Interested in efforts to control health costs? Pay attention to Massachusetts

The state has set benchmarks for health care costs — with a watchdog in the form of the state Health Policy Commission.  Here’s yesterday’s news.

The state attorney general’s office and the Department of Public Health on Thursday signaled that they are drafting conditions for the biggest health care merger proposed in Massachusetts in decades, after a state watchdog agency stood firm behind projections that the deal could sharply raise costs for consumers.

The comments from the three public agencies indicated that nearly two years after it was first proposed, a merger between Beth Israel Deaconess Medical Center and Lahey Health may be nearing final approval — but with guardrails…

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Slide from a Tufts researcher’s Dec. 2017 presentation to the California General Assembly

The Health Policy Commission is charged with studying hospital mergers but cannot block them. It can refer its findings to other officials with greater regulatory authority.

“The question is: Does the merger serve the Commonwealth? The answer is no — not yet,” said Dr. Donald Berwick, a member of the commission, said at a public meeting Thursday.

“Costs are going to go up. They’re going to go up substantially,” he said. “We need a form of restraint.”

Click here for a 2016 interview with chair Stuart Altman. 

Watch yesterday’s meeting, which was live streamed and posted to You Tube

 

 

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In 2017, 96.3 percent of #Massachusetts residents had #healthinsurance. Here’s how they got it.

From the Massachusetts Center for Health Information and Analysis:

Enrollment Trends monitors health insurance coverage in the Commonwealth of Massachusetts, where coverage is defined by unique Massachusetts residents with primary medical membership in the 13 largest commercial payers, MassHealth (Medicaid), or Medicare.

The August 2018 edition of Enrollment Trends offers insights into changes in health insurance coverage in Massachusetts from March 2016 through March 2018.

Key Findings from August 2018 Enrollment Trends

    • Over four million Massachusetts residents received their primary, medical health insurance coverage through private commercial insurance between March 2016 and March 2018.

 

    • In March 2018, MassHealth shifted approximately two-thirds of its Managed Care Organization (MCO) and Primary Care Clinician (PCC) plan enrollees to Accountable Care Organization (ACO) plans.

 

    • Unsubsidized Qualified Health Plan (QHP) enrollment decreased by 14.4% (-7,000 members) from March 2017 to March 2018, while subsidized QHP enrollment increased by 55.0% (+5,000 members) over the same time period.

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KHN: Trump Administration Sinks Teeth Into Paring Down #Drug #Prices

This story notes that CMS approved a Medicaid waiver from Oklahoma in June, but denied a Massachusetts request for a similar exception to existing rules. File_000

Oklahoma’s plan would expand that to negotiate additional prescription price reductions based on value-based purchasing agreements.

Still, CMS’ recent rejection of a related Massachusetts proposal makes it difficult to believe negotiating drug prices will really happen, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

That proposal would have allowed Massachusetts’ Medicaid program to choose drugs 

based on cost and how well the medicines work.

“They have been very good and quite careful with their [Medicaid] program and so why not let them try this?” Rosenbaum said.

Full story below.

Three months after President Donald Trump announced his blueprint to bring down drug prices, administration officials have begun putting some teeth behind the rhetoric.

Many details have yet to be announced. But experts who pay close attention to federal drug policy and Medicare rules say the administration is preparing to incrementally roll out a multipronged plan that tasks the Centers for Medicare & Medicaid Services (CMS) and the Food and Drug Administration with promoting competition, attacking the complicated drug rebate system and introducing tactics to lower what the government pays for drugs.

downloadMark McClellan, director of the Duke-Margolis Center for Health Policy in Durham, N.C., and a former CMS administrator, said that although none of the initial steps has “fundamentally transformed drug prices,” there is “a lot going on inside the administration.”

Two HHS officials who are rolling out the plan, Dan Best and John O’Brien, described their efforts to Kaiser Health News not as a public relations strategy but a push to reform the system.

“This administration is trying to go after root causes” of high drug prices, said Wells Fargo analyst David Maris.

But others are not so optimistic.

Ameet Sarpatwari, an instructor in medicine at Harvard Medical School in Boston, said policies the administration has rolled out thus far “alone will not translate into meaningful cost savings for most Americans.”

