CBO Provides A Roadmap For Improving AHCA

The future of the American Health Care Act (AHCA), the GOP-drafted plan to repeal and replace the Affordable Care Act (ACA), is unclear after the bill was pulled before the House of Representatives could vote on it. But the debate over the ACA and proposals to replace several of its key provisions is unlikely to remain off the national agenda permanently. The individual insurance market under the ACA’s rules is performing poorly in several states around the country, and the situation is unlikely to improve on its own without policy intervention.

It remains valuable, therefore, to understand what would happen if AHCA in fact became law, and what could be done to improve it or a new reform proposal. The best place to start is with the cost estimate of the plan produced by the Congressional Budget Office (CBO).

Trump administration officials, some members of Congress, and assorted commentators have criticized CBO for this estimate, arguing that it is a fundamentally inaccurate assessment of what would occur if AHCA passed. This criticism is misplaced. While some of CBO’s assumptions are indeed questionable, there is little doubt that the agency’s bottom line assessment is basically correct: The bill, as currently structured, would trigger a rise in premiums in the short-run, a sharp increase in the number of people without insurance over the next two years, and then also a steady increase in the number of uninsured Americans over the following eight years.

Instead of trying to discredit this finding, the authors of the legislation would be better off fixing the bill. CBO’s estimate provides a roadmap for what needs to be done to improve the chances the bill will produce the results its authors intend.

AHCA

The American Health Care Act attempts to meet the political imperative of repealing the ACA while retaining important provisions needed to maintain a functioning non-group insurance market and instituting additional reforms. The plan makes significant Medicaid reforms by eliminating the federal government’s enhanced matching rate for the ACA-authorized expansion population and replacing the current matching grant formula with caps on federal spending tracked to per capita enrollment. AHCA replaces the ACA’s income-adjusted premium credits with age-adjusted credits that would be phased out for upper income households and provides a $100 billion fund over 10 years to help stabilize the individual insurance market by subsidizing high-cost enrollees. It also repeals most of the tax increases used to partially fund the ACA’s new spending.

The AHCA eliminates the tax penalties associated with both the individual and employer mandates of the ACA, but it retains most of the insurance rules of the ACA, including the requirement of community-rated premiums (with age adjustments); it also retains the requirement that insurers provide coverage, and make it renewable, to all potential customers, regardless of their health status.

Changing the ACA’s insurance rules in a coherent and systematic manner in AHCA was difficult because the proposal’s sponsors were trying to pass the measure using the budget reconciliation process. A budget reconciliation bill can pass the Senate with a simple majority of 51 votes rather than the usual 60 votes often needed for other legislation. Thus, AHCA might be able to pass in the Senate, which Republicans currently control with 52 seats, without the support of any Democrats.

But budget reconciliation’s rules restrict what can be included in the legislation to matters directly affecting federal spending or revenue. Changes to the rules governing the provision of private health insurance were unlikely to survive a challenge by opponents of the proposal. However, linking the provision of new credits to the re-written insurance rules might have increased the chances such rules could survive a challenge in the Senate.

AHCA is thus an awkward proposal. It effectively eliminates the individual mandate while leaving in place the ACA’s rules prohibiting the use of health status in setting premiums or determining what is covered by insurance. The authors of the measure propose “continuous coverage protection” as a substitute for the individual mandate. Under that provision, insurers would charge a one-year, 30 percent surcharge on premiums to anyone who has experienced more than a two-month break in their insurance coverage.

This penalty is far too weak to work. A young, healthy consumer experiencing a break in coverage has a strong incentive to stay uninsured as long as possible, because the penalty he faces when he reenters the market is the same regardless of how long the spell without insurance lasts. Each year that goes by without paying insurance premiums is savings to him that he keeps. As long as he stays healthy, the savings over time can be substantial even if he pays occasional medical bills out of pocket. Once he decides to purchase health insurance, the consumer will be required to pay a 30 percent surcharge on his premium for one year. After that, the consumer will once again pay without penalty the same community rate as everyone else of the same age and gender.

Arguably, the AHCA’s surcharge provision is even weaker than the ACA’s individual mandate provision. AHCA also substitutes less generous age-based credits for the income-adjusted subsidies of the ACA for lower-income households, and repeals enhanced funding to the states for the Medicaid expansion population. As a result, younger and healthier consumers would have less of an incentive to buy coverage. There would also be more people facing high health costs seeking individual coverage who previously were covered by Medicaid.

That is a recipe for even more adverse selection, driving up premiums for those who remain insured through the individual market. As a result, AHCA would require these households to pay more both for insurance and for accessing medical care than they would have under the ACA.

Even a cursory reading of AHCA would conclude that the bill would not correct the adverse selection problems now plaguing the ACA but would make them marginally worse. Moreover, the proposal’s more modest assistance for insurance enrollment for low-income households would lead to an increase in the number of people in those households who would go without insurance.

CBO’s Assessment

Not surprisingly, CBO’s analysis of the AHCA (as changed by last-minute amendments adopted by the House Rules Committee) confirms that a commonsense reading of what would occur under the proposal is right. The following were the key findings in the agency’s cost estimate:

• Deficit Reduction. CBO estimated that the bill would reduce spending by $1.1 trillion over the coming decade and taxes by $1.0 billion over the same period, producing net deficit reduction of $150 billion. The reduced spending is concentrated in the proposal’s substantial reform of the Medicaid program.
• Coverage. CBO expects AHCA to trigger an immediate jump of 4 million uninsured people in 2017, due to repeal of the tax penalty associated with the individual mandate. In 2018, the agency projects an additional 14 million would go without insurance, and by 2026 the number would be 24 million people.
• Premiums. CBO projects AHCA would lead to a 15 to 20 percent rise in premiums for insurance sold in the individual market over the period 2018 and 2019, relative to the premiums that would occur under the ACA. By 2026, however, premiums under the AHCA would be lower, due mainly to relaxation of rules requiring minimum actuarial values and changes in the profile of the risk pool.
• The Stability of the Market. Despite many predictions to the contrary, CBO projects that the individual insurance market under the ACA, as well as under AHCA, would be viable, in that the customer base would be sufficient to prevent a death spiral. The main reason for this finding is that the subsidies under current law, and also under the proposal, would be sufficient to encourage enough consumer demand among healthy individuals to keep premiums in check.

