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Last Build Date: Tue, 27 Sep 2016 21:01:11 +0000


CMS Bolsters Outreach To Young Adults As Open Enrollment Nears

Tue, 27 Sep 2016 17:57:44 +0000

On September 27, the Centers for Medicare and Medicaid Services announced a new campaign to enroll young adults in the health insurance marketplaces. The announcement was released as part of the White House Millennial Outreach and Enrollment Summit. Young adults have seen the sharpest drop in uninsured rates since the enactment of the Affordable Care Act (ACA) in 2010, yet millions remain uninsured. Nine out of 10 marketplace-eligible young adults without health insurance have incomes that would make them eligible for tax credits, thus they should find marketplace coverage affordable. As young adults tend to be healthy and use little medical care, enrolling them in the marketplaces is an essential step toward stabilizing the marketplace risk pools. Thus, CMS and other federal agencies and private partners are undertaking a major outreach effort to enroll young adults in marketplace coverage for 2017. This effort has several components. First, the outreach effort will use online platforms that cater to young adults. Specifically, it intends to use Twitch, a gamer social video platform and community. According to the press release, this effort will feature: pre-roll before videos, a homepage takeover, and ongoing efforts with streamers on Twitch to amplify our message throughout Open Enrollment. For those of you who, like me, cannot fully grasp the intricacies of this statement, it’s worth noting that 10 million daily active users, many of them 18-36 year olds, currently spend 106 minutes per-day, per-person on Twitch. CMS intends to improve its functionality on mobile devices, which one-in-five millennials use exclusively for internet access. It will offer an end-to-end mobile shopping experience, including the ability to comparison shop on a phone or tablet with intuitive navigation and a streamlined interface to compare plans. CMS is also launching a coordinated social media outreach campaign to young adults under the umbrella #HealthyAdulting. CMS is partnering with nearly two dozen youth, ethnic, medical, disability, women’s, and religious groups to conduct outreach campaigns using digital platforms used by young adults, including Facebook, Twitter, and Tumblr to encourage young people to enroll in marketplace coverage. Partnering organizations will host Twitter, Facebook, and Tumblr events potentially reaching hundreds of thousands of their young adult followers. Finally, CMS is targeting individuals whose coverage will soon end and those who were not covered last year. They are collaborating with the Department of Defense to reach out to service members who are transitioning out of military health coverage. Likewise, they are also working with state Medicaid and CHIP programs to contact individuals losing Medicaid or CHIP coverage (about half of whom are aged 18-34) to encourage them to enroll in marketplace coverage. As announced earlier, the Internal Revenue Service is also contacting individuals who paid the shared responsibility fee or claimed an exemption for 2015 to encourage them to enroll in marketplace coverage. About 45 percent of taxpayers who paid the fee or claimed an exemption in 2015 were under age 35. Hawai’i Completes 1332 Waiver On September 26, CMS notified Hawai’i that its application for a 1332 waiver was complete. Section 1332 of the ACA allows HHS (and the IRS) to waive or modify certain ACA requirements to encourage state innovation as long as proposed state programs meet the coverage and affordability goals of the ACA. Hawai’i asks that it be excused from operating a Small Business Health Options (SHOP) marketplace program and that small group health plans in the state not be required to offer a silver level plan. Hawai’i’s Prepaid Health Care Act has long required small businesses to offer even more generous health plans, thus these provisions are unnecessary. HHS now has 180 days to approve or disapprove Hawai’i’s proposal. It is requesting public comments by October 26, 2016. [...]