Broadly, the strategy falls under a handful of steps:

1. Attacking The Rebates

Health and Human Services Secretary Alex Azar has said Americans “do not have a real market for prescription drugs” because drug middlemen and insurers get a wide range of hidden rebates from drugmakers, but those savings may not be passed on to consumers or Medicare. In July, the administration submitted a proposed rule that could change the way rebates are handled.

Details of the proposal have not been made public. But O’Brien, a deputy assistant secretary at HHS, explained during a recent conference on federal drug spending sponsored by the Pew Charitable Trust: “You don’t have to use market power to get rebates, you can use market power to obtain discounts, to actually lower the price of the drug on the front end.”

Umer Raffat, an investment analyst with EverCore ISI, said “it’s not clear [that drug prices are going down]” but the “rebate structure is changing.”

2. Bringing More Negotiation To Medicare

This week, CMS Administrator Seema Verma announced that Medicare Advantage insurers can use a step-therapy approach to negotiate better prices for Part B drugs — those administered in hospitals and doctors’ offices. These private plans will be allowed to require patients to first select the least expensive drug before stepping up to more costly drugs if the original medications aren’t working.

The administration is also looking at ways to introduce more competition into Part B drug purchasing. That idea was mentioned deep inside the annual Medicare outpatient payment rule released last month.

Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes in New York, pointed to the possible introduction of a competitive purchasing program in which a firm negotiates with drugmakers to buy their drugs and then sells them to the doctors and hospitals that will administer the medications. Bach said that helps ensure that hospitals and doctors can’t make more money by prescribing more expensive drugs.

Currently, Medicare pays the average sales price plus 6 percent to doctors or hospitals when they purchase drugs, a pricing mechanism that can benefit the providers if the drug costs go up. If there were a third party buying the drugs, it would “have a huge effect,” Bach said.

3. Paying For Value

Trump’s blueprint calls for CMS to encourage “value-based care” to lower drug prices, shifting from paying a set fee for drugs to basing payments on how well the patient does on them.

Louisiana’s Medicaid program could show the way. The state is working with CMS to explore a subscription-based model to pay for hepatitis C medicines. Louisiana would pay a fixed price to a drug manufacturer that would then get unlimited access to treat patients enrolled in Louisiana’s Medicaid program or in prison.

The program would move “from a big payment upfront to paying less over time based on actual outcomes,” said McClellan, who also serves on the boards of health care giant Johnson & Johnson and insurer Cigna.

CMS also approved a Medicaid waiver from Oklahoma in June. Medicaid programs are allowed to negotiate drug prices. Oklahoma’s plan would expand that to negotiate additional prescription price reductions based on value-based purchasing agreements.

Still, CMS’ recent rejection of a related Massachusetts proposal makes it difficult to believe negotiating drug prices will really happen, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

That proposal would have allowed Massachusetts’ Medicaid program to choose drugs based on cost and how well the medicines work.

“They have been very good and quite careful with their [Medicaid] program and so why not let them try this?” Rosenbaum said.

4. Tackling Foreign Drug Costs

Pharmaceutical makers often sell their drugs at substantially lower prices in many foreign countries than they do in the United States. Trump emphasized in May that “it’s time to end the global freeloading once and for all,” saying U.S. consumers were paying part of the cost of the medicines that patients in other countries use.

He directed U.S. Trade Representative Robert Lighthizer to address the situation. Lighthizer’s office declined to comment.

When Sen. Todd Young (R-Ind.) asked during a Senate health committee hearing in June whether trade agreements with other countries should be used to “level the playing field,” Azar’s response was swift: “We absolutely believe we should be using our trade agreements to get them to pay more even as we have our job to pay less.”

Avalere Health President Matt Brow, who has been involved in talks with the administration, said it’s clear the focus on overseas pricing isn’t going away and the administration is “talking a lot about how to get the president what he wants.”

5. Increasing Competition

FDA Commissioner Scott Gottlieb has become the Trump administration’s lead proponent for increasing competition among drugmakers.

Competition resonates with Americans “because people see it every day in their experience in Costco and other places,” said Rena Conti, an assistant professor at the University of Chicago.

