Reimbursement

Virtual care has become a mature industry during the COVID-19 pandemic, with insurers and investors pouring money into telehealth startups. But the telehealth boom has changed how practitioners deliver care in ways that they don’t necessarily like, according to a new survey from McKinsey & Co. Though telehealth is here to stay, much remains unsettled about the way physicians use virtual care tools — and how they are paid to do so.

Nearly every physician now uses telehealth, according to McKinsey, and the change happened fast: 83% of physicians that the consulting firm surveyed in 2021 offered virtual services, versus 13% in 2019. The survey also found that by May 2021, 88% of consumers had used virtual care since the start of the pandemic.

After progressive Democratic lawmakers urged CMS to shut down a fee-for-service Medicare model aimed at fostering more value-based care arrangements, the agency’s Center for Medicare and Medicaid Innovation (CMMI) on Feb. 24 unveiled a revamped version that it said more closely aligns with its “vision of creating a health system that achieves equitable outcomes through high quality, affordable, person-centered care.” While the three types of Accountable Care Organizations (ACOs) that may participate starting next year appear to largely mirror the Direct Contracting Entities (DCEs) of the current Global and Professional Direct Contracting (GPDC) Model, CMS aims to ensure that participants in the new model operate as provider-led organizations, have a proven track record of providing care in underserved communities and will not be shifting any enrollees into Medicare Advantage — a key concern expressed by lawmakers and advocates.

The cost of emergency ground ambulance trips has risen considerably in recent years, according to recent research, and experts tell AIS Health that payers have limited power to push back. Nevertheless, the issue has caught the eye of policymakers amid a larger push to increase health care cost transparency and eliminate surprise medical billing, signaling that change may be on the horizon.

From 2017 to 2020, average charges and allowed amounts for both basic life support (BLS) and advanced life support (ALS) emergency ground ambulance transport increased, according to a new white paper from the nonprofit claims-data research organization FAIR Health.

Health insurers and PBMs are paying pharmacies low rates — from one cent to $10 — for filling prescriptions of COVID-19 drugs Paxlovid and molnupiravir, The Wall Street Journal reports. Those fees often don’t cover the costs of filling prescriptions for the Pfizer Inc. and Merck & Co. drugs, pharmacists say, and thus some are refusing to stock the pills. The National Community Pharmacists Association is also lobbying CMS to recommend a $40 reimbursement rate for Paxlovid and molnupiravir, similar to what Medicare pays pharmacies for administering the COVID-19 vaccine, according to the article.

A Phase III clinical trial of AstraZeneca and Daiichi Sankyo drug Enhertu (trastuzumab deruxtecan) delivered promising results that could position the therapy to become a standard treatment for a large group of breast cancer patients. In a Feb. 21 press release, the drug companies reported that Enhertu prolonged survival and slowed the progression of metastatic breast cancer with low levels of a protein known as HER2. The improvement was “clinically meaningful” when compared with standard chemotherapy, and this is the first time such a therapy has shown a benefit in breast cancer patients who have low levels of HER2 expression — a group comprising 55% of all breast cancer patients — the drugmakers said.

A little more than a month after the Biden administration directed private health plans to fully cover at-home COVID-19 tests, insurers now have additional clarity from regulators about how to operationalize that mandate. Still, the country’s largest insurers do not appear to have significantly changed their approaches for covering at-home COVID tests since mid-January — with some still requiring members to submit claims for reimbursement rather than setting up more consumer-friendly direct-coverage pathways.

A Jan. 10 guidance document issued by the administration stated that by Jan. 15, all private group and individual health plans had to start covering up to eight over-the-counter, at-home COVID-19 tests per month for each covered member without imposing cost sharing or utilization management requirements. Previously, pandemic relief legislation required insurers to cover only diagnostic tests that were processed by a lab and ordered by a health care professional.

Aside from a headline-grabbing estimated pay boost of nearly 8% for Medicare Advantage organizations next year, the Biden administration’s first preliminary rate notice didn’t include many surprises for MA and Part D sponsors. Instead, the notice focused largely on potential changes to star ratings in the name of advancing health equity and monitoring member experience. At the same time, the notice addressed one aspect of payments for insurers serving a large portion of patients diagnosed with end-stage renal disease (ESRD) but left another to future policymaking.

In addition to floating a variety of potential changes aimed at advancing health equity in the Medicare Advantage and Part D programs, CMS in its Feb. 2 release of the 2023 preliminary rate notice estimated that MA plans will see an average pay boost of 8% in 2023. And that estimate could change: CMS for 2022 originally estimated that plans would receive an average reimbursement increase of 2.8%, then bumped that estimate up to 4.08% in the final rate announcement.

To Evercore ISI, the 2023 estimate isn’t far off from the “all-in” rate increase of 7.6% in 2022, when considering average risk coding trend, which varies by company.

In January 2021, the outgoing Trump administration approved a Medicaid waiver that would have allowed Tennessee to do something novel: implement a “commercial-style” closed drug formulary while still receiving statutory Medicaid rebates for covered drugs. In the year that’s followed, however, it has become clear that the demonstration program faces long odds regarding whether it will ever actually be implemented.

First, the waiver program — known as TennCare III — is the subject of a lawsuit filed in April 2021 by the National Health Law Program, the Tennessee Justice Center and King & Spalding LLP on behalf of Tennessee Medicaid enrollees. The lawsuit challenges the demonstration program on procedural grounds, arguing that the Trump administration did not provide the required public comment period when it approved Tennessee’s waiver, and on substantive grounds, saying CMS exceeded its authority under Section 1115 of the Medicaid statute in approving the waiver.

Insurers have paid millions of dollars to cover the cost of anti-parasitic drug ivermectin as a COVID-19 treatment even though there is no evidence that it’s actually effective against the disease, according to a new JAMA study. By analyzing claims from December 2020 through March 2021, the researchers found that patients with private insurance spent, on average, $22.48 per ivermectin prescription with insurers reimbursing an average of $35.75, for a total cost of $58.23. Patients with Medicare Advantage spent an average of $13.78, while their health plans reimbursed $39.13, for a total average cost of $52.91 per script. The study also estimated that health plans paid $2.5 million for COVID-related ivermectin prescriptions just in the week of Aug. 13, 2021; extrapolating that over the course of a year, such spending could add up to $129.7 million.

Hospital consolidation has entered a new stage: Large regional hospital systems have finished acquiring most of their smaller local competitors and have begun to combine with large health systems of similar size. Experts say the new phase of market concentration, which also includes large hospital groups acquiring physician groups and outpatient centers, is bound to increase prices for health plans and consumers — and that there’s little regulators can do to stop or reverse it.

Hospital deals are not new: Over the past decade-plus, hundreds of hospital groups have combined, following a trend toward consolidation and vertical integration across the American economy. According to the American Hospital Association, nearly 1,600 hospital transactions took place between 1998 and 2017. Health system market power is now more concentrated than ever: in most regional markets, two or three players control most of the inpatient facilities. In fact, in a majority of U.S. metro areas, one hospital system controls more than half the market.