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Research Roundup - June 2018

Alaska

Division of Insurance Seeking Input to Drive Down Costs

By Kylie Walsh | State of Reform | June 19, 2018

The Alaska Division of Insurance solicited comments on two topics related to healthcare costs, according to State of Reform. The division is seeking proposals for amendments or alternatives to the 80th percentile rule, with particular focus on alternatives that address the potential impacts on the cost of care and protect consumers from surprise balance billing. A recent report by the University of Alaska found that the 80th percentile rule likely has driven up costs. The division is also surveying small business employers to identify issues and barriers to affordable coverage. This is the first step towards applying for a second 1332 Innovation Waiver to address costs in the small-group market, as premium increases have averaged more than 31 percent over the past two years.

California

Hospital Charity Care Drops While Profits Increase

By Kylie Walsh | State of Reform | June 19, 2018

A California Nurses Association (CNA) analysis of hospital financial data reveals a 33 percent drop in the overall amount of charity care provided by California’s nonprofit hospitals from 2011 to 2016, reports State of Reform. The California Hospital Association suggests that the drop demonstrates that patients need less help covering medical bills due to increased insurance coverage under the Affordable Care Act. However, the CNA report shows that despite lower uninsured rates, there are still 12 million Californians struggling to pay medical bills. The analysis reveals that, during the same time period, nonprofit hospitals accumulated nearly $37 billion in profits.

Connecticut

Connecticut Passes Drug Transparency Law

By National Academy for State Health Policy | June 5, 2018

Connecticut is one of several states that have recently enacted drug cost transparency laws, designed to make drug pricing information accessible so states can eventually take action on price gouging, reports NASHP. The new Connecticut law requires drug makers, health insurers, and pharmacy benefit managers (PBM) to disclose a wide assortment of information on price increases. Drug makers must justify large increases, insurers must report them when filing rate requests and PBMs must report how much they collect in rebates and how much they keep.

Feds OK First Stage of New Connecticut Hospital Taxing System

By Keith M. Phaneuf | The CT Mirror | June 8, 2018

The U.S. Centers for Medicare and Medicaid Services approved a significant increase in Connecticut's annual tax on hospitals—from roughly $556 million to $900 million, reports The CT Mirror. The state will redistribute much of the revenue back to its hospital industry through increased hospital payments, but the new taxing arrangement will allow Connecticut to draw an additional $150 million in federal money annually through its Medicaid program. This back-and-forth arrangement is currently employed by a number of states.

Delaware

Delaware Moves Forward on Comprehensive Healthcare Cost Measures

By Milbank Memorial Fund | May 31, 2018

Delaware’s Governor issued an executive order in February establishing a formal advisory committee to focus on healthcare spending and quality measures, according to Milbank Memorial Fund. To inform the committee’s recommendations (which are expected to be released this month), the Department of Health and Social Services developed a toolkit for legislators that provides information about benchmark benefits and strategies for success. This work builds on the state’s ongoing effort to develop a healthcare cost benchmark to measure and serve as a baseline to rein in cost growth.

Louisiana

New Laws Take Aim at Prescription Drug Pricing in Louisiana

By Maria Clark | NOLA.com | June 4, 2018

Two new Louisiana laws aim to regulate drug pricing and providing more transparency in how prices are set. According to NOLA.com, the legislation (SB 282 and SB 283), requires pharmaceutical benefit managers (PBMs) to share more information about how they operate in Louisiana. PBMs negotiate rebates from drug makers to insurers in exchange for lower co-pays, but often do not pass rebates on to the consumer. A recent Altarum study estimated that health insurers nationwide received an estimated $86 billion in rebates in 2016 alone. PBMs will now be required to release an annual report that discloses the percentage of any rebates received from drug manufacturers. Additionally, insurers will have to let enrollees know when they are being charged more for a prescription drug than the insurer itself pays.

