How will the Supreme Court rule in King v. Burwell?
Any day now, the Supreme Court will hand down its decision. How will the court rule?
There are few issues that unite the political polarities these day, but there seems to be consensus emerging about this: We dump too many people in prison, including dumping them on a former coal ash landfill, a situation sparking controversy in a corner of Pennsylvania.
Liberals might see overpopulated prisons as resulting from, say, police profiling, while conservatives might believe, for instance, that there are just too many nonsensical laws on the books. The bottom line: The United States imprisons more people than any other country.
State Correctional Institution (SCI) Fayette County in Pennsylvania, housing 2,000 prisoners and opening in 2003, rests on top of a former coalmine and next to a 500-acre coal ash dump in rural Luzerne township. Not good and possibly unconstitutional, charge two human rights organizations, the Abolitionist Law Center (ALC) and the Human Rights Coalition (HRC) in a recently issued study (http://tinyurl.com/coal-prison).
They cite the Eighth Amendment, which forbids cruel and unusual punishment, and building a prison on a “massive toxic coal waste dump” might be just that. Over 40 million tons of coal waste had been dumped on the site “at depths approaching 150 feet in some places.” The study states that, “Ash is regularly seen blowing off the site … and collecting on the houses of local residents as well as the prison grounds at SCI Fayette.”
Researchers began surveying prisoners in Aug. 2013, and by last July found that:
In addition, 11 prisoners died from cancer between Jan. 2010 and Dec. 2013, and another six reported being diagnosed with cancer.
Of course, self-reported data can skew any study, a problem the authors admit, saying that “the inherent limitations of the survey make it impossible to empirically show that prisoners at SCI-Fayette are getting sick at an unusually high rate or that these illnesses are caused by pollution at the dump.”
More study is needed, of course. But the researchers argue that the patterns they found are “alarming,” especially the respiratory problems because they are the symptoms most associated with airborne pollution. They also argue that prisoners are prone to under-report health problems so as to not appear vulnerable, or raise the ire of guards.
The ACL and the HRC know they lead a fight that not too many others will join. We’re talking about prisoners, after all, many who’ve committed heinous crimes. It’s tempting to think that they deserve whatever plague blows their way.
The Shawshank Redemption makes many lists of the greatest movies of all time. In it, Andy Dufresne (Tim Robbins), a man imprisoned for murdering his wife and her lover, tells Red Redding (Morgan Freeman) that he didn’t commit the crime. Red tells Andy that he’ll fit right in because: “Everyone in here is innocent, you know that?”
No one at SCI Fayette is innocent in the eyes of the law, and so have forfeited some of their Constitutional rights. But not all of them.
If the jury is still out on ACOs, a study by Harvard researchers published in today’s New England Journal of Medicine could be a sign that the verdict will ultimately be that they work.
Judging by these results, ACOs seem effective at reducing health spending, albeit by a modest amount, but may not make much of a difference when it comes to performance measures like hospital readmission.
CMS has previously reported that Pioneer ACOs are a spending reduction success story and save the Medicare program money.
What’s new here is that an independent group of researchers, using some rigorous research methods, have arrived at pretty much the same conclusion.
The Harvard researchers also supplied some details and nuances. Here are a few of them:
The overall finding of the study was that Pioneer ACOs as a group program reduced health care spending by 1.2%, or by $29.20 per beneficiary per quarter, during the first year of the program.
That modest but statistically significant decrease translates into $118 million less in Medicare spending when the spending reductions by all 32 Pioneer ACOs savings are added up. That total exceeds the $76 million in bonuses paid by CMS to the Pioneers ACOs by $42 million, the Harvard researchers pointed out. In other words, it was an okay deal for taxpayers.
The Pioneer ACOs did not, though, result in significant changes in hospital readmission rates, screening mammography, or hospitalizations for conditions like congestive heart failure, which research has shown can be prevented with appropriate ambulatory care. If you are going to argue for ACOs, it appears it will have to be on economic grounds, not big gains in health care quality. The Pioneers were associated with a small increase in the rate of use of preventive services for diabetes, according to the Harvard researchers.
