As part of his $4 trillion budget for next year, President Donald Trump is proposing a $636 billion cut in federal funding for CMS programs over the next decade. Those cuts would make room for more spending on defense and border security.
The budget also proposes deep cuts to Medicaid—previously reported around $800 billion over the next decade. Those savings would come from transforming Medicaid into a per capita cap program starting in 2020. That’s the same move proposed in the House’s Obamacare replacement bill.
Medicare is not directly slashed in Trump’s budget, allowing the President to maintain part of his campaign promise to not touch either entitlement program despite federally subsidized healthcare being one of the biggest contributors to the national debt. In its final report on the state of the CMS, the Obama administration conceded that Medicaid was on track to deplete other federal programs.
Trump’s proposed budget still needs to be passed by Congress and that’s unlikely to happen in its current form.
“I just think it’s the prerogative of Congress to make those decisions in consultation with the president,” Sen. John Cornyn (R-Texas) said as he predicted the Medicaid cuts wouldn’t survive the Senate. “But almost every president’s budget proposal that I know of is basically dead on arrival.”
Trump’s budget extends funding for the Children’s Health Insurance Program, which is up for renewal at the end of this year.
States, however, would lose the enhanced match funding provided by the Affordable Care Act. The law gave states a 23-percentage-point bump in federal matching rates.
The draft budget also ends a provision that prevented states from narrowing the pool of eligible CHIP beneficiaries below what it was in 2010, the first year the ACA kicked in.
The Independent Payment Advisory Board, a panel that was created in the ACA whose sole purpose was to rein in Medicare costs if the program reached insolvency, would be repealed. That move would garner $7.6 billion in administrative costs over 10 years, according to the budget proposal.
Trump’s plan promises that overhauling the tax code and easing regulations will lift economic growth from the lackluster 2.1 percent average rate of recent years to sustained annual gains of 3 percent or better. Higher growth means lower deficits and Trump’s plan folds in more than $2 trillion in unspecified deficit savings over the coming decade from “economic feedback” to promise balance.
Trump also wants to overhaul medical malpractice laws, stating they add to the average American’s healthcare costs. The proposed reforms would save HHS programs $31.8 billion over 10 years and $55 billion to the federal government overall.
A chunk of these savings would result from fewer unnecessary services and curbing the practice of defensive medicine, according to the budget proposal. Trump proposes capping awards for noneconomic damages at $250,000 indexed to inflation. There would also be a three-year statute of limitation on claims.
Trump’s budget targets the National Institutes of Health, though Congress made it clear that it’s willing to spend on medical research, adding $2 billion to NIH funding when Trump had suggested a $1.2 billion cut in the remainder of 2017.
For 2018, HHS continues to recommend a cut of $5.8 billion, with the biggest cuts in the National Cancer Instute, at $1 billion; National Institute of Allergy and Infectious Diseases, at about $840 million; and National institute of Diabetes & Digestive & Kidney Diseases at $355 million.
The National Cancer Institute was particularly favored by appropriators earlier this month, with a $476 million increase.
HHS seeks to reduce how much labs can put towards overhead, such as fringe benefits, utilities and buying lab equipment. On average, labs get 30% of the total grant for overhead, higher than the overhead percentage from private funders.
The budget said: “NIH will implement reforms to release grantees from the costly and time-consuming indirect rate setting process and reporting requirements. Applying a uniform indirect cost rate to all grants mitigates the risk for fraud and abuse because it can be simply and uniformly applied to grantees. The Budget includes this critical reform to reduce indirect costs and preserve more funding for direct science.”
The budget did not say what that overhead amount would be, however.
It’s not just overhead that would fall in the unlikely case that Congress passed this plan. The Trump draft budget would eliminate 1,648 in 2018 for a total of 7,326 for the year.
Diana Zuckerman, president of the National Center for Health Research, does not expect Congress, which was generous to the institutes earlier this month, to support Trump’s cuts.
“I have never known Congress that enthusiastically cut NIH funding,” she said.
But she’s less sanguine about the fate of the Centers for Disease Control and Prevention, which would be cut by $1.3 billion, or just over 20%, in this budget.
Congress loves NIH, but she said, “they don’t realize, whether it’s CDC or AHRQ (Agency for Healthcare Research and Quality), that they have a very important role to play.”
AHRQ is zeroed out in the Trump budget, but NIH would receive $272 million to carry out similar initiatives.
The budget says CDC can still protect the nation and the world at the proposed funding level and that it can even respond to emerging health threats such as Zika.
