Senate Approves Bill to Address Opioid Epidemic

On Monday, the Senate approved a bill to address the opioid epidemic by a vote of 99 to 1. Three months ago, the House passed their own opioid legislative package by a vote of 396 to 14. Both chambers overcame their usual partisan politics to turn 70 separate bills into a comprehensive legislative package that can be enacted before the mid-term elections. Conference discussions have already started, and the goal is to have a final package for President Trump’s signature by Friday, September 28.

While many of the provisions in the House and Senate bills are similar, there are some important differences. In particular, the Senate bill does not include as much funding as the House provisions. Experts in the substance abuse community feel both bills do not include enough money (estimated to require $20 billion a year) to make a dent in the opioid epidemic, which took 50,000 lives last year. One in three Medicare beneficiaries took at least one opioid last year—but at least it’s a start.

“Decreasing access to opioids without appropriate treatment facilities and resources will not decrease the alarming number of deaths in those patients addicted to opioids,” explained a Gorman Health Group senior consultant. “Health plans will still need to plan for alternative medications and treatment placements.”

The Senate bill costs $8.4 billion with the funds to be disbursed to multiple government agencies involved in the public health emergency. Common provisions in both bills include funds for the U.S. Postal Service to detect shipments of the deadly synthetic fentanyl drugs, most of which come from China. The bills also include funds for physicians and first responders to have access to more medications to reduce the use of opioids by addicts and provisions for fewer pills in each prescription. “The restrictions on opioid quantity and day’s supply for those new to opioids should decrease the number of addicts, but it is unclear what methods can be used to stop fentanyl, the dangerous and lethal powder coming from China." Both bills require CMS to test a bundled payment model to expand Medicare coverage for opioid treatment programs. The bills mandate electronic prescribing in Medicare Part D for controlled substance prescriptions, and both bills also include more funding for National Institutes of Health (NIH) research.

The Senate bill does not include $1 billion included in the House that will partially overturn the Medicaid Institutions for Mental Disease (IMD) exclusion, which prohibits Medicaid from paying for addiction services in certain inpatient rehabilitation settings with more than 16 beds. The Senate bill does not authorize additional Medicare funding for non-opioid alternatives for post-surgical pain as included in the House bill or the House provision to share more patient medical information. The Senate bill also does not include a provision to require Medicare Part D plans to provide drug management programs for beneficiaries at risk for substance abuse addiction and requiring Medicare and Medicaid managed care plans to implement safety limits for opioid prescriptions and refills. The Senate bill also does not include a provision allowing CMS to waive limits on telemedicine reimbursement for substance abuse and related mental health disorders.

The President is expected to sign the legislation as soon as it arrives on his desk.


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Trump Administration Alarms PBMS with First Drug Pricing Initiative

The Department of Health and Human Services (HHS) issued its blueprint for dealing with the high price of prescription drugs in May, and the administration is finally undertaking a number of initiatives to operationalize the proposals. So far, as seen from the updates below, the proposals will have the biggest impact on pharmacy benefit managers (PBMs) and payers.

Voluntary Price Drops

Several weeks ago, President Trump tweeted that Pfizer was not following the intent of the blueprint and actually met with the Pfizer CEO at the White House to put pressure on the drug company to delay price increases. As a result, Pfizer will delay price increases on 40 drugs from July until early in 2019. Last month, Novartis postponed a price increase for its autoimmune drug Cosentyx in response to California’s new drug transparency pricing program. The Novartis CEO also announced this week the company would not have further price hikes this year after it raised prices for three costly cancer therapies a few weeks ago. Another major manufacturer, Merck, announced a 60 percent drop in the price of its hepatitis C treatment Zepatier and will make 10 percent pricing cuts to some other products. News sources report, however, HHS Secretary Azar is not counting on these voluntary actions, “We're driving swift, firm regulatory action and legislative action that's going to create every incentive to bring prices down in this country." A deeper investigation by reporters also found these price decreases were mostly illusory, however, they do show drug companies are working with the administration and likely have no reason to fear future HHS proposals. This brings us to HHS’ first significant proposed rule, currently under review at Office of Management and Budget (OMB).

The End of Rebates As We Know It?

