Politics. An economist I know, who has advised presidents for decades, told me the other day “politicians are most dangerous when they are panicked or (dramatic pause) drunk.” He was, of course, referring to the CARES Act and its $2.6 trillion dollar price tag.
In certain ways the easy money of the CARES Act and its smaller, associated supplemental appropriations will likely be credited with aiding and abetting local policies that have and continue to be economically disastrous. With visions of sugarplums from the federal treasury dancing in their heads, state and local officials have used the need for more stimulus to justify delays in school openings and continued restrictions on commerce and assembly.
The return of Congress’ deficit hawks who, having recovered from one of the aforementioned afflictions, are digging in their heels on state and local aid. Their principled opposition, however, will only last as long as advocates for state and local aid reject liability restrictions associated with spread and treatment of COVID. So turn the wheels of Congress.
If the two sides can, as Majority Leader Mitch McConnell put it last week, make law on the things on which they agree, another $50 billion may be headed to a health care system already awash in money. According to bipartisan framework released last week, about $35 billion would be slated to go to the Provider Relief Fund with the balance headed to testing, tracing and vaccine development and deployment.
That would bring the total of relief/stimulus for health care to over half a trillion dollars, rocket fuel for a transformation already underway before COVID. As we will discuss Tuesday, It ain’t over. It’s just beginning.
Policy. When politicians are panicked, or drunk, bureaucrats almost always keep their heads. The Trump administration’s health team is likely to be remembered for exploiting the COVID outbreak to forward their de/re-regulatory agenda at unprecedented speed. Things like the Most Favored Nation Rule on drug prices and telehealth policy are so inextricably linked to the public health emergency, it seems one cannot end without the other.
As we noted last week, no one feels much urgency to end the emergency.
The latest from the Trump administration is a rule that requires Medicaid, CHIP and Qualified Health Plans to develop API based data exchange systems with providers to handle prior authorization. Adding Medicare Advantage plans to the requirement is under consideration.
Apparently, the COVID crisis uncovered one of Medicaid’s many little secrets. Prior Authorization, especially when deployed against frequently low skill, poorly educated and critically ill populations, can be an often-insurmountable obstacle to care. Not to be too cynical but from the perspective of a managed care organization prior authorization is a great way to manage benefit costs.
See for example, $MOH’s prior authorization page. No surprise their list of PA codes includes the fraud prone area of DME. It also includes all inpatient admissions.
All?
More common in commercial coverage is an inpatient admission notification with prior authorization often used for elective procedures.
This requirement is one thing but how a provider requests it and how it is appealed is shocking low tech. A .pdf form is completed with a request to append clinical notes and other documentation and then emailed to reviewer. If the request is denied, a reconsideration form can be submitted. Via Fax. Makes you wonder where the ESG overlords are.
The new rule aims to bring Medicaid plans into the 21st century. The advantage of API data exchange beyond speed is the record it provides state and federal officials. Less paper and more bytes probably yield greater scrutiny.
Great for health care. Probably not great for managed care, especially those that are, as one health company CEO put it to me, "Claims denying machines."
Power. If the COVID outbreak did not make it clear that the age of cooperative federalism is coming to a close, the Supreme Court continues to press the point. Last week, it issued a surprise decision in Rutledge v. Pharmaceutical Care Management Association, reversing a lower court decision on the regulation of Pharmacy Benefit Managers. The lower courts had concluded that Arkansas Act 900, which imposed certain restrictions, was invalid.
Not so say the Supremes.
This decision now limits the wide latitude insurers have been granted in states under the auspices of avoiding interference with federal ERISA laws. Justice Clarence Thomas who wrote a concurring opinion says “Here, the parties have not pointed to any ERISA provision that governs the same matter as Act 900. That alone should resolve the case.” In other words, just because a state law impacts a employee benefit plans, ERISA’s pre-emptions are not automatically triggered.
The decision opens the door for state-level regulation of PBMs. That regulation is very likely to favor independent pharmacists which have found themselves at a disadvantage when faced with dispensing, marketing, DIR and other fees and clawbacks that frequently have little or no connection to services rendered. Independent pharmacists have been particularly irked by practices of CVS which, of course, operates both competing pharmacies and a PBM.
Look for legislative efforts in Ohio, Florida and Georgia where the issue has been particularly hot. State sessions begin just after the new year and conclude around the middle of April.
More bad news for the managed care plans like $CVS and $CI, highly dependent on their ability to pull their PBM levers to buy market share for their Medicare Advantage plans but without the flexibility of $UNH's massive infrastructure.
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Emily Evans
Managing Director – Health Policy
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