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Medicare Coverage Rules Are Not Always Last Word

MANAGED CARE October 2007. © MediMedia USA
Legislation & Regulation

Medicare Coverage Rules Are Not Always Last Word

Yes, commercial health insurers often take a cue from the government, but that doesn't mean that they follow blindly
John Carroll
MANAGED CARE October 2007. ©MediMedia USA

Yes, commercial health insurers often take a cue from the government, but that doesn't mean that they follow blindly

John Carroll

Over the past few months, Medicare has proven to be one tough customer in the health care business.

The agency tightened payment guidelines for a multibillion-dollar class of anemia drugs. Regulators issued ambitious rules refusing to cover a variety of never events — errors so egregious that the feds will now refuse payment to hospitals. And they have turned up the heat on self-referrals, casting a dour look at physicians who direct patients to a facility they have a financial interest in.

There's nothing new about Medicare's influence on commercial carriers. The agency's physician fee schedule has long been a model — of a sort — for health plans to follow in setting payment rates for providers around the country.

Kenneth Kizer, MD, MPH, a safety expert and former CEO of the National Quality Forum, clocks the time it takes for a health plan to respond to Medicare policy changes at two nanoseconds. "They immediately look at what Medicare does."

Medicare's billions of dollars in payments give it plenty of clout, but it's not just the money that influences plans. "It's the government," adds Kizer, himself a former top official at the Veterans Health Administration, "and the government doesn't go out on a limb and do things that haven't been carefully considered. That sends a signal to the rest of the industry."

With the stakes high, just how closely health plans heed those signals is a subject of intense speculation. When the influential New York Times weighed in with its coverage on Medicare's rules on anemia drug payments, it wasted little time in suggesting that the agency's lead would "embolden" health plans to follow suit.

But not so fast.

Yes, MCOs say, you can't overestimate Medicare's influence. But insurers have plenty of things to think through before they adopt public guidelines for private payers — whether it saves them money or not.

"There's always a lot going on in the Medicare world," cautions Jane Galvin, director of regulatory affairs at the Blue Cross & Blue Shield Association. "It's tremendously influential in the commercial sector. Any time that Medicare makes a major coverage decision, clearly our health plans are aware of it and will look to it to see if they should include that on the commercial side."

There are plenty of other factors that health insurers have to take into account before they follow suit, she adds. State mandates, for example, may not allow plans to go the federal route. Also, employers could nix anything they find objectionable. And other observers note a reluctance to run afoul of physician or patient groups.

Setting the pace

In some cases, says Galvin, health plans have been setting the pace on innovation with Medicare following. Medicare in recent years has been updating its benefit plan with the addition of preventive services.

Case in point: The feds' new rule denying coverage for a list of never events was tested by HealthPartners.

"The influence is bi-directional," offers Babette Apland, senior vice president for health and care management at HealthPartners. There's no denying Medicare's influence on key areas, she says. But HealthPartners was ideally suited to launch the first never events policy, given a state law that required hospitals to report them. And most health plans have been even further out in front of the federal agency on preventive care initiatives.

The devil for all of these issues is in the details. And the drug policy on erythropoiesis stimulating agents, or ESAs, offers an example of the deviltry in play when payments get cut.

Earlier this year, Medicare triggered an intense row with cancer specialists when it announced a new rule restricting federal payments for some expensive anemia drugs like Aranesp to cases when the hemoglobin level of a cancer patient was below 10 grams per deciliter of blood.

In most cases, health plans have been slow to follow.

"Medicare has one guideline and commercial plans are usually more member-friendly," says Mike Joslin, executive vice president of CareCore National, which manages oncology programs for health plans. Where Medicare is taking a hard line, he says, plans feel a need to do more to cater to doctors and their members.

"Most plans aren't moving too aggressively in this area," says Joslin, just as he's headed back to his office after meeting with "a large Blue Cross plan" on this very topic. "Blue Shield of California put new guidelines into place [first following Medicare's proposed approach and then adjusting the trigger point to 10 grams per deciliter], but if you look across the board, you'll see some plans move quickly, and others take a more deliberate speed."

Concerned

Joslin wasn't the only health care professional examining this decision. So was Samuel Silver, MD, PhD, the payment expert for the American Society of Hematology (ASH).

"People wonder why we focus so much on CMS," Silver says. "But CMS sets standards that private insurers look at very carefully to see if they should adopt them or not. I think that some carriers are quick to adopt CMS rules — buttressed by the feds' decision to ratchet down coverage."

And Silver does not want plans to follow CMS on the ESA guidelines.

ASH as well as the American Society of Clinical Oncology, another highly influential group of cancer specialists, wants Medicare to back off, saying that the fed's new policy guideline isn't backed up by the best evidence needed to enforce it. Oncologists want more flexibility in determining when it is appropriate to use the ESAs when hemoglobin is under 12 grams per deciliter.

Different constituencies

Silver and his colleagues in the field may have more clout than the worried doctor will allow right now. When Amgen, which makes Aranesp, sat down with analysts to review the massive impact of Medicare's rules, company executives pointed out that commercial insurers weren't likely to simply ignore the professional societies' guidelines on the issue.

Aetna, which expects to introduce a prior-authorization rule on ESAs later this year after testing the approach in a pilot program, agrees.

"That's a routine part of policy development," says James Cross, MD, Aetna's national medical director. "I would say that as long as their views are based on evidence-based medicine and are not self-serving, we'd take what the society has to say and incorporate that into the policy."

Blue Shield of California, which found itself in the physicians' headlights after briefly falling in line with CMS rules for ESAs, was quick to disown any direct federal influence.

"Medicare does not affect commercial coverage decisions directly," says Alan Sokolow, MD, Blue Shield of California's senior vice president and chief medical officer for health care services. "Medicare [makes] their coverage decisions utilizing the same body of scientific literature that we do. Our decisions tend to run in parallel tracks, but not in every situation."

Medicare coverage decisions are often regarded as national benchmarks, he adds, though often these decisions are not without criticism.

Where Medicare may be even more influential than in denial of coverage is when it approves payment for something.

"Once Medicare approves it," says Kizer, "then health plans have a much more difficult time not paying for it."

John Carroll, a freelance writer, has been a contributing editor of Managed Care for six years.