Can MACRA promote greater synergy across Medicaid and Medicare APMs to transform care?

Health Care Current | August 22, 2017

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies and provides updates and insights on policy, regulatory, and legislative changes.

My Take

Can MACRA promote greater synergy across Medicaid and Medicare APMs to transform care?

By Anne Phelps, Principal, US Health Care Regulatory Leader, Deloitte & Touche LLP

Recent legislative efforts to repeal and replace the Affordable Care Act (ACA) pushed Medicaid reform into the center of the health policy spotlight. However, while Congress was debating coverage expansion and federal financing, some states have been quietly implementing their own delivery reform in an effort to reward value-based care. Many Republican and Democratic governors alike have embraced alternative payment models (APMs) such as medical homes, accountable care organizations (ACOs), and bundled payments to help improve the efficiency of their Medicaid programs. The goals of many Medicaid APMs are in line with the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and delivery reform efforts in the commercial market. But are there ways to find synergies across these programs and make it easier for providers to transform care?

State flexibility and innovation
The federal Medicaid statute gives states broad discretion to design and administer their programs in a way that meets the unique needs of their population. Since taking office earlier this year, US Department of Health and Human Services (HHS) Secretary Tom Price, along with Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, have emphasized state flexibility and encouraged governors to apply for Medicaid section 1115 demonstration waivers to improve their programs.

Medicaid APMs range from narrow interventions that target patients with specific health conditions or in a particular geographic area to state-wide initiatives that encompass nearly all the Medicaid population. Many states are leveraging their managed care contracts to promote value-based care; some states have taken advantage of the ACA’s new State Plan option to create Medicaid Health Homes; others have utilized 1115 waivers to finance their initiatives; and more than half of states received funding from the Center for Medicare and Medicaid Innovation (CMMI)’s Innovation Models initiative to implement multi-payer health care payment and delivery reform.

Creating synergy across multiple-payers
For many clinicians and heath care organizations, Medicaid only represents a fraction of their total revenue and the financial incentives of Medicaid APMs may be insufficient to radically alter care delivery. By aligning with Medicare and commercial payers – either through multi-payer initiatives or by synchronizing quality metrics and reporting requirements – states and Medicaid managed care organizations may be able to get more bang for their buck.

It’s been eight months since MACRA went into effect, and it is already altering the Medicare payment landscape. It also creates new opportunities for Medicaid managed care companies and states to help their networks of providers perform well and leverage Medicare financial incentives to support their own value-based care efforts.

Until 2018, the only way clinicians can qualify as Advanced APMs is through the Medicare Shared Savings Program ACOs and the Comprehensive Primary Care Plus initiative. Beginning in 2019, clinicians who participate in Medicare APMs – but do not see enough patients or receive enough payment though those models – will be able to count their patients in APMs with other payers (e.g. Medicaid) toward qualifying for the Advanced APM track. This is the all-payer combination option. These clinicians are exempt from MIPS reporting requirements, can earn an annual lump-sum bonus though 2024, and higher annual-fee schedule updates, compared to MIPS participants.

Stakeholders need to act quickly to take full advantage of MACRA “all-payer combination option”
On June 20, CMS released a proposed rule outlining how the agency intends to implement key provisions of the MACRA’s Advanced APM track, including the “all-payer combination” option. Under the proposal, either clinicians or payers can submit information about APMs to CMS to determine whether the model meets the Other Payer Advanced APM requirements. Only states can submit Medicaid models for consideration, which means that managed care organizations will need to work closely with the Medicaid agencies. While the performance year for the all-payer combination doesn’t begin until January 2019, the deadline for payer-initiated submissions is next spring, just a few months away.

So while the national debate over the ACA continues, we continue to focus on MACRA implementation. There are opportunities for providers to move toward APMs across Medicaid, Medicare, and commercial payers. These opportunities together could provide the financial incentive to reform and improve care delivery.


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In the News

CBO: Withholding CSR payments could increase premiums 20 percent next year

The Congressional Budget Office (CBO) projected that insurance premiums for silver-tiered health plans sold on the exchanges would rise 20 percent next year and people in some areas would have no exchange offerings if cost-sharing reduction (CSR) payments expire after December 2017. The CBO also projected that eliminating CSR payments would increase the deficit by $194 billion over 10 years because of increased spending on premium subsidies.

Federal spending on premium subsidies would increase with rising premiums. The CBO’s estimates assume that the cost of the increases in premium subsidies for those with incomes between 100 percent and 200 percent of the federal poverty level would be offset by the reductions in CSR payments. However, increases in the cost of premium subsidies for those with incomes between 200 percent and 400 percent of the federal poverty level would exceed the reductions in CSR payments. These changes could increase federal deficits by $6 billion in 2018, $21 billion in 2020, and $26 billion in 2026.

The CBO projected that roughly 5 percent of people would live in areas without exchange offerings in 2018 if CSR payments ended after December 2017. The CBO projected that premiums would increase more modestly in later years.

