Medicare Safeguard Overwhelmed by Pricey Drugs

WASHINGTON – A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show.

The cost of Medicare’s “catastrophic” prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program’s number-crunching Office of the Actuary.

Out of some 2,750 drugs covered by Medicare’s Part D benefit, two pills for hepatitis C infection – Harvoni and Sovaldi – accounted for nearly $7.5 billion in catastrophic drug costs in 2015.

The pharmaceutical industry questions the numbers, saying they overstate costs because they don’t factor in manufacturer rebates. However, rebates are not publicly disclosed. Sen. Charles Grassley, R-Iowa, is calling the rise in spending “alarming.”

Medicare’s catastrophic coverage was originally designed to protect seniors with multiple chronic conditions from the cumulatively high costs of taking many different pills. Beneficiaries pay 5 percent after they have spent $4,850 of their own money. With some drugs now costing more than $1,000 per pill, that threshold can be crossed quickly.

Lawmakers who created Part D in 2003 also hoped added protection would entice insurers to participate in the program. Medicare pays 80 percent of the cost of drugs above a catastrophic threshold that combines spending by the beneficiary and the insurer. That means taxpayers, not insurers, bear the exposure for the most expensive patients.

FILE - In this June 14, 2011 file photo, various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show. The cost of Medicare’s “catastrophic” prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program’s number-crunching Office of the Actuary. (AP Photo/Matt Rourke, File)

Various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. (AP Photo/Matt Rourke, File)

The numbers provided to The Associated Press reflect the total paid by taxpayers, insurers and beneficiaries. They offer a glimpse into the volatile and often mysterious world of high-cost drugs:

– Catastrophic spending for Harvoni and Sovaldi – two hepatitis C pills from Gilead Sciences – more than doubled in two years, from about $3.5 billion in 2014 to nearly $7.5 billion in 2015. Harvoni topped the list of Medicare’s high-cost drugs last year; Sovaldi was first in 2014.

The FDA approved Sovaldi in Dec., 2013, and its $1,000-per-pill price quickly made headlines. A congressional investigation last year found that Gilead was focused on maximizing revenue, even as a company analysis showed that a lower price would allow more patients to be treated.

– Revlimid, a cancer drug derived from 1950s thalidomide, surpassed $1.7 billion in catastrophic costs in 2015, coming in second among high-cost drugs. Spending on the medication from biotech company Celgene increased by 50 percent in three years.

– Gleevec, a breakthrough drug introduced in 2001 to treat leukemia, was ensconced as 5th among the top ten pricey medications, with more than $1 billion spent in 2015. That was a 54-percent increase from 2013. Drugmaker Novartis has been criticized for repeatedly hiking the price of Gleevec.

– Catastrophic spending accounts for a fast-growing share of Medicare’s drug costs, which totaled nearly $137 billion in 2015. The catastrophic share was 37 percent, yet only about 9 percent of beneficiaries reached the threshold for such costs. For those patients, average spending jumped by 46 percent, from $9,666 in 2013 to $14,100 in 2015.

“If the numbers continue to increase like this each year, I worry about how much the taxpayers could afford,” said Sen. Grassley, who plans to ask Medicare for explanations.

“It may be that some drug companies are taking advantage of government programs to maximize their market share, and we need to know whether that’s the case,” he added.

Catastrophic coverage will soon cost as much as the entire prescription program did when it launched, said Sen. Ron Wyden, D-Ore. “Congress can’t continue to stand idle.”

Experts say the rapid rise in spending for pricey drugs threatens to make the popular prescription benefit financially unsustainable.

Nonpartisan congressional advisers at the Medicare Payment Advisory Commission have called for an overhaul. The presidential candidates, as well as the Obama administration, have proposed giving Medicare legal authority to negotiate prices.

The drug industry says Medicare patients are getting valuable, innovative medicines.

Lisa Joldersma, policy vice president for the Pharmaceutical Research and Manufacturers of America, also questioned the cost numbers. “I would push back on the notion that taxpayers are bearing 80 percent of the risk here because the numbers do not reflect rebates,” she said.

Rebates for individual drugs are not disclosed. They averaged nearly 13 percent across the entire program in 2013, according to government figures, and were estimated at about 17 percent for 2015.

Most beneficiaries haven’t seen a drastic hit yet from rising drug costs, but that may be changing. This year, average premiums went up more than 15 percent in five of the top eight drug plans, according to the Kaiser Family Foundation.