While it seems indisputable that CBO’s basic findings are directionally correct, there are some assumptions in their assessment that seem unlikely to be accurate:

• Medicaid Expansion. To assess AHCA, CBO used its March 2016 baseline instead of an updated baseline for 2017 that is not yet ready. Under the old baseline, CBO assumed that some additional states would adopt the Medicaid expansion in the coming years. CBO estimated that 5 million more people would be enrolled in Medicaid by 2026 as additional states expanded the program under the ACA. In the current political environment it is highly unlikely that more states would expand Medicaid even with no change in law. As a result, CBO’s estimate makes AHCA look like it is taking away insurance coverage from 5 million people who do not have it today under Medicaid but who CBO thinks will have it in the future if the ACA is not repealed.
• Exchange Enrollment. CBO’s March 2016 baseline assumed there would be 18 million people getting insurance through the ACA’s exchanges in 2018. That is very unlikely given that enrollment in 2017 is 2 million, down slightly from the 12.7 million people enrolled in 2016. The exchanges have experienced mediocre enrollment growth since they began in 2014, and the CBO baseline has been slow in adjusting to that poor performance. Again, the inflated number in the exchanges is likely making AHCA’s effect on coverage appear worse than it would be in reality.

Needed Adjustments

CBO’s analysis of the AHCA is extremely concerning. Although one might dispute the specific numbers, the estimate demonstrates that AHCA as currently designed would lead to substantial loss of insurance coverage, particularly among lower-income families. Rather than criticizing the agency for delivering bad news, policymakers should examine the analysis to identify provisions that should be modified in order to produce a more sustainable reform — and to get a better assessment from CBO.

If AHCA is revisited by Congress, it should be amended substantially to incorporate needed changes aimed primarily at giving families greater access to more affordable health insurance while providing more help to those who most need it.

Higher Financial Penalties for Failure to Maintain Coverage

The one-year, 30 percent surcharge added to premiums for those who are not continuously covered is too weak to discourage individuals from waiting until they expect to have substantial medical bills to enroll in insurance. AHCA’s replacement of the individual mandate with the continuous coverage requirement is a major reason CBO assumes large numbers of healthy people will drop out of insurance. However, the ACA’s mandate also imposes a penalty for those who fail to maintain coverage which is too weak to bring younger, healthier persons into exchange plans. Moreover, that mandate is politically unsustainable.

The AHCA approach is an attempt to replace governmental force with personal responsibility. Under AHCA, no one is required to have insurance, but there are financial consequences for choosing to remain uninsured. However, rather than an arbitrary fixed surcharge, the penalty should be commensurate with the added costs imposed on the health system when such people decide not to buy insurance. For example, the penalty could include a premium surcharge that increases with time out of the market, and a waiting period could be imposed before benefits are paid. Such an approach would eliminate the perverse incentive of a fixed penalty that encourages individuals to remain uninsured, avoiding premium payments, for as long as possible.

The ‘No-Premium’ Health Insurance Option and Automatic Enrollment

Another factor reducing CBO’s estimate of the AHCA’s take-up of insurance is some people’s unwillingness to pay a premium that is larger than the value of their credit. A comprehensive revision of AHCA could broaden the types of plans offered by insurers to include at least one plan available with a premium exactly equal to the credit. Such a plan would provide protection against catastrophic losses without requiring first-dollar coverage for routine expenses. To further improve insurance take-up, AHCA should allow states to automatically enroll uninsured individuals into “no-premium” plans, with an option to change plans or opt out entirely.

Such a change would be controversial. CBO has stated that insurance provides financial protection against high-cost, low-probability events, but noted that such policies must also meet specific requirements established in the law. The ACA requires that health plans cover 10 essential health benefits, be equal to the scope of benefits provided under a typical employer plan, and meet actuarial value standards. Future legislation would clarify how “no-premium” plans would satisfy federal and state insurance requirements.

A Compromise On Medicaid Eligibility Within A Reformed Program

CBO estimates that the Medicaid expansion allowed by the ACA has resulted in 50 percent of the eligible population enrolling in the program. AHCA could be revised to strike a compromise between the expansion and non-expansion states that would increase overall Medicaid coverage and provide fairer funding for state Medicaid programs.

A new uniform national income standard could be set at a level that would free up resources to provide stronger federal support for all state Medicaid programs. Non-expansion states would not be required to expand their Medicaid eligibility to the new standard, but they would receive additional funding through a block grant. Expansion states would likely phase down their programs to the new income standard. In addition, states would be given more control over the program, allowing them to operate Medicaid in ways that promote individual responsibility and ease the transition to private health coverage.

Additional Support For Low-Income Households Above Medicaid Eligibility

The sizeable reduction in non-group insurance coverage estimated by CBO is due in large part to the AHCA’s shift from an income-related premium subsidy to one that varies only by the age of the enrollee. Subsidies ranging from $2,000 to $4,000 per person are not sufficient to make non-group insurance affordable for many with low incomes. AHCA should be revised to provide additional support for these families.

AHCA already includes a $100 billion Patient and State Stability Fund that helps finance the extraordinary costs of high-risk individuals buying non-group insurance; this fund would help reduce average premiums for everyone in that market. In addition, a new fund could be established that supplements premium tax credits for persons below a specific income threshold.

Looking Forward

The failure to pass the AHCA in the early weeks of the Trump administration does not mark the end of the GOP-led effort to reform health financing. New efforts may be made to roll back the ACA substantially and to replace its key provisions with a different framework. Whenever such efforts are initiated, Republicans need to publicly embrace changes to the AHCA that would produce better results than the plan that was pulled back from the House vote. The GOP now has time to pursue a much more deliberate approach to developing such a plan, and to carefully consider various alternative policy options.