Missouri & Kansas

Trouble Paying Medical Bills? Large Survey Shows It’s Common in Kansas and Missouri

By Andy Marso | The Kansas City Star | June 11, 2018

One of the largest surveys of Missouri and Kansas healthcare consumers ever conducted shows that medical debt is a top concern, according to The Kansas City Star. The survey found that 33 percent of Kansas children and 28 percent of Kansas adults lived in a household that struggled to pay medical bills in the last year. In Missouri, difficulty paying medical bills was even more common, with 38 percent of kids and 34 percent of adults living in struggling households. Almost 20 percent of respondents in both states said they had faced financial consequences from medical debt, either asking family and friends for help, seeking personal loans or getting hounded by debt collectors. These results support findings from an earlier study conducted by the Urban Institute.

Missouri OKs Law to Combat Anthem's Controversial ER Policy. Will it Help?

By Brooke Crum | Springfield News-Leader | June 6, 2018

Missouri passed a law designed to circumvent a controversial policy enforced last year by Anthem, allowing the company to deny medical claims when a consumer goes to an emergency department for care deemed non-emergent, according to the Springfield News-Leader. The new law, which goes into effect Aug. 28, 2018, aims to protect patients by reinforcing the “prudent layperson” standard, which suggests that patients should not be penalized for seeking emergency care for reasons that are rational given an average knowledge of health and medicine. Additionally, a licensed physician will be required to examine the medical file before a claim can be denied, which will prevent a computer from determining how claims are processed by billing code. Despite the law, Anthem is likely to continue enforcing its controversial policy in Missouri. 

For Missouri Heart Attack Patients, the Nearest Hospital Isn't Always the Best

By Sarah Fentem | St. Louis Public Radio | May 29, 2018 

The Missouri Department of Health and Senior Services has designated nine hospitals in St. Louis County (and 14 throughout the rest of the state) as priority heart attack centers to ensure that the highest-risk patients have best chance of recovery, according to St. Louis Public Radio. The recent designation is a part of a longstanding effort to develop a Time-Critical Diagnosis System (already in place for other time-sensitive health issues such as trauma and strokes), which directs emergency responders to facilities that are both nearby and well-equipped to meet the patient’s needs. Prior to the system’s introduction, emergency responders were required to transport patients to the nearest hospital, regardless of its ability to effectively treat certain conditions.

Montana

Holy Cow! Moment Changes How Montana’s State Health Plan Does Business

By Julie Appleby | Kaiser Health News | June 20, 2018

Marilyn Bartlett, the director of Montana’s Health Care and Benefits Division got an urgent directive from state legislators in late 2014 to get healthcare costs under control, or else, according to Kaiser Health News. Bartlett designed a new way for the state to do business with hospitals, which accounted for 43 percent of employee healthcare costs. The state began giving these facilities a “reference price” or how much they would be willing to pay for each hospitalization, using Medicare rates as a baseline, and ultimately deciding to reimburse at 234 percent of Medicare rates. Despite some initial opposition from hospitals, after two the state is calling the effort a success. Montana saved $15.6 million compared to what they would have paid without the change. Their reserve fund has even grown so much the state has used it for other needs.

Texas

Texas Residents' Views on State and National Health Policy Priorities

By Liz Hamel, et al. | Kaiser Family Foundation | June 14, 2018

Roughly two-thirds of Texans say the state government is currently not doing enough to make sure low-income adults can get the healthcare they need, and the same share says the state should expand its Medicaid program, according to a Kaiser Family Foundation survey. One of 17 states that did not expand Medicaid under the Affordable Care Act, Texas has the largest number of uninsured residents among U.S. states (21 percent of adults between the ages 19-64). An almost equal number of respondents said top priority should be given to lowering what individuals pay for care (61 percent), reducing maternal mortality (59 percent), lowering prescription drug costs (56 percent), increasing access to health insurance (55 percent), and increasing funding for mental health programs (54 percent).

Vermont

Vermont Passes Drug Transparency Law

By National Academy for State Health Policy | June 5, 2018

Vermont is one of several states that have recently enacted drug cost transparency laws, designed to make drug pricing information accessible so states can eventually take action on price gouging, reports NASHP. The new Vermont law requires state officials to identify 15 drugs whose wholesale acquisition costs rose by 50 percent or more over the last five years, and 15 drugs whose costs rose 15 percent or more over a 12-month period. Drug makers must justify the price increases to the state’s attorney general and the information will be made public, with proprietary information withheld.

