December 11, 2017

Another Hospital Mega Merger Under Discussion; Other Giant Mergers Announced

The Wall Street Journal reported Sunday that Ascension and Providence St. Joseph Health are in discussions about merging – a move that would create the nation’s largest hospital owner.  A merger would create an enterprise of 191 hospitals in 27 states with annual revenue of $44.8 billion, according to the WSJ.  This announcement comes on the heals of other mega health care merger disclosures.  Click here for the story.

  • Advocate Health Care and Aurora Health Care last week announced plans to merge to create Advocate Aurora Health, the 10th largest not-for-profit, integrated health care system. Click here for Advocate’s press release.  Click here for Aurora’s.
  • CVS Health and Aetna, in announcing their merger, want to create an integrated health care system built around their combination of businesses: drugstores, insurance and pharmacy benefit management. But…where are the doctors?  Click here for the Wall Street Journal story.
  • UnitedHealth Group agreed to buy the DaVita Medical Group unit of kidney dialysis firm DaVita for about $4.9 billion in cash.  Click here for the report.

Leapfrog Announces 2017 Top Hospitals

The Leapfrog Group, an independent nonprofit hospital watchdog, has named 109 recipients of its 2017 Top Hospitals Award for children’s, general, teaching and rural facilities. California has the biggest representation on the list with 14 recipients. Maine has the most rural hospitals awarded.  Click here to see the list of awardees.


House Floats 340B Legislation To Stop CMS Regulation

The House Ways and Means Committee is floating legislation (click here) that would stop CMS’ Part B payment cut for 340B pharmaceuticals for two years.  The CMS regulation would cut 340B drug payments by 22.5 percent and will take effect January 1 unless stopped by Congress or the courts.  The amendment may be placed into Congress’ final spending bill before the end of this year.  (The amendment also contains a change to how Indirect Medical Education payments are made.) Meantime, six bipartisan Senators sent a letter to their leadership requesting a moratorium on the rule. There is also a House letter in the works echoing the request for the rule to be put on hold. Click here for the Senate letter.  There are now 136 House cosponsors on the McKinley bill – click here to see whether your Representative has signed on.


MedPAC:  Scrap MIPS As Soon As Possible

The Medicare Payment Advisory Commission is expected to recommend to Congress that the Merit-Based Incentive Payments System (MIPS) be scrapped and replaced with a voluntary program.  MedPAC staff told commission members to take action before physicians become entrenched in the MIPS program.  Most clinicians will continue to be exempt from the program through 2018. In a presentation to MedPAC commissioners, MedPAC staff called MIPS “burdensome and inequitable.”  The debate over the value of MIPS has gained steam in recent months. Two recent studies have also raised concerns about the future success of MIPS. Researchers found Medicare’s Value-Based Payment Modifier Program, the predecessor of MIPS, failed to meet its goals and likely exacerbated disparities in healthcare delivery. A separate study released this week found that almost 30% of practices took a financial penalty that cut their Medicare revenue rather than participate in the program.  Click here to review the MedPAC presentation on MIPS.

  • Medicare fee for service spending increased only 2.3% from 2015 to 2016, according to a new MedPAC analysis.  Continuing a long-time trend, inpatient care decreased and outpatient care increased.  Click here for the MedPAC presentation.
  • Medicare spending on long term acute care hospitals totaled $5.1 billion in 2016 and there was a continued decline in the number of LTCH beds and facilities.  Click here for the MedPAC analysis.
  • Home health agencies saw a Medicare margin of 15.5% in 2016, according to MedPAC, with for profit HHAs at 15.8% and not for profits at 13.4%.  Click here for the MedPAC report.

Two Week Budget Deal Includes CHIP Help Congress has passed a two week Continuing Resolution to keep the government funded through December 22nd. The bill also included a short-term technical adjustment to address some states’ dwindling funds for the Children’s Health Insurance Program (CHIP). Congress has its work cut out for them in the next two weeks – Tax Overhaul, CHIP Reauthorization, 340B, Health Centers Reauthorization, Medicare Extenders, among others. Click here to read the CR legislation.

No Vote This Week on Tax Reform Bill as Health Interests Fight for Changes As the House and Senate go to conference to work out the differences between the bills that each body passed, health care is only one interest of dozens fighting for changes to the final legislation.  A final vote is expected the week of December 17. Still under discussion is the individual mandate repeal, which the Senate version. It is expected the House will agree and mandate will be eliminated in the final bill.  Also under discussion is the tax exemption for private activity bonds. Numerous businesses are lobbying together in the effort to maintain the status quo, including hospitals, builders, universities, and transportation industries. To view the side-by-side comparison of the two bills by the Joint Committee on Taxation, click here.


  • Senate Republicans need a minimum of 50 votes to pass the final tax package.  Sen. Susan Collins (R-ME), who voted in favor of the first tax bill, is now uncertain how she will vote on the final package.  Click here for that report.

