Reimbursement

In Drug-Pricing Dispute With Humana, Walgreens Accuses Arbitrator of ‘Betrayal’

Walgreen Co. filed a lawsuit last month asking a judge to overturn a $642 million arbitration judgment awarded to Humana Inc. pertaining to a dispute over drug pricing. The pharmacy giant alleged that it was seeking the reversal in part because a law firm that used to represent Walgreens allegedly switched sides and encouraged Humana to seek the arbitration. “This arbitration began in betrayal and ended in a miscarriage of justice,” Walgreens’ filing claimed.

The case highlights a common disagreement between payers and pharmacies over reimbursement, although it is unusual to see a company blame a law firm for sparking such a clash, according to a lawyer and pharmacist who spoke with AIS Health, a division of MMIT.

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$6M Settlement Sheds Light on Ongoing ‘Shady Behavior’ of Some MEWAs

After the Trump administration loosened the regulations governing association health plans — and ignited a court battle that ultimately blocked the new rules — AHPs and their close cousin, multiple employer welfare arrangements (MEWAs), have largely faded from the headlines. However, a recent announcement from the Dept. of Labor (DOL) regarding a MEWA that failed to pay $54 million in health claims shows that the fraud and insolvency issues that have long plagued such plans haven’t gone away.

“My sense is that there are what we call self-funded MEWAs out there that may be kind of operating under the regulatory radar,” says Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms (CHIR).

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Option Care Looks to Offer Broader Home-Based Care Model Through Amedisys Purchase

On May 3, Option Care Health, Inc., the largest independent provider of home and alternate site infusion services in the U.S., revealed that it was acquiring Amedisys, Inc., which provides home health, hospice and high-acuity care, for $3.6 billion. While opinions on the deal differed, one industry expert contends that the transaction offers multiple long-term benefits within the ever-evolving health care space, especially the home setting.

The deal comes less than a week after Option Care unveiled its wholly owned subsidiary Naven Health, Inc., a nationwide home infusion nursing network and platform employing more than 1,500 nurses and serving all 50 states.

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Pear Bankruptcy Filing Highlights Reimbursement Barriers for Digital Therapeutics

Pear Therapeutics, Inc. this month filed for Chapter 11 bankruptcy, saying that it had laid off about 92% of its staff but would still pursue a sale of the company or its assets. Health care insiders tell AIS Health, a division of MMIT, that the announcement by one of the pioneers in the prescription digital therapeutics (PDT) industry highlights the challenges such companies face getting their products reimbursed. The difficulties are exacerbated by investors being wary of backing companies that promise future growth but have yet to turn a profit.

In 2017, Pear’s reSET digital app to treat patients with substance use disorder became the first FDA-approved PDT, which are software-based therapies to treat medical and behavioral conditions. Since then, the FDA has approved more than 40 DPTs, according to Brandon Aylward, Ph.D., director of digital health for RTI International, a nonprofit research institute.

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With Hospitals Under Financial Pressure, Payers May Soon Feel Rate Squeeze

Many of the largest U.S. hospital systems reported negative net income from 2022, a list that includes Kaiser Permanente, Mass General Brigham, and the Cleveland Clinic, each of which lost at least $1 billion. Although some prominent hospital systems’ red ink is due to negative investment income, the latest available data suggest that inpatient volumes are down from their pre-pandemic baseline and are likely to stay that way. As a result, experts tell AIS Health, a division of MMIT, hospitals are likely to be even more aggressive with payers than they have been in recent rate negotiation rounds to replace some of that lost revenue and expired federal pandemic relief funds.

Consulting firm Kaufman Hall & Associates, which compiles monthly indices of hospital finances, found in a March 28 report that the median hospital operating margin was -1.1% in February, a slight decrease from January’s -0.8%. The report added that “due to external economic factors, relatively flat margins are likely to continue in the near term.”

