Reimbursement

CMS Fines 2 Georgia Hospitals for Non-Compliance with Price Transparency Rule

In the first enforcement action since CMS’s Hospital Price Transparency rule went into effect at the start of last year, the agency on June 7 fined two hospitals in Georgia a total of more than $1 million for non-compliance with price transparency requirements. Health policy experts tell AIS Health, a division of MMIT, that they hope CMS ramps up its enforcement efforts, which could help payers, patients, employers and other stakeholders benefit from price comparison and greater competition.

CMS levied an $883,180 penalty against Northside Hospital in Atlanta and a $214,320 fine against Northside Hospital in the Atlanta suburb of Canton, Ga. The penalties were announced the same week that a research letter published in JAMA revealed that only 5.7% of hospitals had complied with the federal transparency rule between six and nine months after the legislation was enacted on Jan. 1, 2021 — the latest in a series of studies drawing similar conclusions.

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MedPAC Mulls Method of Reducing High-Cost Outlier Impact on Risk Scores

After its last two reports suggested comprehensive reforms to Medicare Advantage plan reimbursement, the Medicare Payment Advisory Commission (MedPAC) in its June report to Congress shifted its MA focus to one area in particular: the potential for high-cost patient outlier data to skew the calculation of risk scores that determine MA plans’ risk-adjusted pay.

Although the Hierarchical Condition Category (HCC) risk adjustment model is intended to produce scores that reflect the relative health status of a plan’s enrollees, fee-for-service (FFS) Medicare spending data that is used to calculate risk scores can include a small group of outliers whose annual costs are much higher than the average costs of patients with a given condition, explained MedPAC Executive Director Jim Mathews during a June 15 web briefing with members of the press.

Health Insurers, Hospitals Grapple With Inflation, Labor Costs

While inflation hits consumers at car dealerships, airline counters and grocery stores, health insurers and hospitals also are seeing inflationary pressure, particularly with the so-called Great Resignation underway and labor costs skyrocketing.

The Labor Department reported on May 11 that the Consumer Price Index rose 8.3% over the 12-month period that ended in April 2022, down only slightly from the four-decade high of 8.5% reported in March.

“There’s no question that the labor market is tight. So, as you think about inflation, we hear it certainly from our provider partners, and we see it in certain parts of our own business,” Anthem, Inc. CEO Gail Boudreaux told investors during an April 20 conference call to discuss first-quarter 2022 financial results, per The Motley Fool.

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Insurers Are Helping Patients, Providers Deal With Medical Debt

Although fewer Americans are dealing with medical-related financial hardships since the coronavirus pandemic began, the percentage is still high and could rise further as Medicaid redeterminations resume, major Affordable Care Act subsidy expansions expire and inflation eats away at people’s incomes and savings. To that end, payers are implementing ways to ease the burden of high out-of-pocket costs for patients and to help providers improve their collections, even as one expert calls the services a “Band-Aid attempt to cover the widening healthcare affordability gap.”

An Urban Institute report published on May 11 found that 16.8% of adults from 18 to 64 years old had medical debt in April 2021, down from 23.6% in March 2019. The Urban Institute cited several potential reasons for the decline, including a reduction in health care utilization, pandemic relief measures and growth in Medicaid enrollment.

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Study: With High Prices, Rebate Revenue Is Growing for PBMs

New research published in JAMA Health Forum found that rebate revenue for PBMs grew between 2015 and 2019 — but that growing rebate revenue was not passed on to patients.

The research letter’s authors measured both prerebate and postrebate drug costs taken from medical loss ratio (MLR) filings made by plans to CMS. The research sample includes commercial insurance filings from small group, individual and large group health plans across “approximately 2,200 unique health plans” covering 70 million lives.

OIG Report on Prior Authorization Denials Puts Pressure on CMS

As Medicare Advantage insurers face increasing scrutiny from lawmakers over coding practices and a pending pay boost of 8.5% next year, a new HHS Office of Inspector General report on rates of prior authorization and payment denials in MA doesn’t do much to help their case. Although it was based on just a weeklong sample of denial cases, the report adds to a growing body of evidence that the prior authorization process in MA is ripe for improvement and in need of either more guidance from CMS and/or stronger oversight.