The Office of Inspector General sent a proposed rule to OMB to change the current safe harbor protection for manufacturer rebates paid to insurers and PBMs and establish a new safe harbor rule. Naturally, the proposed rule indicates it would have a substantial impact on the industry of over $100 million. While we don’t have details on the proposed rule at this time, Azar previously testified to Congress he was considering prohibiting rebates to PBMs because, in his view, PBMs whose role is to negotiate discounts can actually benefit from higher list prices. The Pharmaceutical Care Management Association which represents PBMs noted two studies, one from the OIG that found reducing or eliminating the safe harbor for rebates and other discounts would not reduce drug prices. The Pharmaceutical Care Management Association (PCMA) also challenged HHS’ authority to change the safe harbor requirements without congressional action. Depending on the severity of the new rule, a change in drug rebates could have immense implications for PBMs and insurers. It is also unclear which programs the new rule would impact. As Thomas Johnson, Gorman Health Group’s Medicaid expert, noted, “For Medicaid, the drug rebate has been crucial in encouraging states to use Medicaid managed care.”


Drug Importation?

In a third effort to reduce drug costs, the Food and Drug Administration (FDA) announced it will create a working group to explore drug imports to curb drug prices. The FDA will initially focus on imports of drugs when there is a sharp price increase in the U.S. for an off-patent drug produced by a single manufacturer. The Washington Post noted responses from stakeholders that such a limited response would not address the overall trend of increasing drug prices for brand name drugs.

The blueprint talked about increasing competitive pressures for drug prices to come down and the actions this week between the administration and the pharmacy manufacturers and PBMs suggest jaw-boning at least before the election may have an impact even if only temporary and symbolic. However, it should be noted proposed regulations like changing the safe harbor for rebates take months to get to a final rule and the voluntary price reductions are also only temporary – until the end of the year and after the election. The FDA working group will also take time to agree on a strategy to curb imports of drugs that have not been previously approved by the FDA.




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House Passes Opioid Bill

Surprise, the House actually passed a bipartisan healthcare bill on June 22 that had support from almost all members of both parties. H.R. 6, Support for Patients and Communities Act, is a comprehensive opioid bill that combines more than 58 individual bills intended to address the national opioid epidemic. The bipartisan bill passed 396-14 with only one Democrat voting against it. The impetus was political pressure in an election year to address a problem that results in the death of 115 Americans each day. A recent CBS poll showed 71 percent of all Americans and 78 percent of Republicans support a government response to the crisis.

The bill also passed because it avoided controversy by not including large amounts of new funding. Members from both parties want to show progress on an issue that affects virtually every state before the November elections. Earlier this year, Congress approved $4 billion in new funding, which advocates argue is a drop in the bucket given the scope of the crisis. The House bill does not include any significant new funding, which is a disappointment to Democrats and advocates, however, they supported the bill to show some accomplishment in an election year on an issue important to voters. They are also hopeful there will be other opportunities for additional funding, e.g., in the Senate bill or through the appropriations process. Just before passage, the House bill included a provision to delay Medicare eligibility for end-stage renal disease (ESRD) patients for three months, saving the government $290 million over a decade. The Medicare savings will result in shifting costs to insurers and health plans. The impact on Medicare Advantage (MA) plans should be small since new ESRD beneficiaries are not eligible to enroll in an MA plan except for a small number of members who are already enrolled and age into Medicare.

So what does the bill do? It expands access to treatment, e.g., by allowing nurse practitioners and physician assistants to administer drugs that will avert death from an overdose, it encourages the development of non-opioid treatments following surgery and for pain relief, and it includes steps to stem the flow of illicit drugs through the mail from other countries. There are a number of Medicare and Medicaid provisions on substance use disorders (SUD) in HR 6.


  • Conduct a demonstration project to increase provider capacity for substance use treatment and recovery services
  • Mandate a beneficiary assignment program that identifies at-risk beneficiaries and assigns them to a pharmaceutical home program
  • Require state Medicaid programs to have safety edits in place for opioid refills, monitor concurrent drug prescribing, and monitor antipsychotic prescribing for children
  • Continue Medicaid coverage for incarcerated juveniles
  • Continue Medicaid coverage for youth in foster care until the age of 26 if they move out of state
  • Require the Centers for Medicare & Medicaid Services (CMS) to issue guidance on Neonatal Abstinence Syndrome (NAS) treatment options and require a Government Accountability Office (GAO) study on coverage gaps for pregnant women with SUD
  • Provide additional incentives for Medicaid health homes for patients with SUD


