Twenty-eleven and 2012 are going to be remembered in the near term as very profitable periods of the generic manufacture of many formerly branded mega-sellers. Of course, the agent getting the most media ink this week is atorvastatin (Lipitor), the ubiquitous cholesterol lowering pill whose miraculous ways even prompted a short-lived lobby to go OTC.
The pharma company Pfizer, it could be reasoned, would still have some skin in the game in spite of generic availability. Specifically, partnerships with pharma benefit managers and insurers would still give the company a stake in orgs that would inhibit generic availability by offering rebates and discounts of branded Lipitor. It is the potential for actions like this which gets the attention of legislators (specifically Democrats) who want fair competition — as opposed to stymied innovations in generic marketing from pocketed profits by PBMs and insurance companies.
Detailed in an NYT piece last month, the prospect for limited availability of generics — specifically for Medicare Part D beneficiaries is a sobering one. Pfizer claims cost equivalencies (with respect to lower co-pays on branded Lipitor) for beneficiaries if the pharma company is able to offer those discounts to third parties. It is an interesting development in what is usually an uneventful and mundane process.
Prescription drug premiums under Medicare Part D will not be increasing next year — not exactly surprising, considering the profound availability of generics in the pharma marketplace currently. Still, welcome news to beneficiaries. As a matter of fact, within the next couple of years, many longstanding branded bestsellers are due to flip generic…a bonanza for competition within this space.[1] Elderly patients are also due rebates and discounts on branded preparations this year as a result of reform. Obama’s provision to shut off of the MMA 2003 stipulation regarding donut hole gaps in coverage under Medicare will continue include more beneficiaries, as a result. | LINK
The latest news from the Medicare front has nothing to do with the latest Paul Ryan salvo against the entitlement. It’s the overall health of the program that has eyes concerned. Five years sooner than expected — that’s how quickly the feds say that funds are being consumed. According to trustees, the earlier deficit projections are the result of the poor economy, resulting in decreased collections from payroll taxes; continued current rates of Medicare spending without the influence of reform; and fraud.
Don’t let those trustees’ predictions fool you. I, and many others who closely watch developments like these within the realm of health policy, believe that the outlook for Medicare is more grim because those original projections assume cuts in reimbursements to doctors that Congress has usually already applied as a matter of course, and overall cost savings are usually difficult to predict, regardless. As a result, Medicare legislation needs scrutiny — and fast. The longer lawmakers sit on numbers like these, they’ll have to apply emergency stopgaps no one wants — huge tax increases[1] or program cuts — to save the program. | LINK
Yesterday, CMS released a statement confirming an increase in reimbursements to Medicare Advantage plans. The uptick of 0.4 percent is not as high as the 1.6 percent planned increase the agency announced just two months ago, but reflects “economic changes” in the marketplace — not changes to Medicare policy.
This is meaningful, as a provision of the reform law was to create payment alignment with traditional FFS Medicare. Almost one-quarter of Medicare beneficiaries possess some sort of coverage through private insurers over and above traditional Medicare. Obviously, private plans will have to adjust to this reality, as the cost of MA care delivery to taxpayers is roughly 10 percent greater than the cost of traditional Medicare delivery.
Are Americans utilizing fewer healthcare resources? Certainly projections like this may bear this trend out. But, private insurers — like UnitedHealth here in Minnesota — face major cuts throughout the next decade under reform.The cost of delivering healthcare via the federal government may be greater in the long run for them. Sure, cost of delivery is important, but the ongoing specter of regulation looms large for private insurers which expect significant ROI on care delivery to those who qualify for Medicare.
The one year anniversary of the ACA is giving many time to reflect on its passage and what it really means for the future of healthcare delivery in the foreseeable future. One thing’s for certain — the controversy surrounding it on all sides will not be going away any time soon. Whereas the public is portrayed in the media as being, at worst, “evenly divided”[1] on the issue (just like every other manufactured boilerplate lately — take your pick), many supporters are saying that the reform law’s original form and intent will eventually get the full support of the American public.
Detractors, not to be outdone, are more emboldened than ever to make this issue a Campaign ’12 one — and a very potent issue, at that. Although the road to the ACA’s passage was characterized by cogent and passionate debate on most levels, the labels applied by opponents — both Republican and Democratic — seemed to take center stage, almost screaming out to any fence-sitters to give up on lobbying for it. In the end, however, the bill survived threats of “death panels”, Tea Party protests, and GOP-stoked fears that ironically warned of the insolvency of Medicare should the measure become law.
