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Why the Centene and WellCare Merger is the Biggest Deal in 2020

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By ANDY MYCHKOVSKY

I feel like the healthcare world just skipped over the $17.3 billion mega-merger between Centene and Wellcare, which just received final regulatory approval last Wednesday. With their powers combined, this new company will create the Thanos of government-focused health plans, hopefully without any of the deranged plans to take over the world. I do get it, 181 million lives are covered by employer-sponsored insurance, between full-risk and self-insured plans. These employer populations have the most disposable income and their HR departments are willing to provide supplemental benefits. However, in my opinion, the future growth of health insurance will be governmental programs like Medicare Advantage (MA), Medicaid managed care, and ACA exchanges. But instead of me telling you this, here is exactly what Centene and WellCare said in a press release to defend the merger:

“The combined company would be the leader in government-sponsored healthcare with increased scale and diversification both geographically and in its managed care service offerings, and enhance access to high-quality services for members. It will offer affordable and high-quality products to its more than 12 million Medicaid and approximately 5 million Medicare members (including Medicare Prescription Drug Plan), as well as individuals served in the Health Insurance Marketplace and the TRICARE program. The combined company will operate 31 NCQA accredited health plans across the country and will have increased exposure to government-sponsored healthcare solutions through WellCare’s Medicare Advantage and Medicare Prescription Drug Plans. It will also benefit from leveraging Centene’s growing position in the Health Insurance Marketplace to new markets. The transaction creates a company with the size and scale to better serve members through enhanced healthcare programs, expanded capabilities and increased investment in technology.”

Simply put, here’s some of quick stats provided at the JP Morgan Healthcare Conference presentation on January 13, 2020:

  • National footprint now serving 1 in 15 Americans
  • Clear market leader in Medicaid managed care and ACA exchange marketplace
  • Dominance serving most complex populations, #1 leader in LTSS and #2 in dual eligible
  • Competitiveness in the Medicare Advantage (MA) enrollment wars
  • $500 million in proposed savings due to annual cost synergies
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How Are Hospitals Supposed to Reduce Readmissions? | Part I

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By KIP SULLIVAN

The notion that hospital readmission rates are a “quality” measure reached the status of conventional wisdom by the late 2000s. In their 2007 and 2008 reports to Congress, the Medicare Payment Advisory Commission (MedPAC) recommended that Congress authorize a program that would punish hospitals for “excess readmissions” of Medicare fee-for-service (FFS) enrollees. In 2010, Congress accepted MedPAC’s recommendation and, in Section 3025 of the Affordable Care Act (ACA) (p. 328), ordered the Centers for Medicare and Medicaid Services (CMS) to start the Hospital Readmissions Reduction Program (HRRP). Section 3025 instructed CMS to target heart failure (HF) and other diseases MedPAC listed in their 2007 report. [1] State Medicaid programs and the insurance industry followed suit.

Today, twelve years after MedPAC recommended the HRRP and seven years after CMS implemented it, it is still not clear how hospitals are supposed to reduce the readmissions targeted by the HRRP, which are all unplanned readmissions that follow discharges within 30 days of patients diagnosed with HF and five other conditions. It is not even clear that hospitals have reduced return visits to hospitals within 30 days of discharge. The ten highly respected organizations that participated in CMS’s first “accountable care organization” (ACO) demonstration, the Physician Group Practice (PGP) Demonstration (which ran from 2005 to 2010), were unable to reduce readmissions (see Table 9.3 p. 147 of the final evaluation) The research consistently shows, however, that at some point in the 2000s many hospitals began to cut 30-day readmissions of Medicare FFS patients. But research also suggests that this decline in readmissions was achieved in part by diverting patients to emergency rooms and observation units, and that the rising rate of ER visits and observation stays may be putting sicker patients at risk [2] Responses like this to incentives imposed by regulators, employers, etc. are often called “unintended consequences” and “gaming.”

To determine whether hospitals are gaming the HRRP, it would help to know, first of all, whether it’s possible for hospitals to reduce readmissions, as the HRRP defines them, without gaming. If there are few or no proven methods of reducing readmissions by improving quality of care (as opposed to gaming), it is reasonable to assume the HRRP has induced gaming. If, on the other hand, (a) proven interventions exist that reduce readmissions as the HRRP defines them, and (b) those interventions cost less than, or no more than, the savings hospitals would reap from the intervention (in the form of avoided penalties or shared savings), then we should expect much less gaming. (As long as risk-adjustment of readmission rates remains crude, we cannot expect gaming to disappear completely even if both conditions are met.)