Funding for CHIP, Health Centers Still Unclear

The Committees of jurisdiction are still heavy in negotiations over the differences between their respective bills to reauthorize the Children’s Health Insurance Program and Community Health Centers. The question is not whether they should be funded but rather how to pay for the programs for future years and for how long. Click here for more on what is at stake and what states are doing as their funding runs out.


Medicare ‘Extenders’ Await Funding; Reps Oppose Cutting CAH Swing Bed Payments

Weeks ago, House and Senate Committees released drafts for Medicare Extenders legislation.  Both contained much needed extensions of expiring health care programs – mostly impacting rural areas – and are now working out the differences.  The House has proposed to reduce funding for Critical Access Hospital swing beds to help pay for the extenders package. However, Congressman Tom O’Halleran (R-AZ) sent a bipartisan letter signed by 18 other representatives to Ways and Means Committee leadership urging them to not cut swing bed reimbursement rates.  Click here for the letter.


CBO: Individual Mandate Repeal Could Result in 13 Million Fewer Insured

The plan to repeal the individual health insurance mandate penalty as part of the Republican tax overhaul could have long-term ramifications for state Medicaid programs. Experts say the impact could force more people into Medicaid as more people are forced to drop insurance exchange coverage as premiums rise. The Congressional Budget Office projects that repealing the mandate penalty would lead to average premiums in the individual insurance market growing by about 10 percent – leading more people to opt out. Overall, an estimated 13 million more Americans would be uninsured by 2027 as a result of mandate repeal. Click here for the CBO estimate.


Fitch, Moody’s: Not for Profit Hospital Outlook is Negative

Weakening Medicare and Medicaid volumes will likely lead to greater financial pressure on not-for-profit hospitals, according to Fitch Ratings last week.  Click here for details from Fitch.  Click here for Moody’s info.


Health Spending Above $10,000 Per Person for First Time

The average amount spent on healthcare per person reached $10,348 in 2016, surpassing $10,000 for the first time, according to an annual report by CMS. The amount is a $354 increase from the year before. The latest findings, published in the journal Health Affairs, show that overall spending grew by an average of 4.3 percent, resulting in a spending total of $3.3 trillion. The share of the gross domestic product devoted to healthcare climbed to 17.9 percent from 17.7 percent in 2015. Hospital care accounted for the largest share of healthcare spending, at 32 percent, while spending on doctors accounted for 20 percent. Click here for more.  Click here for all the CMS data on this.


PhRMA Sues Over California Drug Pricing Transparency Law

The trade group Pharmaceutical Research and Manufacturers of America (PhRMA), which represents the pharmaceutical industry, sued to block California’s new prescription drug transparency law, arguing the measure illegally attempts to “dictate national health care policy” for drug prices. PhRMA’s suit in the U.S. District Court for the Eastern District of California also contends S.B. 17 singles out the drug industry as the “sole determinant of drug costs” and claims it will reduce competition and lead to the stockpiling of medicines. PhRMA is requesting the court permanently enjoin California from implementing the law. The trade group has taken legal action against other state laws, including a Nevada law addressing diabetes drug pricing. Click here for more.



NIH Predicts Alzheimer’s Cases will Double by 2060

The National Institute of Health announced that researchers have used new methodology to estimate that currently 6 million Americans have Alzheimer’s disease or mild cognitive impairment that can sometimes be a precursor to the disease. They also believe that number will more than double, to 15 million by 2060, as the population ages. This new forecast differs from earlier estimates, as scientists have attempted for the first time to account for numbers of people with bio-markers or other evidence of possible pre-clinical Alzheimer’s disease, but who do not have impairment or Alzheimer’s dementia. Click here for more from NIH.


NIH Director Outlines Path To Quicker Opioid Research Funding

At a hearing of the Health Committee last week, National Institutes of Health Director Francis Collins told lawmakers that using an approach known as “other transaction authority” could help more quickly direct money into research on more effective overdose-reversal drugs and less addictive pain medicines. NIH would like more flexibility in how it can spend money on research on fighting opioid abuse and addiction. Collins said that much of the research would be done through developing partnerships with private industry and academic research institutions. To view the hearing and read the written testimony, click here.


Federal Health Exchange Enrollment Tops 3.6 Million as Deadline Nears

More than 820,000 consumers selected plans on in the fifth and next-to-last week of open enrollment, bringing the total number of plan selections to more than 3.6 million. The numbers for the 39 states relying on for enrollment are thus far lagging behind expectations from supporters of the Affordable Care Act. By the end of the sixth week last year, about 4 million people had signed up, according to a biweekly report. But this year’s six-week enrollment period is just half as long as in previous years. The Trump Administration decided earlier this year to shorten the window. Consumer advocates are closely watching the numbers as the Dec. 15 federal deadline draws closer, when traffic typically spikes. Click here for the CMS snapshot report of health exchange enrollments.

  • Many insurers may turn a profit on the Obamacare exchanges for the first time this year because they hiked premiums for health plans, according to an analysis of 31 regional Blue Cross Blue Shield plans.  Click here for details.
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