Concerns about catastrophic costs undercut the image of Medicare’s prescription program as a competitive marketplace in which private insurers bargain with drugmakers to drive down prices.

“The incentive is to price it as high as they can,” said Jim Yocum, senior vice president of Connecture, Inc., a company that tracks drug prices. Medicare is barred from negotiating prices, “so you max out your pricing and most of that risk is covered by the federal government.”

An architect of the program says no one anticipated $1,000 pills. Former Medicare administrator Tom Scully said catastrophic coverage was meant to protect patients taking many different medicines over months and years.

“The pricing is pretty wild,” he said.

A look at Medicare’s top 20 priciest prescription drugs in 2015, ranked by their cost above the program’s “catastrophic” coverage threshold.

Drug Name Uses Cost
Harvoni Hepatitis C $6.3 billion
Revlimid Cancer $1.7 billion
Sovaldi Hepatitis C $1.2 billion
Copaxone Multiple sclerosis $1.1 billion
Gleevec Cancer $1 billion
Humira Pen Rheumatoid arthritis $886 million
Tecfidera Multiple sclerosis $724 million
Renvela Kidney disease $675 million
Xtandi Prostate Cancer $633 million
Lantus Solostar Diabetes $633 million
Zytiga Prostate cancer $623 million
Enbrel Sureclick Rheumatoid arthritis $586 million
Abilify Mental illness $555 million
Sensipar Kidney disease $533 million
Truvada HIV $525 million
Aripiprazole Mental illness $504 million
Lantus Diabetes $484 million
Imbruvica Cancer $473 million
H.P. Acthar Multiple sclerosis $467 million
Lyrica Seizures $461 million
Some medications have additional uses.
Cost above catastrophic threshold in 2015; includes spending by taxpayers, insurers and beneficiaries.
Source: Centers for Medicare and Medicaid Services, Office of the Actuary

New Peak for US Health Care Spending

WASHINGTON (AP) — The nation’s health care tab this year is expected to surpass $10,000 per person for the first time, the government said Wednesday. The new peak means the Obama administration will pass the problem of high health care costs on to its successor.

The report from number crunchers at the Department of Health and Human Services projects that health care spending will grow at a faster rate than the national economy over the coming decade. That squeezes the ability of federal and state governments, not to mention employers and average citizens, to pay.

Growth is projected to average 5.8% from 2015 to 2025, below the pace before the 2007-2009 economic recession but faster than in recent years that saw health care spending moving in step with modest economic growth.

National health expenditures will hit $3.35 trillion this year, which works out to $10,345 for every man, woman and child. The annual increase of 4.8% for 2016 is lower than the forecast for the rest of the decade.

Various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. (AP / Matt Rourke)

Various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. (AP / Matt Rourke)

A stronger economy, faster growth in medical prices and an aging population are driving the trend. Medicare and Medicaid are expected to grow more rapidly than private insurance as the baby-boom generation ages. By 2025, government at all levels will account for nearly half of health care spending, 47%.

The report also projects that the share of Americans with health insurance will remain above 90 percent, assuming that President Barack Obama’s law survives continued Republican attacks.

The analysis serves as a reality check for the major political parties as they prepare for their presidential conventions.

Usually in a national election there are sweeping differences between Democrats and Republicans on health care, one of the chief contributors to the government’s budget problems. But this time the discussion has been narrowly focused on the fate of Obama’s law and little else.

Republican Donald Trump vows to repeal “Obamacare,” while saying he won’t cut Medicare or have people “dying in the street.” Democrat Hillary Clinton has promised to expand government health care benefits.

Both candidates would authorize Medicare to negotiate prescription drug prices, which the report says will grow somewhat more slowly after recent sharp increases.

Obama’s health care law attempted to control costs by reducing Medicare payments to hospitals and insurers, as well as encouraging doctors to use teamwork to keep patients healthier. But it also increased costs by expanding coverage to millions who previously lacked it. People with health insurance use more medical care than the uninsured.

Despite much effort and some progress reining in costs, health care spending is still growing faster than the economy and squeezing out other priorities, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan group that advocates for reducing government red ink.

“No serious candidate for president can demonstrate fiscal leadership without having a plan to help address these costs,” she said. “No matter whether a candidate has an agenda that focuses on tax cuts or spending increases, there will be little room for either.”

The $10,345-per-person spending figure is an average; it doesn’t mean that every individual spends that much in the health care system. In fact, U.S. health care spending is wildly uneven.