The controversy surrounding the reform law is not over by a long shot. Even as healthcare consumers, states, insurance companies, pharma companies, and the federal government hunker down to to accept their roles in the wake of the law, its current incarnation will only be preserved if sound implementation by 2014 overcomes the political rhetoric on the left and right. If the most salient effects of the law — increasing access via exchanges, eradication of pre-existing condition denials, closure of the Medicare Part D doughnut hole, and eliminating coverage and payment inequities in Medicare Advantage plans — remain intact by mid-decade, perhaps the most beneficial result will be that healthcare consumer will receive high-quality, cost effective healthcare delivery without giving the means to this end even a fleeting second thought.
What does the Congressional Budget Office think that repeal of the ACA would do to the current fed budget? According to the CBO, projecting to 2021, the deficit would increase by over $200B in those first 10 years. [PDF, page 2] Also,
The enacted legislation will increase federal revenues (apart from the effect of provisions related to insurance coverage), mostly by increasing the Hospital Insurance payroll tax and imposing fees on certain manufacturers and insurers. Repealing those provisions would reduce revenues by an estimated $520 billion over the 2012-2021 period.
The report also goes on to note an increase in Medicare and Medicaid spending due to repeal of payment reductions (as provided by the reform law) to hospitals, MA plans, and other services would lead to net increases by at least $57B over the period. GOP lawmakers will probably continue to dispute these findings as they continue to pledge for repeal of at least parts of the law. But does that actually mean the party plans to increase the federal deficit by $210B over the next decade?
The effect of the Great Recession spared no sector, including the once unassailable healthcare marketplace. Expenditures on healthcare rose at their lowest rates in a half-century, inching up only 4 percent in 2009. Spending on such needs as physician services (ambulatory and hospital-based), drugs, and acute delivery continued on a rate decrease as compared to spending in 2008 (4.7 percent).
Lost jobs, shrunken payrolls, and less utilization of private insurance primed the rate decrease — all the while, medical costs continued to increase, as GDP related to healthcare rose to 17.6 percent of the economy in this country.[1] Not a rosy picture at all. Count on the GOP to exploit these numbers as Congress prepares to revisit the constitutionality of the reform law — this in spite of the fact that, under reform, the uninsured’s increased use of healthcare services (according to the federal government) is not supposed to increase Medicare payouts to providers. A complete picture of all the data can be found at the CMS site here.
As a result of the ACA, the overall number of Medicare Advantage plans is down. The open eligibility period of 1/1-3/31 is no longer valid, as well. Seniors navigating the open enrollment period for plans (including part D) and coverage will have an easier time of making choices, but because of reform, will those choices of plans be sufficient ones?
According to CMS, the 13 percent drop in all MA plans nationwide reflects the economic waste associated with duplicative plans and fraudulent FFS plans that also contributed to the spike in Medicare costs. Approximately 25 percent of all beneficiaries have MA plans. Open enrollment ends 12/31.
Here’s probably one provision of the reform law that Republicans would like to fight — Medicare Advantage streamlining payments to providers to approach levels in line with Medicare, as opposed to competing with other market MA plans. Over the next couple of years, the gradual phase out of the most egregiously outlying plans (in terms of levels of reimbursements) will affect beneficiaries to varying degrees in different geographical locales. Regional inequities are one reason for the waste in Medicare reimbursements in driving up the cost of healthcare. In the Pacific Northwest, many seniors are being hit especially hard, having to search for supplementals in a previously MA-replete healthcare marketplace.
According to the state Insurance Commissioner’s Office, UnitedHealth Group cancellations affected the largest number of seniors — nearly 16,000 Washington residents. In a statement, the company said it examines many factors each year, including local-provider networks, reimbursement rates, regulatory changes from the federal government and “other local market dynamics” to decide whether to continue plans in particular areas.
In other Medicare news, Part D plans will begin to close the “donut hole” — the gap in coverage in Part D plans which shifted the responsibility of the beneficiary to pay for prescription drugs up to a ceiling, at which Part D coverage would begin again. Look for coverage gaps to close at the higher levels of out-of-pocket costs for the healthcare consumer/beneficiary.
Originating from Saint Paul, Minnesota, [doctorpundit.com] is a weblog about the policy of healthcare and where it intersects with politics and public opinion; it is edited by Michael Douglas, MD, MBA. Welcome, and please consider my take on what is Healthcare 2.0, complemented by a few of my thoughts on my personal avocations and guilty pleasures: music, prose, and writing. Follow Doctor Pundit via RSS above.
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DOCTOR PUNDIT @ ONE YEAR | An occasional DP series from 2010 highlighting healthcare policy trends over the period from 2009-2010 in a compare/contrast format.
