Mary Caffrey is the Associate Editorial Director of AJMC/Managed Care for MJH Life Sciences. Her editorial responsibilities include 

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Louisiana Health Officer Joseph Kanter, MD, MPH, on Saturday ordered the immediate closure of seven nursing homes that evacuated patients to a warehouse on August 27 as Hurricane Ida bore down southeast Louisiana. Conditions deteriorated in the warehouse and seven patients died; five deaths have been declared storm-related, according to a statement from the Louisiana Department of Health (LDH).

The warehouse, located in Independence, La., is located in Tangipahoa Parish, which is north of New Orleans and about 100 miles from where Hurricane Ida made landfall. The nursing homes that evacuated were in Orleans, Jefferson, Lafourche, and Terrebonne parishes, all south of Lake Pontchartrain.

All patients taken to the warehouse have since been relocated, following an inspection that was temporarily blocked by the nursing homes' owner, who also owned the warehouse. Bob Dean, the owner, has previously been cited by state officials for evacuating nursing home patients to a facility he owned that proved to be inadequate. 

LDH Secretary Courtney N. Phillips, PhD, MPA

State officials told the Associated Press that water got into the warehouse and generators failed. Meanwhile, tipsters told officials of patients being left on mattresses on the floor without food or clean clothes. Strong odors of feces permeated the building, and conditions declined rapidly as more patients arrived and owners tried to fit them into an increasingly crowded building. Trash and bags of human waste piled up, according to a nurse 

LDH has now confirmed 7 deaths of nursing home residents evacuated to the Independence facility, 5 of which have been classified as storm-related. State law enforcement officials have called for a criminal investigation, and LDH is reaching out to families of the nursing home residents.

The seven nursing homes that evacuated to the warehouse in Independence include:

River Palms Nursing and Rehab, Orleans Parish

South Lafourche Nursing and Rehab, Lafourche Parish

Maison Orleans Healthcare Center, Orleans Parish

Park Place Healthcare Nursing Home, Jefferson Parish

West Jefferson Health Care Center, Jefferson Parish

Maison DeVille Nursing Home, Terrebonne Parish

Maison DeVille Nursing Home of Harvey, Jefferson Parish

“What happened in Independence is reprehensible, and I know there are many families hurting as a result,” said LDH Secretary Courtney N. Phillips, PhD, MPA. “Today’s action against these facilities is needed. There is more to come. Our department’s mission is to advance the health and wellbeing of our residents—and that includes our vulnerable nursing home residents.”

“The lack of regard for these vulnerable residents' wellbeing is an affront to human dignity,” Kanter said. “We have lost trust in these nursing homes to provide adequate care for their residents. We are taking immediate action today to protect public health.”

Reports of the deteriorating conditions at warehouse after Hurricane Ida made landfall prompted LDH inspectors to visit the site, but they were blocked from making a full inspection August 31 and “subject to intimidation by the owner of the seven nursing facilities,” according to state officials.

LDH and other state and local agencies returned September 1 to evacuate local residents and all had been relocated by September 2.

For several days, Louisiana news outlets have covered the evacuation of the warehouse and history of issues with Dean's nursing homes. He has been described as a previously active political donor who more recently has become isolated among the state's powerful network of nursing home operators. News reports said Dean’s nursing homes received 

 from Medicare before the recent evacuation, which the website nola.com said was a part of a plan on file with the state following the deaths of fragile, elderly patients in floodwaters during Hurricane Katrina in 2005.

 at nursing homes he owned due to poor care. News outlets report attempts to reach Dean have been unsuccesful.

Articles

Bob Dean, the nursing homes' owner, has previously been cited by state officials for evacuating patients to a facility he owned that proved to be inadequate.

Louisiana Health Officer Shutters Nursing Homes That Sent Patients to Warehouse, Where 7 Died

This week, CMS offered proposals during the annual rulemaking process that it said would “address the health equity gap, ensure consumers have the information they need to make fully informed decisions regarding their healthcare, improve emergency care access in rural communities, and use lessons learned from the COVID-19 pandemic to inform patient care and quality measurements.”

In other words, the Biden team is looking to levy fines on hospitals that are skirting the pricing transparency rule that took effect during President Donald Trump’s final weeks in office. And CMS has taking the first step toward publicizing vaccination rates of staff at hospitals and surgical centers, so that consumers can make informed choices when scheduling their care.

The actions follow President Joe Biden’s wide-ranging 

 aimed at increasing competition, which include steps to protect rural healthcare and continue the focus on transparency in hospital pricing. There had been speculation whether Biden would retain one of the Trump administration’s last major health policy moves, but Biden appears poised to expand it. Proposals announced Monday are included 

 of the CY 2022 Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Proposed Rule.

“As President Biden made clear in his executive order promoting competition, a key to price fairness is price transparency,” HHS Secretary Xavier Becerra said as 

. “No medical entity should be able to throttle competition at the expense of patients. I have fought anti-competitive practices before, and strongly believe healthcare must be in reach for everyone.”