About 5 percent of the population — those most frail or ill — accounts for nearly half the spending in a given year, according to a separate government study. Meanwhile, half the population has little or no health care costs, accounting for 3% of spending.

Of the total $3.35 trillion spending projected this year, hospital care accounts for the largest share, about 32%. Doctors and other clinicians account for nearly 20%. Prescription drugs bought through pharmacies account for about 10%.

The report also projected that out-of-pocket cost paid directly by consumers will continue to increase as the number of people covered by high-deductible plans keeps growing.

Wednesday’s report was published online by the journal Health Affairs.

In Nod to Sanders, Clinton Offers New Health Care Proposals

ORLANDO, Fla. – In another nod to primary rival Bernie Sanders, Hillary Clinton is proposing to increase federal money for community health centers and outlining steps to expand access to health care across the nation.

Clinton’s campaign says the proposal is part of her plan to provide universal health care coverage in the United States. The presumptive Democratic presidential nominee also is reaffirming her support for a public-option insurance plan and for expanding Medicare by letting people age 55 year and older opt in.

The announcement Saturday was a clear gesture toward Sanders, who ran a strong primary campaign against Clinton and has held back from endorsing her candidacy as the party’s convention nears.

In a statement, Clinton said: “We have more work to do to finish our long fight to provide universal, quality, affordable health care to everyone in America.”

Clinton’s campaign noted that Sanders had promoted doubling money for primary care services at federally qualified health centers. Money for these centers was increased under the Affordable Care Act, an effort led by the Vermont senator.

According to the Clinton campaign, her proposal would make money for these centers permanent and expand it by $40 billion over the next 10 years. Her campaign said the money would be mandatory and not subject to annual appropriation. The proposal would more than double the money for the centers, which currently get $3.6 billion annually.

Sanders, in a conference call after the Clinton campaign’s announcement, said her proposal “will save lives” and “ease suffering” and represented “an important step forward in expanding health care in America and expanding health insurance and health care access to tens of millions of Americans.”

The health care proposal follows on Clinton’s recent announcement of new ways to tackle college affordability, including a plan that ensures families with annual incomes up to $125,000 pay no tuition at in-state public colleges and universities.

That initiative was seen as a response to Sanders’ call for free tuition at all public colleges and universities, an idea popular with the young voters who flocked to his rallies.

FILE - In this July 8, 2016 file photo, Democratic presidential candidate Hillary Clinton speaks in Philadelphia. In another nod to primary rival Bernie Sanders, Hillary Clinton is announcing a new proposal to double funding for community health centers, aiming to increase access to primary care services. (AP Photo/Matt Rourke, File)

In this July 8, 2016 photo, Democratic presidential candidate Hillary Clinton speaks in Philadelphia. (AP Photo/Matt Rourke, File)

Clinton’s policy overtures come as Sanders appears to be close to supporting her candidacy.

Two Democrats with knowledge of Sanders’ plans told The Associated Press that Sanders was closing in on offering his public endorsement of Clinton. The Democrats spoke on condition of anonymity to discuss private conversations they were not authorized to disclose.

Clinton’s campaign has announced a stop in New Hampshire on Tuesday but did not say whether Sanders also would attend.

Sanders told reporters that the two campaigns “are coming closer and closer together in trying to address the major issues facing this country.” He added: “We’ll have more to say, I think, in the very near future.”

Clinton and Sanders frequently clashed over health care during the primaries. Sanders campaigned on a “Medicare for all” plan that would have provided universal coverage. Clinton said that would undercut President Barack Obama’s health law, rely too heavily on GOP governors and reopen a contentious debate with Republicans in Congress.

Clinton’s health care priorities have centered on capping out-of-pocket costs for prescription drugs and providing tax credits for families facing high medical costs.

Clinton has reiterated her support for a “public option” for states to set up their own health insurance plan to compete against private insurers. Sanders was instrumental in passing legislation that would allow that.

Both supported a public insurance option at the national level but opposition from moderate Democrats prevented that proposal from being included in the health overhaul law.

CMS Proposes Medicare Changes that Benefit Puerto Rico

SAN JUAN — The Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule that would modify aspects of the formula used to compensate hospitals in the United States for providing services to traditional Medicare patients, and the revised formula—which will take effect on Oct. 1, 2016—would significantly benefit the approximately 50 acute-care hospitals in Puerto Rico. After a public comment period, CMS will issue a final rule on August 1, 2016.