  • Require Part D plans to establish drug management programs for at-risk beneficiaries
  • Require e-prescribing for coverage of prescription drugs that are controlled substances under the Medicare Part D program
  • Create a pass-through payment extension to encourage the development of clinically superior non-opioid drugs
  • Add a review of current opioid prescriptions and, as appropriate, a screening for opioid use disorder (OUD) as part of the Welcome to Medicare initial examination
  • Incentivize post-surgical injections as a pain treatment alternative to opioids by reversing a reimbursement cut for these treatments in the Ambulatory Service Center setting
  • Provide access to Medication-Assisted Treatment (MAT)
  • Evaluate the utilization of telehealth services in treating SUD

On June 20, the House passed a controversial separate bill that would allow Medicaid payment for 30 days during a year for a five-year period for substance abuse treatment at inpatient hospitals with more than 16 beds. Medicaid payment for inpatient substance abuse treatment is currently not allowed under the Institution for Mental Disease (IMD) exclusion policy. The cost of this expansion is estimated at $1 billion.

Next, both of these House-passed opioid bills will go to the Senate where three committees have been developing their own legislative package to deal with the opioid crisis. Many of the Senate provisions are similar to the provisions in the House bill. Expect to see congressional passage of a major opioid legislative package by the fall.




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President Trump unveils a Blueprint to Lower Drug Prices

On May 11, 2018, President Trump unveiled his Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs entitled “American Patients First”. The President emphasized lowering drug prices as one of his greatest priorities during the campaign and promised to use the federal government’s purchasing power to negotiate lower drug prices to protect consumers, in particular Medicare beneficiaries, from being ripped off by greedy drug companies.

While the administration has continued to discuss the problem of unaffordable drugs since the election, the Blueprint is the first concrete plan to improve affordability of drugs for Medicare beneficiaries. But is it merely a laundry list of ideas on how to reduce the list price of drugs or a concrete, step-by-step process of addressing a complex drug pricing system that has grown out of control for patients and payers? The Blueprint clearly does not call for direct government to drug manufacturer negotiations as a way to lower drug prices as discussed during the campaign, but does it provide a better way of using Medicare’s purchasing power by empowering private plans combined with changes to government-administered drug pricing formulas to accomplish the same goal as claimed by the Department of Health and Human Services (HHS) Secretary Azar after the President’s speech?

An analysis of the Medicare proposals in the Blueprint reveals there are a number of very specific proposals that could strengthen the ability of Medicare to tighten its purchasing power over many prescription drugs Medicare covers, however, there is a lack of a legislative authority to negotiate the costs of many of the more expensive Part B drugs used by a population with high drug chronic care needs and a lack of authority to implement a number of more aggressive purchasing strategies that would lower Part D costs. As background, Medicare covers outpatient prescription drugs under the Part D benefit, which uses private health and drug plans to negotiate discounts on behalf of their respective enrollees. Medicare also covers drugs under Part B that are administered by a physician in an office or outpatient setting and are paid with prices set through an administrative formula based on average sales prices and are not negotiated. Medicare also covers a smaller number of drugs under Part A in an inpatient setting.

There are a number of proposals included in the Blueprint the Administration could implement through its regulatory and administrative authority to lower the costs of the Part D program, although it should be pointed out that even changing regulations often involves a multi-year process of proposing regulatory changes, seeking comments, and finalizing the new policies. Subject to legal review, these could include the following:

  • Updating Medicare’s drug pricing dashboard to make price increases and generic competition more transparent. It should be noted CMS has already updated the dashboard since the Blueprint was announced, and further updates would be expected.
  • Giving plan sponsors more power when negotiating with manufacturers similar to the provision in the 2019 regulation that would allow mid-year substitution of generic drugs on formularies in response to a price increase. This could include prices for high-cost drugs that lack competition or drugs that do not provide rebates.
  • Implement more measures to inform Medicare beneficiaries about lower-cost alternatives, e.g., improving the usefulness of the Part D Explanation of Benefits.
  • Prohibiting Part D contracts from pharmacist gag clauses, e.g., preventing pharmacists from telling patients when they can pay less out-of-pocket by not using insurance.
  • Permit Part D plans to pay a different price for a high-cost drugs based on the indication.
  • Develop demonstrations to test innovative ways of encouraging value-based purchasing that would hold manufacturers responsible for outcomes and offer value over volume.