People Post: Staff And Board Changes In Health Philanthropy

Tue, 27 Sep 2016 15:40:22 +0000

Zia Agha has been promoted to chief medical officer at West Health, which includes the Gary and Mary West Foundation, West Health Institute, and the Gary and Mary West Health Policy Center. Agha will continue in his position of West Health’s executive vice president of clinical research and informatics and will have additional responsibilities for telehealth, according to a September 8 press release. Agha is an internal medicine physician and a clinical professor at the University of California, San Diego. Derek Coy has been named the New York State Health Foundation’s (NYSHealth’s) new veterans’ health officer. He is a veteran of the US Marine Corps who served in Iraq, and he attained the rank of sergeant. Previously, Coy worked for the organization called Iraq and Afghanistan Veterans of America. Coy said in the release, “I’m eager to jumpstart and lead NYSHealth’s efforts to ensure that veterans get the care and support they need and deserve.” A RAND Corporation assessment, funded by NYSHealth, found that nearly half of veterans returning to New York State prefer to receive care and services outside of the Veterans Administration (VA) system, the release noted. After more than a decade as director of public information at the United Hospital Fund, Bob de Luna has resigned from the fund. He is the new press secretary/senior director of media relations at NYC (New York City) Health and Hospitals, which is the largest public health care system in the United States, according to an August 5 press release. After more than twenty-five years as chairman of the Heinz Endowments, Teresa Heinz will pass the chairman’s baton to another family member. She will continue, though, as a member of the endowments’ board and of its Executive Committee. In October, she will be succeeded as chairman by her son André Heinz. Each of her other two sons will later serve as chairman. Teresa Heinz’s late husband was former US Senator H. John Heinz III. Read more here. Teresa Heinz is now married to US Secretary of State John Kerry. Marian Mulkey has left the California Health Care Foundation, where she had been chief learning officer. She is exploring new work challenges in the arena(s) of health, policy, or both, she told Health Affairs. Read the June 17, 2014, Health Affairs Blog post, “Online ACA Marketplaces: The Value Of Consumer Experience Assessments,” by Mulkey and Claudia Page. It was published in the blog’s GrantWatch section. Lendri Purcell has been named vice president of environmental health and youth development programming at the Barbara and Donald Jonas Family Fund. She is a granddaughter of the fund’s cofounders Barbara and Donald Jonas. According to an August 1 press release, “Purcell will expand current partnerships with an emphasis on growing awareness about how commonly used toxic substances are impacting children’s health.” She has been spearheading this new area for both the fund and the Jonas Center for Nursing and Veterans Healthcare. “Specifically, she will examine ways to partner with academic institutions to more effectively integrate environmental health into the larger healthcare system, particularly for children.” Purcell also continues to be involved with and lead the Jonas Youth Initiative, according to a spokesperson for the Jonas Family Fund. S. Karthick Ramakrishnan, a professor and associate dean of the School of Public Policy at the University of California, Riverside, has been appointed to the board of the California Endowment. He is also a global fellow at the Woodrow Wilson International Center for Scholars, in Washington, D.C. Ramakrishan holds a Ph.D. in politics from Princeton University. Jeff Richardson, former vice president of the AbbVie Foundation, has joined APCO Worldwide’s Health Advisory Board, according to an August 1 press release. He “will advise APCO’s clients on global health, HIV/AIDS and corporate philanthropy matters.” Other advisory board members include Kavita Patel, Leslie V. Norwalk, and Derek Yach. Previo[...]

The Proposed Federal ‘Right-To-Try’ Law Is Not The Answer For Critically Ill Patients