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Resident Commissioner Pedro Pierluisi

The federal government reimburses hospitals who admit Medicare patients under the Inpatient Prospective Payment System. Each hospital receives a “base rate” payment, which can then be adjusted upward due to a variety of factors. The base rate payment is intended to cover both the operating costs and the capital costs that a reasonably efficient hospital would incur in providing care. Every hospital in the states is paid the same base rate. Until recently, however, hospitals in Puerto Rico were paid a base rate that was about 14 percent lower than the base rate paid to hospitals in the states, according to statement released Monday by Resident Commissioner Pedro Pierluisi’s office in Washington, D.C.

In March 2015, Pierluisi introduced legislation, H.R. 1417, to fix this disparity. The language of H.R. 1417 was included in the Consolidated Appropriations Act for fiscal year 2016 and enacted into law in December. As a result, starting this year, hospitals in Puerto Rico will receive the same base rate as hospitals in the states with respect to the “operating costs” portion of the formula, which is the largest factor in the formula.

“At the urging of the resident commissioner, the proposed rule just issued by CMS would also extend state-like treatment to hospitals in Puerto Rico under the smaller but still significant ‘capital costs’ portion of the formula, starting on October 1st. It is estimated that, once all of these changes are fully implemented, annual Medicare base rate payments to hospitals in Puerto Rico could increase by nearly $12 million per year.  

“In addition, the rule issued by CMS proposes to improve the way in which Puerto Rico hospitals are treated under the Medicare ‘disproportionate share hospital’—or DSH—program,” the congressman’s statement reads.

FILE - In this July 30, 2015 file photo, a sign supporting Medicare is seen on Capitol Hill in Washington. A Medicare proposal to test new ways of paying for chemotherapy and other drugs given in a doctor's office has sparked a furious battle, and cancer doctors are demanding that the Obama administration scrap the experiment. (AP Photo/Jacquelyn Martin, File)

A sign supporting Medicare is seen on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin, File)

Since the 1980s, the federal government has utilized the DSH program to provide additional financial support directly to hospitals that treat a high percentage of low-income patients, who tend to be more costly to care for. The formula used to calculate DSH payments to a hospital has operated to the disadvantage of hospitals in Puerto Rico because it relies in part on how often a hospital treats a patient who is enrolled in both Medicare and the Supplemental Security Income program, known as SSI, but Congress has not extended the SSI program to Puerto Rico.

The resident commissioner’s release adds that “In June 2015, Pierluisi introduced H.R. 2635, the Improving the Treatment of the U.S. Territories Under Federal Health Programs Act, and Section 203 of that bill would amend the DSH formula for Puerto Rico, establishing a substitute—or proxy—for SSI for part of the formula. The rule just issued by CMS does precisely that, which will help ensure that island hospitals receive fair DSH payments. According to CMS, this change is expected to have net positive impact of approximately $8.4 million annually, increasing DSH payments from $66.7 million a year to $75.1 million a year.

“In the last several months, we have made significant progress in improving Puerto Rico’s treatment under traditional Medicare and Medicare Advantage. In December 2015, Congress enacted the Consolidated Appropriations Act for Fiscal Year 2016, which included two provisions taken verbatim from bills I introduced. The first provision provided Puerto Rico hospitals with the same base rate as hospitals in the states under Medicare, and the proposed rule that CMS just issued ensures that this provision will be fully implemented starting on October 1st.

“The second provision fixed another disparity, authorizing bonus payments under Medicare to hospitals in Puerto Rico that become meaningful users of electronic health records, which help modernize services and improve patient care. Then, in April, after years of efforts, CMS issued a rule that will help stabilize and strengthen the Medicare Advantage program in Puerto Rico, which provides health insurance to nearly 570,000 seniors and disabled individuals on the island. Finally, the proposed rule just issued by CMS will help ensure that Puerto Rico hospitals are treated equitably under the Medicare DSH program,” Pierluisi stated.

“There is still much work that remains to be done to ensure that Puerto Rico is treated fairly under federal health programs, whether it be Medicaid, traditional Medicare or Medicare Advantage, but it is important to pause and acknowledge the progress we are making towards this goal,” added the Resident Commissioner.


Medicare Plan on Payment for Cancer Drugs Stirs Battle

WASHINGTON – A Medicare proposal to test new ways of paying for chemotherapy and other drugs given in a doctor’s office has sparked a furious battle, and cancer doctors are demanding that the Obama administration scrap the experiment.

