Research Roundup - September 2018


California’s Drug Transparency Law: Navigating the Boundaries of State Authority on Drug Pricing

By Katherine Gudiksen, et al. | Health Affairs | September 2018

California’s drug transparency law, passed in October 2017, aims to promote transparency in pharmaceutical pricing, enhance understanding about pharmaceutical pricing trends and help manage pharmaceutical costs. While it might not significantly reduce drug prices, the law represents a meaningful step towards navigating the challenging political and legal environments preventing state action to rein in drug prices. This Health Affairs article examines the legal and regulatory aspects of the law, compares it to other state efforts to address rising drug prices and provides recommendations for maximizing impact by coupling transparency with other incentives.

The California Competitive Model: How Has it Fared, and What’s Next?

By Glenn Melnick, Katya Fonkych and Jack Zwanziger | Health Affairs | September 2018

California has been successful in controlling rising healthcare costs by promoting price competition through market-based, managed care policies, according to a study in Health Affairs. However, recent data revealed that the state has not been able sustain its initial success in controlling growth in hospital prices. This article explores two trends that researchers suggest are responsible for the erosion of the conditions needed to sustain price competition within the state: hospital consolidation and regulations to ensure timely access to emergency hospital services that increased hospitals’ bargaining power over health plans.

One in Five Fewer Heart Attacks: Impact, Savings and Sustainability in San Diego County Collaborative

By Allen Fremont, et al. | Health Affairs | September 2018

Be There San Diego – a multi-stakeholder population health collaborative consisting of partners at the federal, state and local levels – was established in 2011 to reduce cardiovascular events through the uptake of best practices and patient and medical community activation. Before its inception, rates of hospitalization for heart attacks were about the same in San Diego County compared to the rest of the state. Since then, hospitalizations for acute myocardial infarction (AMI) have decreased by 22 percent in San Diego County versus 8 percent in the rest of the state, according to a study published in Health Affairs. Researchers estimate that 3,826 AMI hospitalizations were avoided and $86 million was saved in San Diego. The results suggest that a science-based health collaborative can improve community health outcomes while lowering costs.


This ACO Saved Medicare $5.6 million. Here's Why That's a 'Big Deal'

By Meredith Newman | Delaware News Journal | Sept. 17, 2018

Delaware ACO Aledade achieved $5.6 million dollars in Medicare savings in 2017, according to Delaware News Journal. Aledade credits the bulk of its improvements to its data portal which alerts primary care physicians to recent emergency department visits by their patients as well as needed patient tests and screenings. The ACO also provides on-call access to a doctor or nurse 24 hours a day, 7 days a week. As a result, emergency department visits have decreased by 9 percent among the ACO’s Medicare patients.  


Affordable Homes are Key to Mental Health Solutions

By Emily Allen | Post Register | Aug. 28, 2018

This op-ed highlights the connection between stable housing and behavioral health, particularly for Idahoans undergoing or finishing treatment. Given the shortage of affordable housing units in the state, these individuals are at high-risk of relapse – increasing the likelihood of costly emergency department visits, hospital admissions and incarceration. Supportive services provided by programs like Housing First can successfully break the cycle of recovery and crisis.


Expanded Medicaid Boosted Finances of Michigan's Poor

By Karen Bouffard | The Detroit News | Sept. 17, 2018

A University of Michigan study has revealed that enrollment in Michigan's expanded Medicaid program boosted the finances of many low-income residents as well as their healthcare status, according to The Detroit News. Residents who gained coverage through the state’s Healthy Michigan Plan have experienced fewer financial issues, like unpaid debts, medical bills, overdrawn credit cards, evictions and bankruptcies. One of the main goals of the Healthy Michigan Plan is to address social determinants of health in order to promote positive health outcomes. The greatest financial gains were experienced by people with chronic illnesses or ones who had a hospital stay or emergency department visit after they enrolled.


Oklahoma is Implementing a New Program that Only Pays Big Pharma Full Price if Their Drugs Work

By Charlotte Hu | Business Insider | Aug. 20, 2018

Oklahoma's Medicaid program is implementing a first-in-the-nation drug pricing policy where the state only compensates drug companies the full price for their medications if they work as advertised, according to Business Insider. While the program is designed to hold pharmaceutical companies accountable for the efficacy and safety of their drugs, participation is voluntary – potentially mitigating the desired effect. But drug companies that do sign up will have their effective products included in a “preferred drug list,” which could result in a greater long-term profits.