Receiving widespread coverage at press time, starting with a New York Times article summarizing it as “saying that insurers deny tens of thousands of authorization requests annually,” OIG on April 28 released a report titled, “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care.” The report immediately drew praise from providers, such as the American Medical Association (AMA), which issued a statement agreeing with federal investigators’ recommendations on reining in inappropriate denials. But AMA argued that more needs to be done, such as passing a bipartisan bill that aims to establish new electronic prior authorization (PA) requirements on MA insurers.

PBM Critics Increasingly Take Their Grievances to Court

As scrutiny on PBMs continues, various stakeholders are turning to the legal system to challenge the business practices of major firms.

Centene Corp. has been the target of the most litigation, having now reached settlements with nine state attorneys general over allegations that its PBM subsidiary Envolve overcharged those states’ Medicaid programs for prescription drugs, according to a filing with the Securities and Exchange Commission. The company has set aside $1.25 billion to fund those settlements and potential future lawsuits, and it is in the process of restructuring its PBM holdings.

News Briefs: Humana Wins in Rite Aid Reimbursement Dispute

AllianceRx Walgreens Prime — a specialty and home delivery pharmacy business owned by Walgreens Boots Alliance — is rebranding to AllianceRx Walgreens Pharmacy. The move comes after Walgreens assumed full ownership of the business; previously, it was a joint venture between Walgreens and the PBM Prime Therapeutics. In addition to the company’s name change, it promoted Tracey James, R.Ph., from the role of senior vice president to chief operating officer.

Rite Aid Corp. must pay Humana Inc. $123 million after an arbitrator found that the retail pharmacy chain inflated reimbursement claims above the “usual and customary” prices for drugs, Stat reported. Rite Aid’s rival Walgreens Boots Alliance Inc. faces a similar lawsuit brought by several Blue Cross and Blue Shield affiliates. In both cases, the payers allege that the pharmacy chain systematically charged the health plans inflated prices for generic prescription fills. The health plans claim that their contracts with the pharmacies entitled them to reimburse the pharmacies for drug fills at the lowest price that the pharmacies charged for the drug in question, an arrangement called “usual and customary” pricing. However, the health plans say that the pharmacies charged cash-paying customers less than the “usual and customary” price submitted to health plans for reimbursement. Rite Aid plans to ask a federal court to vacate the arbitrator’s decision in the Humana case, per Stat, while the Walgreens-Blues suit is pending.

News Briefs: Lawmakers Urge CMS to Rethink 8.5% Medicare Advantage Plan Rate Increase

Sen. Elizabeth Warren (D-Mass.) and other progressive lawmakers wrote CMS Administrator Chiquita Brooks-LaSure asking the agency to reconsider recently finalized policies that would lead to an average revenue increase of 8.5% for Medicare Advantage plans next year. Citing the Medicare Payment Advisory Commission’s March 2022 Report to the Congress, lawmakers wrote that MA plans last year were paid 4% more per enrollee than fee-for-service Medicare, even though the program was designed to generate savings by paying insurers rates set at 95% of those used by FFS Medicare. “To preserve Medicare and its Hospital Insurance (HI) Trust Fund, we urge CMS to mitigate the announced payment increases for Medicare Advantage plans so they are on par with payments to fee-for-service Traditional Medicare and take additional steps to address overpayments and increase transparency in the Medicare Advantage program,” they wrote on April 20.

News Briefs: Express Scripts Wins Anthem Lawsuit

The long-running lawsuit between Anthem, Inc. and Express Scripts — over whether the PBM now owned by Cigna Corp. overcharged Anthem for prescription drugs — has finally concluded. Anthem first sued Express Scripts in 2016, alleging primarily that the PBM failed to honor its contractual agreement to provide “competitive benchmark pricing” for prescription drugs and thus owed the insurer $14.8 billion in damages. Ultimately, Judge Edgardo Ramos dismissed most of Anthem’s claims, finding that the companies’ contract did not “obligate Express Scripts to provide competitive benchmark pricing, but merely to negotiate in good faith in the event that Anthem’s market analysis shows non-competitive pricing.”