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Our Take: As COVID-19 cases soar, the private sector and government officials try to respond

Mar 23, 2020
Steps are taken to increase medical supplies, prevent drug shortages

In response to pressure from Congress, governors, hospitals, and expert advisers, President Donald Trump invoked the Defense Production Act last week, giving the government authority to have private U.S. companies suspend their usual manufacturing activity so they can ramp up production of supplies needed to address the pandemic, such as respirators and protective gear for medical workers.

Meanwhile, the Pentagon said it would donate 5 million respirator masks and up to 2,000 ventilators to the Department of Health and Human Services (HHS), various sources reported. However, the ventilators require special training to operate and may be good for only a single use.

In an effort to thwart drug shortages during the pandemic, Sen. Marsha Blackburn, R-Tenn., and Sen. Bob Menendez, D-N.J., introduced the Securing America’s Medicine Cabinet Act, or SAM-C. The bill would authorize $100 million to develop centers of excellence in advanced pharmaceutical manufacturing; the measure is intended to reduce the nation’s reliance on pharmaceutical ingredients manufactured abroad. Sen. Blackburn said only 28% of the facilities that produce active pharmaceutical ingredients (APIs) are in the U.S.

Other steps are taken to address the continued lack of tests and testing

Last Monday, the FDA gave states permission to approve coronavirus test kits developed in local laboratories, taking the FDA out of the approval process, Reuters reported. Several hospitals and health systems — including Hackensack Meridian Health, Northwell Health, and Memorial Healthcare — had already been developing their own means of diagnosing COVID-19, Modern Healthcare reported.

Vice President Mike Pence said a week ago that more than 2,000 commercial laboratories would be available to process coronavirus tests using high-speed machines. Other federal officials said the government would help set up drive-through testing centers, which states would operate in conjunction with the U.S. Public Health Service Commissioned Corps. In addition, the Department of Defense said it would make 14 certified testing labs available to test civilians, with two more labs to be offered soon.

CMS expands Medicare telehealth coverage
To limit exposure to the virus and slow its spread, CMS announced Tuesday that it is temporarily lifting geographic and other restrictions and will pay clinicians to provide a wider range of telehealth services to beneficiaries (including regular office visits, mental health counseling, and preventive screenings) for dates of service starting March 6. The virtual visits will be covered at the same rate as in-person visits.

Additionally, the HHS Office of Inspector General is giving providers the flexibility to lower or waive beneficiaries’ cost share for telehealth visits that are paid by federal programs.

A few states, such as Washington, are starting to take advantage of relaxed federal regulations and are allowing physicians to voluntarily provide telehealth services even if they are not licensed there, according to CNBC. Governors must use their emergency powers in order for that to happen.

Hospital-at-home programs prepare to shore up capacity to treat patients
With the very real possibility that the number of patients needing treatment for COVID-19 could far surpass the number of hospital rooms available, hospital-at-home programs like the one at Mount Sinai could represent a much-needed alternative.

The programs would give hospitals an early-discharge option for patients who are not infected with the coronavirus, opening up more space for those with severe symptoms related to COVID-19. The programs could also be used to monitor people who test positive for the coronavirus but are not ill enough to require acute inpatient care.

Modern Healthcare noted that before hospital-at-home programs can be fully utilized in these ways, CMS needs to revise its home health regulations. Currently, Medicare doesn’t reimburse home health providers for telehealth services when used as a substitute for in-person visits, and patients must be homebound in order for home health services to be covered.

Hospitals turn to Congress for help; CMS advises delaying elective procedures 
Several large hospital groups have asked Congress to end or suspend the Medicare sequester cuts. (The sequester reduced spending for most Medicare benefits by 2%, starting in 2013.) The COVID-19 economic stimulus bill proposed by Senate Republicans would suspend sequestration through December but would extend it for a year beyond its original end date, Modern Healthcare reported.

In addition to requesting that the sequester be suspended, America’s Essential Hospitals, a group that represents 300 safety-net hospitals, asked Congress to hold off on the planned $4 billion in cuts to Medicaid Disproportionate Share Hospital payments for at least two years. The cuts are supposed to take effect May 23.

To be prepared to meet the expected surge of patients with COVID-19, hospitals are being asked to delay elective surgeries; many already have. In the guidance CMS released last Wednesday, the agency gives providers the final decision on which procedures to delay, based on their available staff, equipment, and beds.