Philadelphia’s Tax on Sweetened Beverages Raises Prices of Taxed Products and Affects Product Availability

By Mathematica Policy Research | Sept. 10, 2018

Manufacturers, distributors and retailers in Philadelphia are passing the full amount of the city’s newly implemented sugar-sweetened beverage tax on to consumers, according to Mathematica Policy Research. Although the data revealed some variation across stores, the tax of 1.5 cents per ounce typically raised retail prices by roughly 1.5 cents per ounce. As a result of the tax, sweetened drinks are more expensive and less available in stores. These findings come at a time when a growing number of communities are considering beverage taxes as a solution to rising rates of obesity and diet-related chronic diseases, such as Type 2 Diabetes.

South Carolina

South Carolina Bolsters Rural Care Access by Letting Nurse Practitioners Travel Farther

By Mary Katherine Wildeman | Post and Courier | Aug. 14, 2018

In an effort to better serve rural populations, South Carolina will now allow nurse practitioners (NPs) to travel further to serve clients and increased, from 3 to 6, the number of NPs a physician can supervise. Previously, NPs had to practice within 45 miles of the supervising physician. The new law, which took effect July 1, has the potential to increase access to care in all 46 of South Carolina’s counties which are considered “medically underserved” by the State Department of Health and Environmental Control, according to the Post and Courier. 


Vermont Pilot Program Seeks to Lessen Hospital Stays for Medicare Patients

By Liora Engel-Smith | Sentinel Source | Aug. 21, 2018

Medicare rules dictate that patients must stay at a hospital for at least three consecutive days before the program will cover treatment at a skilled nursing facility. However, OneCare Vermont, a statewide network of insurers and medical facilities, granted Brattleboro Memorial Hospital and three local facilities a waiver that reduces that requirement to one day, reports the Sentinel Source. The waiver is expected to decrease unnecessary hospital stays, cut costs and potentially improve quality by protecting patients from hospital-borne infections.


For more state news and to get alerts for your state, visit our state news section.

Recent Reports

It was a banner month for ACOs -- multiple studies demonstrated savings despite differing numbers. A recent blog post by Milbank Memorial Fund President Christopher Koller highlights studies and discusses potential reasons for variation.


Medicare Spending After Three Years of the Medicare Shared Savings Program

By J. Michael McWilliams, et al. | New England Journal of Medicine | Sept. 5, 2018

The Medicare Shared Savings Program (MSSP) has been in place for three years, providing incentives to healthcare providers to lower spending for Medicare patients while achieving high performance on a set of quality measures. Researchers analyzed Medicare claims from 2009 to 2015 to compare changes in Medicare spending for patients in accountable care organizations (ACOs) before and after entry into the MSSP, according to a study in NEJM. The researchers discovered that MSSP participation was associated with reductions in spending for the physician group ACOs. These reductions grew larger with longer participation in the program and were significantly greater than the reductions from hospital-integrated ACOs. By 2015, these ACOs decreased average per patient spending by $474.

CMS Data Shows ACOs Saved Medicare $314M in 2017

By Evan Sweeney | FierceHealthcare | Aug. 31, 2018

New data released by the Centers for Medicare and Medicaid Services (CMS) show that ACOs generated hundreds of millions in savings in 2017, according to an article in FierceHealthcare. The data show that 472 ACOs--caring for 9 million Medicare beneficiaries--recorded $1.1 billion in gross savings, including $314 million saved by ACOs in the Shared Savings Program (after accounting for shared savings payments). The article notes this contradicts CMS Administrator Seema Verma’s assertion that the program is losing money on ACOs that only share upside risk. As a result of this perception, CMS released a proposed rule that would shorten the path to two-sided risk to two years and cut shared savings in half. Surveys conducted by the National Association of ACOs (NAACOs) have revealed that these ACOs would leave the program if asked to take on more risk. 

CMS Underestimated Medicare ACOs' Savings

By Maria Castellucci | Modern Healthcare | Sept. 11, 2018

A study commissioned by the National Association of ACOs (NAACOs) found that the Medicare Shared Savings program generated $1.84 billion in savings over three years, which is nearly twice the savings that CMS data shows, according to Modern Healthcare. This discrepancy may be due to the fact that CMS likely does not conduct analysis comparing ACO spending to spending on Medicare beneficiaries not enrolled in ACOs. Leadership at the Institute for Accountable Care hopes that this new study changes the narrative around whether non-risk bearing ACOs can produce savings.