The vehement reaction is raising questions about the government’s ability to tackle high drug costs, the top health care concern for the public.

At issue are some of the most expensive drugs for treating life-changing diseases. The question isn’t whether those drugs are fairly priced, but whether Medicare’s current payment policy encourages doctors to prescribe the costliest medications so they can make more money.

Injected and infused drugs for such conditions as macular degeneration, rheumatoid arthritis and Crohn’s disease are also affected.

FILE - In this July 30, 2015 file photo, a sign supporting Medicare is seen on Capitol Hill in Washington. A Medicare proposal to test new ways of paying for chemotherapy and other drugs given in a doctor's office has sparked a furious battle, and cancer doctors are demanding that the Obama administration scrap the experiment. (AP Photo/Jacquelyn Martin, File)

A sign supporting Medicare is seen on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin, File)

Medicare now pays doctors and hospital outpatient clinics the average sales price of a drug, plus a 6 percent add-on, somewhat reduced by federal budget cuts. Naturally, 6 percent of a $15,000 drug is more than 6 percent of a $3,000 drug. But does that influence doctors’ decisions, raising costs for the government as well as those on Medicare?

Medicare officials seem to think so.

The new formula announced last month combines a 2.5 percent add-on with a flat fee for each day the drug is administered. A control group of doctors and hospitals would continue to be paid under the current system.

The experiment could become permanent policy if it lowers costs while maintaining quality. A second wave of experimentation would try to link what Medicare pays for a given drug to how well it works.

Specialist doctors, drugmakers and some patient advocacy groups are trying to compel Medicare to drop the plan. Primary care doctors, consumer groups representing older people, and some economic experts want the experiment to move ahead.

Opponents say if that happens, cancer patients will be forced to go to outpatient hospital clinics instead of their local cancer doctor for the latest and most effective drugs. That’s because smaller, doctor-owned clinics may no longer be able to afford the upfront costs of cutting-edge medications. In rural areas, patients may have to travel long distances to get to a hospital clinic, they say.

Supporters call that “Medi-scare,” a reference to the timeworn political strategy of exaggerating the impact of proposed Medicare changes to frighten beneficiaries.

The rhetoric has escalated.

“It is remarkably insulting that some people today think that cancer physicians in large numbers are saying, ‘What’s the most expensive way I can treat this patient?’ ” said Dr. Allen Lichter, CEO of the American Society of Clinical Oncology, which represents some 20,000 U.S. cancer specialists.

Medicare is making “a dreadful mistake,” added Lichter, who says that many cancer drugs don’t have a low-cost alternative. “It will severely damage oncology practices across the country, and it will not solve what we have long recognized is a serious problem, that cancer drug prices are skyrocketing.”

But Dr. Peter Bach, director of a policy center at Memorial Sloan Kettering Cancer Center in New York, believes Medicare is doing the right thing. Doctors, like other human beings, respond to financial incentives, he said, and the current payment policy sends the wrong signal.

“When drugs are more profitable, both doctors and hospitals tend to use them more,” Bach said.

Change would mean “getting doctors out of the business of profiting when the drugs they use are more expensive” and instead “prescribing drugs based on what’s best for patients,” he added.

Doctors are the gatekeepers of the health care system, and their prescribing decisions can determine the fortunes of new medications. That’s brought the drug industry deep into the Medicare fight. The Pharmaceutical Research and Manufacturers of America, one of the most powerful lobbying groups in Washington, and the Biotechnology Innovation Organization are in the forefront of opposition.

The cost of cancer treatment can vary dramatically with the type of disease; some medications cost tens of thousands of dollars a month.

The drugs in the payment experiment are covered through Medicare’s outpatient benefit, known as Part B, for which most beneficiaries pay a monthly premium of $104.90. Part B drugs cost the program about $20 billion a year. That’s a fraction of what Medicare spends overall on prescription drugs.

Opponents are trying to raise the profile of the issue in Congress. Sen. Charles Grassley, R-Iowa, a critic of the pharmaceutical industry, said he’s already gotten 70 letters from constituents, 59 of them from concerned patients.

“The proposal creates different access based on where a Medicare beneficiary lives,” said Grassley. “The Obama administration should abandon the proposal and go back to the drawing board.”

