HRI as we see it
This week’s regulatory and legislative news
June 26, 2017
- Trump administration: CBO says Senate health reform bill would lead to 22 million more uninsured
- State of the states: Single-payer proposals hit a wall in California, Nevada
- New FDA process aims to expedite generic medication review
- US Supreme Court ruling limits product liability mass litigation
- New England Journal of Medicine analysis: Coverage expansion may improve health outcomes
- MACRA adjustments among MedPAC’s considerations in latest report
- HRI as we see it will not publish the week of July 3
Trump administration: CBO says Senate health reform bill would lead to 22 million more uninsured
The Congressional Budget Office (CBO) analysis this week of the Senate’s Better Care Reconciliation Act (BCRA) showed that the new healthcare bill would lead to 22 million fewer Americans with health insurance over the next decade compared with current projections under the ACA. It also found that the bill would decrease federal Medicaid spending by $772 billion, or 26 percent, over the next decade and reduce the number of Medicaid enrollees by 15 million more than current projections. The report also estimates that insurance premiums could increase as fewer healthy people purchase insurance, resulting in sicker—and costlier—insurance risk pools. Premiums would decrease in the long term, but only if insurance plans cut benefits, the CBO found. Senate Majority Leader Mitch McConnell (R-KY) has postponed a vote on the bill until after July 9.
HRI impact analysis: The CBO’s score of the BCRA is similar to its scoring of the American Health Care Act, the bill that the House of Representatives approved in May, which was expected to result in 23 million fewer insured Americans over the next decade. As healthcare companies prepare for the potential passage of either bill, they should consider, among other things, how reform could affect different customer segments. For example, the CBO found that certain groups—namely the elderly and the poor—would fare negatively under the bills, and that state efforts to reform insurance could disrupt some existing protections, such as lifetime financial limits on care or certain essential health benefits.
State of the states: Single-payer proposals hit a wall in California, Nevada
State legislative proposals to bring single-payer healthcare reforms to Nevada and California are not likely to become law this year. Nevada Gov. Brian Sandoval (R) vetoed a “Medicaid for all” bill last week that would have allowed all uninsured residents to purchase Medicaid-like coverage through a newly created Nevada Care Plan. If passed, the program would have required a waiver from CMS allowing residents to use ACA tax credits to purchase coverage. A California bill to create a state-run healthcare system was held up by Assembly Speaker Anthony Rendon, a Democrat, last week. Rendon effectively ended the bill’s chance for passage this year but encouraged senators to continue improving the bill for consideration next year. Sandoval and Rendon each believed the respective bills lacked complete information about implementation, financing and effects on healthcare delivery. Bill sponsors have pledged to reintroduce the Nevada bill and improve the California bill for consideration next year.
HRI impact analysis: As an increasing number of states consider their own health reforms, healthcare companies should consider how any proposed changes might affect their compliance obligations, revenues and profits. Single-payer healthcare systems have garnered some political support, but implementing these systems will be challenged by states’ needs to maintain balanced budgets. That could mean healthcare companies might have to accept lower margins or give states discounts on services to manage costs. Companies should watch state reform efforts closely and also consider how federal health reform efforts could affect state operations.
New FDA process aims to expedite generic medication review
The FDA issued new draft guidance last week establishing an expedited process for it to review and approve high-priority generic drugs, shaving months off the standard approval time. The guidance involves the pre-submission facility correspondence (PFC) process, in which a generic medicine’s sponsor can submit information to the FDA about its manufacturing and bioequivalence—the extent to which it is similar to the one it references—two months before completing an approval application. If a generic drug meets the FDA’s “priority” criteria for generics, regulators will move to expedite the review process, including conducting earlier facility inspections and reviewing an approval application in less time. However, the PFC must be substantially complete when submitted; the FDA won’t review another PFC if the first one is “deficient.”
HRI impact analysis: The guidance is part of a recent flurry of FDA activity to decrease regulatory barriers to entry for generics in hopes of creating additional competition and reducing drug prices. In addition to the guidance, the FDA says, it is planning to explore the “balance between innovation and access” to generic medications, and ways to eliminate what it considers the improper use of its regulations to delay or deny competitors. The FDA is even moving ahead of schedule in some cases. Its new guidance document was called for under the draft text of the upcoming Generic Drug User Fee Act reauthorization, which likely won’t be signed into law for several more months.
US Supreme Court ruling limits product liability mass litigation
The US Supreme Court ruled in favor of Bristol-Myers Squibb (BMS) on June 19 in a case that sets a new precedent for product liability/mass tort cases. Going forward, it will be more difficult to successfully sue companies outside the plaintiff’s home state, the state in which the company is headquartered or incorporated, or the state where the injury occurred. The BMS case involved over 600 plaintiffs—86 California residents and 592 residents from 33 other states—who asserted that the BMS blood thinner Plavix harmed them. The plaintiffs filed eight complaints in California Superior Court claiming the product was defective and the advertising misleading. BMS wanted to dismiss the nonresidents’ claims, asserting that California did not have jurisdiction over their claims because the nonresident plaintiffs did not obtain Plavix, suffer injuries or receive treatment for their injuries in California. Although Plavix was distributed nationwide by a California-based distributor that BMS contracted with, the US Supreme Court did not find the connection strong enough to establish jurisdiction. As a result, the US Supreme Court determined that California does not have jurisdiction over BMS, since BMS is not headquartered or incorporated in California. The nonresident plaintiffs could file claims in each of their 33 home states or the states that have jurisdiction over BMS.