Tue, 27 Sep 2016 15:00:22 +0000

Currently, patients have two main options to access experimental therapies that may treat their conditions but that have not yet been approved by the Food and Drug Administration (FDA): enrolling in a clinical trial or applying to FDA’s expanded access (also known as compassionate use) program. But because FDA’s expanded access program has been viewed as cumbersome and overly restrictive, 31 states have passed “Right-To-Try” laws in the past two years. Based on model legislation created by the Goldwater Institute, a public policy think tank, right-to-try laws are intended to authorize use of experimental, not-yet-approved treatments for patients with advanced illness; prohibit sanctions of health care providers for providing experimental treatment; and clarify health insurers’ roles. In May, the Trickett Wendler Right to Try Act of 2016, a companion to a House bill introduced in 2015, was introduced in the Senate. But right-to-try laws, while currently popular, are controversial. In California, Governor Jerry Brown recently vetoed a right-to-try law, saying the FDA’s revised expanded access program should be given a chance to work. A 2015 article in The New England Journal of Medicine provides a legal and ethical critique of expanded access and use of investigational drugs, noting that right-to-try laws “will have limited effect” because “they do not compel manufacturers and insurers to supply and pay for experimental therapies.” I am a survivor of advanced metastatic melanoma. As I wrote in my Narrative Matters essay in the July issue of Health Affairs, I was excluded from extremely promising clinical trials three different times and the delays in access almost killed me. “Faced with imminent death, informed patients have the right to risk their lives by taking a promising but unproven drug, just as they have the right to decide when to terminate further treatment,” I concluded in my essay. “Withholding drugs in such situations is unethical and paternalistic, even if it may violate the physician’s Hippocratic oath to ‘first, do no harm.’” A day after my article appeared, a representative of The Goldwater Institute contacted me, asking if I would be interested in possibly testifying on behalf of right-to-try legislation. After reading the model legislation and the proposed Senate bill, and doing some digging, I decided that while the right-to-try movement has a goal I could approve of in theory, I think it will be counter-productive in the end. Concerns With Right-To-Try Laws To date, I know of no publicized cases where a right-to-try law has enabled access to drugs by the critically ill. There are a number of problems with right-to-try legislation that may explain why. Will pharma participate? There is nothing in any right-to-try legislation, including the proposed federal bill, that compels drug companies to provide their experimental drugs to critically ill patients. This is likely to be the major sticking point. There are many reasons a drug company would not want to provide experimental and unproven drugs, including burdensome costs (especially if the company is small) and potential poor health outcomes when the drug is used in a less controlled situation with sicker patients (leading to liability or bad publicity). Who pays? There is nothing in the proposed Senate bill concerning payment, and the model legislation merely notes that a health plan may, but is not required to, cover experimental therapies. In some states, insurance companies are likely to cover costs, and in others it remains unclear who is responsible. Under compassionate use, the FDA prohibits drug companies from charging more than their manufacturing costs for a yet-unapproved drug, which should prevent profiteering at the patient’s expense. Still, my fear is that the right-to-try laws will likely favor the wealthy and best informed. What drugs and how promising? The model legislation and proposed federal legislation specify that any drug deemed safe by the [...]

New Guidance on Premium Rate Increases

Mon, 26 Sep 2016 18:44:42 +0000


Section 2794 of the Affordable Care Act requires the Department of Health and Human Services (HHS), in conjunction with the states, to review “unreasonable increases in premiums for health insurance coverage.” Section 2794 further provides that:

The process established under paragraph (1) shall require health insurance issuers to submit to the Secretary and the relevant State a justification for an unreasonable premium increase prior to the implementation of the increase. Such issuers shall prominently post such information on their Internet websites….

Under implementing regulations, premium increases are reviewed for unreasonableness by states determined by the Centers for Medicare and Medicaid Services (CMS) to have “effective rate review programs,” or by CMS itself in states that do not have such programs. Currently CMS reviews the reasonableness of rates in only five states as the rest have been determined to have effective rate review.

Implementing regulations provide that rate increases exceeding 10 percent (or an HHS approved state-specific threshold) are subject to review by CMS or by states. Rate increases have been reviewed at the product level until this year, but for policy years beginning as of January 1, 2017, rate increases are being reviewed by at the plan level. Premium increases in excess of 10 percent are not per se unreasonable, but may be considered to be unreasonable if they are determined by CMS or a state after further review to be excessive, unjustified, or unfairly discriminatory.

If rates are determined to be unreasonable by a state, the state may have the authority to disapprove them. If the state lacks this authority, however, or if CMS determines a premium increase to be unreasonable in states where it does review, the insurer may nonetheless implement the increase. The insurer must, however, submit to CMS or the state a “final justification” of the unreasonable rate increase. It must prominently post on its website publicly available documentation it submitted in support of its rate filing, the final state or CMS determination of unreasonableness with the supporting explanation provided by CMS or the state, and the insurer’s final justification for implementing the rate increase. This information must continue to be available for three years.

On September 26, 2016, CMS released a guidance further clarifying the “prominent display” requirement and the required content of the final justification. A justification is “prominently posted” if it can be viewed on the insurer’s public website through a clearly identifiable link or tab from the home page without requiring an individual to create or access an account or enter a policy number. An individual must be able to easily determine which rate filing applies to a specific product in a particular market and year.