CBO can be an indispensable source of help in this process. The agency regularly works with the key committees and leadership offices to provide objective, preliminary assessments of draft plans before they are released for public consumption. Instead of condemning or ignoring CBO, congressional leaders would be well-advised to take full advantage of the agency’s analytic expertise to make the needed adjustments to the AHCA plan. That will ensure all sides are better prepared for serious debate when health policy again moves back onto center stage.

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Health Affairs’ April Issue: Maternity Coverage, Children, Disability & More

The April issue of Health Affairs, a variety issue, contains studies about hospital pricing, health coverage for pregnant immigrant women, seat-belt use in the United States, and the amount of US physicians' clinical time spent on computer-related tasks.

Hospital chargemasters: how much do they affect what patients and insurers actually pay?

Over the past few decades, researchers have noted a widening gap between official hospital list prices and the amounts actually paid by patients and insurers. To better understand the role of the chargemaster, Michael Batty of the Federal Reserve Board and Benedic Ippolito at the American Enterprise Institute examined data covering the period 2002–14. According to the authors, basic hospital characteristics were strong predictors of which hospitals set higher list prices: A large, for-profit, urban hospital that was a member of a chain had list price markups that were 360 percent higher than those of a small independent, rural, nonprofit hospital. The authors found that higher list prices were also correlated with higher payments from the uninsured and privately insured patients. In the case of the uninsured, they used the passage of California's Hospital Fair Pricing Act to provide causal evidence that hospitals with higher list prices generated higher payments from patients. The authors found that list prices are an increasingly important indicator of which hospitals ultimately receive higher payments—which suggests potential causal channels for this relationship.

Effects of insurance coverage for pregnant immigrant women in the United States

Despite federal restrictions on coverage for recent immigrants and undocumented immigrants in the United States, the 2002 Children's Health Insurance Program (CHIP) unborn child option allowed states to use federal funding to provide health services to mothers during pregnancy and delivery-related care regardless of their immigration or legal status. Laura Wherry of the University of California, Los Angeles, and coauthors used 1998–2013 data from the National Center for Health Statistics to compare pregnancy-related care and infant health outcomes in states expanding coverage for pregnant immigrant women with those in states that did not. The study found an approximately one-third decrease in the share of immigrant women with low education who received no prenatal care in states expanding access to care compared to states that did not. However, the authors did not find significant changes in the incidence of low birthweight, preterm birth, being small for gestational age, or infant death when comparing the same groups. They conclude that the results do not rule out the possibility of longer-term improvements in the health of these children and that the goal of achieving sustained health improvements may benefit from other programmatic tactics.

Also of interest:

• Low-Income Children With Chronic Conditions Face Increased Costs If Shifted From CHIP To Marketplace Plans; Alon Peltz and coauthors from Yale University School of Medicine.

PRACTICE OF MEDICINE: Half of physicians' clinical time spent on computer tasks

Measuring how physicians spend their clinical time is essential in making clinic staffing decisions and improving the accuracy of payment for physician services. Ming Tai-Seale of the Palo Alto Medical Foundation Research Institute and coauthors analyzed electronic health record (EHR) data for the period 2011–14 from nearly 500 physicians in a community-based health care system in one of the first studies using such data to understand how physicians spend their time. The authors found that each day the physicians logged an average of 3.08 hours on face-to-face office visits (49 percent of their time) and 3.17 hours (51 percent of their time) on desktop medicine activities, which included communicating online with patients, ordering tests, reviewing test results, sending staff messages, and other tasks (see the exhibit below). Since physicians are reimbursed for office visits, lab work, and medical procedures but not for desktop medicine tasks, the authors suggest that their findings highlight the misalignment of the current fee-for-service payment policy and the potential for physician burnout with EHR use. This study is the first of Health Affairs' new series, The Practice Of Medicine, which explores the broad practice environment and how features of that environment affect practitioners. The series is supported by the Physicians Foundation.

DATAWATCH:  Seat-belt noncompliance still a problem in most US counties

Seat-belts have proven to significantly reduce harm from motor vehicle crashes, and the US Department of Health and Human Services' Healthy People 2020 initiative includes the goal of 92 percent or greater seat-belt compliance for front-seat occupants. Jacob Sunshine and coauthors of the University of Washington examined the results of a longitudinal telephone survey conducted by states in collaboration with the Centers for Disease Control and found that the national prevalence of compliant seat-belt use (those who responded that they "always" used them) was 85.9 percent in 2012, the latest year in which county level information was available. While this represents an increase of 8.4 percent from 2002, only 2.2 percent of US counties had achieved the Healthy People 2020 objective. Among the authors' findings: counties within states with primary enforcement laws (officers may issue a ticket for seat-belt noncompliance even if there is no other traffic infraction) have overall compliance rates that are more than 10 percentage points higher than rates in counties without such laws. According to the National Highway Traffic Safety Administration, in 2015 deaths from automobile crashes had the largest percentage one-year increase since 1966. To help address this growing problem, the authors recommend that primary seat-belt enforcement laws be adopted by remaining holdout states.

Also of interest:

• DATAWATCH: Most Americans Have Good Health, Little Unmet Need, And Few Health Care Expenses; Marc Berk of Health Affairs and Zhengyi Fang of Social and Scientific Systems.

Disparities in cesarean births in Mexico

Mexico is the country in the Americas with the second-highest prevalence of cesarean deliveries (second only to Brazil). Sylvia Guendelman of the University of California, Berkeley and coauthors used 2014 Mexican birth certificate data to perform population-level data analyses on more than 600,000 first-time mothers. According to the authors, 48.7 percent of these births were cesarean deliveries. Individual Mexican states' rates ranged widely but presented no clear geographical patterns. The study also revealed that enrollees in Seguro Popular, the public health insurance program, had lower cesarean birth rates than those in other insurance programs and those without insurance. The widest difference, however, was in the delivery location: cesarean rates in private birthing facilities occurred almost twice as often as those taking place in other facilities. "Mexico's continuing transition toward universal health coverage through Seguro Popular…may help curb the cesarean epidemic," the authors conclude. "To do this, the health care system must tackle access barriers to public hospitals…, increase the number of qualified staff members to oversee and support women through the labor process, and educate women about the benefits of vaginal birth."