Sovaldi, Harvoni, Viekira Pak, a slew of oncology meds—they’re all contributing to specialty pharmacy sticker shock.
Ivacaftor (Kalydeco) for cystic fibrosis hasn’t been in the news quite as much, but priced at $300,000 per year, it’s also part of the trend of super-high-priced drugs that is sweeping American health care.
Approved by the FDA two years ago, ivacaftor targets a particular genetic mutation that affects only about 4% of people with cystic fibrosis, so despite that stratospheric price, it hasn’t had the same effect on budgets as the hepatitis C drugs like Sovaldi or, increasingly, expensive cancer drugs.
One of our regular contributors, Krishna Patel, wrote about ivacaftor in this month’s issue of Managed Care, and her takeaway was for payers to follow the guidelines for ivacaftor and not erect obstacles to people getting a drug that might make a huge difference in their lives.
But the FDA is expected to approve a new medication some time this year that combines ivacaftor with another medication, lumacaftor. And rather than working in small percentage of people with cystic fibrosis, this new combination is expected to be effective in roughly half of those with the cystic fibrosis who are ages 12 and older.
Kevin Bowen and Patrick Gleason of Prime Therapeutics are presenting a poster today at the annual meeting of Academy of Managed Care Pharmacy in San Diego that gives some estimates of the financial consequences of this new drug on health plans and other payers.
If Bowen and Gleason have crunched the numbers correctly, this new combination drug for cystic fibrosis might also be quite the budget buster.
“We wanted to open people’s eyes to the reality of these numbers,” says Gleason.
And, says Gleason, it’s wishful thinking to believe the cost of the new combination will be offset by avoidance of medical costs, which can be extraordinarily high for cystic fibrosis because some people with the disease get lung transplants.
“You can’t pay for this with medical cost avoidance,” says Gleason.
Okay, now let's do the numbers
Bowen and Gleason started with the premise that the new ivacaftor-lumacaftor drug will be roughly the same price as ivacaftor alone and, by looking Prime Therapeutics claims, put a price tag of $367,000 per year on it, which includes medical and pharmacy costs.
They figured someone might be on the drug for 28 years if they start at about age 12 (the harsh truth is that people with cystic fibrosis face a limited life expectancy).
So the lifetime treatment cost can be estimated at $10.3 million ($367,000 x 28 = $10.3 million).
Then they looked at medical costs of someone who got a lung transplant. Lung transplants are terrifically expensive. The total medical and pharmacy cost in the year of the transplant is $577,000 and in subsequent years, $143,000.
Cystic fibrosis care without a lung transplant or ivacaftor costs about $76,000 per years.
Bowen and Gleason didn’t do this math, but if you figure lung transplants are done as a last resort, it is reasonable to assume that a person with cystic fibrosis might have many years of care prior to lung transplant, then a transplant, followed by years of post-transplant care.
So the equation for lifetime treatment costs might look something like this:
$1.368 million (18 years x $76,000) + $577,000 (the year of the lung transplant) + $1.287 million (9 years x $143,000 of post-transplant care).
That adds up to $3.232 million, which is about a third of the $10.3 million in life treatment cost for the ivacaftor-lumacaftor combination (again, presuming it is priced at about the same as ivacaftor).
In their poster, Bowen and Gleason say that about 4.5 out of every 100,000 members would meet the criteria for the new combination drug and that 90% would take the drug. So for Prime Therapeutics population, that translates into increased cost of $1.01 PMPM, or $150 million per year.
These new drugs for cystic fibrosis seem to be a great advance. If they mean that the young people who are affected by very difficult disease can live healthier, presumably happier, and perhaps longer lives, they deserve the welcome mat—and more. We want medical progress.
But at these prices how are we going to pay for it?
No one is against all the progress being made in cancer treatment, which includes milder, effective treatments and medications tailored to take advantage of the genetic weaknesses of tumor cells.
This morning I woke up to front-page story in the Philadelphia Inquirer about the University of Pennsylvania and Novartis settling a patent dispute that had cast a legal cloud over their immunotherapeutic treatments, which rev up a person’s own immune system to take on the cancer and its runaway growth instead of relying on toxic chemicals.