Additional proposals were included in the Blueprint to improve Part D that are more controversial and will most likely need Congressional action include the following:

  • Reducing the minimum number of drugs per class or category in Part D formularies from two to one
  • Excluding manufacturer discounts from out-of-pocket costs in the coverage gap and establishing an out-of-pocket maximum in the catastrophic phase of the Part D benefit
  • Eliminating or further restricting drugs in the protective classes
  • Eliminating cost sharing for generic drugs for low-income beneficiaries
  • Requiring Part D plans to apply a substantial portion of rebates at the point of sale

A number of proposals in the Blueprint could improve the purchasing power of Part B. These include the following:

  • Leveraging the Competitive Acquisition Program in Part B, e.g., allow physicians to obtain drugs from vendors approved through a competitive bidding process or directly purchasing drugs through the current average sales price method
  • Finalizing a policy in which each biosimilar for a given biologic gets its own billing and payment code under Medicare Part B to incentivize development of additional lower-cost biosimilars
  • Modifying the Wholesale Acquisition-cost based payment for Part B

More controversial proposals to improve Part B drug pricing that were included in the Blueprint will need new authorities:

  • Leveraging Part D plans’ negotiating power for certain drugs covered under Part B by moving them to Part D
  • Modifying site-neutral payment policy for physician-administered drugs under Part B or between inpatient and outpatient settings

Other proposals not specific to Medicare included in the Blueprint that could also reduce Medicare drug prices include the following:

  • Using specific incentives that are yet to be defined to discourage manufacturer price increases
  • Including list prices in advertising
  • Speeding up Food and Drug Administration (FDA) approval of generic drugs
  • Reviewing and modifying the role of patent exclusivity
  • Considering the role and fiduciary status of Pharmacy Benefit Managers
  • Measures to restrict the use of rebates and discounts and create incentives for manufacturers to lower list prices



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Rising Drug Costs Continue to be a Concern

During the presidential campaign, Donald Trump highlighted the need to address rising drug costs, stating the drug industry was “getting away with murder.” Several recent high-price drug increases for HIV/AIDS drugs, hepatitis C drugs, and the EpiPen®, among others, have also raised Congressional, state, and public concern about the issue. During the campaign, Trump discussed allowing re-importation of cheaper drugs or allowing the government to negotiate drug prices as ways to lower prices.

The Trump administration has now established a working group, led by the Office of Management and Budget (OMB), which includes top officials from the U.S. Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS), the Food and Drug Administration (FDA), the Health Resources & Services Administration (HRSA), the National Economic Council, and the Office of the Trade Representative, and work has begun on development of an Executive Order on the subject. According to press reports, the Executive Order is expected to include more modest proposals than discussed during the campaign such as speeding up approval of generic drugs as well as proposals that are supported by the drug industry. There is no announced schedule for release of the Executive Order, however, working group members have discussed a July release as well as continued work throughout the summer.

Politico has obtained a copy of a draft Executive Order and is reporting the policy changes provide broad authority for federal agencies including FDA, CMS, the U.S. Trade Representative, and other health agencies to develop measures to deal with drug prices. For example, CMS could design Medicare and Medicaid benefits that would reduce out-of-pocket costs for beneficiaries or modify the Part D protected classes. The Executive Order could also include a focus on value-based drug pricing, which would allow agreements between insurers (including Medicare and Medicaid) and manufacturers that tie payment to drug efficacy. This proposal is supported by the pharmaceutical industry. The order is also expected to roll back a federal 340B drug discount program, which was expanded during the Obama administration, and provides discounts to hospitals and clinics that serve a large number of low-income patients. Not all of these proposals would actually reduce total health system drug prices. In some cases, they would merely shift who is paying. House and Senate Democrats have written a letter to the administration requesting a more comprehensive approach in the Executive Order such as measures to increase transparency in drug pricing and increase price competition.

The FDA has already moved to implement a proposal that is focused on speeding up drug approvals. On June 19, the FDA issued draft guidance for comments which is intended to assist companies in getting shorter reviews of generic drug applications. Initially, this policy will focus on older drugs that have limited competition On June 27, the FDA published a list of off-patent, off-exclusivity branded drugs without approved generics as part of a new policy to speed up generic reviews. Previously, the FDA Commissioner announced the FDA will develop a “drug competition action plan” to facilitate competition among expensive drugs after holding a public hearing on ways to accomplish this goal and will move to clear the backlog of FDA reviews of generic drugs.