The administration is prioritizing opioid abuse prevention efforts, combating childhood obesity, vaccine stockpiling and investing in CDC infrastructure, the document states.
Despite that statement, the budget proposes a 17% cut to the CDC’s sexually transmitted disease and tuberculosis prevention efforts. Immunization and influenza preparation funding would fall by 10%. Chronic disease prevention and health promotion would be cut by 19%.
Trump’s plan promises that overhauling the tax code and easing regulations will lift economic growth from the lackluster 2.1% average rate of recent years to sustained annual gains of 3% or better. Higher growth means lower deficits and Trump’s plan folds in more than $2 trillion in unspecified deficit savings over the coming decade from “economic feedback” to promise balance.
As physician practices work to implement Medicare’s new value-based payment system, Black Book Research identified some of the top MACRA challenges they face.
The Black Book survey is based on responses from 8,845 physician practices collected from February to April asking about the challenges created by the Medicare Access and CHIP Reauthorization Act (MACRA). Some of the top trends uncovered include:
- Small practices lack MACRA resources. 81% of independent physicians in practices with four or more clinicians say they have not grasped how to align their data with the new reporting measures. While larger practices turn to consultants to help them, 75% of practices with three or fewer physicians struggle to manage technology basics.
- More independent physicians consider selling their practices. The MACRA changes have 75% of independent clinicians considering selling their practices to hospitals or group practices to eliminate the administrative burden and capital costs of compliance.
- There’s still lots of confusion about the complicated payment system. For instance, 69% of practice managers are aware they need to report on six quality measures, but only 22% are aware they can choose the metrics that best reflect their practice’s strengths. And 94% were unaware or unsure of how to predict their 2017 scores under the Merit-based Incentive Payment System (MIPS) track.
- Some small and rural providers want to join Accountable Care Organizations (ACO). 67% of small practices are considering joining an ACO to avoid the penalties for lower scores because they lack infrastructure.
- Many practices will look to outsource. Many physician practices will be scrambling to get their programs in line this year. 80% of provider organizations that have not developed their MACRA strategy or plan say they expect to outsource to catch up as best they can for 2017.
If there’s any good news, the American Medical Association says many physicians are not aware that two Meaningful Use requirements have been dropped under MACRA. Physicians are free from reporting on the requirements for computerized physician order entry and clinical decision support, according to an AMA Wire report.
The federal government on Monday finalized its 2018 payment rates for Medicare Advantage plans, settling on an average rate increase of 0.45% after initially proposing a 0.25% increase.
After accounting for the “expected growth in coding acuity,” MA plans can expect a total change of 2.95% in revenue, according to the Centers for Medicare & Medicaid Services. Under the agency’s initial rate proposal, that figure would have been 2.75%.
Last year, the CMS approved a rate increase of 0.85% after proposing a 1.35% payment bump.
The CMS says the updated policies included in this year’s rate announcement give MA organizations the incentive to develop new plan offerings with “innovative provider network arrangements” that may further encourage enrollees to access high-quality healthcare services.
“Medicare is committed to strengthening Medicare Advantage and the Prescription Drug Program by supporting flexibility and efficiency,” CMS Administrator Seema Verma said in the announcement.
The rate announcement also makes other policy changes in response to industry feedback regarding the 2018 advance notice. For example, the government will slow the phase-in of the use of encounter data to calculate enrollee risk scores, using that data for just 15% of the risk adjustment payment to MA plans in 2018 instead of the initially proposed 25%.
President Donald Trump is calling for members of both parties in Congress to support his ideas to replace the Affordable Care Act.
In a speech before Congress Tuesday night, Trump outlined, for the first time, a more detailed healthcare reform package.
First, he wants people with pre-existing conditions to maintain coverage. Trump suggested Americans buy their own plans with tax credits and expanded health savings accounts.
It’s unlikely Democrats will back many of Trump’s suggestions. While Republicans stood and applauded during the evening address, their colleagues across the aisle largely remained seated and stone-faced.
Trump pushed back against stabilizing the individual market before addressing Medicaid expansion. GOP plans appear to favor a Medicaid program that offers capped federal funding.
On Tuesday, Trump seem to indicate the two reforms should occur concurrently. Earlier this week, Trump met with insurers who said they were encouraged by recent moves by Trump’s administration to address some of the industry’s concerns.
In what appeared to be a nod to governors who also met with the president this week, Trump called on Congress to give states resources and flexibility to tweak Medicaid as governors see fit.