But is the price of this progress just way too steep?
Oncology drugs are a hot topic
Many people are wrestling with these questions. Two sessions this afternoon at the Academy of Managed Care Pharmacy’s annual meeting in San Diego are devoted to management of oncology drugs.
Meanwhile, this morning Health Affairs unveiled its April issue devoted to cost and quality of cancer care.
I thought one of the most thought-provoking articles in Health Affairs was by Darius Lakdawalla, a professor at University of Southern California, and his colleagues.
They argued that we shouldn’t just be looking at the dollar outlay for cancer drugs:
The more complete approach suggested in the health economics literature offsets the growth in costs with the corresponding gain in patient value that resulted from it.
Sounds good. But what is “patient value?”
Some QALY math
Lakdawalla and his team deftly answer that question by cooking something they called quality-adjusted cost of care.
Their recipe starts simply enough with the cost of the new treatment. Next, they measured the growth in the value of the treatment in terms of how much it adds in quality-adjusted life-years (QALYs)—and they also put a price tag on the QALYs. How a QALY should be priced is always open for discussion, but Lakdawalla and company settle on a not-unreasonable figure of $100,000.
Then they compared the added cost of the new treatments to the monetized QALYs to show the net change in quality-adjusted cost of care.
In slightly plainer English, they compared the cost of these high-priced cancer drugs with the QALYs they provide, with QALYs valued at $100,000 per.
An example always helps clarify this kind of number crunching, and Lakdawalla provides two.
Colorectal cancer tx: A break-even proposition
The first example they picked is colorectal cancer treatment. As they explain, in the early 90s, almost all colorectal cancer patients were treated with fluorouracil and leucovorin. The cost for 24 weeks of treatment was $121. One hundred and twenty-one dollars! That’s cheap by any standard.
In 1998, a regimen that included irinotecan became popular and the average cost of treatment was $688. That still seems like a bargain.
But in the early 2000s, four new drugs are introduced for the treatment of colorectal cancer: capecitabine (Xeloda), oxaliplatin (Eloxatin), bevacizumab (Avastin), and cetuximab (Erbitux). The days of frugal colorectal cancer treatment were over. The cost of a treatment cycle climbed to more than $35,000.
So, in relatively short period of time, the cost of colorectal cancer treatment went from being roughly equivalent to the price of a television to being the equivalent of the price of a Lexus.
But, of course, we are not talking about TVs and cars, but people's lives. So is the extra money worth it? Lakdawalla reports that patients with stage 4 colorectal cancer treated with fluorouracil and leucovorin lived, on average, just over a year.
Patients treated with bevacizumab and oxaliplatin live, on average, almost twice as long.
(Patients with less severe cases of colorectal cancer probably live longer but the researchers were cautious and assumed that the QALY gain was the same as that for the stage 4 cancers.)
There are more assumptions and math involved in their quality-adjusted cost of care calculations, but here is bottom line from the researchers:
The average treatment cost increased sharply between 1998 and 2005, but the quality-adjusted cost of care remained largely flat because of roughly offsetting gains in health. To be precise, health care costs increased by $34,493 as a result of the new products. However, health improved by 0.33115 QALYs, valued at $33,115 per person. Thus, the quality-adjusted cost of care increased by only $1,377 during this time period. In this case, society got roughly what it paid for
The last sentence is worth repeating: we got what we paid for.
Lakdawalla performed a similar set of calculations of multiple myeloma. The annual cost of drugs to treat the blood marrow cancer increased from about $36,000 in 2004 to more than $109,000 in 2009. But crank up the quality-adjusted cost of care calculator, and that tripling seems like a good deal. Here’s Lakdawalla’s summary:
Although cost increased, the quality-adjusted cost of care for patients with multiple myeloma fell by $67,863 per patient between 2004 and 2009 because of offsetting health gains valued at $140,800 for all patients with multiple myeloma.
An important caveat: The gains were mainly among patients who received new therapies as second-line treatments. For those receiving only established first-line therapies, the quality-adjusted cost of care increased by $49,000 per patient because the price of thalidomide went up.
Still, how do we pay for it?