Medicare’s experiment was designed by the Center for Medicare and Medicaid Innovation, a government agency created by President Barack Obama’s health care law to find ways to improve quality and contain cost.

Obama has less than a year left in office and isn’t facing re-election, so it seems unlikely that his administration would tear up its plan. But the proposal remains open for public comment, and changes may follow.

“If the administration were to pull back, it would be an ominous sign,” said Leigh Purvis, a health policy expert for AARP, which supports the experiment. “We’ve done a lot of talk about prescription drug spending, but we really haven’t moved to the action part. This is really the first time we’ve seen talk translated into action.”

The Associated Press

CMS Finalizes 2017 Payment and Policy Updates to Medicare Health and Drug Plans

SAN JUAN – The Centers for Medicare & Medicaid Services (CMS) has released the final Medicare Advantage and Part D Prescription Drug Program changes for 2017, which seek to provide stable payments to plans and make improvements to the program for plans that provide care to the most vulnerable enrollees.

Factoring in adjustments for the health of patients covered by a plan, the final number works out to about a 3 percent increase for Medicare Advantage and Part D prescription plans. CMS will also implement an interim adjustment to the star ratings to “reflect the socioeconomic and disability status of a plan’s enrollees.” Additionally, the finalized policies “will provide much needed stability to the Medicare Advantage program in Puerto Rico,” CMS’s statement reads.  

money stethoscopeIn response to the release, Resident Commissioner Pedro Pierluisi said, “I and others have been fighting hard to stabilize and strengthen the Medicare Advantage program in Puerto Rico, which provides health insurance to nearly 570,000 seniors and disabled individuals on the island, including nearly 300,000 low-income seniors who are enrolled in both Medicare and Medicaid, which is known in Puerto Rico as Mi Salud.

“Although I am still reviewing the details of the final rule, my preliminary reading indicates that we have achieved a very positive result.  According to a summary released by CMS, ‘CMS will implement a number of changes in 2017 that will significantly benefit Medicare Advantage enrollees in Puerto Rico.’  The summary further states:  ‘As a result of the finalized policies, the expected revenue change for Medicare Advantage Plans in Puerto Rico is 1.25 percent.’  According to one estimate I have received, the final rule will result in an increase in annual funding to Puerto Rico of approximately $430 million per year.  

“Notwithstanding this positive development, there is still much work that remains to be done to ensure that Puerto Rico is treated fairly under federal health programs, whether it be Medicaid, traditional Medicare or Medicare Advantage.”

Medicare also announced a transition period for some employer-sponsored plans that were facing a cut. It will be spread over two years.

“We continue to strengthen Medicare Advantage and Medicare Part D, in particular for enrollees who need additional investments in their health, such as dually Medicare-Medicaid eligible individuals and those with complex socioeconomic needs,” said Acting Administrator Andy Slavitt.


New Analysis: ‘Obamacare’ Coverage Costs Rising

WASHINGTON — Expanded health insurance coverage under the Affordable Care Act, President Barack Obama’s signature legislative legacy, will cost the government more, according to an official study released Thursday. Still, on balance, the measure more than pays for itself.

The nonpartisan Congressional Budget Office said the health care law will cost $1.34 trillion over the coming decade, $136 billion more than the CBO predicted a year ago. That 11 percent hike is mostly caused by higher-than-expected enrollment in the expanded Medicaid program established under the law.

All told, 22 million more people will have health care coverage this year than if the law had never been enacted, CBO said. The measure’s coverage provisions are expected to cost $110 billion this year.

The number of uninsured people this year is anticipated at 27 million.

About 90 percent of the U.S. population will have coverage, a percentage that is expected to remain stable into the future.

The study also projected a slight decline in employment-based coverage, although it will remain by far the most common kind among working-age people and their families.

Employers now cover some 155 million people, about 57 percent of those under 65. That’s expected to decline to 152 million people in 2019. Ten years from now, employers will be covering about 54 percent of those under 65.

CBO said part of the shrinkage is attributable to the health care law: some workers may qualify for Medicaid, which is virtually free to them, and certain employers may decide not to offer coverage because a government-subsidized alternative is available. (Larger employers would face fines if they take that route.)

But the agency also noted that employer coverage had been declining due to rising medical costs well before the health care law was passed, and that trend continues.

The analysis underscores the view that the health care law is driving the nation’s gains in insurance coverage, which raises political risks for Republicans who would repeal it.