Also of interest:

• Industry-Led Access-To-Medicines Initiatives In Low- And Middle-Income Countries: Strategies And Evidence; Peter Rockers of the Boston University School of Public Health and coauthors.

The impact of ACA Medicaid expansion on dental visits: mixed results

Dental coverage for adults is an optional benefit under Medicaid, one that about half of states offer.  With thirty-one states and the District of Columbia expanding Medicaid eligibility under the Affordable Care Act (ACA), how many more low-income Americans sought dental care? To answer this question, Astha Singhal of Boston University and coauthors compared 2010 and 2014 data collected by the Centers for Disease Control and Prevention. The study found that 1.5 million more low-income adults reported having a dental visit in 2014 than in 2010. However, among states expanding Medicaid that offer dental benefits, there was a decline in usage among adults with children, who had enjoyed this access before the ACA's implementation. These results provide evidence that the addition of new low-income patients may be straining the capacity of providers willing to treat low-income patients and that additional policy initiatives may be needed to expand the size of this subset of the dental care delivery system.

from Health Affairs BlogHealth Affairs Blog http://ift.tt/2oRZ9T2

Health Affairs’ April Issue: Maternity Coverage, Children, Disability & More

The April issue of Health Affairs, a variety issue, contains studies about hospital pricing, health coverage for pregnant immigrant women, seat-belt use in the United States, and the amount of US physicians’ clinical time spent on computer-related tasks.

Hospital chargemasters: how much do they affect what patients and insurers actually pay?

Over the past few decades, researchers have noted a widening gap between official hospital list prices and the amounts actually paid by patients and insurers. To better understand the role of the chargemaster, Michael Batty of the Federal Reserve Board and Benedic Ippolito at the American Enterprise Institute examined data covering the period 2002–14. According to the authors, basic hospital characteristics were strong predictors of which hospitals set higher list prices: A large, for-profit, urban hospital that was a member of a chain had list price markups that were 360 percent higher than those of a small independent, rural, nonprofit hospital. The authors found that higher list prices were also correlated with higher payments from the uninsured and privately insured patients. In the case of the uninsured, they used the passage of California’s Hospital Fair Pricing Act to provide causal evidence that hospitals with higher list prices generated higher payments from patients. The authors found that list prices are an increasingly important indicator of which hospitals ultimately receive higher payments—which suggests potential causal channels for this relationship.

Effects of insurance coverage for pregnant immigrant women in the United States

Despite federal restrictions on coverage for recent immigrants and undocumented immigrants in the United States, the 2002 Children’s Health Insurance Program (CHIP) unborn child option allowed states to use federal funding to provide health services to mothers during pregnancy and delivery-related care regardless of their immigration or legal status. Laura Wherry of the University of California, Los Angeles, and coauthors used 1998–2013 data from the National Center for Health Statistics to compare pregnancy-related care and infant health outcomes in states expanding coverage for pregnant immigrant women with those in states that did not. The study found an approximately one-third decrease in the share of immigrant women with low education who received no prenatal care in states expanding access to care compared to states that did not. However, the authors did not find significant changes in the incidence of low birthweight, preterm birth, being small for gestational age, or infant death when comparing the same groups. They conclude that the results do not rule out the possibility of longer-term improvements in the health of these children and that the goal of achieving sustained health improvements may benefit from other programmatic tactics.

Also of interest:

• Low-Income Children With Chronic Conditions Face Increased Costs If Shifted From CHIP To Marketplace Plans; Alon Peltz and coauthors from Yale University School of Medicine.

PRACTICE OF MEDICINE: Half of physicians’ clinical time spent on computer tasks

Measuring how physicians spend their clinical time is essential in making clinic staffing decisions and improving the accuracy of payment for physician services. Ming Tai-Seale of the Palo Alto Medical Foundation Research Institute and coauthors analyzed electronic health record (EHR) data for the period 2011–14 from nearly 500 physicians in a community-based health care system in one of the first studies using such data to understand how physicians spend their time. The authors found that each day the physicians logged an average of 3.08 hours on face-to-face office visits (49 percent of their time) and 3.17 hours (51 percent of their time) on desktop medicine activities, which included communicating online with patients, ordering tests, reviewing test results, sending staff messages, and other tasks (see the exhibit below). Since physicians are reimbursed for office visits, lab work, and medical procedures but not for desktop medicine tasks, the authors suggest that their findings highlight the misalignment of the current fee-for-service payment policy and the potential for physician burnout with EHR use. This study is the first of Health Affairs’ new series, The Practice Of Medicine, which explores the broad practice environment and how features of that environment affect practitioners. The series is supported by the Physicians Foundation.

DATAWATCH:  Seat-belt noncompliance still a problem in most US counties

Seat-belts have proven to significantly reduce harm from motor vehicle crashes, and the US Department of Health and Human Services’ Healthy People 2020 initiative includes the goal of 92 percent or greater seat-belt compliance for front-seat occupants. Jacob Sunshine and coauthors of the University of Washington examined the results of a longitudinal telephone survey conducted by states in collaboration with the Centers for Disease Control and found that the national prevalence of compliant seat-belt use (those who responded that they “always” used them) was 85.9 percent in 2012, the latest year in which county level information was available. While this represents an increase of 8.4 percent from 2002, only 2.2 percent of US counties had achieved the Healthy People 2020 objective. Among the authors’ findings: counties within states with primary enforcement laws (officers may issue a ticket for seat-belt noncompliance even if there is no other traffic infraction) have overall compliance rates that are more than 10 percentage points higher than rates in counties without such laws. According to the National Highway Traffic Safety Administration, in 2015 deaths from automobile crashes had the largest percentage one-year increase since 1966. To help address this growing problem, the authors recommend that primary seat-belt enforcement laws be adopted by remaining holdout states.

Also of interest:

• DATAWATCH: Most Americans Have Good Health, Little Unmet Need, And Few Health Care Expenses; Marc Berk of Health Affairs and Zhengyi Fang of Social and Scientific Systems.