The proposed transparency rule, Becerra said, calls for stiffer penalties for concealing the costs of services and procedures, and shows that such practices “will not be tolerated by this administration.” The action follows reports from consumers as well as analyses, including 

®, that hospitals are not making clear, accessible pricing information available online as has been required since the rule took effect January 1, 2021.

For failing to comply with the rule, CMS proposes the following fines:

Hospitals with a bed count of 30 or less, $300 a day

For hospitals with more than 30 beds, once the bed count exceeds 30 beds, add a penalty of $10 per bed per day, with the daily fine not to exceed $5,500;

A full calendar year would have a minimum fine of $109,500 and a maximum fine of $2,007,500 per hospital.

Even with the uneven compliance, CMS has already seen wide variation in pricing, even within the same hospital or the same health system, depending on which insurer is billing the hospital.

. CMS is proposing to update OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.3%. According to CMS’ fact, sheet, this update is based on the projected hospital market basket increase of 2.5% reduced by 0.2 percentage point for the productivity adjustment. CMS officials note elsewhere they are using CY 2019 date to set CY 2022 rates due to the disruption caused by the COVID-19 public health emergency.

Agency officials are asking for input on ways to report health disparities based on social risk factors and race and ethnicity, to make such reporting more comprehensive and actionable. Comments could involve data collection, analysis and reporting of quality measure results by factors that include race, Medicare/Medicaid dual eligible status, disability status, LGBTQ+, and socioeconomic status, or other factors.

CMS reports that 138rural hospitals have closed since 2010, “disproportionately within communities with a higher proportion of people of color and communities with higher poverty rates.” The trend deprives rural Americans of key services, including access to emergency care. Congress enacted Section 125 of the Consolidated Appropriations Act of 2021 (CAA), to create a new provider type for Rural Emergency Hospitals (REHs). CMS is requesting a range of information to develop requirements that will apply to REHs, which the goal of creating the new provider designation on or after January 1, 2023.

CMS seeks comment on how hospitals are using flexibilities allowed during the public health emergency to provide mental health services remotely and whether CMS should consider permanent changes. CMS also seeks input on how to measure how many front-line healthcare workers in hospital outpatient departments and ambulatory surgical centers are vaccinated against COVID-19, and how to make this information available to the public so consumers have this information when making healthcare decisions.

CMS plans to reverse some policies that would have had Medicare pay for surgical procedures that could pose a risk to patients. The agency seeks to halt the phased elimination of the Inpatient-Only (IPO) list—procedures that Medicare will only make payment for when provided in the inpatient setting. CMS adopted a policy for 2021 to eliminate this list over a phased period and removed musculoskeletal procedures from the list in 2021. However, the current CMS leadership determined that criteria for removing items from the list were not followed and that there was not enough evidence that these services could be performed safety on Medicare patients on an outpatient basis. Some of the procedures to be removed from the IPO list included limb amputations and invasive spinal procedures. CMS seeks to return them to the list in 2022, and seeks comment on the future of the IPO list and criteria for evaluating which services should be on it.

The ongoing debate about cuts to the drug discount purchasing program 

 will reach the Supreme Court of the United States this fall. CMS notes in the Monday’s proposal that beginning January 1, 2018, Medicare adopted a policy to pay an adjusted amount of average selling price (ASP) minus 22.5% for certain separately payable drugs or biologicals acquired through the 340B Program. “In this rule, we are proposing to maintain the payment rate of ASP minus 22.5% for certain separately payable drugs or biologicals acquired through the 340B Program. Under this proposal, rural sole community hospitals, children’s hospitals, and PPS-exempt cancer hospitals would continue to be excepted from this policy.”

One proposal asks hospitals for input on how to measure vaccination rates among staff with the aim of letting consumers have the information.





CMS Proposals Would Boost Price Transparency, Take Steps to Promote Safety as COVID-19 Remains a Threat

Hospital mergers are a prime target in President Joe Biden’s expansive executive order that calls on federal departments and agencies to reshape what he called a “booming” economy by putting workers first and ensuring consumer protections.

The order spans sectors from banking to transportation with 72 specific initiatives, including several that target healthcare, which is already undergoing upheaval amid the COVID-19 pandemic, which has exacerbated shortages of doctors and nurses, strained supply chains, and pushed veteran administrators into retirement.

“For decades, corporate consolidation has been accelerating,” a statement issued with the order reads. “In over 75% of U.S. industries, a smaller number of large companies now control more of the business than they did twenty years ago. This is true across healthcare, financial services, agriculture and more. That lack of competition drives up prices for consumers.”

The statement cited data claiming that mark-ups have tripled, raising costs for necessities like prescription drugs, hearing aids, and internet service—which became essential during the pandemic as telehealth became the only way to see a doctor.

Key items in Biden’s executive order include:

Empowering antitrust agencies, including the Federal Trade Commission, to address problems surrounding consolidation in certain industries, including healthcare, where mergers have left some rural areas with no hospital.