Spending on premiums for many of those with incomes between 100 percent and 200 percent of the federal poverty level would remain roughly the same. If, as CBO model assumed, insurers added the costs to silver-tiered plans, gold-tiered plans could become cheaper than silver-tiered plans for people with incomes between 200 percent and 400 percent of the federal poverty level.

The administration announced it would pay CSR payments for August.

Background: Under the ACA, insurers are required to reduce deductibles, copays, and other out of pocket expenses for low-income enrollees in the exchanges. Under the previous administration, the US House of Representatives filed a lawsuit challenging the CSR payments, which the House argues are unconstitutional because Congress never appropriated the funds. The appeal is in abeyance pending resolution or legislative action (see the April 18, 2017 Health Care Current).

Related: The US Centers for Medicare and Medicaid Services (CMS) announced that it would extend the rate filing deadline from August 16 until September 6 for insurers in the exchanges. CMS says it plans to change the federal risk adjustment methodology in states where exchange insurers can increase silver plan rates to account for uncompensated liability for cost-sharing reduction payments.

CMS: Only one county without exchange coverage

On August 16, CMS announced that only one county in Ohio is projected to have no insurers participating in the exchanges next year.

In its announcement, CMS projected that close to half (45 percent) of counties, could have only one insurer next year (see the August 1, 2017 Health Care Current). Tax credits for those eligible are only available through the exchanges. In 2017, 84 percent of all exchange customers received premium tax credits and 57 percent of exchange customers received cost-sharing reductions.

CMS scales back bundled payment programs

On August 15, 2017, CMS proposed to limit the joint replacement bundled payment program and to end several mandatory bundled payments for cardiac care. Through the Innovation Center, CMS pays for certain procedures and care services together as one payment or a “bundle.”

Specifically, the proposed rule would reduce the number of counties required to participate in the Comprehensive Care for Joint Replacement demonstration from 67 to 34. Clinicians in the remaining counties 33 would be able to participate in the joint model voluntarily if they chose.

Additionally, the new proposed rule would end the four Cardiac Rehabilitation incentive payment models. The cardiac bundled payment rule was set to go into effect on January 1, 2018, combining care for cardiac episodes and rehabilitation into one payment.

CMS said it was seeking opportunities to improve care and reduce the burden on hospitals. It said there would be further opportunities for provider organizations to participate in voluntary bundled payment models. Hospital perspectives on these programs are mixed: some hospitals argue that mandatory bundling is burdensome; others support the programs and are concerned that cancelling them is disruptive.

Comments on the proposed rule are due to CMS on October 16, 2017.

HHS further delays implementation of 340B changes

On August 17, 2017 HHS proposed to delay the implementation date of a rule that would change the calculation for the ceiling price and civil monetary penalties for drug manufacturers that participate in the 340B program.

HHS is delaying the Obama-era changes until July 1, 2018 to allow time to review and change the new rules. They were initially set to go into effect in March 2017.

Report: Physician opioid prescriptions are higher with lower medical school rank

Physicians prescribing the most opioids tend to have attended lower-ranked medical schools, according to a recent report by the National Bureau of Economic Research.

In fact, many graduates of highly ranked schools did not write any opioid prescriptions. Researchers also noted that doctors of osteopathy (DOs) wrote a higher number of opioid prescriptions on average than medical doctors (MDs). They found that this prescribing behavior was consistent across various physician specialties, locations, and patient types.

Training was likely the most important factor for differences in prescribing behavior, according to the report. They found that differences in opioid prescribing patterns between graduates of higher- and lower-ranked medical schools were smaller when physicians received training on pain management. The rank of a physician’s medical school mattered less than the type of training he or she received.

Policymakers and physician educators could offer pain management training to help combat opioid addiction. For example, at the urging of the White House, in March of 2016, more than 60 medical schools agreed to incorporate the Centers for Disease Control’s pain management guidelines in their curriculum.

Background: Researchers used prescriber data from QuintilesIMS, which included background information from the American Medical Association and medical school rankings from US News and World Report’s, “Best Medical Schools: Research Rankings.”

Related: One in 12 US physicians received opioid-related payments – largely honoraria or speaking fees – from manufacturers of opioid drugs between 2013 and 2015, according to new research published in the American Journal of Public Health. In total, drug makers paid over $46 million to 68,177 physicians. Researchers compared this with payments for non-steroidal anti-inflammatory drugs, also used to treat pain, and found that total payments for NSAIDs were much less, around $13 million.

The majority of payments to physicians were for honoraria or speaking fees. Researchers excluded payments tied to research. They studied data from the Open Payments database. CMS requires pharmaceutical companies disclose payments to physicians and posts the data publically.

(Sources: Molly Schnell and Janet Currie, “Addressing the opioid epidemic: Is there a role for physician education?” National Bureau of Economic Research, August 2017; Scott Hadland, Maxwell Krieger, et al., “Industry payments to physicians for opioid products,” American Journal of Public Health, September 2017)

Rising prices of common, older drugs burden Medicaid program

The rising prices of older commonly used drugs place significant burden on Medicaid budgets, according to a recent analysis by Kaiser Health News. The Kaiser analysis showed that 313 regularly used drugs increased Medicaid spending by $3.2 billion in 2016 over 2015.