Disparities in cesarean births in Mexico

Mexico is the country in the Americas with the second-highest prevalence of cesarean deliveries (second only to Brazil). Sylvia Guendelman of the University of California, Berkeley and coauthors used 2014 Mexican birth certificate data to perform population-level data analyses on more than 600,000 first-time mothers. According to the authors, 48.7 percent of these births were cesarean deliveries. Individual Mexican states’ rates ranged widely but presented no clear geographical patterns. The study also revealed that enrollees in Seguro Popular, the public health insurance program, had lower cesarean birth rates than those in other insurance programs and those without insurance. The widest difference, however, was in the delivery location: cesarean rates in private birthing facilities occurred almost twice as often as those taking place in other facilities. “Mexico’s continuing transition toward universal health coverage through Seguro Popular…may help curb the cesarean epidemic,” the authors conclude. “To do this, the health care system must tackle access barriers to public hospitals…, increase the number of qualified staff members to oversee and support women through the labor process, and educate women about the benefits of vaginal birth.”

Also of interest:

• Industry-Led Access-To-Medicines Initiatives In Low- And Middle-Income Countries: Strategies And Evidence; Peter Rockers of the Boston University School of Public Health and coauthors.

The impact of ACA Medicaid expansion on dental visits: mixed results

Dental coverage for adults is an optional benefit under Medicaid, one that about half of states offer.  With thirty-one states and the District of Columbia expanding Medicaid eligibility under the Affordable Care Act (ACA), how many more low-income Americans sought dental care? To answer this question, Astha Singhal of Boston University and coauthors compared 2010 and 2014 data collected by the Centers for Disease Control and Prevention. The study found that 1.5 million more low-income adults reported having a dental visit in 2014 than in 2010. However, among states expanding Medicaid that offer dental benefits, there was a decline in usage among adults with children, who had enjoyed this access before the ACA’s implementation. These results provide evidence that the addition of new low-income patients may be straining the capacity of providers willing to treat low-income patients and that additional policy initiatives may be needed to expand the size of this subset of the dental care delivery system.

from Health Affairs BlogHealth Affairs Blog http://ift.tt/2oRZ9T2

Bunny Cups with Homemade Lemonade

This Easter, we are serving these bunny cups with homemade lemonade for our kids — and we just had to share them with you!

We created this fun craft for our friends at Imperial Sugar and are sharing all the details over on the Imperial Sugar Kids in the Kitchen site!

Aren’t they adorable?! Be sure to visit the Homemade Lemonade in Bunny Cups tutorial to learn how to create your own!

And while you’re there, be sure to enter the online Easter Egg Hunt contest, hosted by Imperial Sugar. It looks like so much fun!

More Easter Crafts

These awesome Easter tutorials feature our favorite ingredient — Imperial Sugar!

• Crispy Rice Easter Egg Treats
• Homemade Easter Chalk Melts
• Easter Chick and Bunny Handprint Craft

 

The post Bunny Cups with Homemade Lemonade appeared first on Kids Activities Blog.

from Kids Activities Blog http://ift.tt/2nBUyUt

Bunny Cups with Homemade Lemonade

This Easter, we are serving these bunny cups with homemade lemonade for our kids — and we just had to share them with you!

We created this fun craft for our friends at Imperial Sugar and are sharing all the details over on the Imperial Sugar Kids in the Kitchen site!

Aren't they adorable?! Be sure to visit the Homemade Lemonade in Bunny Cups tutorial to learn how to create your own!

And while you're there, be sure to enter the online Easter Egg Hunt contest, hosted by Imperial Sugar. It looks like so much fun!

More Easter Crafts

These awesome Easter tutorials feature our favorite ingredient — Imperial Sugar!

• Crispy Rice Easter Egg Treats
• Homemade Easter Chalk Melts
• Easter Chick and Bunny Handprint Craft

 

The post Bunny Cups with Homemade Lemonade appeared first on Kids Activities Blog.

from Kids Activities Blog http://ift.tt/2nBUyUt

Overcoming Challenges Of Outcomes-Based Contracting For Pharmaceuticals: Early Lessons From The Genentech–Priority Health Pilot

In recent decades, treatment advances have helped people with cancer live longer and better lives. Scientific investments have led to breakthroughs not previously imaginable, such as the development of immunotherapies and precision medicines. However, treating people with serious diseases such as cancer is expensive. The direct medical costs of cancer reached $88 billion in 2014, 12.4 percent of which was attributed to drugs.

Given the costs of new treatments, the U.S. health care system faces unprecedented pressure to improve the efficient and appropriate use of health care products and services. Health care decision makers are challenging pharmaceutical manufacturers to demonstrate the value of their medicines, not just in terms of clinical efficacy but also in terms of economic and quality-of-life outcomes. As a result, there is growing interest in outcomes-based (or performance-based) contracting, which is intended to align pricing with a medicine’s observable clinical benefit. While definitions of outcomes-based contracts vary across the industry, common arrangements tie rebates to patient outcomes, rather than to volume. For example, the manufacturer agrees to provide a rebate to a payer if the observed performance of a specific medicine doesn’t reach the agreed-upon threshold. If the medicine performs as observed in clinical trials (or better), the payer does not receive a rebate.

Background

In 2015, Genentech (Note 1) (a drug manufacturer) and Priority Health (Note 2) (a nonprofit health plan) agreed to collaborate on an outcomes-based contract for Avastin ® (bevacizumab) in patients with non–small-cell lung cancer (NSCLC). We sought to move beyond the transactional nature of payer–pharma relationships to build a strategic relationship, ensuring that the right patients are on the right medication. Our ultimate intent was to improve patient outcomes. Philosophically, we agreed that payers may feel more comfortable with the cost of medicines that produce positive outcomes in clinically appropriate patients, and that there are situations in which manufacturers should share some financial risk when a medicine doesn’t work as well as expected. Our expectation was that a workable pilot contract might lay a foundation for demonstrating the potential benefits of outcomes-based agreements to patients, providers, payers, and manufacturers.

Key Considerations

We recognized and addressed five fundamental requirements for developing and executing an outcomes-based agreement.