Bracing for losses, Medicare ACOs ask CMS to waive penalties 
Accountable care organizations participating in the Medicare Shared Savings Program and the Next-Gen ACO program are hoping the federal government will take action to mitigate the financial losses they could incur as a result of the pandemic — such as waiving penalties, extending deadlines for alternative payment models, and holding ACOs harmless with regard to quality assessments for 2020, Fierce Healthcare reported.

Some federal programs have a policy in place to address losses stemming from “extreme and uncontrollable circumstances,” but hospital and physician organizations are concerned that such policies will be inadequate, given the potential enormity of the pandemic.

CMS also has a policy to address situations in which an unforeseen circumstance could affect an ACO’s quality score, but again, ACOs fear it won’t be enough. They are also worried about the calculation of the benchmark, which is based on the three previous years’ spending. Because this year’s spending could significantly exceed the benchmark, the National Association of ACOs is hopeful that CMS will make special adjustments.

Drugmakers suspend in-person meetings with physicians
Sales representatives at Pfizer, Amgen, Merck, and other drug companies are no longer meeting with physicians in person because of the risk of infection, and are instead conducting their interactions online. More will likely follow suit, as many hospitals and group practices are limiting access to essential visitors only.

If their salesforces are grounded for months, drug companies could feel a sharp impact. The timing is particularly unfortunate for relatively smaller companies with new or expanded drug approvals, like Amarin, whose Vascepa (icosapent ethyl) was just approved as an add-on treatment for reducing the risk of cardiovascular events. Anticipating being able to market the drug to a much broader patient population, Amarin recently doubled its salesforce to 800 people.

Merger approvals face potential delays
Both the Federal Trade Commission and the Justice Department are asking companies for more time to complete their merger reviews. According to Bloomberg, the agencies said an additional 30 days may be necessary, as coronavirus-related disruptions could interfere with companies’ ability to provide documents and make employees available for interviews.

AbbVie’s pending $63 billion acquisition of Allergan is one of the more prominent deals that could get caught up in the delayed time frame. AbbVie stated in a press release last Tuesday that it anticipates closing the transaction in May.

What else you need to know

Detroit-based Henry Ford Health System quadrupled its net income last year, recently released audited financial documents show. The health system reported net income of $354.5 million for 2019, compared with $86.8 million for 2018. Revenue rose as well — $6.3 billion for 2019 versus $5.9 billion for 2018. Part of that increase was attributed to higher net patient revenue from outpatient visits, along with expanded specialty and ambulatory pharmacy activities.

Kentucky lawmakers passed a bill that would eliminate pharmacy benefit managers from the state’s Medicaid program by requiring the program to pay pharmacies directly for prescription drugs, the Associated Press reported. The state Senate voted 30-1 last week to send the measure to Gov. Andy Beshear.

The Arizona Legislature approved a new assessment on hospitals to get more money for the state’s Medicaid program, according to an AP report. The proposal would assess hospitals approximately $350 million annually for outpatient services. In return, hospitals, physicians, and other providers would receive larger payments — a projected total of $1.1 billion — for care given to Medicaid patients, which is expected to eliminate an estimated $1 billion in unreimbursed costs, AP noted. The bill is to be sent to Gov. Doug Ducey for his consideration.

Wauwatosa, Wis.-based Froedtert Health will acquire a minority stake in Holy Family Memorial (HFM) Medical Center, a Catholic provider based in Manitowoc, Wis. The two organizations signed a letter of intent “to provide health care services,” HFM said in its announcement, adding that HFM would continue to operate as a locally led and managed health network.

Rite Aid Corp. will rebrand its pharmacy benefits and services company as “Elixir.” Currently called EnvisionRxOptions, the company includes multiple PBMs, mail delivery and specialty pharmacy services, network and rebate administration, Medicare Part D insurance, and other lines of service. Rite Aid noted in a news release that EnvisionRxOptions is “the only payor-agnostic PBM with a retail pharmacy footprint,” and that moving forward it will be “well-positioned with mid-market employer groups and regional health plans.” Forbes said the rebranding effort is an attempt to keep the PBM company “competitive as an independent business” at a time when larger PBMs are owned by insurers.

What we’re reading
Catching Up to Coronavirus: Top 60 Treatments in Development. Genetic Engineering & Biotechnology News, 3.18.20
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