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Our Take: CMS approves controversial waiver, finalizes rules, penalizes hospitals for readmissions

Nov 09, 2020

In the last week or so, CMS has taken a number of steps that could have a significant impact on stakeholders across the health care spectrum, from providers and insurers to consumers and patients. Below are several that we felt would be of particular interest to our readers.

— Sunday a week ago, the agency approved a waiver that authorizes Georgia to restructure its individual market by 1) establishing a reinsurance program, starting with the 2022 plan year, and 2) eliminating HealthCare.gov as an enrollment option, starting with the 2023 plan year, without setting up a state-run version.

This means that Georgia could become the first state not to offer a government-run marketplace for individuals who want to enroll in Affordable Care Act (ACA) plans. Instead, consumers will use a platform called the Georgia Access Model to enroll in a health plan through a broker, an insurer, or an agent.

At 13.7%, Georgia’s uninsured rate is one of the country’s highest. The state says high premiums and low insurer participation in the marketplace are partly to blame. CMS contends that decentralizing the enrollment process will “improve the consumer shopping experience” because it will motivate brokers, agents, and others in the private sector to increase their marketing and outreach efforts.

The reinsurance program, which would protect insurers from high claims, is expected to lower annual premiums in the individual market by an average of about 10%, CMS said.

Based on comments and letters CMS received, there are many who oppose eliminating HealthCare.gov as an option for Georgians. Critics say it won’t make the experience better for consumers because individuals already have the option of direct enrollment. What it will do, they say, is make it easier for brokers to sell skimpier short-term plans and earn higher commissions. It will also likely confuse consumers and make it more difficult to sign up for coverage — which could cause the state’s uninsured rate to climb even higher.

— Early last week CMS finalized a rule intended to increase access to home dialysis for patients with end-stage renal disease (ESRD). Last year the agency introduced a transitional add-on payment adjustment for new and innovative equipment and supplies. The new rule expands eligibility for the additional Medicare payment to qualifying new dialysis machines when used in the home.

CMS noted that more than 85% of Medicare fee-for-service beneficiaries with ESRD receive dialysis at least three times a week at a facility, which means they are spending an average of 12 hours every week outside the home to get the treatment they need. These patients have had the highest rates of hospitalization for COVID-19 among Medicare beneficiaries, the agency said, which is not surprising, as most have multiple chronic conditions and comorbidities.

— Another rule that CMS finalized will require group health plans and private insurers in the individual and group markets to publicly post the rates they’ve negotiated with providers. It’s similar to a price transparency rule that will require hospitals to post their insurer-negotiated rates online starting in January. The purpose is to make it easier for consumers to shop and compare before they buy.

Specifically, starting in 2022, most health plans will have to post negotiated rates for in-network providers, pricing for out-of-network providers, and in-network prices for prescription drugs the plan covers, along with historical net prices. Then, in 2023, health plans will be required to offer an online shopping tool that includes an out-of-pocket cost estimate and negotiated prices for 500 services that CMS considers “most shoppable.” A year later, the requirement will apply to “every item and service,” CMS Administrator Seema Verma said on a press call.

Insurers began pushing back when the rule was proposed last November, citing the expense of building and maintaining the price transparency tool — although many already offer some version of a cost calculator on their website that could be modified to meet the new requirements. Some have said that providing the pricing information will confuse consumers, an argument that hospitals also used when they challenged the earlier transparency rule.

— A third rule that CMS finalized will provide an aggregate 1.9% increase in payments to home health agencies, or about $390 million, in 2021. It also makes permanent the changes to home health regulations for telehealth that were outlined in March in response to the COVID-19 public health emergency, helping to secure telehealth’s future as a commonly used method of accessing and delivering care.

— Lastly, Kaiser Health News reported that 2,545 hospitals — almost half of the country’s 5,267 total hospitals — will receive lower Medicare payments for having too many readmissions in accordance with the ACA’s Hospital Readmissions Reduction Program. It’s worth mentioning that 2,176 hospitals are exempt from the penalties because of their status as critical access facilities or specialty hospitals. So, out of the 3,080 hospitals evaluated, 83% received a penalty.