Taking seniors covered by Medicare out of the equation, the government devotes $660 billion to subsidizing health care for people under 65, including the Medicaid program for the poor and disabled and tax benefits for employer-provided health insurance.

The budget office did not provide a new estimate of Obamacare’s overall impact on the federal deficit, other than to say that it is, on net, expected to reduce the deficit. The law included a roster of tax increases and cuts in Medicare payments to hospitals and other providers to pay for coverage expansion.

The Obama administration said the report shows that the law is working to cover the uninsured and that the cost projections, when viewed in context, remain positive.

“It’s important to appreciate that the (health care law) is not just about some race to meet a given number of enrollees,” spokesman Aaron Albright said in a statement. “It is about health care in America for all of us as we go through life … affordable insurance is not out of reach because of costs or a pre-existing condition.”

CBO is a congressional agency that does budget forecasts and cost estimates of legislation.

By The Associated Press

Pierluisi Letter Signed by US Legislators Seeks Puerto Rico Medicare Program Improvement

SAN JUAN – Resident Commissioner Pedro Pierluisi wrote to the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), urging them to take steps to stabilize and strengthen the Medicare Advantage (MA) program in Puerto Rico. The letter was also signed by 12 members of the U.S. House and Senate.pierluisi twitter

Three of every four Medicare beneficiaries in Puerto Rico—about 570,000 elderly and disabled individuals—are enrolled in a Medicare Advantage plan, which is the highest penetration rate of any U.S. jurisdiction, according to a statement released Monday

“On February 19th, CMS issued its proposed payment policies for MA plans for Fiscal Year 2017, which begins on October 1, 2016. The federal agency discussed Puerto Rico at length and proposed numerous policy changes that will benefit MA plans and patients on the island. This is a major development, since—in previous years—CMS often declined to make such policy changes to assist Puerto Rico. In the letter, my congressional colleagues and I urge CMS to include the positive proposals it discusses in its preliminary rule in the final rule that it will publish on April 4th,” Pierluisi stated.

The other members of Congress who signed the letter are Sens. Charles Schumer and Kirsten Gillibrand of New York; Sens. Bill Nelson and Marco Rubio of Florida; Reps. José Serrano, Charles Rangel and Nydia Velázquez of New York; Rep. Patrick Murphy of Florida; Rep. Luis Gutiérrez of Illinois; Rep. William Lacy Clay of Missouri; and Rep. John Larson of Connecticut.

In 2015, Pierluisi led two other letters to the HHS and CMS regarding the MA program. Those were also signed by various  senators and representatives.


Sanders Health Plan Would be More Generous than Medicare

WASHINGTON – Democratic presidential candidate Bernie Sanders says his plan for a government-run health care system from cradle to grave is like Medicare for all.

But with full coverage for long-term care, most dental care included, no deductibles and zero copays, the Sanders plan is considerably more generous. Think of it as Medicare on growth hormones.

Setting aside ideological issues, the scope of Sanders’ plan and its lack of detail have raised questions about its seriousness. Some health care experts see it mainly as a political document to distinguish Sanders’ revolutionary ideas from Hillary Clinton’s incremental approach.

Sanders runs the risk of looking “like he is living in a fantasy land, for putting forward an idea he can’t possibly deliver during his term in office,” said Drew Altman, president of the nonpartisan Kaiser Family Foundation.

Last Sunday, the Vermont senator released an 8-page outline of his “Medicare For All” plan, an idea he’s long advocated. The campaign estimates it would cost $1.38 trillion a year, paid for with new taxes that would take the place of private health insurance premiums. Here’s a look at some things Sanders left out:


Medicare doesn’t cover long-term care, not to mention dentures, and seniors face deductibles and cost-sharing when they go to the doctor. Many buy an additional private insurance policy to cover Medicare gaps. “BernieCare,” as it is being called, would be above and beyond.

“It’s not Medicare for all,” said Republican economist Gail Wilensky, who ran Medicare under former President George H.W. Bush. “It’s nonsense to talk about it as if it were. You’re just giving people a comfort level that’s inappropriate.”

Even if there are important differences with Medicare, supporters of Sanders’ plan say it’s similar in the sense that virtually all seniors are covered under that program. Sanders’ approach is also called ‘single-payer,’ because the government would become the steward of the health care system, currently about one-sixth of the economy.


Sanders says his plan will cost $6 trillion less over 10 years than the current health care system. But his path to savings is unclear.

