In 2019, drugmakers will cover more costs for patients enrolled in Medicare Part D, and the AARP is intent to make sure it stays that way. The new policy is focused on the plan’s “donut hole,” or coverage gap between initial coverage and catastrophic coverage. Donut explanation here. Currently, manufacturers provide drugs for that gap at a 50% discount, but the new policy pushes that to 70%. The “lame duck” legislative session between now and the end of the year could be the pharma industry’s last chance to lobby against that measure. To ensure that doesn’t happen the AARP is launching a radio, digital, and print ad campaign to get legislators to reject pharma lobbying. So you can expect to see seniors shaking their canes at Congress this December in addition to their traditional yearly yelling at carolers.
While any DTC drug commercial will likely include shots of people happily hiking and a list of side effects longer than the symptoms of the disease it’s curing, one thing you won’t see advertised is the price of the prescription. New federal policy could change that for drugs covered under Medicare and Medicaid, forcing companies to disclose list prices in TV advertisements. While most patients don’t typically pay the full price for their prescriptions, Health and Human Services Secretary Alex Azar says, “They deserve to know if the drug company has pushed their prices to abusive levels.” PhRMA says their members would be willing to include a link to a website that has pricing information in advertisements, to which Azar pretty much replied, that’s not what I meant.
Not to be outdone by the Cigna-Express Scripts merger, CVS Health and Aetna’s proposed merger has been approved by the US Justice Department. The $69B (nice) deal combines Aetna’s insurance skills with CVS’s drug benefits management and nearly 10,000 pharmacy locations to create a healthcare behemoth. The deal will allow Aetna customers to seek less expensive medical services at those pharmacy locations, including CVS’s 1,000+ walk-in clinics which have served 25M patients since 2000. To get the deal approved, Aetna had to sell all its standalone Medicare Part D plans. Otherwise, the merged company would have owned 30 percent of those drug plans—an unacceptable share to the DOJ. We’ll be interested to see how the new company competes with the similarly structured Cigna-Express Scripts in the coming years.
Don’t forget who you work for. According to Dr. Poonam Alaigh, former Acting Under Secretary of Health at the Dept of Veterans Affairs, “Medicare covers only 14% of all Americans with insurance, where half of Americans receive their health insurance benefits through their employer.” In a recent article she states “With employers in the drivers’ seat, this year is going to be an interesting one to watch for value-based purchasing arrangements.” What is value-based pricing? Not this (mild language, very funny). We’d start with this video from Harvard professor Michael Porter or this one from Humana. Dr. Poonan references three models becoming more popular with employers: Implementing Bundled Payment Approaches, Adopting ACO models, and Adopting Employee Incentives. With stats like “as of 2016 large self-funded employers offering bundled programs realized cost savings of 20-30% per case” it’s time for employers to step-up.
You know what grew at almost the same rate (up ~24%) as the DJIA in 2017? The number of ACOs operating in the US. For the uninitiated, “Accountable Care Organizations (ACOs) are groups of health care providers, who come together to give coordinated care to Medicare patients. When an ACO succeeds in delivering high-quality care and spending health care dollars more wisely, it shares the savings it achieves for the Medicare program.” There will be 18% more ACOs in 2018, than in 2017. There are 5 different ACO models and according to a report by IQVIA (form required), there are “1,000 federal, commercial and Medicaid ACOs, representing an estimated 28M beneficiaries.” The report lists the top 30 ACOs as well as the top ACOs in each of the 5 models. Not sure, but ~9% of the US population starts to raise an eyebrow or one.
Hospitals must report the number of hospital-originated patient infections to Centers for Medicare and Medicaid Services (CMS). This is mandated because, according to a 2016 report (paywall warning), medical errors are the 3rd leading cause of death in the U.S. No way?!? Way. Medicare is then supposed to review and investigate suspicious reports—ones that hint of under-reporting. But why would a healthcare facility under-report these figures, you ask? Because results are made public and hospitals receive financial bonuses or penalties based on their numbers. A recent investigation by the Office of the Inspector General reported that the vast majority of hospitals they sampled passed inspection, but CMS needs to rely more heavily on data analytics to identify likely offenders. If you ever think InsightCity is behaving unethically, let us know. We’ll investigate ourselves and get back to you. Trust us.
When doctors tell you to take your medicine, eat well, and exercise, you should listen, right? Especially if you have a chronic illness like Type 2 Diabetes. Easier said than done, it seems. The IMS Institute for Healthcare Informatics has released a report showing that under 40% of Type 2 Diabetes patients globally achieve optimal levels of adherence and persistence. 4-15% of costs related to treating Type 2 Diabetes complications are associated with failure to properly follow medication and treatment regimens. In the US, these avoidable complications cost Medicare $4 billion every year. Ouch. Let’s all try listening to our doctors. Let’s lace up our sneakers and go find some Pokémon. Our bodies and wallets will be healthier for it.