The final justification cannot simply restate the rationale in the initial rate filing. It must include a thorough explanation and analysis of the insurer’s decision to implement the unreasonable rate increase and must respond to the concerns raised by CMS or the reviewing state.

It is not clear why CMS is offering this further guidance a half decade into the rate review program, but given the reportedly high level of premium increases for 2017, further clarification was presumably judged necessary.

Building A 21st Century Health Department To Lead Baltimore’s Culture Of Health

Mon, 26 Sep 2016 18:00:38 +0000

Editor’s note: This is the first of a periodic series of Health Affairs Blog posts discussing the Culture of Health. In 2014 the Robert Wood Johnson Foundation announced its Culture of Health initiative, which promotes health, well-being, and equity. The initiative identifies roles for individuals, communities, commercial entities, and public policy that extend beyond the reach of medical care into sectors not traditionally associated with health. Health Affairs is planning a theme issue in November 2016 that will explore various aspects of the Culture of Health. In the aftermath of the unrest sparked by Freddie Gray’s death in April 2015, Baltimore City was thrust into the national spotlight. Glaringly absent from the mainstream media discussion, however, was dialogue around systemic health disparities — an issue deeply intertwined with race, poverty, and social justice. Baltimore faces a mortality rate 30 percent higher than the rest of Maryland and ranks last in the state on nearly all key health outcomes. This reality is compounded by a series of complex social, economic, and political determinants of health: more than one in three of Baltimore’s children live below the federal poverty line, and more than 30 percent of Baltimore households earn less than $25,000/year. Baltimore houses some of the best health care institutions in the country, yet significant disparities exist. We know that this is largely because health care alone cannot drive health. While 97 percent of health care costs are spent on medical care delivered in hospitals, only 10 percent of what determines life-expectancy takes place within the four walls of a health care facility. Where we live, work, and play each day drives our health and well-being. As the oldest, continuously operating health department in the country, the Baltimore City Health Department (BCHD)’s mission and mandate is to promote a culture of health throughout the city via a comprehensive spectrum of service delivery, advocacy, education, and strategic partnerships that bridge the gap between the clinic and the community. Our Culture of Health approach contains four key prongs: Building Unconventional, Cross-Sector Coalitions To Leverage Best-Practice Models B’More for Healthy Babies is a city-wide public-private partnership developed to decrease the city’s infant mortality rate. Drawing upon the unique expertise of local businesses, foundations, and faith/community-based organizations, the program has reduced the infant mortality rate in the city by 28 percent, decreased the teen birth rate by 36 percent, and closed the disparity between black and white infant deaths by almost 40 percent. Engaging And Empowering Communities To Tackle Health BCHD deploys peer-based models that draw on community expertise while increasing economic opportunity. For example, our Safe Streets program takes a public health approach to violence prevention. Safe Streets uses ex-felons who know their surrounding communities intimately to serve as “violence interrupters”; their lived experience allows them to build relationships with local youth and intervene directly at the point of conflict. In 2014, Safe Streets facilitated 15,000 client interactions and mediated 800 conflicts, more than 80 percent of which were deemed likely or very likely to have resulted in gun violence. Connecting Health Care And Public Health As a neutral convener, BCHD brings together hundreds of local stakeholders to create city-wide alignment around topics including opioid prescription best practices, high-utilizer case management, and trauma interventions. Our Local Health Improvement Council, which consists of hospitals, federally qualified health centers, community-based organizations, and faith leaders enables us to break out of our silos and move forward on shared, city-wide health priorities. In response to the opioid epidemic sweeping our country, we have convened thousands of physicians, p[...]