Leadership commitment

Both parties must commit time and resources for design and implementation. Because outcomes-based contracts are still in their infancy, and much is undefined, manufacturers and payers should expect a period of trial and exploration until the contract terms are defined.

Medicine selection

Not all conditions and medications are good candidates for outcomes-based contracts. The selected medicine should have clearly defined outcomes that can be observed in a relatively short timeframe (preferably less than one year), obtained easily, and measured reliably and objectively. Medicines indicated for chronic conditions such as rheumatoid arthritis, multiple sclerosis, or even some cancers may be less suitable if clinical endpoints are not measured consistently and objectively within a year.

Definitions and metrics

The ability to measure various outcomes, or “endpoints,” in a consistent and timely way varies widely among treatments. In oncology, for instance, progression-free survival (PFS) is an endpoint frequently used as a surrogate for overall survival in an accelerated or regular Food and Drug Administration (FDA) approval pathway. Appropriate use of surrogate endpoints is highly dependent on multiple factors, such as effect size and duration, life expectancy based on the condition studies, benefits of other available therapies, and others. In the case of PFS, although it has not been statistically validated as a surrogate for survival in all settings, predictable measurement, smaller trial size, and shorter follow-up compared with overall survival studies have made it a desirable and frequent target in studies focused on appropriate tumor types.

Data issues

The operational requirements of outcomes-based contracts can be daunting. The payer is responsible for tracking an individual patient’s health status and for collecting and reporting patient-level longitudinal data. However, most payer systems cannot evaluate specific clinical and outcomes data. For example, a payer claims system may indicate when a patient discontinues a medication, but not why — a major stumbling block if PFS is the agreed-upon endpoint in the contract. Determining whether the discontinuation was due to clinical progression, toxicity, patient or provider preference, or some other reason often requires gaining access to the electronic health record (EHR), which many payers don’t have. Granting such access to payers can create privacy concerns.

Even with access to EHR data, payers may face challenges, such as missing data fields or pertinent data documented in nonreadable text fields. If a provider’s EHR system does not capture the desired endpoint, line of therapy, indication for which a drug is prescribed, or medication dose, it may be difficult for the payer to gain maximum benefit from the contract — either because of missing data or because of the overhead incurred in extracting data from text fields or chart reviews.

As these challenges suggest, it is important to balance specificity with simplicity. If complexity makes operationalizing the contract impractical or cumbersome, either the manufacturer or the payer may be unwilling to enter into an agreement.

Government price reporting

A manufacturer’s willingness to participate in value-based agreements can be limited by government price-reporting obligations. Medicaid’s “best price” rule, 340B ceiling prices, and Medicare’s calculation of average sales price (ASP) for medicines covered under Medicare Part B can be affected by the magnitude and scale of outcomes-based agreements. The degree of discounting under these types of agreements can effectively reduce a drug’s price to below the Medicaid benchmark, resulting in a “new” 340B price for manufacturers, and adversely affect ASP-based reimbursement for provider-administered medicines, even if these providers do not participate in or benefit from outcomes-based arrangements.

Genentech–Priority Health Pilot Design and Structure

The focus of the Genentech–Priority Health outcomes-based pilot was the first-line use of Avastin (bevacizumab) in patients with non–small-cell lung cancer (NSCLC).

Under the terms of the agreement, we tied rebates to PFS, a key endpoint in the phase 3 clinical trial. The shorter the PFS in a given patient, the greater the rebate to Priority Health. If a patient remained progression-free on bevacizumab longer than six months (the median PFS outcome in the phase 3 trial of bevacizumab for this indication), Priority Health would not receive a rebate. Genentech and Priority Health agreed to measure PFS at the individual level rather than at the population level to expedite data capture and increase the timeliness of rebates. We agreed on a methodology for calculating and verifying PFS from claims, imaging, and EHR data.

In selecting this outcome measure, both parties had to be willing to make some assumptions. For example, we agreed to identify appropriate patients for inclusion based only on diagnosis codes. Although this criterion is not specific to type or stage of cancer, we agreed that if a patient had a diagnosis of lung cancer and was on bevacizumab, we could assume that it was for stage IV, metastatic NSCLC, consistent with the drug’s labeling. Although a prior authorization process could capture both stage and line of therapy, Priority Health does not require prior authorization for these purposes. We also agreed to assume first-line treatment if there was no chemotherapeutic agent within six months prior to the first date of infusion and no diagnosis of lung cancer within 60 days.

We rounded down the threshold for a rebate (six months of PFS) from the outcome of the clinical trial (a 6.2-month PFS advantage) for simplicity of executing a contract. For patients whose claims indicated that they were on bevacizumab for more than six months, we deemed the threshold met. For patients for whom the interval between the first dose and the last dose was less than six months, we agreed to establish the reason: toxicity, progression, or patient or provider preference to switch. If the patient was switched because of toxicity or disease progression, Genentech would rebate a portion of the drug cost to Priority Health. If the patient switched treatment because of provider or patient preference, Genentech would not provide a rebate to Priority Health.

To assess the reason for discontinuation, Priority Health accessed EHR data through a regional health information exchange, Great Lakes Health Connect. The parties agreed that an imaging study recorded in the EHR indicating, for example, “The patient has progression by Response Evaluation Criteria in Solid Tumors (RECIST) criteria” would be acceptable evidence of disease progression. If no imaging study was available, then Priority Health reviewed oncology office, infusion center, or inpatient EHRs. In the absence of any electronic records, Priority Health obtained records from the treating oncologist to assess what prompted the discontinuation. Priority Health agreed to commit the internal resources necessary to locate these data. Genentech supported Priority Health’s efforts with a dedicated team of medical and privacy professionals.

Each rebate was directly proportional to the magnitude of the difference between the actual and expected PFS. Exhibit 1 shows an illustrative calculation to demonstrate how such an agreement could be structured. (Note: Discount values shown below are for illustrative purposes only and are not feasible in today’s environment due to the government price-reporting obligations referenced earlier.)

 

With regard to the impact of this rebate on government price reporting, the effect of the Genentech–Priority Health pilot contract is finite, and we deemed it manageable, given its size and scale. However, the potential impact on government prices for certain drugs may be a deterrent in future large-scale outcomes-driven contracts.