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Now More Than Ever, the Case for Medicaid Expansion

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Sam Aptekar
Phuoc Le

By PHUOC LE, MD and SAM APTEKAR

A friend of mine told me the other day, “We’ve seen our insured patient population go from 15% to 70% in the few years since Obamacare.” As a primary care physician in the Midwest, he’s worked for years in an inner-city clinic that serves a poor community, many of whom also suffer from mental illness. Before the Affordable Care Act (ACA), the clinic constantly struggled to stay afloat financially. Too often patients would be sent to an emergency room because the clinic couldn’t afford to provide some of the simplest medical tests, like an x-ray. Now, with most of his patients insured through the Medicaid expansion program, the clinic has beefed up its staffing and ancillary services, allowing them to provide better preventive care, and in turn, reduce costly ER visits.

From the time Medicaid was established in 1965 as the country’s first federally-funded health insurance plan for low-income individuals, state governments have only been required to cover the poorest of their citizens. Before the ACA, some 47 million Americans were uninsured because their incomes exceeded state-determined benchmarks for Medicaid eligibility and they earned far too little to buy insurance through the private marketplace.

The ACA reduced the number of uninsured Americans by mandating that states increase their income requirement for Medicaid to 138% of the federal poverty line (about $1,330 per month for a single individual), and promising that the federal government would cover the cost to do so. However, in a 2012 decision, the Supreme Court left it to the states to decide if they wanted to increase their Medicaid eligibility. If they agreed to adopt Medicaid expansion, the federal government offered to cover 100% of the increased cost in 2014 and 90% by 2021.

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Part 2: Bypassing Prior Authorizations

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By NIRAN AL-AGBA, MD

A few weeks ago, I saw a young patient who was suffering from an ear infection. It was his fourth visit in eight weeks, as the infection had proven resistant to an escalating series of antibiotics prescribed so far. It was time to bring out a heavier hitter. I prescribed Ciprofloxacin, an antibiotic rarely used in pediatrics, yet effective for some drug-resistant pediatric infections.

The patient was on the state Medicaid insurance and required a so-called prior authorization, or PA, for Ciprofloxacin. Consisting of additional paperwork that physicians are required to fill out before pharmacists can fill prescriptions for certain drugs, PAs boil down to yet another cost-cutting measure implemented by insurers to stand between patients and certain costly drugs.

The PA process usually takes from 48-72 hours, and it’s not infrequent for requests to be denied, even when the physician has demonstrated an undeniable medical need for the drug in question.

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We Should Use Both Medicare Advantage for All and Medicaid As A Package to Cover Everyone And We Should Do It Now

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BY GEORGE HALVORSON

A growing number of people want to set aside all of our current health care financing approaches as a country and set up Medicare For All as a Canadian like single payer system to cover every American and pay for our care.

When we spend three trillion dollars a year on health care and still have thirty million people without insurance, the possibility of covering everyone using the most direct and simple approach has some obvious appeal.

That Medicare for All approach being proposed to Congress today would be funded with a half dozen taxes that would include making income tax more progressive and inheritance tax levels significantly higher than they are now.

If we do have enough political momentum and enough alignment as a nation to actually replace everything in our health coverage world with a national Medicare for All system that is financed by those new taxes, then we should seriously consider going even further and spend the same amount of money buying better coverage and better care for everyone by setting up a Medicare Advantage program for Everyone and using that approach and program to cover all Americans.

Medicare Advantage has better benefits, better care coordination, better quality reporting, and a higher level of focus on better care outcomes and better care connectivity than standard Medicare.

Standard Medicare buys care entirely by the piece.   Buying care entirely by the piece rewards bad care, bad care outcomes, bad health, and inefficient care connectivity.

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Steal From the Poor. Give to the Rich. Rinse. Repeat. The Tax Bill and Health Care Part II..

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By STEVEN FINDLAY

“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit. Frankly it’s the health-care entitlements that are the big drivers of our debt…that’s really where the problem lies, fiscally speaking.”

— Paul Ryan, Dec. 6, 2017 on a talk radio show.

Amazing. You have to give Ryan credit for consistency and a kind of brutal Republican honesty.   Within weeks of pushing a huge tax cut for corporations and the wealthy, he’s basically saying Republicans plan to pay for that by making cuts to Social Security, Medicare and Medicaid.