For more state news and to get alerts for your state, visit the Hub state news page.

Recent Reports

New Peterson-Kaiser Charts Expose Trends in Prices for Health Services

By Peterson Center on Healthcare and Kaiser Family Foundation | May 2018

The Peterson Center on Healthcare and Kaiser Family Foundation released two chart collections as part of their Health System Tracker that explore how healthcare prices have changed over time. One collection reveals that prices have increased for a variety of health services more rapidly than general economic inflation. The other enables users to compare U.S. prices and use of health services to other countries.

Few Americans Receive All High-Priority, Appropriate Clinical Preventive Services

By Amanda Borsky, et al. | Health Affairs | June 2018

Only 8 percent of U.S. adults aged 35 and older had received all of the high-priority, appropriate clinical preventive services recommended for them as of 2015, according to a report published in Health Affairs. Nearly 5 percent of adults did not receive any such services, leading researchers to conclude that further delivery system-level efforts are needed to increase the use of preventive services.

High Spending Growth Rates for Key Diseases in 2000-14 Were Driven by Technology and Demographic Factors

By Abe Dunn, et al. | Health Affairs | June 2018

Thirty health conditions accounted for 42 percent of the growth in per capita spending between 2000 and 1014, according to this Health Affairs study. Primary drivers of spending growth included the use of new technologies, a shift toward the provision of preventive-type services and changing demographic factors. Importantly, the health benefits of many new technologies appeared to outweigh the associated expenditures on treatment, indicating that they are cost-effective and provide a net value to society.

The Comprehensive Primary Care Initiative: Effects on Spending, Quality, Patients and Physicians

By Deborah Peikes, et al. | Health Affairs | May 23, 2018

The Comprehensive Primary Care (CPC) Initiative, a healthcare delivery model developed by the CMS, tested whether multipayer support of primary care practices located across the U.S. would improve primary care delivery, improve care quality or reduce spending. A recent study evaluating the initiative’s effects on care delivery and outcomes for fee-for-service Medicare beneficiaries found that CPC slowed growth in emergency department visits by 2 percent. However, it did not reduce Medicare spending enough to cover care management fees; appreciably improve physician or beneficiary experience; or improve practice performance on a limited set of Medicare claims-based quality measures. 

The FDA is Approving More Generic Drugs than Ever Before, Faster Than Ever Before. Is it Enough to Lower Drug Costs?

By PwC Health Research Institute | June 2018

The Food and Drug Administration (FDA) has sought to stem high drug prices by encouraging generic competition, however other significant competitive hurdles may limit the agency’s impact on drug pricing. A report from PricewaterhouseCoopers revealed that generic competition won't affect 46 percent of the estimated sales revenue of the top 100 drugs through 2023. Though the FDA is approving generics at a much faster rate, very few blockbuster products are expected to go off-patent until 2022. Between 2018 and 2021, only 15 drugs with more than $1 billion in annual sales will lose patent protections. Additionally, many drugs going off-patent are biologics that will require biosimilars, which have been slow to develop. Other hurdles include: industry consolidation, by generic manufacturers and retail channels, and companies using Risk Evaluation and Mitigation Strategies (REMS) to prevent potential generic competitors from obtaining drug supplies.

Drug Makers Blamed for Blocking Generics Have Jacked Up Prices and Cost U.S. Billions

By Sydney Lupkin | Kaiser Health News | June, 2018

The Food and Drug Administration has posted a list of the pharmaceutical companies that have refused to let generic manufacturers buy the drug samples needed to test for bioequivalence, according to a story in Kaiser Health News. These purposeful delays in getting cheaper pharmaceutical competitors into the market cost Medicare and Medicaid nearly $12 billion in 2016. The analysis shows that the manufacturers that have withheld or refused to sell samples of their drugs have raised prices on those branded drugs by nearly 60 percent between 2012 and 2016. Congress is considering legislation that would allow generic manufacturers to sue brand-name manufacturers to compel them to provide the samples they need for bioequivalence testing. 