Calculating Shared Savings: Administrative Formulas Versus Research-Based Evaluations

Mon, 26 Sep 2016 15:00:10 +0000

Shared savings lie at the core of many recent health care payment and delivery reforms, most prominently those involving accountable care organizations (ACOs). The distribution of savings between payers and providers depends crucially on the establishment of whether savings were generated by new provider activities, and if so, the magnitude of such savings. Two approaches to savings assessment are commonly applied: 1) administrative formulas and 2) research-based evaluation. While the two approaches are related, they use very different methods to achieve different goals. Although the main conclusions often overlap, there are times when administrative formulas and research-based evaluations can produce strikingly different results, provoking substantial confusion and consternation among stakeholders. This post looks at the advantages and disadvantages of the two approaches and discusses how they can be melded to best serve administrative, payment, and research needs. A case study in divergent results In the Comprehensive Primary Care (CPC) Initiative, the Centers for Medicare and Medicaid Services (CMS) used a set of administrative formulas (similar to those used in the Medicare Shared Savings Program (MSSP) and Pioneer ACO Program) to determine whether participating primary care practices earned shared savings. To obtain an independent and more comprehensive assessment of the initiative, CMS contracted with Mathematica Policy Research to conduct a thorough research-based evaluation of the program. In four of the seven CPC regions, the findings from administrative formulas and research-based evaluation were broadly consistent in showing gross savings or losses (i.e., before accounting for care management fees). But in the remaining three regions, the findings were inconsistent. In Colorado, the administrative formulas gave credit for 1.3 percent savings, while the evaluation found neither savings nor losses. In New Jersey and New York, the administrative formulas recorded losses (i.e., expenditure increases) of 0.7 percent and 3.8 percent, respectively. But according to the Mathematica evaluation, these states achieved savings of 4 percent and 2 percent, respectively (though only New Jersey’s savings were statistically significant). Of course, the only results that matter for distributing financial rewards are those derived from the administrative formulas. Thus, it is not hard to imagine why providers in New Jersey and New York would take the lead in questioning why the two approaches produced such divergent results and which set of numbers is really “right.” Anatomy of two methods The potential for discrepancy and controversy between the two savings assessment approaches is not unique to the CPC Initiative. Thus, it is important to understand the different mechanics and purposes of the two approaches. The administrative formulas used in the CPC Initiative determined whether the CPC practices produced spending levels that were low enough to give the practices credit for generating savings. Savings were established if per capita spending among patients attributed to CPC practices was lower than corresponding spending in a reference population of patients in the same region who met the CPC criteria but were not attributed to a CPC practice. To isolate the effect of the initiative as clearly as possible, the spending amounts were multiplied by ratios that account for changes in casemix (e.g., disabled, non-disabled), patient risk scores, and secular trend growth in spending. The virtue of this approach is that it is consistent and easy to replicate across CPC sites. Once the formulas are set, they can be populated fairly quickly and easily as new data become available. The drawback is that these formulas employ what are essentially “back-of-the-envelope” adjustments that are not designed to determine whether CPC activities actually caused any real changes in spending. In contrast[...]

The Latest Health Wonk Review

Fri, 23 Sep 2016 17:00:47 +0000


Louise Norris celebrates the 10-year anniversary of the Colorado Health Insurance Insider with the latest Health Wonk Review. This includes Theodore T. Lee, Abbe Gluck, and Gregory Curfman’s latest Health Affairs Blog analysis of the ban on on allowing CMS to negotiate with pharmaceutical companies to set prescription drug prices for Medicare Part D.

The next edition will be hosted by Joe Paduda at Managed Care Matters on October 6.