Initially, curbing excessive drug prices had bipartisan support in Congress, and Congress started to move on drug prices. However, it appears partisan gridlock over the Affordable Care Act (ACA) repeal and replace legislation will thwart any real congressional action this year. The Senate Health, Education, Labor, and Pension (HELP) Committee held a hearing in early June which focused on patient costs for drugs. The HELP hearing demonstrated a lack of bipartisan consensus on the problem and potential solutions, with Republicans focusing on bringing more drugs to the market faster to promote competition and the Democrats focusing on more active policies like government negotiation of Part D prices. A second HELP hearing scheduled for July has been canceled, and it is unlikely a third hearing planned for the fall will be held. The House Energy and Commerce Committee said they are planning a hearing on the issue, but there is no scheduled date.

States have also moved to address drug prices. In June, Nevada enacted legislation to require increased transparency of drug prices for treatment of diabetes. Companies that have raised a drug’s list price over a certain amount must disclose information about the costs of making and marketing the drug and any rebates provided to Pharmacy Benefit Managers (PBMs). The legislation also includes provisions for more PBM transparency. Vermont already has a drug price transparency statute on the books and has produced a report on egregious drug price spikes. Maryland recently passed legislation that provides authority for the Attorney General to target generic drug makers who increase the acquisition cost of a generic drug more than 50 percent in one year and to impose civil penalties or lower the price, though this has recently been challenged in court.



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CMS Announces Expansion of the Medicare Advantage Value-Based Insurance Design Model

The Centers for Medicare & Medicaid Services (CMS) announced plans to expand the Medicare Advantage (MA) Value-Based Insurance Design (VBID) model to more states and more conditions in 2018 without the experience of the first year's launch, which begins in January 2017. The schedule underlines the Administration's goal of rapidly expanding the use of innovative payment and delivery models that emphasize quality and good outcomes rather than volume of services. VBID models have been used in the private sector to better manage the costs and care of persons with high healthcare needs and the Medicare population, which has the largest number of persons with chronic care conditions, and offers the potential to see even better results for more people.

Under the demonstration, the requirement that the MA benefit package be uniform for all enrollees will be waived. The uniformity provision was adopted many years ago to ensure health plans did not use benefit design to exclude persons with conditions and disabilities requiring the use of many services and prescription drugs. Fortunately, over time, policymakers and plans have seen the value of programs that better manage the conditions of persons with chronic conditions, such as disease management programs, although participation has been lower than expected. The VBID model will allow MA plans to lower cost sharing, add services, and target providers considered "high value" for the selected chronic condition. MA and Part D plans will still be required to offer uniform benefits under the new model for all plan members with the target condition. As a beneficiary protection, participants in the VBID program can never pay more than other MA enrollees for their services or receive fewer benefits.

For 2018, the new states eligible to participate will include Texas, Michigan, and Alabama. Seven states and seven chronic conditions were selected for the first year of the demonstration.  Participating plans will be announced in September 2016. The additional chronic conditions that will be available for VBID participants include rheumatoid arthritis and dementia. The second year model test program will allow MA organizations with at least one plan or a parent organization with one plan with 2,000 or more enrollees to offer VBID enrollment to other Plan Benefit Packages (PBPs) with at least 500 enrollees, thus expanding the number of participating plans and VBID participants.

CMS will conduct a webinar of the second year changes on August 24, 2016, at 2:00 pm EST.  Participants may register at

CMS plans to issue a Request for Applications for the second year VBID model test program in the fall of 2016. Information on how to apply can be found at



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Medicare Advantage Pays Hospitals Less than Medicare

Researchers at Stanford University conducted a study of hospital payments by Medicare Advantage (MA) plans, Fee-for-Service (FFS) Medicare, and commercial insurers in 2009 and 2012 and found MA plans pay lower prices than FFS for most (but not all) types of admissions and in most (but not all) geographic areas. The study found:

  • MA plans paid 8 percent less than FFS after adjusting for diagnostic-related group (DRG) and geographic area differences between MA and FFS.
  • If differences in hospital networks are also taken into account, MA plans paid 5.6 percent less than traditional Medicare. Thus, about one-third of the 8 percent difference in MA and FFS prices is attributable to narrower MA networks.
  • MA plans in areas with the highest FFS spending paid lower hospital prices than MA plans in areas with the lowest FFS spending.
  • MA plans with the highest enrollment penetration rates paid lower hospital prices compared with MA plans in areas with lower MA penetration rates.
  • MA plans pay less for admissions with short lengths of stay.

