Welcome to The Donut Hole’s weekly summary. The news doesn’t stop. Lucky for you, we are here to help you take in the week that was in the business of healthcare.
Texas law eases prior auth burdens, but payers see it as a dangerous move
The prior authorization process is one of the clearest points of tension between payors and clinicians in our healthcare system and imposes a tremendous administrative cost on providers. A new Texas state law aims to shift some of the power in the process back to clinicians. Specifically, the law prohibits payors from requiring pre-approval for services if a provider holds “gold card” status, which they can earn if they have a 90% prior authorization approval rate. Health plans that require prior authorizations must evaluate whether a provider qualifies for the gold card exemption once every six months.
Proponents of the law are hoping for some relief from onerous back-office burdens for providers and reduced treatment delays for patients. From the article:
“I spend 15 hours on the phone every week managing prior authorization, and that’s time that I can’t take care of patients,” said Dr. Debra Patt, an Austin-based cancer specialist and immediate past chair of the Texas Medical Association’s Council on Legislation, in a phone interview. “We’ve tripled our staffing to manage prior authorization.”
Then there is the issue of delaying patient care. Patients often have to wait for insurer approval to come through before they can begin their treatment. “When I need to provide urgent chemotherapy, I can’t get it authorized in time for patients,” Patt said. “And that can be the difference between life and death.”
Opponents of the law, primarily those in the payor community, say pre-authorization is an important tool to protect patients from overtreatment and inappropriate or dangerous care.
Potential impact on you: Obviously, nobody is for dangerous overtreatment or otherwise inappropriate care. That said, the burden of prior authorization processes on patients and providers is a real problem, and we applaud Texas seeking a solution. We will watch carefully for any studies on the impact of the law on patient care. If the policy proves beneficial, we hope other states (and ideally the federal government) follow suit with similar patient- and provider-friendly legislation.
Study: Medicare access narrows racial gaps in coverage, healthcare costs
Here’s some news from the health policy world. Access to Medicare may help address racial disparities in insurance coverage, access to care, and self-reported outcomes, according to a new study published in JAMA Internal Medicine. The study tracked more than 2.4M Americans and found that immediately after turning 65 (i.e. becoming eligible for Medicare), health coverage for Black respondents increased from 86.3% to 95.8% and coverage for Hispanic respondents increased from 77.4% to 91.3%. Health coverage for white respondents also jumped, rising from 92% to 98.5%. Additionally, the study found that gaining Medicare coverage narrowed gaps in access to a usual care provider, the cost of care, and flu vaccine rates.
Per the study’s authors:
"Our findings also suggest that expanding Medicare may be a viable means to reduce racial and ethnic disparities and advance health equity by closing coverage gaps across the US."
Potential impact on you: This study hits on two hot issues: health disparities across race and class and the Progressive push to lower the Medicare eligibility age. This study suggests that the eligibility age could be an effective tool to addressing the embarrassing levels of health disparities in the U.S.
It also ties back to a study we previously covered from the Peterson Center on Healthcare and KFF that suggested that lowering the Medicare eligibility age to 50 could result in significant savings for employer-sponsored plans. While that all sounds great, the reality is that such a policy has no chance of passing today’s Congress. Additionally, more people on Medicare would mean less revenue for providers (Medicare pays lower rates than commercial payors), which could result in more rural and community hospital bankruptcies and, selfishly for some of our readers, reduced physician salaries. That’s not to say the policy isn’t worthwhile, we should just recognize that every policy decision has trade-offs.
Pfizer court fight could legalize Medicare copays and unleash 'gold rush' in sales
Pharma giant Pfizer is suing the federal government over a ban on reimbursing Medicare patients for out-of-pocket medication costs (i.e kickbacks), the same issue that resulted in a $24M settlement from the company three years ago. Essentially, what Pfizer wants to do is cover all or a substantially all of a patient’s cost sharing in order to incentivize them to request Pfizer’s drugs. Pfizer would still receive reimbursement from Medicare, making the practice economically worthwhile for the company.
Specifically, Pfizer’s lawsuit seeks a judge’s permission to directly reimburse patient expenses for two of its heart-failure drugs, which each cost $225,000 a year. An outside administrator would use Pfizer contributions to cover Medicare copays, deductibles and coinsurance for those drugs, which otherwise would cost patients a total of about $13,000 a year.
While kickbacks are illegal today, pharma companies can donate to independent charities than can then use those funds to help patients afford their medications. Not surprisingly, these charities have seen a host of allegations of rules violations as donating pharma companies attempt to direct payments towards specific therapies. The strategy makes sense financially. Every $1M channeled through a charity “has the potential to generate up to $21M for the sponsor company, funded by the U.S. government,” Andrew Baum, a Citi pharma stock analyst, wrote in 2017.
Potential impact on you: While the specifics around the antikickback rules are unlikely to significantly impact you, patient cost sharing for prescription drugs remains a key issue. As a clinician, you need your patients to take their medications as prescribed. Expensive copays and coinsurance, however, reduce adherence rates. There are certainly a lot of factors at play in Pfizer’s lawsuit, but the core goal of making medications more affordable for patients is an important one.
The article also highlights the plan design issue we touched on in a recent issue. If patients faced the same cost sharing regardless of the specific drug, then these reimbursements or kickbacks wouldn’t be necessary in the first place.
Amwell to scoop up SilverCloud Health, Conversa Health for $320M
Virtual care company Amwell recently announced two acquisitions - SilverCloud and Conversa. SilverCloud is a digital on-demand behavioral health platform with a focus on depression and anxiety in particular. Coversa is a SMS-based virtual care and triage platform used by health systems to communicate with their patients for a variety of monitoring and engagement use cases.
From the chairman and co-CEO of Amwell:
“We believe that future care delivery will inevitably blend in-person, virtual and digital care experiences; and as such, we are uniquely building a global platform to support such advanced, coordinated care.”
Potential impact on you: These acquisitions highlight three broad trends in the market right now. First, it seems like everyone is focused on better integrating behavioral health into care workflows. Expect Amwell to push SivlerCloud heavily across its employer and health plan customers. Moving forward, SilverCloud’s chronic health capabilities could be a core component of a Amwell-branded diabetes or hypertension management program.
Second, Conversa highlights the rapid innovation in the “digital front door” space. Traditional and virtual-first providers are fighting with each other to deliver a high end user experience that attracts patients and keeps them in network. Conversa could be a valuable tool to Amwell’s health system customers and should integrate well with Amwell’s existing virtual care capabilities.
Third, the co-CEO’s quote illustrates where we believe care delivery is heading. The delivery models of the future will blend in-office, video, and asynchronous visits and monitoring to hopefully enable high quality longitudinal care. Amwell and others are building towards that future already, but payment models (i.e. value based care) will need to advance further for these care paradigms to take hold at scale.
Other news you may like:
Emergency Medical Services: Last Week Tonight with John Oliver (HBO)
Insurers push back on CMS' proposals to extend ACA open enrollment, bring back standardized plans
CMS: Part D premiums projected to increase nearly 5% in 2022 to $33
Stellar Health, Highmark Inc. Announce Value-Based Care Initiative
Biogen and Eisai unveil details for five-year, real-world Aduhelm clinical trial
Exo looks to commercialize its handheld ultrasound with $220M in funding
Ring Therapeutics rounds up $117M to find better viral vectors for gene therapy
Telehealth: A quarter-trillion-dollar post-COVID-19 reality?
At Urgent Care, He Got 5 Stitches and a Big Surprise: A Plastic Surgeon’s Bill for $1,040
Have a great week!
— Hannah and Caleb Bank, Co-founders
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