Finally, he returned to his campaign idea of allowing insurance be sold across state lines.
“Mandating every American to buy government-approved health insurance was never the right solution for America. The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we will do,” he said.
Policy experts have decried many of the ideas, such as a greater reliance on health savings accounts instead of premium subsidies.
HSAs fail to benefit low-income people who might not have extra cash to store away for healthcare, according to the Center for American Progress. “This proposal would replace assistance for low-income people with a tax shelter for the wealthy,” the left-leaning think tank said.
HSAs are generally tied to high-deductible health plans, meaning that individuals might be responsible for higher out of pocket costs.
Some conservative lawmakers say tax credits and HSAs amount to “Obamacare lite.”
The American Academy of Family Physicians expressed dismay over Trump’s ideas.
“He has stepped back from policies that will ensure all Americans have access to meaningful, affordable health care coverage,” Dr. John Megis.
Trump’s plan “to slash premium subsidies for hard-working families would cause many millions to lose health coverage,” said Ron Pollack, executive director of the advocacy group Families USA. “It would also make out-of-pocket costs unaffordable for many others.”
Experts say Aetna is unlikely to win an appeal of a U.S. District Court judge’s decision to effectively block a $37 billion merger with Humana that would have altered the Medicare Advantage landscape.
An appeal by Aetna and Humana could allow the merger a chance to close in what some expect will be a more lenient antitrust environment under President Donald Trump’s administration. But some experts say Trump will have no bearing on the court’s ruling.
U.S. District Judge John D. Bates blocked the merger on antitrust grounds, claiming that it would substantially reduce competition in violation of antitrust law.
“Specifically, the proposed merger is likely to substantially lessen competition in the sale of individual Medicare Advantage plans in 364 counties identified in the complaint and in the sale of individual commercial insurance on the public exchanges in three counties in Florida identified in the complaint,” the order reads.
In those 364 counties, Medicare Advantage serves approximately 1.6 million seniors, nearly 980,000 of whom have enrolled with Aetna or Humana, according to the U.S. Justice Department’s complaint.
The Justice Department and healthcare industry associations applauded the decision.
“[This] decision is a victory for American consumers—especially seniors and working families and individuals,” Deputy Assistant Attorney General Brent Snyder, who is currently heading the Justice Department, said in a statement. “Competition spurs health insurers to offer higher quality and more affordable health insurance to seniors who choose Medicare Advantage plans and to low-income families and individuals who purchase insurance from public exchanges. This merger would have stifled competition and led to higher prices and lower quality health insurance.”
The “decision rightly puts the needs of patients first in ensuring they have access to health care coverage that is affordable,” Rick Pollack, president and CEO of the American Hospital Association, said in a statement. Dr. Andrew Gurman, president of the American Medical Association said seniors “were the big winners today.”
Aetna spokesman T.J. Crawford said the insurer’s lawyers are reviewing the 158-page opinion and “are giving serious consideration to an appeal after putting forward a compelling case.” Hartford, Conn.-based Aetna may owe Louisville-based Humana a $1 billion breakup fee if the merger ultimately falls through.
The court’s decision wasn’t a shock. Many analysts expected the court to block the merger, though Aetna executives have continuously reiterated their confidence in the merger. Ana Gupte, an analyst with Leerink Partners, had given it a 1-in-3 chance of being approved.
But the ruling does set an important precedent in how Medicare markets are defined.
Aetna and Humana originally announced their intent to merge on July 2, 2015. The Justice Department, along with eight states and the District of Columbia, sued to block the merger in July 2016, saying it would reduce competition and raise prices in Medicare Advantage plans—the private, managed-care version of traditional Medicare—as well as plans sold through the Affordable Care Act’s public health insurance exchanges.
The key issue in the trial that wrapped up at the end of December concerned whether traditional fee-for-service Medicare competed with Medicare Advantage. The Justice Department argued they were separate markets and did not compete, while the insurers argued the opposite. Humana is the second-largest Medicare Advantage insurer, while Aetna is the fourth-largest and is rapidly adding more members.
In the opinion, Judge Bates wrote that most evidence shows industry stakeholders and the public view Medicare Advantage and traditional Medicare as two distinct markets and not easily substituted for one another. Supplemental Medicare plans are also unlikely to alleviate anti-competitive effects of the merger, he said.
Most telling, Bates wrote, is data from the Kaiser Family Foundation on the number of seniors who leave Medicare Advantage plans for traditional Medicare plans. “The switching data presents a clear picture: Medicare Advantage enrollees rarely switch plans, but when they do, they overwhelming stay within Medicare Advantage.”