Evaluating the Impact of the Orphan Drug Act’s Seven-Year Market Exclusivity Period

By Ameet Sarpatwari, et al. | Health Affairs | June 2018

The Orphan Drug Act provides incentive for pharmaceutical companies to develop drugs for rare diseases by providing a seven-year exclusive marketing right. In a study published in Health Affairs, researchers assessed orphan drug exclusivity protections compared to regular patent protections for any new drug. The findings suggest that the Orphan Drug Act’s market exclusivity incentive has played a small role in protecting rare disease drugs from competition, yet there has been a substantial increase in rare disease drugs as a fraction of all new drug approvals.

Payers Moving to Value-Based Care Faster Than Expected

By Les Masterson | Healthcare Dive | June 2018

Insurers are moving away from fee-for-service towards value-based care more quickly than predicted, according to a report published on Healthcare Dive. Providers are finding that they need a long time to implement these programs; the majority need a year with a quarter needing up to two years to implement the programs, which in a fast-moving healthcare market might be problematic. Fee-for-service accounts for 37.2 percent of reimbursements, but Change Healthcare predicts this will drop to 26 percent by 2021. This shift will be difficult because providers will need to take on more risk. But, this trend is just beginning; more value-based contracting is expected in the coming years so providers will feel more pressure to move towards these risk-based contracts.

Pay for Success Financing and Home-Based Multi-Component Childhood Asthma Interventions: Modeling Results from the Detroit Medicaid Population

By Paula Lantz, George Miller and Corwin Rhyan | Milbank Quarterly | June 2018

“Pay for Success” models, which provide value to the public sector but are financed by private investors who receive government payouts if metrics in a performance-based contract are met, have gained popularity as an innovative way to address social needs. According to a new study, there is an estimated savings of up to $2.8 million to federal Medicaid and $1.3 million to state Medicaid when targeting children with home-based asthma interventions when they have had at least one hospitalization in the past year. Findings conclude that a multicomponent intervention that combines home-based remediation and medical case management to high-risk children with asthma has the great potential for financing through a Pay for Success model.

Promoting Better Health Beyond Healthcare

By Alissa Beers, et al. | Center for Health Care Strategies | May 2018

Interviews of more than 30 key informants representing programs in 19 states explored ways that states are collaborating across agencies to improve population health while accomplishing reciprocal goals in areas like transportation and education, according to a report from the Center for Health Strategies. The report outlines important lessons on how cross-sector partnerships can successfully advance health outcomes through empowering local communities, facilitating cross-sector learning and collaboration, supporting data-sharing, and cultivating cross-sector leadership. Additional case studies detailing successful partnerships in five states across the country (CA, LA, MA, OH, OR) provide a specific look at some cross-sector initiatives.

The Business Case for Racial Equity: A Strategy for Growth in Michigan; New Orleans, LA; Mississippi and New Mexico

By Ani Turner | Altarum and Kellogg Foundation | June 2018

Last month the national Business Case for Racial Equity was released, indicating $8 trillion more dollars in the U.S. economy could be realized by 2050 if the U.S. could eliminate racial disparities in education, healthcare, incarceration and employment, according to an Altarum/W.K. Kellogg Foundation report. The groups also released studies of Michigan, Mississippi, New Orleans and New Mexico indicating the similar levels of economic gain by eliminating these same racial disparities, and offers strategies to accomplish these goals. 

Increases in Cost-Sharing Payments Continue to Outpace Wage Growth

By Gary Claxton, et al. | Kaiser Family Foundation | June 2018

In this research brief from the Kaiser Family Foundation, researchers examined a sample of health benefit claims to calculate the average dollars paid towards deductibles, copayments and co-insurance. Findings show that between 2006 and 2016 average payments for co-insurance and deductibles rose yet average payments for copayments fell. Overall, findings indicate health insurance coverage continues to pay a large share of the cost of covered benefits, but patients in large employer plans are paying a somewhat greater share of their medical expenses out-of-pocket.

Do Academic Medical Centers Disproportionately Benefit the Sickest Patients?

By Laura Burke, et al. | Health Affairs | June 2018

In the discussions of lowering healthcare costs, some policymakers have argued that academic medical centers are costly and should be reserved for only the most complex patients. Research in this study however found that patients of all severity levels, including those with low-severity, had lower odds of 30-day re-admissions when treated at an academic medical center than compared to similar patients that are treated at a community hospital. Authors argue that limiting patients’ access to academic medical centers could lead to worse outcomes for all patients regardless of severity.