Commercial insurer rates were much higher than either MA or Medicare FFS rates. Commercial plans pay higher prices than FFS for almost all types of admissions in almost all geographic areas. Higher FFS spending was associated with lower commercial prices.

The researchers (Laurence C. Baker, M. Kate Bundorf, M. Devlin, and Daniel P. Kessler) undertook the study because the literature provides no systematic analysis of the unit prices MA plans pay relative to FFS payments and whether lower MA costs are due to lower quantities of services per patient, lower prices per treatment, or both. According to the researchers, the conventional wisdom is MA plans save costs by lowering the quantity of services, and MA plans pay more to providers because they lack the FFS monopsony purchasing power. The study concludes at least part of the cost advantage of MA plans is due to lower prices and not lower quantities than FFS.

The researchers recommended Medicare consider the market environment more broadly than the level of FFS spending when setting MA payments. The researchers also recommended FFS payments to hospitals be adjusted across geographic differences and DRGs to better reflect the market.

The study used the Centers for Medicare & Medicaid Services (CMS) FFS data on all hospital payments and claims data for patients from the Health Care Cost Institute (HCCI), which represents 27 percent of the non-elderly population and 31 percent of the elderly MA population. The actual hospital prices negotiated with plans were not available since they are considered proprietary.

The study methodology used the average price per admission across metropolitan areas adjusted for differences in hospital networks, geographic areas, and case mix. To account for case mix, the researchers used only the DRG pairs that were common to MA and FFS. The researchers noted several limitations to their study findings, for example, HCCI claims data are not identical to the national distribution of MA and commercial enrollees and do not capture unobserved differences in patient severity across insurers, e.g., MA and commercial hospital admissions may be more severe than FFS admissions due to prior admission and prescreening.



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Medicare at 50: Past, Present & Future

Since its inception on July 30,1965, millions of elderly and disabled Americans have been able to obtain medical care through Medicare. Before Medicare, almost half of all Americans 65 and older had no health insurance. Today that number has dropped to a staggering 2 percent.

The accomplishments for Medicare have been noteworthy.

These include increased access to health insurance coverage and healthcare, decreased disparities in access by race leading to desegregation of hospital staff and facilities, as well as payment and delivery system reforms such as prospective payment, capitation, and shared savings — all of which have been adopted by private payers. Karen Davis from Johns Hopkins and former President of the Commonwealth Fund noted the success of Medicare's insurance Marketplace which offers beneficiaries a choice of traditional Medicare and Medicare Advantage plans with a 4-5 Star program that is driving plans and enrollment to higher quality. Medicare spending per capita has grown more slowly than overall health spending per capita and is currently at historically low rates.

The challenges are many.

Disjointed coverage (Parts A, B, D) is confusing to beneficiaries and results in high administrative costs and overpayments. Out-of-pocket costs for premiums, cost-sharing, and uncovered services remain high, and Medicare has no out-of-pocket maximum. Medicare does not cover long-term care services or home- and community-based services. Provider payment still remains largely fee-for-service, resulting in incentives for volume and provider not patient-centered care.

The Future

The future involves many different directions. The first is moving from an acute care model to a program that can effectively care for beneficiaries with complex chronic conditions. Provider payment reform needs to move to value-based payment that rewards efficiency and quality. The focus needs to shift to patient-centered care rather than provider-centric care. Care coordination and team care needs to be a focus. Program fragmentation and high out-of-pocket costs, particularly for high service users, needs to be addressed.

As Charles Darwin pointed out, evolution isn't about being the biggest or the smartest, but the most adaptable. Government programs have become the biggest opportunity for payers. Rates will be positive especially in Medicare Advantage, but the compliance environment will be brutal throughout the rest of the Obama administration. Star Ratings and the member experience are now driving the market — 30 plus states are now using some form of Star Ratings for performance-based payment, many states have adopted quality ratings for Medicaid managed care plans, but there is no national standard….yet, and the Health Insurance Marketplace will begin publishing quality ratings in 2016.

What have we learned?

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About 81M will be enrolled in Medicare by 2030. Is your organization prepared?


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Navigators, In-Person Assisters and Brokers

The Alliance for Health Reform held a briefing on August 5, 2014 on "Navigating the Health Insurance Landscape:  What's Next for Navigators, In-Person Assisters and Brokers?"