Ryan’s “Roadmap for America” laid it all out in 2008: privatize Social Security, transform Medicare into a premium support plan, and block grant Medicaid.

Of course, Ryan is correct about these programs from a “fiscally-speaking” point of view.   The three do make up the lion’s share of the federal budget and their current rate of growth is unsustainable. Come 2035 and beyond they would start to gobble up almost the whole federal budget. The three programs will comprise about 50 percent of the $4.1 trillion federal budget in 2018.

And here’s a whooping number for you: Social Security, Medicare and Medicaid will cost the government $28 trillion through 2027.

But let’s be very clear about what is happening now that could set a dangerous precedent for the future. The Republican-led House and Senate, with the support of the Trump administration, have passed tax reform bills that primarily cut taxes for corporations and people making over $150,000 a year.

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Which Is More Efficient: Employer-Sponsored Insurance or Medicaid?

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By SAURABH JHA, MD

An old disagreement between Uwe Reinhardt and Sally Pipes in Forbes is a teachable moment. There’s a dearth of confrontational debates in health policy and education is worse off for it.

Crux of the issue is the more efficient system: employer-sponsored insurance (ESI) or Medicaid. Sally Pipes, president of the market-leaning Pacific Research Institute, believes it is ESI. Employers spend 60% less than the government, per person: $3,430 versus $9,130, per person (according to the American Health Policy Institute). Seems like a no brainer.

Pipes credits “consumerist and market-friendly approaches to health insurance” for the efficiencies. She blames “fraud,” “improper payment,” and “waste” for problems in government-run components of health care.

But Uwe Reinhardt, economist at Princeton, counters that Medicaid appears inefficient because of the risk composition of its enrollees. Put simply, Medicaid recipients are sicker. Sicker patients use more health care resources. Econ 101.

The points of tension in their disagreement are instructive.

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Death and Medicaid

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By ANISH KOKA, MD

I remember 7 South at the Children’s hospital very well. I remember the distinctive smell, the large rooms, the friendly nurses, and Shantel. For a brief period of time, Shantel and her little boy – a too skinny child named James – were there every time I was there with my little girl. 7 South was the GI floor – Shantel and I were there because our children had the same dastardly liver disease that, for the time being, was winning. And that was it. We had nothing else in common.

She grew up in North Philadelphia, not far from where I was finishing a residency program in Internal Medicine. She had three other children, was a single mother, and in the year that I spent shuttling to the hospital I never saw the father of her child. Shantel did not work, and relied almost exclusively on the welfare programs to make life work.

I was a medical resident, our family had a combined income north of $150,000/ year, and our health insurance was through my employer. My wife and I worked, which meant that we had the flexibility for one of us to stop working, and still maintain our benefits.Continue reading…

Senate Releases Obamacare Replacement Bill (Download)

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BY THCB STAFF

With action expected on the legislation next week, the Senate released the full text of its proposed Obamacare replacement.

Surprise, surprise: after weeks of secret meetings and dramatic late night tweets, the legislation looks very similar to the House Bill. More soon.

SENATEHEALTHCARE

 

 

 

The Positive Impact of New Wage Protections on Home Health Agency Bottom Lines

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By JEFFREY GROSSMAN

Screen Shot 2016-05-20 at 9.31.00 AM

In January 2016, the Department of Labor (DOL) officially extended federal wage protections to home care workers under the Fair Labor Standards Act, entitling them to the federal minimum wage, time-and-a-half pay for overtime, and pay for time spent traveling between clients. Predictably, lobbyist groups working on behalf of home care agencies have petitioned the Supreme Court to upend the new regulation. Their petition currently sits in limbo while the eight-member Court delays its’ consideration (presumably in fear of an unproductive 4-4 voting split while awaiting the confirmation of a ninth Justice). In the interim, those hoping for a review should consider the positive impacts of the new regulation and the opportunities it presents.

While on the surface this unfunded government mandate hurts home health agencies struggling to offer care within already slim Medicaid reimbursement margins, there is also a business case for increasing wages. First, increased wages will help entice new workers to the field, enabling agencies to care for more patients. Presently the median hourly wage for home care workers is $9.38[1], compared to the median for refuse collectors at $15.52 and parking enforcement workers at $16.99. While caregivers are often driven by a passion for their work, relatively low wages force many to look elsewhere. With higher pay, agencies should see an immediate impact on their ability to recruit new employees and increase revenue through improved bandwidth.

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