Making it easier to change jobs, including between states, by reducing occupational licensing requirements and limiting non-compete agreements.

Reducing prescription drug prices by allowing programs run by states and tribes that import drugs from Canada.

Promoting more procurement opportunities for small business with federal agencies.

The order creates a White House Competition Council the track progress on the initiatives and agencies’ response.

Consolidation in healthcare over the past decade—mergers of hospitals into larger systems, acquisition of practices, and vertical integration of health plans and pharmacy benefit managers (PBMs)—has drawn fire from consumer and antitrust advocates who say the trend works against keeping down costs, especially when one looks at some individual markets.

The order directs the Justice Department and the FTC to examine guidelines on hospital mergers to ensure that patients are not harmed.

Recent trends also work against reining in the price of prescription drugs, because powerful PBMs can dictate which drugs appear on formularies, demand rebates, or impose fees. Just this week, a study by authors at USC’s Schaeffer Center found that Medicare overspent by $2.6 billion in 2018 on commonly prescribed generic drugs compared with prices charged by Costco.

Biden’s order directs HHS to do the following:

Support hospital price transparency rules and to finish implementing bipartisan federal legislation to address surprise hospital billing. This is significant, because many wondered the fact of the transparency rules imposed at the very end of the Trump administration.

Restore a rule from the Obama era that insurers selling plans under the federal marketplace, created by the Affordable Care Act, must have at least one standard design to serve as a benchmark for consumers to compare with other companies. This concept was scrapped under the Trump administration.

Directs the FDA, which is part of HHS, to work with states and tribes on safe import practices under the Medicare Modernization Act of 2003.

Increases support for generic and biosimilar drugs and allows 45 days for a comprehensive plan to combat high prescription prices.

Empowers FTC to ban “pay for delay” and similar practices that keep low cost drug or biosimilar options off the market.

Hospital Mergers Targeted in Biden Executive Order

Health systems that want to save money on a major cost of delivering care might look no further than their nearest Costco.

That’s what a health economics research team from the Leonard D. Schaeffer Center at the University of Southern California to highlight Medicare pays an extra $2.6 billion for generic drugs, thanks to layers of middlemen who negotiate prices for government—but pocket some of the savings. The study, led by Erin Trish, PhD, appeared 

When reimbursement policies eliminate cost-sharing for some prescriptions—making the “cost” invisible for some patients—those taking the drugs don’t realize that the government is spending billions for prescriptions cost less at nearby warehouse outlets, such as Costco.

The authors point out that while there’s been plenty of attention to brand name drugs with eye-popping list prices, most of the drugs that Americans take—both in the hospital or at home—are generic medications. In fact, 88% of Medicare Part D prescriptions dispensed in 2018 were generic, so any savings retained by pharmacy benefit managers (PBMs) could quickly add up.

The findings suggest these practices, which work against Medicare, beneficiaries, and the taxpayers, deserve a closer look, Trish said in a statement released by USC.

“Our analysis shows that in systems like Costco’s, where incentives are set up to deliver value directly to the consumer at the pharmacy counter, that’s what happens,” said 

 and an assistant professor of pharmaceutical and health economics at the USC School of Pharmacy. “It’s time to fix those incentives in the Medicare Part D system to put the patient first.”

To conduct their study, the team compared what Medicare Part D plans paid for 184 commonly prescribed generic drugs, including patient out-of-pocket costs, with the cash prices that Costco members were charged for the same drugs in the years 2017 and 2018.

They found the government overpaid, and by a lot: after analyzing 1.4 billion Part D claims, they found Medicare overpaid 13% in 2017 and close to 21% in 2018, compared with the Costco customers.

For those who take regular prescriptions for a chronic condition—which many seniors do—the savings at Costco escalated. Members who took advantage of the 90-day fill option in 2018 saved whopping 53% over what Medicare plans paid. Medicare plans overspent. Medicare plans overpaid on 30-day and 90-day fills by 43%, the study found.

PBMs have been in the crosshairs from government leaders and advocacy groups alike in recent years. Vertical integration with payers has made them more powerful, and 

 many states have taken action to protect consumers and their own Medicaid budgets. Federal legislation has been introduced to limit or 

, but any effort to rein in PBM practices will have unforeseen effects. Advocacy groups in the cancer care community say efforts to stop spread pricing have resulted in the creation of new classes of fees to get revenue another way.

For those who take regular prescriptions for a chronic condition—which many seniors do—the savings at Costco escalated.

Mary Caffrey

Articles

Louisiana Health Officer Shutters Nursing Homes That Sent Patients to Warehouse, Where 7 Died

CMS Proposals Would Boost Price Transparency, Take Steps to Promote Safety as COVID-19 Remains a Threat

Hospital Mergers Targeted in Biden Executive Order

For Proof of Government Inefficiency in Drug Purchasing, They Went to Costco