There is a lot of talk these days about value-based care and payment. It seems to me that Lakdawalla’s research grounds that chatter in some numbers, even if those numbers are built on several assumptions. Certainly these kinds of calculations will help payers compare treatments.
Some tiny sliver of the public may even find them helpful as the way American health care is paid for and delivered changes.
Still, the big questions remain. How are we, as a society, going to pay these oncology bills? If they are paid, who exactly is going to foot the bill? And are pharmaceutical and biotech companies making the price of the progress they are providing us far too dear?
We usually want to be in the middle of networks with plenty of strength and sprawl. People strive to have large professional and social networks. Wirelesss carriers brag about how big and reliable their networks are.
It was that way in health care, too. After the pushback against managed care in the 1990s, insurers loosened the reins. Come open enrollment, people were enticed to sign up for a health plan that had cast a wide net with a wide choice of providers or, often more importantly, a plan that their favorite doctor accepted.
But now all talk is of narrow networks and being much more selective—some providers say discriminatory—about which providers are included in health plan’s network, all in the name of value-based care.
David Harlow, one of my favorite bloggers (full disclosure: although he wouldn’t remember, his son went to the same day care in Newton, Mass., as my son) said this about narrow networks a couple of years ago:
"One managed care strategy that has long seemed incompatible with broad notions of the right to freedom of choice is the notion of establishing narrow networks. By establishing narrow networks, managed care plans have the opportunity to, um, manage care."
Harlow also wrote this:
“…the point is that for managed care to work, the network must be managed. We've been kidding ourselves by pretending otherwise.”
But not everyone is so accepting of narrow networks as an obviously necessary ingredient in the organization of health care.
Last year, Medical Economics ran a piece with this punchy headline: “Narrow Networks: Obamacare’s broken promise and how doctors and patients can fight back.”
Valora Gurganious, of DoctorsManagement, a medical practice consulting firm in Knoxville, Tenn., was quoted in the piece as saying this about narrow networks:
“Their patients are being ripped away from them and that’s not right. They’re not being allowed to practice their craft. We’re in a major transition, and it’s going to be bumpy.”
We’ll see just how bumpy the ride is going to be.
A panel on the emergence of narrow networks I am moderating this morning at the 12th annual World Health Care Congress should provide some navigational insights.
The members of the panel include Juan Serrano, senior vice president at Catholic Health Initiatives; Jeffrey Gold, a senior vice president at the Healthcare Association of New York State; and Joseph Berardo, Jr., president and chief executive officer of MagnaCare.
We’ve had some discussions in preparation for this morning’s discussion. Juan, Jeff, and Joseph are on the optimistic side of the spectrum when it comes to narrow networks and the potential they have for getting the cost–quality balancing act right.
One thing I hope we can get into this morning is the role that ACOs will play in creating narrow networks. Provider organizations graded on quality and bearing financial risk may have an especially strong incentive to put together narrow networks.
I also help we’ll discuss what narrow networks will mean for the public. All of this aspirational chatter about value-based care will seem hollow and self-serving if people feel that narrow networks keep them from the health care they want and need.
If you're into health care policy and law, tomorrow is your Superbowl, World Series, and World Cup all rolled into one.
Oral arguments for King v. Burwell are scheduled to start tomorrow at 10 a.m. As Richard Mark Kirkner explained in our February issue, the case could uphold the ACA or severely crimp the law by eliminating premium subsidies in the 34 states that use the federal health exchange.
The ACA has been resilient, and many health care interests would rather live with the law, despite its flaws, than see it come undone.
The politics are tricky. People may complain mightily about "Obamacare," but Republicans are worried about blowback if millions of Americans lose premium subsidies and thus health care coverage. Ben Sasse, a Republican senator from Nebraska, has proposed that Congress extend Cobra-like coverage to those who bought policies on the federal exchanges if the plaintiffs succeed in King v. Burwell.
We won't know whether they did till the court ruling comes out in late June or July.
Meanwhile, many a gigabyte has been used analyzing and handicapping King v. Burwell.
The case hinges on whether premium subsidies are available only to people who bought coverage on exchanges established by a state.
