This Week in Health Care Reform: August 28th, 2020

Experts warn policymakers not to be distracted by Big Pharma’s ‘blame game’; bigger health systems don’t lead to better health care; behavioral health patients account for a disproportionate share of health spending; and, what we’re learning from virtual house calls.

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Week in Review

Pharma Distraction: The recent Executive Order announced by the Administration targeting drug rebates essentially takes away one of the only guardrails available to stakeholders in their ongoing efforts to better insulate consumers from the pharmaceutical industry’s unchecked pricing power.  Currently, these stakeholders, such as pharmacy benefit managers (PBMs) use these rebates in their negotiations with drugmakers to exact price concessions on behalf of their customers – health plans and employers.  By eliminating these rebates in the Medicare Part D prescription drug program, drug companies stand to pocket billions of dollars, leaving seniors and taxpayers footing the bill.  Specifically, independent analyses estimate that the proposed rebate rule would not only raise Part D premiums, but could ultimately wind up costing nearly $200 billion by the end of the decade.  Experts caution that Big Pharma’s deflecting focus onto PBMs and rebates is nothing more than a transparent effort by the drug industry to evade responsibility for their role in driving up prescription drug prices.  It being an election year, policymakers would do well to pay attention to voters’ attitudes relative to Part D and the proposed rebate rule.  According to recent polling, the vast majority of seniors (91 percent) say that they’re satisfied with their Medicare prescription drug coverage.  Additionally, 85 percent say that increasing premiums in Part D would impact them financially.  And, most saliently, fully twice as many voters oppose (versus support) eliminating rebates in Medicare Part D.

Private Equity Study: A new study appearing in the Journal of the American Medical Association (JAMA) takes a look at the impact that private equity acquisitions have had on hospitals’ income, use, and quality.  What researchers essentially found was that hospitals charge significantly more once private equity interests get involved.  In fact, hospitals owned by these firms bring in nearly 30 percent more income than other hospitals.  This issue has only become more pressing as the pace in which private equity firms have looked to acquire health care providers has gained steam.  A separate study expands on this, reinforcing the urgency of taking a measured look at how these health system acquisitions have impacted patients and communities.  Despite often being used as justification for these consolidations, research published in Health Affairs earlier this month established that increased quality was not generally associated with larger hospitals and physician offices.  This only supplements the growing body of studies showing how the consolidation of health systems can result in decreased competition and higher prices.

Behavioral Health: As our focus on whole-person health continues to evolve, so, too, does our understanding of the impact that behavioral health has had on our overall health care spending.  In a new study from consulting firm Milliman, researchers found that 27 percent of people with, both, behavioral health and medical conditions, accounted for 57 percent of total annual health care costs across the commercially-insured population studied.  Further, the costs for those with a behavioral health condition were about 3.5 times higher than those without those conditions.  These findings have real-world implications for employers, governments, payers, and providers, as finding a way to attune our health care system to better address these patients’ needs can reduce unnecessary and avoidable pressure on our health care system.  For instance, one hospital in Massachusetts launched a care collaboration program connecting behavioral health patients presenting at the ER with case managers who were able to transition those patients to the appropriate care in an outpatient setting.  In doing so, the hospital was able to reduce these visits to the ER by 78 percent.

Virtual House Calls: Even before the coronavirus accelerated the widespread adoption of digital health applications, telehealth was quickly establishing itself as a powerful tool.  But, our response to the pandemic has only served to focus greater attention on the role that telehealth will play in our health care delivery and reimbursement model going forward.  For example, among older Americans, telehealth visits have skyrocketed since earlier this year.  Employers, too, are reworking their health care benefit strategies to emphasize virtual care.  Home health providers had also already significantly expanded their telehealth offerings.  The result of all these efforts has ushered in something of a resurrection for the house call, as virtual care visits have afforded providers a valuable glimpse into their patients’ lives and, more accurately, their home environments.  In fact, studies have shown that automated blood pressure readings, taken when a patient is sitting quietly alone, are more accurate.  Additionally, patients seem to perform better on cognitive tests administered via telehealth for dementia.


A recent infographic from the Modern Medicaid Alliance shows how the Medicaid program connects Americans 65 years of age and older with critical services, such as long-term services and supports (LTSS) and access to social services.

Stay safe and be well.

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