Grants On Tap: Funders Support Clean Drinking Water

Fri, 23 Sep 2016 14:24:53 +0000

With the widespread media coverage of Flint, Michigan’s water crisis, cities, advocacy groups, and philanthropy have adjusted their assumption that the country’s laws and infrastructure assure the public safe and healthy drinking water. Since coverage began more than a year ago, the media has reported on contaminated drinking water, water scarcity, lead pipelines, and flaws in the nation’s drinking water infrastructure and regulations in cities and towns across the country. Water-focused grant making isn’t new for philanthropy. Environmental philanthropy generally has focused on conservation, source water protection, stormwater infrastructure, and, in the West, water scarcity. Health philanthropy has focused on access to water and nutrition. In light of new information, however, foundations across health–environment portfolios are rethinking their commitments and considering new investments that would focus squarely on ensuring universal access to healthy and affordable drinking water. Earlier this year, two webinars were organized to help funders understand what had happened, and what was happening, in Flint, and then, what the implications from that crisis were for our national drinking water infrastructure. Twelve different funder (affinity) groups sponsored the calls, and the webinars were incredibly well attended with well over one hundred funders joining each of the programs. This summer, in response to the burgeoning media and philanthropic attention, the Health and Environmental Funders Network (HEFN) surveyed foundations interested or engaged in grant making focused on healthy and affordable drinking water, aiming to better understand what foundations are doing and what more is needed to ensure our nation’s drinking water is healthy and affordable. The results—from twenty foundations—are in. Most of the survey respondents, fifteen of the twenty, are already making grants related to clean drinking water. Like they do with many other environmental health issues, foundations are approaching this issue from a number of different perspectives—from a concern for children’s health to watershed protection to environmental justice. Despite the variety of goals, respondents seemed to have a shared sense of the most urgent needs at this moment, including support for community organizing, government oversight and accountability, and advocacy. Looking forward, foundations have developed, and are still developing, a variety of strategies, both to respond to the Flint crisis and to improve access to clean drinking water around the United States. Develop A New National Model With all eyes on Flint, Michigan, where citizens were exposed to high levels of lead as well as other contaminants, ten foundations are investing nearly $125 million to help the community recover. The goals of this initiative begin with ensuring access to safe drinking water and meeting the health needs of the residents, but they go farther to include supporting early education, supporting community engagement efforts, boosting the local nonprofit infrastructure, and supporting efforts to revitalize the local economy. This work could be a model for foundations, nongovernmental organizations (NGOs), and decision makers to use as a reference, as many communities around the country face environmental health injustices similar to the one in Flint. Invest Locally Issues with drinking water, as with other water issues, vary by place, with regional differences driving challenges and needs. For example, in the West, water scarcity creates the challenge (and need!). In the Midwest, communities are challenged by contamination related to agricultural chemicals and by climate-related algal blooms. Still other places are challenged by aging infrastructure, including lead pipes. And, of course, the issues are not singular, and that requires many water utilities t[...]

House v. Burwell And Qualified Health Plans For 2017

Thu, 22 Sep 2016 16:32:54 +0000

Insurers must decide by September 23, 2016 whether they will be offering qualified health plans (QHPs) in the federally facilitated marketplace (FFE) for 2017. Insurers choosing to do so must sign a QHP certification and privacy and security agreement. The agreement contains standard provisions governing protection of enrollee privacy and secure electronic communications with the Centers for Medicare and Medicaid Services (CMS). One term of the contract, however, has attracted attention. The agreement states that: CMS acknowledges that [the insurer] has developed its products for the FFE based on the assumption that APTCs [advance premium tax credits] and CSRs [cost sharing reduction payments] will be available to qualifying Enrollees. In the event that this assumption ceases to be valid during the term of this Agreement, CMS acknowledges that the issuer could have cause to terminate this agreement subject to applicable state and federal law. House v. Burwell Quite obviously this provision addresses concerns raised by House v. Burwell. If the House ultimately prevails in this litigation, funding for reimbursing insurers for reducing cost sharing for their eligible enrollees could be terminated. A House victory would not, however, terminate the obligation of QHP insurers to reduce cost sharing, which would leave the insurers with substantial obligations not covered by their premiums. Congress could decide subsequent to a judgment in its favor to appropriate funding for the CSRs. Insurers may also ultimately be able to enforce the obligation of the government to fund the CSRs through the Court of Claims. But in the interim insurers would face severe financial problems. The contract clause permits insurers to reduce their losses by terminating their marketplace participation, effectively transferring the cost of a house victory to low-income enrollees who would lose their marketplace coverage. The agreement does not specifically state how much notice an insurer would have to give before terminating. Under federal regulations, an insurer must give 90 days’ notice before terminating an insurance product; although if the insurer were continuing the product in the individual market this provision might not apply. The agreement does provide that termination of marketplace participation would not relieve the insurer of a continuing obligation to provide coverage for its enrollees for the full plan year under applicable state law. Under guaranteed renewal requirements of state and federal law, the insurer would have to offer continued coverage. Presumably, however, without the benefit of APTC and CSRs, most subsidized marketplace enrollees would drop coverage or cease to pay their premiums. QHP insurers must generally give 90 days’ notice to enrollees who have APTC before terminating them for nonpayment (although they can pend claims after the first 30 days), but if a QHP insurer leaves the marketplace, presumably APTC ends as well. In most states that insurer would still have to give at least 30 days’ notice before terminating coverage for nonpayment. Implications of the Potential Rulings If the courts (presumably the Supreme Court) ultimately rule for the House and insurers begin to abandon the marketplaces under the contract provision, presumably none will remain to pick up enrollees terminated by other insurers. Insurers could, of course, dramatically increase their premiums to cover their unfunded cost-sharing obligations, but the time lag between when a judgment was handed down and the time when rates could be revised might well be too long for insurers to survive. The ultimate losers in a victory for the House will be the millions of Americans who have finally been able to afford health care coverage—and health care—because of the Affordable Care Act (ACA)’s APTC and CSR assistance. The a[...]