Elizabeth B. Wydra, chief counsel at the Constitutional Accountability Center, wrote this in the Washington Post:
The act’s challengers argue that Congress included those words as a way to push states to establish their own exchanges by threatening to withhold tax credits from their citizens — and that this “threat” was necessary to secure the crucial vote of then-Sen. Ben Nelson (D-Neb.). But Nelson has gone on record saying that is absolutely false.
Wydra is not a disinterested party. Her organization has filed an amicus brief with the court on behalf of current and former members of Congress and state legislatures supporting the nationwide availability of premium subsidies.
Nicholas Bagley, a University of Michigan law school professor who was a source in Richard Mark Kirkner's piece about King v. Burwell for Managed Care, made a similar point a few days ago in The New York Times:
The plaintiffs claim that Congress always meant the fallback exchanges to fail. The potential collapse of the state’s market for individual insurance, they argue, was just another (hidden) threat to get states to establish their own exchanges.
But that’s nonsense. If Congress had meant to punish uncooperative states, it didn’t have to saddle them with dysfunctional exchanges. It could have left them with no exchanges at all. Congress created a fallback because it wanted to enable everyone — even people in states that objected to health care reform — to secure affordable insurance. That’s the only way to make sense of the law as a whole.
But Michael Cannon, health policy director of the libertarian Cato Institute, disagrees with Wydra and Bagley. In Kliff's narrative, Cannon is a central character in the legal genesis and strategizing that resulted in tomorrow's high court legal drama. In November, Cannon wrote a myth-deblunking post on the Scotusblog that said that Congress considered variations of premiums subsidies and exchanges during the sausage-making of the ACA and that the language in the statute is purposeful and intended:
Many bills Congress considered in 2009-2010 offered exchange subsidies in all states. Other bills offered exchange subsidies only in states that cooperated on implementation. Some members undoubtedly preferred the former type. The one that passed Congress, however was the latter type. The fact that that was the only bill that could pass Congress means that members voting for the ACA intended to enact this restriction, even if they ideally would have preferred another bill.
Who is right, Wydra and Bagley or Cannon? It will be up to the Supreme Court decide. It may be a very interesting summer in American health care.
Last May, two health advocacy groups filed a complaint with the Office for Civil Rights at HHS accusing four insurers selling plans in Florida of discriminating against people with HIV/AIDS by putting the drugs for treating the condition on the top tier of their formularies.
Researchers at the Harvard School of Public Health have followed up that complaint with their own research into what they are calling “adverse tiering.” The researchers, Douglas B. Jacobs and Benjamin D. Sommers, reported their results in this week’s New England Journal of Medicine.
The Harvard researchers looked at silver-level plans listed in the federal health exchange in 12 states, six with insurers mentioned in the complaint (Delaware, Florida, Louisiana, Michigan, South Carolina, and Utah) and six of the most populous states without any of those insurers (Illinois, New Jersey, Ohio, Pennsylvania, Texas, and Virginia).
Jacobs and Sommers investigated the formularies and benefit summaries of the plans for nucleoside reverse-transcriptase inhibitors (NRTIs), a class of drugs that is a mainstay of HIV/AIDS treatment. They defined adverse tiering as placing all NRTIs on tiers with a coinsurance or copayment level of at least 30%. They used the drug prices paid by Humana, which publishes those prices online, to estimate cost.
Here are some of the highlights of what they found:
The Harvard researchers mentioned two consequences of adverse tiering: financial hardship for those who are affected and, over time, adverse selection to health plans that don’t use adverse tiering.
Jacobs and Sommers also suggest ways to mitigate the effect of adverse tiering, starting with price transparency and a clear and concise explanation of a drug’s overall cost for the enrollee. In isolation, they say, price transparency could actually make adverse selection worse. So they also propose establishing “protected conditions” for which there would be an upper limit on cost sharing. Protected conditions are nothing new, Jacobs and Sommers note, pointing to Medicare Part D and drugs for HIV, seizures, and cancer.
Finally, the Harvard researchers float the idea of requiring health plans to offer drug benefits that meet a set actuarial value. As they explain it, that would mean that the percentage of drug costs paid by a health plan would have to meet a certain threshold of, say, 70%.