For starters, a government takeover of health care financing would eliminate all the useful signals about value that private payers generate. A few years ago, it became obvious Medicare had a problem paying for home medical equipment when government officials could find the same items on the Internet for much less.

“How do you learn about the value of things if you don’t have an accompanying private sector?” asked economist Paul Hughes-Cromwick of the Altarum Institute, a Michigan-based nonprofit that does research and consulting. “All of a sudden you wouldn’t have an empirical basis on which to build.”

Altman, the Kaiser foundation president, said it’s possible a single-payer system could produce substantial savings, for example by eliminating administrative duplication among insurers.

“I can’t say how big those savings would be from the Sanders plan because all we have is a sketchy outline,” he added. Any significant savings would have to come from reductions in payments to hospitals and doctors, not discussed in the campaign outline.


Back in 2013, the Obama administration famously promised that the president’s health care plan would launch on the same day in all 50 states. But when they flipped the switch, the website didn’t work. Sanders’ plan makes no mention of a phase-in, meaning the government would have to get everything right the first time.

The head of one of the nation’s largest hospital groups said a test of some kind would seem prudent.

“If the nation wanted to experiment, we would be willing to look at the details and consider being supportive – but the details are huge,” said Sister Carol Keehan, CEO of the Catholic Health Association.

As nonprofits, Catholic hospitals are not locked into any particular payment model, Keehan explained. The U.S. could do better. “There is no question a lot of money in the delivery system is poorly spent,” she said.

Sanders’ own state had wanted to implement a single-payer under the umbrella of flexibility encouraged by President Barack Obama’s health care law. But Vermont pulled back after the magnitude of expected tax increases became clear.

“Bernie may have a bigger job on his hands than he understands, trying to get people to just take a look at this,” Keehan said.


Most economically advanced countries with government-run health care set up their systems long ago, but Taiwan’s National Health Insurance is newer, recently celebrating its 20th anniversary.

Princeton University researcher Tsung-Mei Cheng said there are lessons from Taiwan for any country contemplating the move.

Taiwan’s system has been very popular with the public, but the government had to expand the tax base to keep pace with costs. The system does have copays, although they are affordable for most middle-class households. Doctors’ use of costly technologies such as MRIs is closely monitored. And it can take three to five years after expensive new drugs are introduced elsewhere for them to become widely available in Taiwan.

For single-payer to gain acceptance here, Cheng said Americans would have to change their mindset.

“You would have to have a social consensus that health care is a right, and not only everyone should have it, but everyone should have the same,” said Cheng.


Sanders plan –

Medicare Expands Coordinated Care for 8.9M Beneficiaries

WASHINGTON – Medicare is expanding a major experiment that strives to keep seniors healthier by coordinating basic medical care to prevent common problems that often lead to hospitalization, the agency said on Monday.

Officials announced 121 new “accountable care organizations,” networks of doctors and hospitals that collaborate to better serve patients with chronic medical conditions. A limited number will be able to directly recruit patients.

“We do view this as beneficiaries voting with their feet,” said Patrick Conway, Medicare’s chief medical officer. Talking things over with their doctor is the best way for beneficiaries to decide on joining one of the accountable care groups. They can also call Medicare at 1-800-633-4227 to find out if there is a so-called ACO in their community.

ACOs work to improve quality and lower costs. Part of their payment from Medicare is based on how well they meet those goals. It can be as simple as making sure patients receive regular follow-up visits and stay on their medications. Eliminating duplicative tests is another route to savings.

Monday’s announcement means 8.9 million beneficiaries will now be getting their care through ACOs. That’s close to 1 in 4 seniors with traditional Medicare. The total number of ACOs will increase to 477 across the country.

Twenty-one new ACOs will be allowed to recruit patients, and Conway said they’re already starting out with 650,000 beneficiaries.

The ACO’s come in a variety of designs, according to the level of financial risk the groups themselves take on. Conway said organizations that take more responsibility for the bottom line often do better on quality, because they have a greater incentive to keep patients healthy.

Traditionally Medicare paid the bills as they came in from hospitals and doctors. But under President Barack Obama’s health care law, the program is trying to shift to rewarding quality over sheer volume of services. With Medicare’s long-term financial future in jeopardy, much is at stake.

The new approach tries to remake the way medical care is delivered to patients, by fostering teamwork among clinicians, emphasizing timely preventive services and paying close attention to patients’ transitions between hospital and home. The jury is still out on its lasting impact.

By The Associated Press