Conclusion

Outcomes-based agreements are a natural extension of a health care delivery-and-reimbursement environment that is moving toward value. With provider organizations taking increasing accountability for both costs and outcomes, it is becoming incumbent upon manufacturers to demonstrate the economic, clinical, and quality-of-life benefits of their medicines. The pilot described here was successful in that Genentech and Priority Health both learned how to overcome clinical, operational, and contractual challenges and demonstrated that this type of agreement is feasible. Genentech and Priority Health believe pilots like the one explored here are the right way forward.

In providing resources to advance this work, we are creating strategic relationships that are essential to today’s focus on value. The success of these types of efforts depends on leaders across stakeholder groups who are willing to champion the work, take on a learning mind-set, and share a commitment to being part of a solution to health care cost, data, and access issues. As such, we measured the success of this pilot in operational learnings, as opposed to immediate financial benefits. Although not a panacea, outcomes-based contracts may be a useful tool in aligning cost and value, driving health care efficiency, and ensuring that appropriate patients benefit from innovative medicines.

Such efforts can have impact only if scale can be achieved. Although pilot agreements such as the one described here are feasible, large-scale agreements will ultimately generate broad industry change. The inherent complexities of outcomes-based contracts should not serve as a deterrent. Rather, they should compel all involved entities, both public and private, to collaborate on and devote resources to addressing cost, data, and access challenges. No one manufacturer, payer, or provider can single-handedly make outcomes-based contracting a reality. However, continued collaboration and government entities’ support will be critical in reaching a long-term solution.

Note 1

Genentech, a member of the Roche Group, is a biotechnology company that discovers, develops, manufactures, and commercializes medicines to treat patients with serious or life-threatening medical conditions.

Note 2

Priority Health is a Michigan-based nonprofit health plan with a portfolio of health benefit options for employer groups and individuals, including Medicare and Medicaid plans.

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Overcoming Challenges Of Outcomes-Based Contracting For Pharmaceuticals: Early Lessons From The Genentech–Priority Health Pilot

In recent decades, treatment advances have helped people with cancer live longer and better lives. Scientific investments have led to breakthroughs not previously imaginable, such as the development of immunotherapies and precision medicines. However, treating people with serious diseases such as cancer is expensive. The direct medical costs of cancer reached $88 billion in 2014, 12.4 percent of which was attributed to drugs.

Given the costs of new treatments, the U.S. health care system faces unprecedented pressure to improve the efficient and appropriate use of health care products and services. Health care decision makers are challenging pharmaceutical manufacturers to demonstrate the value of their medicines, not just in terms of clinical efficacy but also in terms of economic and quality-of-life outcomes. As a result, there is growing interest in outcomes-based (or performance-based) contracting, which is intended to align pricing with a medicine's observable clinical benefit. While definitions of outcomes-based contracts vary across the industry, common arrangements tie rebates to patient outcomes, rather than to volume. For example, the manufacturer agrees to provide a rebate to a payer if the observed performance of a specific medicine doesn't reach the agreed-upon threshold. If the medicine performs as observed in clinical trials (or better), the payer does not receive a rebate.

Background

In 2015, Genentech (Note 1) (a drug manufacturer) and Priority Health (Note 2) (a nonprofit health plan) agreed to collaborate on an outcomes-based contract for Avastin ® (bevacizumab) in patients with non–small-cell lung cancer (NSCLC). We sought to move beyond the transactional nature of payer–pharma relationships to build a strategic relationship, ensuring that the right patients are on the right medication. Our ultimate intent was to improve patient outcomes. Philosophically, we agreed that payers may feel more comfortable with the cost of medicines that produce positive outcomes in clinically appropriate patients, and that there are situations in which manufacturers should share some financial risk when a medicine doesn't work as well as expected. Our expectation was that a workable pilot contract might lay a foundation for demonstrating the potential benefits of outcomes-based agreements to patients, providers, payers, and manufacturers.

Key Considerations

We recognized and addressed five fundamental requirements for developing and executing an outcomes-based agreement.

Leadership commitment

Both parties must commit time and resources for design and implementation. Because outcomes-based contracts are still in their infancy, and much is undefined, manufacturers and payers should expect a period of trial and exploration until the contract terms are defined.

Medicine selection

Not all conditions and medications are good candidates for outcomes-based contracts. The selected medicine should have clearly defined outcomes that can be observed in a relatively short timeframe (preferably less than one year), obtained easily, and measured reliably and objectively. Medicines indicated for chronic conditions such as rheumatoid arthritis, multiple sclerosis, or even some cancers may be less suitable if clinical endpoints are not measured consistently and objectively within a year.

Definitions and metrics

The ability to measure various outcomes, or "endpoints," in a consistent and timely way varies widely among treatments. In oncology, for instance, progression-free survival (PFS) is an endpoint frequently used as a surrogate for overall survival in an accelerated or regular Food and Drug Administration (FDA) approval pathway. Appropriate use of surrogate endpoints is highly dependent on multiple factors, such as effect size and duration, life expectancy based on the condition studies, benefits of other available therapies, and others. In the case of PFS, although it has not been statistically validated as a surrogate for survival in all settings, predictable measurement, smaller trial size, and shorter follow-up compared with overall survival studies have made it a desirable and frequent target in studies focused on appropriate tumor types.

Data issues

The operational requirements of outcomes-based contracts can be daunting. The payer is responsible for tracking an individual patient's health status and for collecting and reporting patient-level longitudinal data. However, most payer systems cannot evaluate specific clinical and outcomes data. For example, a payer claims system may indicate when a patient discontinues a medication, but not why — a major stumbling block if PFS is the agreed-upon endpoint in the contract. Determining whether the discontinuation was due to clinical progression, toxicity, patient or provider preference, or some other reason often requires gaining access to the electronic health record (EHR), which many payers don't have. Granting such access to payers can create privacy concerns.

