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

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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.”

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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.

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

The Supreme Court on Thursday tossed a lawsuit that once again threatened the Affordable Care Act (ACA), ruling 7-2 that Republican-led states who brought the case lacked legal standing to challenge the law.

For the third time, an increasingly conservative court left intact the law’s protections that require coverage for preexisting conditions, created Medicaid expansion, promote health screenings and preventive care, and launched novel, value-based payment strategies within the agency that manages Medicare and Medicaid.

The ruling comes as President Joe Biden has tried to build on the ACA and create new incentives for states that have not expanded Medicaid to do so, amid mounting evidence that having health coverage reduces mortality.

 and was joined by Justices Elana Kagan and Sonia Sotomayor, as well Chief Justice John Roberts and two appointees of President Donald Trump, Justices Brett Kavanaugh and Amy Coney Barrett. The opinion focused on the fact that individual states governed by Republicans, along with individual plaintiffs, had failed to show “a concrete, particularized injury fairly traceable to the defendants,” and thus could not challenge the law on constitutional merits.

The latest challenge, led by Texas, began after Trump’s 2017 tax law eliminated the enforcement mechanism for the ACA’s individual mandate. On those grounds, the Republican-led states tried to assert that the entire law must fall, even provisions unrelated to the requirement that all Americans have health insurance.

Today, the Supreme Court’s majority found that the states failed to make their case that the de facto end of the mandate would cause them harm, which would create grounds to challenge the entire ACA.

“Unsurprisingly, the States have not demonstrated that an unenforceable mandate will cause their residents to enroll in valuable benefits programs that they would otherwise forgo. It would require far stronger evidence than the States have offered here to support their counterintuitive theory of standing, which rests on a ‘highly attenuated chain of possibilities.’”

Justice Clarence Thomas wrote a concurring opinion, stating, "Although this Court has erred twice before in cases involving the Affordable Care Act, it does not err today."

An estimated 20 million people had gained coverage under the law at a peak in 2017, but there was some loss of coverage during the Trump administration. More recently, more than 1 million people signed up for coverage through the ACA under a 

 authorized by the Biden administration due to the COVID-19 pandemic. The American Rescue Plan reduced premiums, and additional proposals would make those premium cuts permanent.

While many legal experts had questioned the merits of the Republican states’ challenge, the addition of Justices Neil Gorsuch, Kavanaugh, and Barrett to the court raised concerns among the law’s supporters about what would happen once the case reached the highest court. Gorsuch and Justice Samuel Alito dissented, but the other Trump appointees ruled with majority on the narrower question of standing.

The latest challenge was argued in November, just after Barrett joined the court, and the defense was organized by a group of officials from Democrat-led states. Their leader was former California Attorney General Xavier Becerra, recently confirmed as Biden's HHS secretary.

The ACA is now one of the most litigated pieces of legislation in history. It survived an initial challenge after its passage in 2010, although the court did reshape the law by allowing states to opt out of Medicaid expansion.

However, that decision ended up creating an environment for research comparing health outcomes between expansion and non-expansion states, and now data are pouring in that show how populations with health coverage benefit in multiple ways—those 

 who are able to manage their disease suffer fewer complications.

Veterans of the Obama administration who helped write and implement the ACA were surprised and pleased this morning, and said the decision opens the door for the Biden administration to improve the law.

“Bottom line—this is incredible,” former Obama administration policy official Kavita Patel, MD, told MSNBC. “It’s a chance for the Biden Administration to try to take back some of what the country lost when the individual mandate was taken away. … Not being a lawyer, I don’t think you could have a clearer path saying, ‘this is it.’”

“It’s not a close call in terms of the law, and not a close call in terms of who we are as a country,” said former Acting CMS Administrator Andy Slavitt.

Chiquita Brooks-LaSure, now CMS Administrator with chief responsibility for implementing the law, recalled her work on its passage during her tenure with the House Ways and Means Committee. 

"Millions of Americans can breathe a sigh of relief following today’s Supreme Court 7-2 ruling upholding the Affordable Care Act," she said. "This victory assures access to affordable and comprehensive health insurance for patients and families across the country."

She pointed to the fact that 12 states have still not expanded Medicaid, but the Biden administration hopes that will now change.  "Through the ACA, and hand-in-hand with CMS, dozens of states have expanded Medicaid – bringing quality coverage to our family and neighbors who need it most. We will continue to partner with states because we know 4 million more Americans stand to gain access to quality health coverage in the remaining states."

Other supporters of the ACA also called for working to improve the law.

"CareFirst is pleased that the key provisions of the Affordable Care Act remain in effect and will continue to promote access to affordable health insurance for the individuals we serve and all Americans,” said Brian D. Pieninck, president and CEO of CareFirst BlueCross BlueShield. “CareFirst looks forward to continuing our work with federal and state policymakers to maintain and improve access to healthcare throughout our region."

Officials from the Robert Wood Johnson Foundation called for an end of “meritless attacks against a milestone law. … It is time now for our nation to resume its path toward achieving universal health care coverage.”

Mary Caffrey

Articles

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

Supreme Court Upholds ACA, Says States Lacked Standing