That Bates views the Medicare Advantage and Medicare fee-for-service markets as separate is a “significant setback to the industry from a consolidation perspective,” Barclays analyst Joshua Raskin wrote in a research note Monday. Because the Medicare Advantage market is already heavily consolidated, “There are few large combinations in the industry that would seem feasible,” he said.
While Aetna and Humana earlier this year agreed to sell some Medicare Advantage assets to Molina Healthcare to satisfy the government’s concerns, Bates decided the divestiture would not restore the competition lost by the merger. The court said Molina’s experience as primarily a Medicaid insurer is not likely to make it a successful competitor in Medicare Advantage.
Meanwhile, rival insurers Anthem and Cigna are waiting to learn if their $54 billion merger will be approved by U.S. District Judge Amy Berman Jackson. That case hinges on whether the merger will reduce competition in the national market, so it’s unlikely that the decision in the Aetna-Humana case will have much influence over Jackson’s decision, said Tim Greaney, co-director of the Center for Health Law Studies at St. Louis University.
Jackson has also likely already made up her mind in the Anthem-Cigna case and could rule any day, he said.
On December 15, the Centers for Medicare & Medicaid Services (CMS) announced more new opportunities for clinicians to join Advanced Alternative Payment Models (APMs) to improve care and earn additional incentive payments under the Quality Payment Program, which implements the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).
Beginning in January and February 2017, CMS will open applications for new rounds of two CMS Innovation Center models for the 2018 performance year – for new practices and payers in the Comprehensive Primary Care Plus (CPC+) model and new participants in the Next Generation Accountable Care Organization (ACO) model. With these new opportunities, CMS expects that by the 2018 performance period, 25 percent of clinicians in the Quality Payment Program would be a part of these advanced models and may be eligible to earn incentive payments.
“The CMS Innovation Center, which the Affordable Care Act created, takes best practices from physicians and other clinicians and promotes them across the nation,” said CMS Acting Administrator Andy Slavitt. “Thanks to the bipartisan MACRA, more clinicians and their patients will benefit from being a part of these models. That’s good for the future of Medicare, the health of beneficiaries, and the satisfaction of clinicians with their work.”
For the 2017 performance year, under the Quality Payment Program, clinicians may earn a 5 percent incentive payment through sufficient participation in the following Advanced APMs:
- Comprehensive ESRD Care Model (Large Dialysis Organization (LDO) arrangement)
- Comprehensive ESRD Care Model (non-LDO two-sided risk arrangement)
- Medicare Shared Savings Program – Track 2
- Medicare Shared Savings Program – Track 3
- Next Generation ACO Model
- Oncology Care Model (two-sided risk arrangement)
In 2018, CMS anticipates that clinicians may also earn the incentive payment through sufficient participation in the following new and existing models:
- Medicare ACO Track 1+ Model
- New voluntary bundled payment model
- Comprehensive Care for Joint Replacement Payment Model (Certified Electronic Health Record Technology (CEHRT) track)
- Advancing Care Coordination through Episode Payment Models Track 1 (CEHRT track)
These lists will continue to change and grow as more models are proposed and developed in partnership with the clinician community and with input from the Physician-Focused Payment Model Technical Advisory Committee.
“We are excited to build on the progress of comprehensive primary care, the foundation of a better health system,” said Dr. Patrick Conway, CMS Acting Deputy Administrator. “Our Next Generation ACO model is the future of accountable care where providers take on full accountability for total cost of care and quality for a population of patients. These models allow doctors and other clinicians to practice the way they want to, including spending more time with patients, and provide coordinated, patient-centered care to all beneficiaries.”
Today’s announcement is one in a series of Innovation Center initiatives that will expand opportunities for clinicians to participate in Advanced Alternative Payment Models under MACRA. CMS’ work in developing and expanding new payment models will continue to be guided by the following core principles:
- Supporting innovative payment and service delivery models with strong potential to improve health care quality and lower costs.
- Engaging with and listening to consumers, providers, and other stakeholders allowing for open and transparent dialogue, including through the appropriate use of notice-and-comment rule making and ombudsmen.
- Evaluating results based on appropriately scoped and sized demonstrations and advancing best practices based on their impact on quality and cost.
This is part of the Administration’s effort to build a system that delivers better care, one in which clinicians work together and have a full understanding of patients’ needs, Medicare pays for what works and spends taxpayer money more wisely, and patients are in the center of their care, resulting in a healthier country.
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