Even with access to EHR data, payers may face challenges, such as missing data fields or pertinent data documented in nonreadable text fields. If a provider's EHR system does not capture the desired endpoint, line of therapy, indication for which a drug is prescribed, or medication dose, it may be difficult for the payer to gain maximum benefit from the contract — either because of missing data or because of the overhead incurred in extracting data from text fields or chart reviews.

As these challenges suggest, it is important to balance specificity with simplicity. If complexity makes operationalizing the contract impractical or cumbersome, either the manufacturer or the payer may be unwilling to enter into an agreement.

Government price reporting

A manufacturer's willingness to participate in value-based agreements can be limited by government price-reporting obligations. Medicaid's "best price" rule, 340B ceiling prices, and Medicare's calculation of average sales price (ASP) for medicines covered under Medicare Part B can be affected by the magnitude and scale of outcomes-based agreements. The degree of discounting under these types of agreements can effectively reduce a drug's price to below the Medicaid benchmark, resulting in a "new" 340B price for manufacturers, and adversely affect ASP-based reimbursement for provider-administered medicines, even if these providers do not participate in or benefit from outcomes-based arrangements.

Genentech–Priority Health Pilot Design and Structure

The focus of the Genentech–Priority Health outcomes-based pilot was the first-line use of Avastin (bevacizumab) in patients with non–small-cell lung cancer (NSCLC).

Under the terms of the agreement, we tied rebates to PFS, a key endpoint in the phase 3 clinical trial. The shorter the PFS in a given patient, the greater the rebate to Priority Health. If a patient remained progression-free on bevacizumab longer than six months (the median PFS outcome in the phase 3 trial of bevacizumab for this indication), Priority Health would not receive a rebate. Genentech and Priority Health agreed to measure PFS at the individual level rather than at the population level to expedite data capture and increase the timeliness of rebates. We agreed on a methodology for calculating and verifying PFS from claims, imaging, and EHR data.

In selecting this outcome measure, both parties had to be willing to make some assumptions. For example, we agreed to identify appropriate patients for inclusion based only on diagnosis codes. Although this criterion is not specific to type or stage of cancer, we agreed that if a patient had a diagnosis of lung cancer and was on bevacizumab, we could assume that it was for stage IV, metastatic NSCLC, consistent with the drug's labeling. Although a prior authorization process could capture both stage and line of therapy, Priority Health does not require prior authorization for these purposes. We also agreed to assume first-line treatment if there was no chemotherapeutic agent within six months prior to the first date of infusion and no diagnosis of lung cancer within 60 days.

We rounded down the threshold for a rebate (six months of PFS) from the outcome of the clinical trial (a 6.2-month PFS advantage) for simplicity of executing a contract. For patients whose claims indicated that they were on bevacizumab for more than six months, we deemed the threshold met. For patients for whom the interval between the first dose and the last dose was less than six months, we agreed to establish the reason: toxicity, progression, or patient or provider preference to switch. If the patient was switched because of toxicity or disease progression, Genentech would rebate a portion of the drug cost to Priority Health. If the patient switched treatment because of provider or patient preference, Genentech would not provide a rebate to Priority Health.

To assess the reason for discontinuation, Priority Health accessed EHR data through a regional health information exchange, Great Lakes Health Connect. The parties agreed that an imaging study recorded in the EHR indicating, for example, "The patient has progression by Response Evaluation Criteria in Solid Tumors (RECIST) criteria" would be acceptable evidence of disease progression. If no imaging study was available, then Priority Health reviewed oncology office, infusion center, or inpatient EHRs. In the absence of any electronic records, Priority Health obtained records from the treating oncologist to assess what prompted the discontinuation. Priority Health agreed to commit the internal resources necessary to locate these data. Genentech supported Priority Health's efforts with a dedicated team of medical and privacy professionals.

Each rebate was directly proportional to the magnitude of the difference between the actual and expected PFS. Exhibit 1 shows an illustrative calculation to demonstrate how such an agreement could be structured. (Note: Discount values shown below are for illustrative purposes only and are not feasible in today's environment due to the government price-reporting obligations referenced earlier.)

 

With regard to the impact of this rebate on government price reporting, the effect of the Genentech–Priority Health pilot contract is finite, and we deemed it manageable, given its size and scale. However, the potential impact on government prices for certain drugs may be a deterrent in future large-scale outcomes-driven contracts.

Conclusion

Outcomes-based agreements are a natural extension of a health care delivery-and-reimbursement environment that is moving toward value. With provider organizations taking increasing accountability for both costs and outcomes, it is becoming incumbent upon manufacturers to demonstrate the economic, clinical, and quality-of-life benefits of their medicines. The pilot described here was successful in that Genentech and Priority Health both learned how to overcome clinical, operational, and contractual challenges and demonstrated that this type of agreement is feasible. Genentech and Priority Health believe pilots like the one explored here are the right way forward.

In providing resources to advance this work, we are creating strategic relationships that are essential to today's focus on value. The success of these types of efforts depends on leaders across stakeholder groups who are willing to champion the work, take on a learning mind-set, and share a commitment to being part of a solution to health care cost, data, and access issues. As such, we measured the success of this pilot in operational learnings, as opposed to immediate financial benefits. Although not a panacea, outcomes-based contracts may be a useful tool in aligning cost and value, driving health care efficiency, and ensuring that appropriate patients benefit from innovative medicines.

Such efforts can have impact only if scale can be achieved. Although pilot agreements such as the one described here are feasible, large-scale agreements will ultimately generate broad industry change. The inherent complexities of outcomes-based contracts should not serve as a deterrent. Rather, they should compel all involved entities, both public and private, to collaborate on and devote resources to addressing cost, data, and access challenges. No one manufacturer, payer, or provider can single-handedly make outcomes-based contracting a reality. However, continued collaboration and government entities' support will be critical in reaching a long-term solution.

Note 1

Genentech, a member of the Roche Group, is a biotechnology company that discovers, develops, manufactures, and commercializes medicines to treat patients with serious or life-threatening medical conditions.

Note 2

Priority Health is a Michigan-based nonprofit health plan with a portfolio of health benefit options for employer groups and individuals, including Medicare and Medicaid plans.

from Health Affairs BlogHealth Affairs Blog http://ift.tt/2nAVxEE