Visit the Hub website for background on strategies to address frequent ED utilizers, prescription drug competition, multi-stakeholder collaborations, state roles in healthcare value and more!

Commentary/News

Philly's Heroin Camps Illustrate How Housing Instability Hurts Health

By Antoinette Kraus | Philadelphia Inquirer | May 2018

Housing and health are inextricably linked and supportive housing services for the homeless population could result in cost savings, according to Antoinette Kraus’ op-ed in The Philadelphia Inquirer. People encamped in Kensington’s so-called “heroin camps” have been forced to clear out—many of them with comorbid opioid addiction and mental health conditions. Kraus asserts that shutting down encampments and connecting some people to treatment are only temporary fixes. Without access to housing, people are less likely to stick to a treatment plan, self-manage chronic conditions, take their medications and more likely to end up in the emergency department. To help vulnerable people find and keep housing, additional coaching and support are key. In one study of 1,272 chronically homeless individuals in Pennsylvania, taxpayers were projected to save almost $3 million dollars after providing supportive housing services.

Anthem’s Imaging Policy Could Cut into Hospitals’ Profits

By Tripp Baltz | Bloomberg Law | June 2018

Anthem Blue Cross Blue Shield’s new policy to pay for outpatient MRI’s and CT scans only when members get them at freestanding imaging centers, rather than in hospitals, is likely to cause a financial hit to hospitals, according to a story in Bloomberg Law. The policy was rolled out in nine states in 2017 and four more states will be added in 2018. According to the report, prices for imaging in hospitals is two to three times higher than in freestanding clinics. Under this new policy, unless the doctor inputs language indicating the imaging was medically necessary in the hospital, the insurance provider will not cover the cost if the images were done there. Rural areas that do not have freestanding clinics are exempt.

CMS Hospital Star-Rating System Has Been Wrong for Two Years, Health System Finds

By Maria Castellucci | Modern Healthcare | June 15, 2018

Since 2016, CMS has miscalculated star ratings in their Hospital Compare database, according to researchers at Rush University Medical Center in Chicago. The individual measures that make up a quality category are supposed to be weighted evenly, however the researchers at Rush found that just one measure in the safety-of-care category almost entirely determined how the hospital scored in that category. They also found that the safety-of-care category dramatically affected the overall star rating of the hospital and hence did not accurately reflect hospital performance. Rush researchers have long argued against the use of star-ratings reflecting performance as they say teaching hospitals are at a disadvantage when compared to specialty or community hospitals that see less complex, less sick patients. Hospital star ratings are used by payers to negotiate contracts and can be used by consumers to determine where to seek healthcare

Toward Hospital Global Budgeting: State Considerations

By Robert Murray | State Health and Value Strategies | May 2018

As state policymakers look to identify strategies to reduce the cost of healthcare while at the same time providing high-quality care, differing payment models have been under review. This research brief provides an overview of hospital global budgeting for state healthcare officials and outlines an approach between bundling services and global capitation, allowing state health officials to determine if global budgeting is an option in their state.

Sugar, Tobacco, and Alcohol Taxes to Achieve Sustainable Development Goals

By Robert Martin, et al. | The Lancet | May 2018

Evidence suggests that significantly raising tobacco taxes has been the single-most effective way to reduce tobacco use. Evidence shows the same is true for alcohol and for sugar taxes. The authors of this commentary in The Lancet argue that policymakers have not used this lever nearly enough to address broader public health issues.  A call to action for policymakers to adopt sugar, tobacco and alcohol taxes to increase public health is made.

Why Competition Won’t Bring Down Drug Prices

By Elisabeth Rosenthal | The New York Times | June 2018

History suggests that even with more competition, drug prices will not be reduced, according to this op-ed piece. The Trump Administration’s 50-point blueprint to bring down drug prices includes steps to increase competition in the market. However, Rosenthal cites a number of examples where pharmaceutical prices have risen substantially, even with competition in the market place. She argues that without guidance to correct for market failures, the blueprint by Trump’s Administration is not likely to have an impact on drug prices.