Consumer enrollment in Qualified Health Plans (QHPs) offered in the Exchange Marketplaces for 2014 was greatly assisted by Navigators, In-Person Assisters (including Certified Application Counselors) and Brokers. 28,000 navigators and assisters helped 10.6 million consumers during the first ACA open enrollment period.  The Kaiser Family Foundation just completed a survey and issued a report entitled "Survey of Health Insurance Marketplace Assister Programs: A First Look under the Affordable Care Act". The survey did not include agents and brokers.  The survey reported that there were 4,400 assister programs nationwide.   Certified Application Counsellor Programs account for 45 percent of the assister programs, in-person assistance programs were 26 percent, the FQHC share was 26 percent, Navigator programs represented only 2 percent and the Federal Enrollment Assistance program provided only 1 percent.

According to the Kaiser study, the federal government spent over $400 million on these assistance programs during the first year. $100 million came from Exchange establishment grants, $208 million from grants to FQHCs, and $105 million from CMS ACA implementation funds. In addition, there was substantial additional funding from private sources including non-profit community programs, hospitals and health care providers, state and local governments.  Funding for assister programs in the state-based marketplaces and federal-state partnership markets was substantially higher than funding in the federal marketplaces.  The uneven funding distribution meant that the number of assister staff per 10,000 uninsured was about half in the federal marketplaces.

Assistance was time intensive involving on average one to two hours for each client.  The top three reasons consumers sought assistance included their limited understanding of the ACA and the need to understand plan choices and their lack of confidence in applying on their own.   Information from QHP websites was inadequate and plans did not have dedicated phone lines for assisters.  Assisters faced a number of challenges including lack of health insurance literacy, transportation issues in rural areas and lack of trust in certain hard to reach communities. States had only 10-12 weeks to hire and train most assisters. 92 percent of assisters wanted additional training especially in the areas of subsidies, tax penalties, and immigration issues.  Successful techniques in reaching the target uninsured populations included partnership with community agencies, building on Medicaid and CHIP networks, use of mobile navigators and media outreach efforts.  Back-end access to Exchange portals in some states, e.g. Maryland and New York greatly helped the assisters with their jobs. States with larger funding were able to conduct more outreach and education events and schedule one on one appointments.

There is no data on the number of agents and brokers that participated in the 2014 open enrollment period.  The National Association of Health Underwriters (NAHU) reported high broker interest and their 2013 survey found that almost 75 percent were obtaining marketplace certification.  HHS reported that 70,000 agents were certified by the federal marketplaces.  State exchange data shows 30,000 additional agents and brokers were certified. The NAHU reported that agent and broker services had an 89 percent customer satisfaction rate. In general, state based exchanges were designed with better broker participation mechanisms than the federal marketplace, although all exchanges experienced technological issues.  The level of collaboration between brokers and assisters varied across states.  Some assisters were wary of brokers, largely because they received commissions from the plans.  Others valued the expertise of the brokers.

90 percent of assister programs reported post-enrollment problems after the ACA open enrollment ended in April.  The top problems identified included not receiving an insurance card, Medicaid eligibility determination problems, and failure to receive a premium invoice. Three fourths of the consumers lacked understanding of the basic insurance concepts. About one-third of the enrollees picked the wrong plan, for example because they didn't understand high deductible plans or innovative benefit designs that covered some benefits but not others.

76 percent of the assister programs plan to continue during the second open enrollment.  This open enrollment is 50 percent shorter than the first enrollment period and overlaps with tax season.  The assisters will also be facing the QHP renewal process as well as uncertainly on the functionality of the online portals.  New QHPs will be entering the marketplace. Federal Navigator funding will be $8 million less.  States can continue to use their grants for the 2015 enrollment period, but they must be self-supporting in 2016.  Additional education will be needed on tax penalties which will be three times larger if consumers don't sign up in 2015.

NAHU expects broker participation in the 2015 open enrollment period to be high, although slightly lower than 2014.  A June survey found that 69 percent of brokers plan to sell on the individual exchange in 2015. Brokers see opportunities with new plans entering the marketplace and the availability of the SHOP exchanges. Brokers and agents experienced a number of challenges in 2014 including payment and liability issues resulting from the failure of applications to record multiple assisters.    NAHU recommends broker portals, additional fields to record multiple assister numbers on applications, ability to edit enrollment records to add NPNs and addition of a complete list of brokers on


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