HRI impact analysis: The ruling could change the landscape for class-action lawsuits by limiting lawsuits to states in which an injury or purchase occurred. This also could restrict the use of courts in districts considered to be friendly to plaintiffs, and limit the size of class-action lawsuits. This ruling limits plaintiffs’ claims to their home states or the state in which the corporation is headquartered or incorporated. New York and Delaware are the two most common states for Fortune 500 companies to be headquartered or incorporated.
New England Journal of Medicine analysis: Coverage expansion may improve health outcomes
The New England Journal of Medicine (NEJM) published a review last week suggesting that insurance coverage expansion benefits health. The analysis evaluated the findings of roughly 25 studies from the last decade on insurance expansion’s effects on access to care and utilization, chronic disease care and outcomes, well-being and self-reported health, and mortality. The studies covered insurance expansions that included pre-ACA and ACA Medicaid expansion, 2006 Massachusetts statewide reform, and the ACA provision allowing young adults to remain on their parents’ plan until age 26. One study found that three states that expanded Medicaid in the early 2000s experienced a 6 percent decrease in mortality rates over five years, compared with neighboring nonexpansion states, which experienced an increase in mortality rates. Those expansion states also experienced a significant decrease in the rate of delayed care due to cost, and a significant increase in rates of self-reported “excellent” or “very good” well-being. The NEJM reviewers cited several areas needing further research but concluded that the evidence suggests insurance coverage improves health outcomes.
HRI impact analysis:
The NEJM’s findings come at a time of uncertainty about the future of Medicaid expansion, coverage subsidies and premium increases. The two health reform bills in play in the House (AHCA) and the Senate (BCRA) are expected to reduce the number of insured Americans, according to the CBO. If one of the bills becomes law, the health industry may see lower primary care utilization, less chronic disease management, reductions in well-being and self-reported health because of stress over lack of coverage, and increased mortality. Providers and payers should prepare to help patients—particularly ones at risk of losing coverage—navigate potential gaps in coverage and explore other coverage options.
MACRA adjustments among MedPAC’s considerations in latest report
The Medicare Payment Advisory Commission (MedPAC) issued a report this month analyzing Medicare payment policy and making recommendations for improvement, including several for redesigning the Medicare Access and CHIP Reauthorization Act (MACRA). To better identify and reward high-performing physicians in the new payment system’s Merit-based Incentive Payment System (MIPS) track, the report suggests replacing all quality reporting requirements with population-based outcome measures. The report also urges broadening eligibility for MACRA’s second payment track, Advanced Alternative Payment Models (A-APM), in which physicians take on more risk with the potential to receive higher bonuses. The report, one of two mandated by Congress each year, makes several other recommendations, including implementing a unified payment system for post-acute care and adjusting payment formulas for drugs under Medicare Part B. It also calls for establishing site-neutral payments in response to increasing physician-hospital consolidation, which has resulted in higher Medicare hospital facility fees.
HRI impact analysis:
CMS announced last month that more than half of physicians are exempt from MACRA in 2017, welcome news to some who need more time to prepare. However, the latest MedPAC report could intensify provider uncertainty about MACRA’s future. All providers should continue preparing for MACRA, with an emphasis on raising physician awareness about how the new system will affect their pay. An HRI survey conducted in April found that 60 percent of clinicians were unsure which of the two program tracks they had selected in 2017. Many are still unaware of MACRA entirely, according to Modern Healthcare.
HRI as we see it will not publish the week of July 3
Due to the Fourth of July holiday, HRI will not publish a newsletter next week. Publication will resume the week of July 10
Upcoming events and deadlines
- July 3-7 — Congressional recess for Independence Day
- July 10 — CMS comment deadline on the required disclosures from certain hospitals regarding physician ownership
- July 12 — HHS comment deadline for suggested changes to existing regulations to reduce ACA regulatory burdens and improve healthcare choices to empower patients
- July 15 — CMS comment deadline on proposed changes to Wisconsin’s BadgerCare Medicaid waiver
Quote of the week
“That is the goal of the plan, to make certain that any transition from Medicaid to the individual market, from Medicaid to the employer-sponsored market, from Medicaid to Medicare, and the other ways that nobody falls through those cracks, that that is a seamless transition. That doesn’t occur right now, but that’s the goal of the plan.”
— Tom Price, US Department of Health and Human Services secretary, discussing health reform at the Aspen Ideas Festival
In the news
The healthcare industry has found many uses for virtual reality, including educational and training resources for patients and clinicians, pain management, physical therapy, and treatment for mental and emotional disorders. In 2017, the virtual reality market in healthcare is valued at almost $1 billion and is expected to grow to $5.1 billion by 2025, according to Grand View Research.
Factually correct
30.3 per 1,000 — The net increase per year in emergency department visits among patients from the 503 community centers participating in a three-year pilot of patient-centered medical homes, despite an increase in primary care utilization. The pilot showed an increase in access to health care but also an increase in spending.
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Trine K. Tsouderos
HRI Regulatory Center Leader
Tel: +1 (312) 241 3824
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Sarah Haflett
Health Research Institute director
Tel: +1 (267) 330 1654
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