Health Policy Report

August 1, 2016

The Week in Review

Following the Republican convention in Cleveland two weeks ago, Democrats convened in Philadelphia last week to officially nominate Hillary Clinton for President. The biggest scandal of the convention struck before the gavel even dropped as Democratic National Committee Chairwoman Rep. Debbie Wasserman Schulz (D-FL) was forced to resign amid the release of emails suggesting that the Democratic Party staff favored Clinton over her opponent Sen. Bernie Sanders (I-VT) and actively sought to undermine his campaign. However, after that rocky start, the convention featured a heavy-hitting lineup of current and past Democratic leaders that vehemently attacked the ideology and credentials of Republican nominee Donald Trump while also casting an optimistic counter view of American society. 

That optimism was manifested in the policy proposals pushed by Clinton, who highlighted infrastructure spending, immigration reform, new gun restrictions, and lessening the cost of a college education as her immediate priorities. While healthcare reform was not included on that list, the Democratic nominee indicated drug pricing was a problem and Democrats seem to be demonstrating an openness to improvements to the Affordable Care Act (ACA). .

The Week Ahead

With the conventions over, lawmakers will enter the traditional month-long August recess, and most will be busy campaigning at home. A busy September awaits, with a continuing resolution (CR) to fund the government past the end of the fiscal year on September 30 likely topping the congressional agenda.

CMS Proposes Bundled Payments for Cardiac Care

On Monday, the Centers for Medicare and Medicaid Services (CMS) announced its second-ever program to mandate bundled payments just months after launching its first – a sign that Medicare is aggressively pushing ahead to lock in new payment reforms before the Obama Administration leaves office. The proposed program, which targets patients who have had a heart attack or undergo bypass surgery, would be phased in over five years beginning July 1, 2017 in almost 100 metropolitan areas across the country. It follows a similar initiative focused on hip and knee replacements that began in April of this year as part of the Administration's goal to tie 50 percent of Medicare payments to alternative care models by 2018.

While critics say accountable care organizations and other new reform models introduced by the Affordable Care Act (ACA) aren't especially effective at controlling costs, there's growing evidence that bundled payments indeed tamp down spending. Unlike Medicare's traditional fee-for-service payments, bundled payment programs aim to improve care quality and coordination by reimbursing providers for an entire episode of care, rather than reimbursing for each separate step. If a hospital meets quality targets and ends up spending less than the target, it gets to keep some of the money that is saved; if it spends over the target, it has to pay back money to the government.

While many are supportive of bundled payment programs, including some healthcare stakeholders and Members of Congress on both sides of the aisle, some providers have expressed concern that the Administration is trying to do too much, too quickly on payment reform with less than six months left in the White House. They warn that the Administration is pushing ahead on mandatory bundled payments even though it's too early to know how well the mandatory knee and hip replacement bundled payment model is working. One representative from the American College of Cardiology quickly came out with a statement on Monday expressing some apprehension to the proposal. "We support the concept," he said. “But it is important that bundled care models be carried out in such a way that clinicians are given the time and tools to truly impact patient care in the best ways possible." Other providers have said they are still reviewing the proposal.

CMS Announces Overall Star Rating to be Included on Hospital Compare Site

On Wednesday, the Centers for Medicare and Medicaid Services (CMS) unveiled a simplified star-based rating system for hospitals, a controversial move that quickly sparked opposition from both industry groups and lawmakers. The Overall Hospital Quality Star Rating seeks to summarize the ratings CMS has issued for healthcare providers over the past decade, combining 64 of 100 existing metrics into one rating ranging from one to five stars. The change is meant to make quality scores easier to understand for consumers visiting CMS’s Hospital Compare website. The star ratings will be based on quality measures for routine care that the average individual receives. As CMS notes on its website, “cutting edge care that certain hospitals provide such as specialized cancer care, will not be reflected in the quality ratings.”

The overall star ratings were initially slated for release in April, but the agency pushed back the date in response to concerns from lawmakers and stakeholders who encouraged CMS to wait. CMS stated that the delay was intended to give hospitals additional time to better understand their methodology and data. Stakeholders expressed disappointment in the release of the new rating system, with organizations such as the American Hospital Association expressing concern that the star-based system unfairly penalizes teaching hospitals and those serving higher numbers of lower income patients. Meanwhile, lawmakers also criticized the release. On Monday, Reps. Jim Renacci (R-OH) and Kathleen Rice (D-NY) introduced a bill that would delay the release of the ratings. CMS said it would continue to analyze the ratings data and consider public feedback on the star ratings, which will be updated quarterly.

Avalere Health Looks at Value Frameworks and the Lack of Implementation By Health Plans

A survey released Tuesday by Avalere Health considered the impact of recently developed “value frameworks” on the healthcare system. In response to rising prescription drug costs, a number of organizations have begun to develop different ways to assess the value of new medicines based on such attributes as cost, quality of life, and effectiveness in an effort to provide guidance on appropriate market prices. Among these “value frameworks” are the Institute for Clinical and Economic Review (ICER), American Society of Clinical Oncology (ASCO), Memorial Sloan Kettering Cancer Center’s DrugAbacus, the National Comprehensive Cancer Network (NCCN), and a collaboration between the American College of Cardiology and the American Heart Association (ACC-AHA). According to the National Pharmaceutical Council, these frameworks reflect the interest and expertise of the organizations developing them. ACC-AHA, ASCO, and NCCN are designed by professional societies to assist with shared-decision making between patients and physicians while ICER and Drug Abacus have more of a payer focus. ASCO, NCCN and Drug Abacus all have an oncology focus and ACC-AHA is focused on cardiology. While the federal government does not oversee the frameworks themselves, they fit within the Obama administration’s goal for the future of health reform: basing 50 percent of Medicare payments on value by 2018.

Achieving value remains a difficult target as it is often defined differently by patients and payers — and is even defined differently among patients themselves. As a result, new value frameworks are being developed – such as FasterCures – that take into account the patient perspective and may hold promise.  Indeed, many of the current frameworks do not factor all the elements that are important to patients such as quality of life, work productivity, caregiver burden, unmet need and burden of illness. Many also consider list prices for drugs and devices, rather than the price paid by the payer or patient. As the issue of drug pricing attracts attention in Congress, state governments, and Presidential candidates, the definition of value is very likely to remain in the headlines. As frameworks are refined over time, they may become a useful tool that payers, providers, and patients can utilize for optimal outcomes at a reasonable price.

Nevertheless, a survey conducted by Avalere Health revealed that even as health plans continue to criticize drug prices, they have not yet embraced these new tools. The poll showed that none of the 11 plans queried actively rely on these new methods and a majority do not expect to do so next year either. According to Avalere Vice President Josh Seidman, the plans are concerned over getting better comparative information on the value of different therapies, but are also troubled by the fact that these tools are “somewhat nascent and not robust enough.” He says the plans would like to see physicians and other health care providers more readily embrace the value tools before formally incorporating them into any decision-making procedures.