburse for them, and doctors to prescribe them.
Veterinary pharmaceutical companies would soon be required to submit adverse event reports associated with their products in electronic format under a new proposed rule the FDA released last week. The FDA began requiring electronic submission of adverse events for human pharmaceuticals and biologics in 2014, and the rule is expected to extend an all-electronic system’s benefits to veterinary products. With electronic data, the FDA can more easily find potentially dangerous products and can make the information more transparent by publishing it on its website, open.FDA.gov, where the public can download it for free.
HRI impact analysis: In the release, the FDA said that electronic drug event submissions would allow the agency to ensure that new drugs are safe and effective by making it easier to find potential issues earlier. Electronic pharmacovigilance data also can be vital to organizations looking to develop new products. As explained in HRI’s Future of Pharmacovigilance paper in September, legislation known as the 21st Century Cures Act allows manufacturers of human pharmaceuticals to get products approved based on their use in real-world settings. Though that’s not the case with veterinary products, companies can still use their pharmacovigilance data to find new uses for drugs, better determine their value relative to competitors’ products, and predict safety issues.
The Bipartisan Budget Act of 2018, which President Donald Trump signed Feb. 9, contains more than 50 healthcare provisions, including more than a dozen focused on chronic care. These include expanding access to telehealth for Medicare Advantage patients who are part of an accountable care organization, receive home dialysis or have suffered a stroke. Several of the provisions dealing with chronic care seek to remove barriers for accountable care organizations, signaling continued support for value-based models. Overall, this part of the law makes small tweaks to smooth the way for value-based care, greater care coordination and digital care.
In its first year under the Trump administration, the Food and Drug Administration (FDA) has sharply cut back on the issuance of new regulations and warning letters while approving record-setting numbers of new drugs, generic drugs and drugs for orphan diseases, an analysis by HRI found. In other areas, the FDA has carried on with long-running trends in enforcement, facility inspections, the issuance of guidance documents and policy, and crackdowns on drug quality issues—strong indications that FDA Commissioner Scott Gottlieb is largely staying the course set by his predecessors. In this new data-filled report, Continue to take as prescribed: Amid a steep slowdown in regulation, the FDA hit record highs for drug approvals while maintaining enforcement, HRI examines the FDA’s past year of approvals and enforcement.
Under the Trump administration, HHS has continued the federal government’s campaign to tie payments to quality, but it’s taking a more restrained approach than it did under the Obama administration. New programs and delayed or canceled older ones have created uncertainty and slowed the movement toward value-based care. Payers and providers should carefully consider how shifts in reporting and participation will affect their operations, particularly as the landscape remains unsettled. In its new paper, Value-based care under President Trump: Slower, more voluntary, HRI examines HHS’ approach to value-based care based in a year of decisions big and small.
The shooting at Marjorie Stoneman Douglas High School in Parkland, Fla., has sparked an extraordinary student-led movement advocating for greater gun control measures, including protests and school walkouts across the country. Deaths attributable to firearms have risen for high school-aged teens, with 2,665 dying in 2016 compared with 2,331 in 2010, according to an HRI analysis of CDC data.
March 6-7 — Public forum in Baltimore to discuss proposed changes to ICD-10-CM and ICD-10-PCS code sets and diagnosis coding
March 16 — Deadline for comments to FDA’s Opioid Policy Steering Committee: Prescribing Intervention—Exploring a Strategy for Implementation
A study examining a risk-reduction intervention for high-risk teens in the juvenile justice system has shown potential for reducing sexual risk-taking. The study, called PHAT Life, was conducted with 310 urban youth ages 13 to 17 on probation in Chicago. The intervention uses role-playing, videos, games and skill-building techniques to promote knowledge about HIV/AIDS and healthy sexual choices. Participants with the highest risk sexual behavior, defined as having multiple partners and low condom use, were four times more likely to report a reduction in risk behaviors after the study relative to a control group. Youth ages 13 to 24 are disproportionately at risk for new HIV infections.
Research Analyst, Health Research Institute, PwC US
Tel: +1 (678) 419 1864
Research Analyst, Health Research Institute
Tel: +1 (703) 918-1028