When the HHS complaint hit the news in May, the health plans responded in several ways: that they viewed HIV drugs to be specialty drugs and covered in the same way as the expensive drugs for conditions like rheumatoid arthritis and multiple sclerosis; that enrollees wouldn’t have to pay anything after they hit ACA limits on out-of-of-pocket expenses; and that they offered a variety of services to their members with HIV/AIDS.
In November, Cigna agreed to restructure its drug plan for HIV drugs. According to the Wall Street Journal, while admitting no wrongdoing, the company entered into an agreement with Florida insurance regulators that, among other things, moved generic HIV drugs to a lower-cost generic tier and set limits on copays.
Who knows how adverse tiering will play out.
But in addition to bringing attention to a new term in the managed care lexicon (they didn’t exactly coin it), the Harvard researchers have definitely started an important conversation.
We need all the light we can get on drug benefit coverage—arcane and difficult to master even by the experts among us.
And any discussion that aids efforts to make them fair and equitable should be welcomed with open arms.
The use of new hepatitis C therapies will increase rapidly, but the effect on spending is greatest early on, according to a PricewaterhouseCoopers analysis. According to the consulting firm’s projections, the expensive medications will eventually lower health care spending because they will improve the health of people with hepatitis C patients, so liver transplants and other high-cost medical interventions will be avoided.
Source: “Medical Cost Trend: Behind the Numbers 2015,” PricewaterhouseCoopers Health Research Institute, June 2014. PwC analysis based on National Health and Nutrition Examination Survey and 2012 Truven claims data from employers.
Three more organizations have exited CMS’s Pioneer accountable care organization (ACO) program, leaving just 19 of the original 32 participants in the fold for the elite program’s third year.
The Franciscan Alliance in Indianapolis, the Genesys Physician Hospital Organization in Flint, Mich., and the Renaissance Health Network in Wayne, Pa., in the southeastern part of the state, are leaving the Pioneer program, according to a list posted on the CMS website this afternoon.
Sharp Healthcare in San Diego had announced in August that it was dropping out.
Nine organizations left the Pioneer ACO program last year, leaving 23 participants in the program’s second year. This round of dropouts brings the survivors down to 19. Here is list of them: PioneerSurvivors
Sharp executives have said that Pioneer financial benchmarks worked against their ACO because they didn’t factor in higher wage costs in San Diego and special payments to hospitals for taking care of Medicaid payments.
The Pioneer program is an important proving ground for the much-talked-about ACO model because only large organizations with care coordination and cost control bona fides were invited to participate. The Pioneer organizations are eligible for greater payments if they beat financial benchmarks set by CMS than the ACOs participating in CMS’s Medicare Shared Savings Program, but they are also subject to greater penalties if they fall short.
Peter Wehrwein is a veteran health care writer and editor who contributes frequently to Managed Care.
Maybe, just maybe, accountable care organizations (ACOs) are the best bet for hitting the health care exacta of controlling costs and improving the quality of care.
Figures released by CMS on September 16 showed that the 23 organizations in the elite Pioneer program and 220 in the Shared Savings program produced over $372 million in savings while earning $445 million in shared savings payments.
As a group, the Pioneer ACOs improved on 28 of the 33 quality measures that CMS grades ACOs on. The Shared Savings ACOs improved on 30 of them. CMS also reported that the Pioneers did well on measures of patient and caregiver experience, an indication that the cost and quality efforts don’t result in a leaner, but meaner, form of health care.
These figures are preliminary results from the second year of the Pioneer program and from the first year Shared Savings program.
The ACO news isn’t all sunshine and light. Three of the Pioneer ACOs generated losses, and Sharp Healthcare, a five-hospital system in San Diego, announced in August that it was leaving the program. One of the Shared Savings ACOs overspent its target by $10 million and owes $4 million in shared losses. CMS didn’t name the three Pioneers or the one Shared Savings ACO in its press release.
Peter Wehrwein is a frequent contributor to Managed Care.
How will the Supreme Court rule in King v. Burwell?
Any day now, the Supreme Court will hand down its decision. How will the court rule?