Prices have increased for both brand name and generic drugs, some of which were over 20 years old (see the August 15, 2017 Health Care Current). The exit of some generic drug makers from certain markets may have contributed to increasing prices. Some companies also raise prices under new ownership or when the price has not been increased in some time.

Generally, generics trend cheaper over time. Based on the changes in per-unit costs from 2015 to 2016, Medicaid saved $1.6 billion on generics before rebates. However, many individual generic drugs also had per-unit cost that doubled or tripled from 2015 to 2016.

As the price of drugs increases, some hospitals are cutting back on the use of expensive drugs, keeping fewer units in the hospital pharmacy inventory, and substituting other drugs when appropriate. States have also implemented reforms, such as requiring drug manufacturers to alert the state when their prices increase significantly and setting limits on the prices states must pay for drugs.

FDA Commissioner Scott Gottlieb has announced plans to help encourage generic drug competition (see the August 1, 2017 Health Care Current).

AHRQ report finds overall care quality improving even as disparities persist

The Agency for Healthcare Research and Quality (AHRQ) found that health care quality and access in the US improved through 2014, though disparities persist. Congress mandated that AHRQ report annually on general health care quality and disparities in care experienced by different racial and socioeconomic groups.

In the 14th annual National Healthcare Quality and Disparities Report, AHRQ looked at patient safety, person-centered care, care coordination, treatment effectiveness, healthy living, and affordability to determine overall quality. The agency found that, on the whole, the quality of health care services improved in the US.

Though the uninsured rate declined from 30.6 percent to 15.4 percent between 2010 and 2016, researchers found that 70 percent of access to care measures show ongoing disparities between 2000 and 2014. Examples of measures that did not change included the number of adults that needed immediate care but did not receive it, individuals that skipped or delayed filling prescriptions, and the number people with a primary care physician.

Some states with high quality of care overall still had large disparities. Wisconsin, for example, ranked as having some of the highest quality care, but also had high disparities between certain groups.

AHRQ worked with the Interagency Working Group to write the report and it includes more than 250 measures.

(Source: Agency for Healthcare Research and Quality, “2016 National Healthcare Quality and Disparities Report,” July 2017)

Breaking Boundaries

Startups see a market for innovative solutions to help smokers quit

Smoking still remains a huge public health challenge in the US and globally. According to the World Health Organization, nearly 80 percent of smokers live in low or middle-income countries. Though the US is not a low or middle-income country and smoking rates are at an all-time low, it is still widely prevalent among low-income populations.

In 2008, Gallup found that 34 percent of those making $6,000 to $11,999 per year smoke while only 13 percent of those with incomes above $90,000 smoked – a 21 percentage-point difference. A study featured in this month’s Health Affairs shows the trends in disparities between Appalachia and the rest of the US in life expectancy, infant mortality, and mortality from major causes of death. Smoking-related diseases accounted for more than half of the life-expectancy gap between Appalachia and the rest of the country.

Over the years, consumers have used many evidence-based smoking cessation tools: Medication and nicotine replacement therapies (NRT), support groups, telephonic and online health coaching, and financial incentives. Now, startups are coming to the market to offer other more technology-focused solutions – including wearables, mobile apps, and virtual reality.

Somatix, a digital health company, is using wearables to track unhealthy behaviors and send prompts to the wearer. Its product targets employer wellness programs and insurers. The wearable and feedback information allows the user to share the data with a physician, and help the user understand patterns in their behavior, to help them make changes.

Another startup, MindCotine, offers a virtual reality program combined with an app that guides the user through a meditation designed to quell nicotine cravings. Consumers would need to purchase a VR headset, which many are already purchasing for gaming purposes, and download the app. Chrono Therapeutics is aiming to integrate the pharmacological and behavioral approaches into one product. The company plans to offer a transdermal patch that delivers nicotine, but unlike traditional patches, the device delivers peak doses when a smoker is most likely to crave a cigarette. The patch also has a Bluetooth-enabled sensor that connects to a smartphone and delivers data to the user and to a coach who can help them plan next steps to quit.

Analysis: With 40 million smokers in the US alone, and with 7 out of 10 smokers trying to quit, there is a big market for smoking cessation products. The startups have different hurdles to overcome before they market their products. Studies show the virtual reality techniques have promising results, but most tobacco cessation specialists say more research on virtual reality is needed. One study out of the University of Houston demonstrated that smokers who received virtual reality therapy plus NRT had significantly lower nicotine cravings and smoking rates compared to the group that received NRT only. A small Canadian study showed smokers’ cravings were reduced when they participated in a virtual reality game involving seeking out and crushing cigarettes.

There are many wearables on the market and we know that for some people who want to use them to improve health-related behaviors, once the novelty wears off, the healthy change does too. Because the transdermal patch with a device is a drug/device combination product, the company will need to get approval from regulators in every country they hope to market the product, and one challenge is meeting the different requirements for different countries.

With smoking costs reaching $300 billion per year from direct medical costs and lost productivity, individuals trying to quit, insurers, employers, and other health care stakeholders are likely to be hoping that new, innovative solutions will boost cessation rates across the globe.

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