Jean Lawrence
MANAGED CARE June 1997. ©1997 Stezzi Communications

They've done it! The White House and Congress have had numerous big sit-downs on the budget and finally closed in on an "agreement." The president and Congressional leaders have agreed to balance the budget by 2002 (for the first time since 1969) — helped in no small part by bullish predictions of future revenues. "A golden moment for America," intoned GOP House Budget Committee Chairman John Kasich of Ohio.

The bulk of the cuts would come out of Medicare, which would take a $115 billion hit over the next five years. Purportedly, this will ransom the program until 2008, while adding benefits such as mammograms and diabetes testing. Home health care costs would be transferred to general revenues, partially offset by increased premiums. Medicaid also took a cut — although a lesser one — of $15 billion. Heads-up, hospitals: Most of that would come from the disproportionate-share payments! Also in the bill is money to insure 5 million children.

Although most of the I's are dotted and congressional leaders say the major points will basically be rubber-stamped by the committees, it is not a completely done deal until the president signs on the dotted line.

Meanwhile, the redoubtable Republican senator from Texas, Phil Gramm, has cooked up a whole new approach: privatizing Medicare. Stay with me; this is not as weird as it sounds. The present Medicare system would be replaced with a new system in which the cohorts born within each calendar year would contribute to a different pooled insurance plan.

Gramm, we should note, is a respected health player, charged by Senate Majority Leader Trent Lott with coming up with health initiatives for this Congress. This is one of them. The plan would set up a $2,500 deductible insurance policy for each retiree (thought to be "close" to the $870 hospital deductible and $1,100 cost of Medigap currently paid by most retirees). This would pay all costs over and above the deductible, including prescription drugs. The contribution would be 1.36 percent of income and would be mandatory. Those over 40 would stay in the current program until it is phased out, and everyone would continue to pay to support the current retirees.

But what about Medicare funds that now go to finance graduate medical education and disproportionate-share payments to hospitals, not to mention the countless other things financed by Medicare? Good questions.

Bill Would End Health Plans' ERISA Exemption

No question, some GOP members of Congress are gunning for managed care. Notable among them are Rep. Charlie Norwood from Georgia and Sen. Al D'Amato of New York. They are sponsoring the Patient Access to Responsible Care Act, already nicknamed PARCA.

Sporting 60 bipartisan cosponsors in the House, the legislation would prohibit all private insurance plans, including self-funded employer plans, from limiting discussion of patient options, requiring preliminary authorization for emergency treatment or giving incentives to physicians and other providers to limit necessary care or access to specialists when recommended by primary care physicians.

All private plans would also be required to offer point-of-service options for patients who want to go off-network (although they would have to pay a differential).

In addition — and very importantly — this bill would allow consumers to file malpractice suits against health plans now exempted from state laws by the Employee Retirement and Income Security Act, better known as ERISA.

This initiative, too, is far from a done deal, but because of public concern, it seems to have staying power.

GAO Pinpoints Overpayment to Medicare HMOs

The Government Accounting Office says it has figured out why, at 95 percent of the average per-capita costs in a county, HMOs have been paid too much for their members' care.

It seems that, to put it simply, the Health Care Financing Administration has been using the average cost of only the fee-for-service enrollees as the average for the county, not the average including the HMO enrollees, thus overstating that county's average.

Also, the greater the HMO enrollment in a county, the greater the overstatement of average costs.

Test Makers Squabble Over Medicare Market

As lawmakers approve more preventive tests for Medicare beneficiaries, the manufacturers of various tests are gouging each other in the halls of Congress to ace out their competitors as the approved test.

Colonoscopy verses barium studies: which is best for detecting colorectal cancer? Both sides have fielded law firms in the cause. This has led to a battle over the efficacy of the two screening methods. Amazingly, such minutiae may be decided in the hallowed halls.

HHS Unveils Plan For Clinical Labs To Police Selves

June Gibbs Brown, the Department of Health and Human Services' inspector general, released a plan to help labs self-regulate, self-report and prevent fraud. Under the model, labs would have to produce written standards of conduct, inform employees of areas of potential fraud, develop education programs, audit compliance, discipline employees who are involved in questionable activities, and have clear guidelines on when an employee should be fired.

When a lab is found to have Medicare or Medicaid fraud problems, having this program in place could ameliorate penalties, Brown said. Model programs, she added, are in the works for hospitals and the managed care industry.

Take as Needed...

New standards for HEDIS 3.0 — the Health Plan Employer Data and Information Set — have been released by the National Committee for Quality Assurance. The idea is to compare apples and apples when health plans submit data.... As more for-profit hospitals take over not-for-profit institutions, local communities suffer — in the eyes of Congress, anyway. Once the investors own the hospital, critics of these deals say, it can be resold to an entity over which local officials have no control. Twenty-six states are working on controls, and California and Nebraska have already passed bills that might act as models for federal action. All details of the sale would have to be revealed to the state attorney general, state health agencies would monitor the transaction, and the not-for-profit CEO would not be able to profit from the changeover.... Expected late this summer are new Stark self-referral rules. Physicians will no longer be able to keep their own earnings and pay their expenses separately if they are part of group practices that bill under one provider number and split overhead. Bad news for doctors in a group practice who maintain their own offices.... The Institute of Medicine has recommended an overhaul of the funding program for physician training. We're talking about $6 billion, which at present is helping to educate some 100,000 doctors. More institutions would become eligible for federal support, which if approved would be supported by a trust fund. Congress also would set funding levels for graduate medical education each year. Efforts would also be made to smooth out Medicare reimbursements for training among institutions (some hospitals get 10 times as much as others). Graduate nursing education also would become eligible for reimbursement.... The Food and Drug Administration says it has no backup plan if Congress fails to enact proposed user fees. The $131 million in fees would partially cover premarket and postmarket costs in major FDA areas such as foods, human drugs, biologics, animal drugs and medical devices. Actually, approval of the fees requires several committee actions and has been shot down in the past. Not surprisingly, some legislators found the FDA's refusal to say how the fees would be used and what it would do if it didn't get them exasperating. Exasperated legislators tend to move slowly.

Jean Lawrence

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.