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UnitedHealth, Cigna Prior Authorization Moves May Signal ‘Course Correction’

Two major health insurers, UnitedHealthcare and Cigna Healthcare, say they’re reworking their prior authorization (PA) policies to improve a process that has triggered a growing chorus of complaints from health care providers and patients. The moves come as CMS is poised to finalize a new regulation that requires insurers to speed up and streamline their PA processes. Industry experts say the policy changes are long overdue and could return PA to serving a useful — rather than overly burdensome — role in the health care system.

In a March 29 post on its website, UnitedHealth wrote that starting in the third quarter of this year, it will eliminate “nearly 20% of current prior authorizations, as part of a comprehensive effort to simplify the health care experience for consumers and providers.”

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Insurance Industry, Biden Admin Trade Barbs Over Medicare Advantage ‘Cuts’

In the view of Medicare Advantage organizations (MAOs) and their allies, federal regulators have been unjustifiably assailing an increasingly popular program among seniors. But to the Biden administration, MAOs’ complaints are unfounded — and their attempt to paint the latest round of proposals as a pay cut is intentionally misleading.

To one longtime health care industry observer, both sides’ arguments amount to “just a lot of noise” that doesn’t do much to prove their cases in the court of public opinion.

As for whether MAOs are actually in line for a pay cut, “it’s one of those things where it’s too close to call…and they’re arguing in the review booth at an NFL game,” says John Gorman, who worked at CMS during the Clinton administration and is now chairman and CEO of Nightingale Partners LLC.

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Study Could Help Policymakers Set Fair Reimbursement Rate for Ground Ambulances

Ground ambulance services are exempt from the federal ban on balance billing, also known as surprise billing, and a new study published in the journal Health Affairs found that privately owned ambulances are more likely to balance bill than their public sector counterparts. The study’s findings will doubtless be considered by a new federal panel convened to recommend solutions to the complexities of ground ambulance balance billing, which could shape potential legislation to fix the problem in the current Congress — legislation that could find the federal government setting rates for ambulance reimbursement.

A key reason that ground ambulance services were not included in the No Surprises Act (NSA) — the 2020 law that bans medical balance billing — is the ownership structure of ambulance services. About 60% of ground ambulance providers are funded by local governments as part of their fire departments or as a quasi-utility, according to Loren Adler, a coauthor of the study and an economist and associate director of the USC-Brookings Schaeffer Initiative for Health Policy. That arrangement is somewhat unique in the U.S. health care system.

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New Blues-Owned Drug Contracting Org Wants to Work With, Not Against Providers, CEO Says

A new venture founded by Blue Cross and Blue Shield affiliates, called the Synergie Medication Collective, aims to improve affordability and access to drugs covered under the medical benefit — a category that includes cancer medications and cell/gene therapies. Synergie’s chief executive says the goal isn’t to disrupt the current distribution system for clinically administered drugs, but rather to leverage the Blues’ size and bargaining power to scale up innovations like outcomes-based contracting for some of the country’s priciest drugs.

“We’re basically a medical contracting organization,” Synergie CEO Jerrod Henshaw tells AIS Health, a division of MMIT. “And by that, I mean we’re not going to be buying and billing like a Vizient or a HealthTrust and displacing any of that. We’re not going to be in the distribution channel.”

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Medicaid Plans Aren’t Properly Reporting MLR Data, OIG Finds

Many of the medical loss ratio (MLR) reports that Medicaid managed care organizations are submitting to states are incomplete, and much of that missing data concerns how much MCOs are spending on administrative services, according to a new report from the HHS Office of Inspector General (OIG).

The report, published in September, is part of a “body of work” that the watchdog agency initiated a few years ago that focuses on the implementation of the federal MLR requirements for Medicaid managed care ushered in via the 2016 update to MCO regulations, the HHS-OIG Office of Evaluation and Inspections tells AIS Health via email. The new report builds upon a data brief issued in August 2021 that “served as a first-of-its-kind nationwide landscape of Medicaid managed care MLRs,” and found that most states established a minimum MLR of 85% for their contracted MCOs. That means plans must spend at least 85% of their premium revenue on covered health care services and quality improvement activities.

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