Value: Can We Afford To Think Long-Term While Ignoring Budget Impact?

Thu, 22 Sep 2016 15:30:01 +0000

In their Health Affairs Blog post, Darius Lakdawalla and Peter Neumann raise numerous concerns about the inclusion of potential budget impact estimates alongside what they view as more traditional analyses of the “value” of a health care service. They advocate instead for increased experimentation with new forms of payment and delivery of care. I agree that these experiments have the potential to improve value for patients and the health care system in the future. But I believe Lakdawalla and Neumann underappreciate how budget impact analyses can help catalyze innovative pricing and payment approaches. I will expand on this and also take the opportunity to address what I believe are misunderstandings in their article regarding the conceptual background of the Institute for Clinical and Economic Review’s (ICER’s) potential budget impact analyses, how the information is intended to be used, and how it is actually being used by insurers and policymakers. It’s Not Whether To Think About Budget Impact, But How I would start with a question that critics of budget impact assessment often ignore: What type of economic perspective and information currently influences decision-making by insurers in the US? Without a doubt—and insurers are the first to admit this—it is budget impact. Considerations regarding budget impact, and not measures of long-term cost-effectiveness, have dominated the way that insurers assess the economic impact of all health care services, not just drugs. There is a logic to this perspective but also obvious perverse outcomes. Budget impact is a reasonable consideration because insurers work in rapid cycles with purchasers and individual subscribers, translating short-term cost projections into planned insurance premiums for the coming year. Rapid cost growth in the short term, especially when it increases beyond anticipated inflation rates, pushes quickly upstream to purchasers and policymakers who have to make their own short-term decisions about how to find the needed resources. This may lead to decisions to increase deductibles or otherwise reduce health benefits for employees; public insurers might need to consider reducing next year’s education budget to find the funds to keep a state Medicaid program afloat. In addition, for provider groups that bear financial risk, budget impact analyses inform very real short-term decisions about how to allocate resources to maximize the quality of health care within a given budget. A rapid increase in costs resulting from the significant budget impact of a new drug might lead to decisions to forgo hiring of needed new staff, or delay of introduction of other new services. Quite simply, budget impact, and not long-term cost-effectiveness, determines how affordable health care insurance will be in coming years and shapes what health care can be provided with the resources available. Yet, the perverse influence of an undiluted focus on budget impact cannot be overstated. A narrow short-term perspective blinds policymakers, insurers, and providers to the need to reshape the delivery system and reframe payment mechanisms to “make room” for new, and potentially expensive, interventions that will help patients and pay off in the end. Here I could not agree more with Lakdawalla and Neumann: If an economic analysis of new interventions is focused only on the short term, relying solely on budget impact estimates, patients and our health care system will be the ultimate losers. But we do not advance the kind of discussions that are needed to manage the potential tension between long-term value for money and short-term budget impact by pushing budget impact assessment into a dark, back room. The idea that having analyses of long-term value and budget impact in the same report will somehow taint decisions cou[...]