More Than Half of Americans Have Received a Surprise Medical Bill

By Alex Kacik | Modern Healthcare | Aug. 30, 2018

New survey data reveal that more than half of American adults have received a surprise medical bill for a service they thought would be covered by insurance. A majority of these surprise charges were for physician services, followed closely by laboratory tests, according to an article in Modern Healthcare. Low literacy around benefit design, deductibles and networks can also exacerbate the issue. Potential solutions could involve requiring better network transparency and implementing legislation that protects consumers from surprise medical bills.

Surprise Medical Bills are What Americans Fear Most in Paying for Healthcare

By Jordan Rau | The Lund Report | Sept. 5, 2018

A Kaiser Family Foundation poll found that 67 percent of people worry about unexpected medical bills--more than they fear insurance deductibles, prescription drug costs or paying for the basics in life. Thirty-nine percent of people surveyed said they received a surprise medical bill within the previous 12 months, with more than 12 percent of them reporting bills that were $2,000 or more, according to analysis from The Lund Report.

What Should be Done About the High Cost of Prescription Drugs?

By West Health Institute and NORC at the University of Chicago| September 2018

A survey conducted by West Health Institute, using analytics from NORC, found that Sixty five percent of Americans are extremely or very concerned about the cost of prescription drugs, with 82 percent indicating interest in giving Medicare the ability to negotiate with manufacturers to reduce drug prices, according to a report from West Health Institute and NORC at the University of Chicago. Other proposals that garnered the support of a majority of respondents included allowing more generic competition to enter the market, increasing transparency about pricing practices, importing drugs from Canada and eliminating direct to consumer prescription drug advertisement. Additionally, 80 percent of respondents stated that the cost of prescription medications should be a priority for congressional candidates.

Healthcare Spending Under Employer-Sponsored Insurance: A 10-Year Retrospective

By Amanda Frost, et al. | Health Affairs | Sept. 19, 2018

Total per capita spending on health services for enrollees in employer-sponsored plans and enrollee out-of-pocket spending increased by 44 percent and 43 percent, respectively, from 2007 to 2016, according to an analysis published in Health Affairs. Spending on outpatient services grew more quickly compared to spending on the other types of services. The authors noted that annual growth rates for four major service categories were lower between 2010 and 2013 compared to the previous three-year period. Some factors that may have affected growth rates include: the Great Recession, the introduction of costly new drugs and medical technology, the continuing shift in hospital care from inpatient to outpatient settings, and the increasing use of high-deductible health plans.

Improved Medication Adherence Could Save Billions in Hospital Costs

By Paige Minemyer | FierceHealthcare | Sept. 20, 2018

A new report from The National Council of Behavioral Health’s Medical Director Institute estimated that half of people fail to take medication as prescribed and that improvements to adherence could save $2 billion by 2025 in hospital costs alone. Some proposed solutions include better provider communication, increased used of risk assessment, greater use of long-lasting injectables, increased patient access to pharmacy services and enhanced data-sharing, according to analysis from FierceHealthcare. However, payers may be unwilling to cover services that would lead to greater savings in the long-term.

Visit the Hub website for background on ACO’s, healthcare cost drivers, prescription drug spending, surprise medical bills, transparency initiatives, social determinants of health and more!


Half of U.S. Doctors Have Pay Tied to 'Value-Based Metrics'

By Bruce Japsen | Forbes | Sept. 19, 2018

A new survey has revealed that nearly half of the nation’s physicians report compensation tied to “value-based metrics” as fee-for-service medicine gives way to alternative payment models that link pay to quality and health outcomes. The increasing amount of pay tied to value-based metrics is a significant jump from 42 percent of physicians in 2016, according to Forbes. Insurers like Aetna, Cigna, Humana, UnitedHealth Group and Blue Cross and Blue Shield plans are also increasingly paying a larger share of their reimbursements in value-based care models. However, doctors aren’t convinced value-based care models are the answer. Survey data showed value-based payments account for just 14 percent of their total income and more than half of doctors don't believe they will improve quality of care or reduce costs.