Gottlieb has announced plans to bolster the use of generic drugs and an “action plan” to encourage the development of biosimilars, which are copycat versions of expensive biologic drugs made from living organisms.

And to combat anti-competitive behavior in the market, Gottlieb said the FDA has passed along information to the Federal Trade Commission and hinted at potential action to come: “I think we’ve handed them some pretty good facts.”

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

 

Why does Partners cost more than other #Massachusetts #hospitals? Price variation revealed in new report.

The Commonwealth of Massachusetts tracks not only what it spends on Medicaid, but total  health care spending.  Modern Healthcare reports on the variation in care spending recently identified by the in Massachusetts Health Policy Commission. 

The highest-cost providers in Massachusetts spent nearly a third more per patient than their lowest-cost peers, mirroring the widespread cost variation found in markets throughout the country. 

Massachusetts’ largest and highest-cost organization, Boston-based Partners HealthCare, spent 32% more per patient annually than Reliant Medical Group, after adjusting for treatment severity, according to a new report from the Massachusetts Health Policy Commission that analyzed the 14 largest providers in the state. That variation amounted to more than $1,500 per patient.

varaiation in speanding

 

Boston researcher in NYTimes on why the US spends so much on health care. The answer is same as it was in 2003 — prices.

33586416554_c4c88c0477_zAustin Frakt,  director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System writes in The New York Times today:

A large part of the answer can be found in the title of a 2003 paper in Health Affairs by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.

He goes on to quote a JAMA  study:

Over all, the researchers found that American personal health spending grew by about $930 billion between 1996 and 2013, from $1.2 trillion to $2.1 trillion (amounts adjusted for inflation). This was a huge increase, far outpacing overall economic growth. The health sector grew at a 4 percent annual rate, while the overall economy grew at a 2.4 percent rate.

You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population. But that explains less than half of the spending growth. After accounting for those kinds of demographic factors, which we can do very little about, health spending still grew by about $574 billion from 1996 to 2013.

Did the increasing sickness in the American population explain much of the rest of the growth in spending? Nope. Measured by how much we spend, we’ve actually gotten a bit healthier. 

For more on Dr. Frakt’s work, see his blog, The Incidental Economist.

 

Health Policy Commission versus Partners

Lots of amazing research and care happens at Partners Healthcare, and we pay a bonus for it.

Or, as  Boston Globe writer   puts it “Partners has long been criticized for using its power in the health care market to extract higher payments from insurers and driving up health care costs.”

But, Partners faces scrutiny from the Massachusetts Health Policy Commission, a panel that includes some health care heavyweights and a team of data analysts who are tracking cost and utilization in the state.  

McCluskey reports in today’s paper: 

Partners HealthCare’s expansion plans suffered a setback Wednesday after a state watchdog agency warned that health care costs for consumers would rise significantly if Partners is allowed to acquire the specialty hospital Massachusetts Eye and Ear.

The Health Policy Commission said Partners, the state’s largest health care network, is likely to seek higher reimbursements for care by Mass. Eye and Ear and its doctors if the deal goes through. Because Partners is already a high-priced network, the deal would increase health care spending statewide by $20.8 million to $61.2 million a year, according to the commission.

“These spending increases would ultimately be borne by consumers and businesses through higher commercial premiums,” the commission said in a lengthy report.

Last year, your correspondent interviewed Brandies economist Stuart Altman, who chairs the panel, about what Massachusetts is doing to contain health costs.

First of all, it is the only state that has recognized that it should be involved in total state spending. Some other states that are closer are Vermont and Maryland. But the Massachusetts state government is really acknowledging that it has responsibility for not only what it spends on Medicaid, but that it should be concerned with total spending.

 

Can hospitals be leaner?@STATnews take you insides the Brigham’s “struggle to cut costs.”

More here.

Over the past three months, the Brigham provided STAT unbrigham

usual access to meetings of its top management and internal deliberations and documents. 

This inside look shows how one of the nation’s leading hospitals is confronting the daunting financial and marketplace forces buffeting academic medical centers across the U.S.

“This wasn’t about ordinary cost-cutting,” Walls said. “It was very clear we had to become a much leaner, more efficient organization.”

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