This round of penalties was calculated using hospitals’ case histories between July 2016 and June 2019. The average penalty was 0.69%, although 613 hospitals received a penalty of 1% or more. In September, CMS said it might suspend the program in the future if the COVID-19 pandemic makes it too hard to evaluate hospitals’ performance.

What else you need to know

Ascension is expanding its pharmacy services with the launch of a new brand called Ascension Rx, Becker’s Hospital Review reported. The goal of Ascension’s new pharmacy model — which will center on the patient-clinician relationship and includes specialty medication services, medication packaging and delivery, infusion therapy, and medication management — is to improve the coordination, safety, and quality of care. As part of the new brand, the St. Louis-based health system is developing a centralized national mail order pharmacy service and plans to open an Ascension Rx specialty pharmacy in Austin, Texas, next spring.

Blue Cross Blue Shield of North Carolina is creating an accountable care organization with Kansas City, Mo.-based Caravan Health. The ACO will work with community and rural hospitals to expand the insurer’s Blue Premier value-based care program to more areas of North Carolina. According to a press release issued by the two organizations, approximately 28% of North Carolina residents live in rural areas and about 26% of the providers in Blue Cross NC’s network are in rural areas. Through the ACO, which will launch in January, providers will have access to resources at Caravan Health such as enhanced data analytics, patient engagement technologies, and accountability tools that can help them measure and improve quality.

Humana and Southwestern Health Resources announced a value-based agreement that will take effect on Jan. 1, 2021. Dallas-based Southwestern Health Resources is the clinically integrated network for the University of Texas Southwestern Medical Center in Dallas and Texas Health Resources in Arlington, Texas. Building on an existing network contract between the two entities, the agreement gives Medicare Advantage members in Humana’s HMO plans in-network access to approximately 30 hospitals and 350 care facilities in 16 counties. Under the agreement, physician reimbursement is linked to patients’ health outcomes.

Northwell Health’s Feinstein Institutes for Medical Research and Fitbit are partnering on a study to validate an algorithm Fitbit is developing for the early detection of COVID-19. Northwell Health said in a news release that the Medical Technology Enterprise Consortium selected Fitbit to receive a Department of Defense award of nearly $2.5 million; the funding will support the development of wearable technology that can diagnose COVID-19 before it becomes symptomatic. In the study, thousands of Northwell Health employees will receive Fitbit devices and will be notified of “potential illness, as well as COVID-19 testing to assess and verify the results.”

Pfizer and Mylan have been cleared to proceed with their plans to combine Mylan with Pfizer’s Upjohn business unit, the companies announced Oct. 31. The Federal Trade Commission accepted a proposed consent order, with a stipulation — Pfizer must divest six of its drugs to Prasco, an authorized generics company, including the combination hypertension/cholesterol drug Caduet (amlodipine besylate/atorvastatin calcium), and Mylan must also divest one of its drugs. On Nov. 13, Upjohn will be spun off to Pfizer’s stockholders and combined with Mylan. The merger is expected to close on Nov. 16; the resulting company will be named Viatris Inc. Pfizer shareholders will own 57% of outstanding Viatris shares and Mylan shareholders will own 43%. Pfizer will receive $12 billion from Viatris as “partial consideration” for the spin-off. Viatris will produce and sell generic and brand-name drugs, including EpiPen (epinephrine) and Viagra (sildenafil citrate).

AtlantiCare is no longer part of Geisinger. The two health systems released a statement last Monday saying they had finalized their separation, which was first announced on March 31 and took effect on Oct. 31. Danville, Pa.-based Geisinger acquired AtlantiCare, which is based in Egg Harbor Township, N.J., in 2015, but AtlantiCare’s board of directors voted in September 2019 to split from the larger health system. They will continue to collaborate on the New Jersey campus of the Geisinger Commonwealth School of Medicine.

Larry Merlo will step down as CVS Health’s CEO and president on Feb. 1, 2021. Karen Lynch, currently the executive vice president of CVS Health and president of Aetna, has been chosen as his successor. Merlo, who has been with CVS for more than 40 years and has served in his current positions for a decade, according to a CVS press statement, will serve on the board of directors until the next shareholder meeting in May and will officially retire on May 31.

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