All-Payer Claims Databases: A Work in Progress

By Tana Bannow | Modern Healthcare | Sept. 15, 2018

Brown University is drilling into the state's all-payer claims database (APCD) to measure healthcare performance and figure out how to make the information useful to consumers, payers and providers, according to Modern Healthcare. Though 16 states had APCDs up and running as of earlier this year and another two had plans in place to do so, the National Conference of State Legislatures says it's still too early to say whether they've helped states control costs for patients or payers. Though experts caution that APCDs don’t lower healthcare costs, they can provide actionable information. APCDs have been used to compile important analyses, such as a report on inadequate treatment for hepatitis C patients in Colorado, a study in Arkansas that examined what conditions people are using medical marijuana for, and multiple studies on opioid prescribing. Questions remain about whether patients will use price transparency tools after a study revealed that only 11 percent of more than 70,000 families offered the Truven Treatment Cost Calculator used the tool at least once.

Sick of Confusing Medical Bills?

By Penelope Wang | Consumer Reports | Aug. 1, 2018

Two out of three people have had at least one medical billing issue within the past two years, such as higher-than-expected charges, unclear statements, and bills arriving months late, according to a Consumer Reports survey. Respondents often paid bills they weren’t sure they owed due to confusion, uncertainty about whether their efforts to dispute them would make a difference and fear that not paying would hurt their credit record. From the provider perspective, bill processing can cost a physician more than $99,000 a year in labor and overhead expenses and can be more costly and time consuming for emergency departments and other specialties. Given widespread inefficiencies, complex coding requirements and a fragmented healthcare system, it’s easy to see how the medical billing process is a major driver of U.S. healthcare spending.

The Remedy for Surprise Medical Bills May Lie in Stitching up Federal Law

By Michelle Andrews and Julie Appleby | Kaiser Family Foundation | Sept. 10, 2018

The simplest way to stop surprise bills may be through restrictions imposed by federal legislation that would apply to both state-regulated policies sold by insurers and employer-sponsored self-funded health plans, which are federally regulated, according to the Kaiser Family Foundation. An analysis found that about 60 percent of workers who get coverage through their job have self-insured plans, and 18 percent of people with coverage through a large employer who were admitted to the hospital in 2016 received at least one bill from an out-of-network provider. Federal legislation may be able to close a loophole in the Affordable Care Act that allows out-of-network emergency doctors, hospitals and other providers, such as ambulance services, from balance billing consumers for the amounts their health plan didn’t pay. Currently, more than 20 states have laws protecting consumers from surprise bills if they’re covered by a state-regulated insurance policy, but state legislation varies. 

States are Trying to Lower Drug Prices. Here's How Their Efforts are Being Thwarted

By Caitlin Burke | FierceHealthcare | Sept. 13, 2018

States are taking steps to address high drug prices in the absence of federal action, but their efforts have been met by heavy opposition, according to an article in FierceHealthcare. One such effort in Massachusetts, which sought a waiver for its Medicaid program confronting new blockbuster therapies that have received accelerated approval through the FDA and a steep price tag, was denied by CMS. In the same request, Massachusetts sought a closed formulary, where only a few drugs in each category receive coverage to encourage competitive pricing. Instead, CMS proposed an alternative: Massachusetts would have to negotiate the price of every drug it covered and forgo all price reductions federally mandated for Medicaid. Earlier this year, Maryland, Nevada and California passed bills to challenge drug pricing. But, industry trade group PhRMA filed suit against the bills in California and Nevada, and the Association for Accessible Medicines sued in Maryland. However, some state actions, like one in Oregon requiring drug makers who hike their drug prices 10 percent or more to tell the state about their costs, have been signed into law.

Behind Your Rising Healthcare Bills: Secret Hospital Deals That Squelch Competition

By Anna Wilde Mathews | Wall Street Journal | Sept. 18, 2018

A health plan that excludes a costly system can be more than 10 percent less expensive for consumers and employers, according to insurance-industry officials, but dominant hospital systems use an array of secret contract terms to protect their turf and block efforts to curb healthcare costs, according to an article in the Wall Street Journal. Hospital care is the largest single component of healthcare spending in the U.S. and accounts for more than $1 trillion a year, roughly three times what is spent annually on prescription drugs. Additionally, hospital prices grew at about three times the rate of inflation between 1960 and 2016. A lack of transparency around contract negotiations and anti-steering clauses that prevent insurers from steering patients to less expensive or higher quality care serve to exacerbate the issue. 


Visit the Hub website for background on healthcare cost drivers, prescription drug spending, surprise medical bills, all-payer claims databases and more!