Category: Curator

HHS Curator is our free research service published by our team. We read hundreds of Medicaid news items each week and highlight and summarize them for you to save you time.

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MCO – Elevance Health Reports $1.3 Billion Profit And Insurer Ups Forecast Once Again

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

[MM Curator Summary]: Elevance profits are down YOY, but revenues from non-Medicaid lines of business are increasing.

Clipped from: https://www.forbes.com/sites/brucejapsen/2023/10/18/elevance-health-reports-13-billion-profit-as-insurer-ups-forecast-once-again/?sh=655338e76c53

Elevance Health reported a third quarter profit of $1.29 billion as the health insurer added health … [+] plan members despite a big dip in Medicaid enrollment due to the end of a pandemic-era coverage provision.

Elevance Health

Elevance Health reported a third quarter profit of $1.29 billion as the health insurer added new customers despite a big dip in Medicaid enrollment due to the end of a pandemic-era coverage provision.

Elevance, which sells government and commercial health insurance including Blue Cross and Blue Shield plans in 14 states, Wednesday reported third quarter profits decreased nearly 20% to $1.29 billion compared to $1.6 billion in the year-ago quarter. The dip in net income was due largely to an “operating loss of $741 million in the company’s “corporate & other segment” executives said was driven by “business optimization charges.”

“In the third quarter, we completed a strategic review of our operations, assets, and investments to enhance operating efficiency, refine the focus of our investments in innovation and optimize our physical footprint,” the company said in its earnings report. “This resulted in a net charge of $697 million, comprised of the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices.”

Still, revenue jumped 7% to $42.8 billion as overall health plan enrollment grew and the company’s Carelon health services business performed well.

Elevance’s membership grew by 42,000, or 0.1%, to 47.3 million as of September 30, 2023 compared to a year ago.

The growth was driven primarily by “growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage membership, partially offset by attrition in Medicaid due to the resumption of eligibility redeterminations and a new entrant into one of our state Medicaid programs in the third quarter, as well as declines in our Employer Group risk-based business,” Elevance said in its third quarter earnings report.

The end of the U.S. Public Health Emergency in May after three years of the Covid-19 pandemic is impacting health insurers that have a significant business administering Medicaid coverage for states, which are conducting so-called “Medicaid redeterminations.” Medicaid redetermination, also described as Medicaid renewal or Medicaid recertification, is essentially when people are asked to show they are qualified for such coverage.

“During the third quarter of 2023, medical membership decreased by 664 thousand driven by attrition in Medicaid due to the aforementioned dynamics,” Elevance said in its report.

Still, Elevance’s profits and continued growth are figured in the company’s forecast for increased profits with adjusted net income now expected to be “greater than $33.00 per share.” That is more than an earlier forecast for adjusted net income of company “greater than $32.85” per share.

“Elevance Health delivered another quarter of solid performance reflecting the strength and balance of our diversified portfolio of businesses, our continued investments in innovation and growth, and our relentless focus on affordability, simplicity, and customer experience,” said Elevance Health president and chief executive Gail K. Boudreaux. “With affordability a paramount concern for all payors and a more uncertain forward-looking operating environment, we took action during the third quarter that will enhance our ability to act nimbly and operate efficiently.”

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MCO- Medicaid Managed Care Organizations face scrutiny over prior authorization denials

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: The scrutiny on MCO denials and prior auths continues.

 
 

 
 

Clipped from: https://thetimesweekly.com/medicaid-managed-care-organizations-face-scrutiny-over-prior-authorization-denials/

 
 

A recent review of Medicaid Managed Care Organizations (MCOs) has revealed concerning trends in approving prior authorization requests for services. In 2019, MCOs denied one out of every eight requests for prior authorization of services, according to a report by the Office of the Inspector General (OIG).

Among the 115 MCOs examined in the review, 12 exhibited denial rates for prior authorization requests that exceeded 25 percent—twice the overall rate. This discrepancy in approval rates highlights potential disparities in access to essential healthcare services for Medicaid enrollees.

Despite the high number of denials, many state Medicaid agencies reported that they did not routinely review the appropriateness of MCO denials. Additionally, many still needed to have mechanisms in place to collect and monitor data on these decisions. More robust oversight is required, potentially allowing inappropriate denials to go undetected within the Medicaid-managed care system.

The OIG has recommended measures to improve enrollee protections and state oversight of prior authorization denials in Medicaid-managed care in response to these findings. These include:

• States must regularly review the appropriateness of a sample of MCO prior authorization denials.

• Mandating States to collect data on MCO prior authorization decisions.

• Issuing guidance to states on utilizing MCO prior authorization data for oversight.

• States must implement automatic external medical reviews of upheld MCO prior authorization denials.

In their official response, the Centers for Medicare & Medicaid Services (CMS) did not indicate concurrence with the first four recommendations. However, they agreed with the recommendation to collaborate with States to identify and address MCOs that may be issuing inappropriate prior authorization denials.

Senator Robert Casey (D-Pa.), who chairs the Senate Special Committee on Aging and U.S. Representative Frank Pallone, Jr. (D-N.J.), Energy and Commerce Committee ranking member, has voiced concerns about the potential prioritization of MCOs’ financial interests over the needs of patients seeking care. “I’m deeply troubled by reports that Medicaid managed care plans denied an average of one out of every eight requests for treatment, more than double the rate of service denials in Medicare Advantage,” Pallone said in an earlier statement.

“Medicaid is a lifeline for over 80 million people, including children, people with disabilities, seniors, and hardworking families,” he continued. “This report strongly suggests that some private insurance plans, which states have contracted with to provide health care coverage to their residents, may be improperly denying access to critical services to maximize their profits.”

In a letter to the OIG, Casey emphasized the role of insurance companies in administering Medicaid benefits through MCOs, which receive fixed fees known as “capitated payments.”

Casey noted that independent watchdogs have consistently raised concerns about the MCO model, which may incentivize insurers to limit payments and deny coverage. He highlighted that MCOs have expanded significantly, becoming the “dominant delivery system” for Medicaid, providing coverage to over 67 million Americans, or 84 percent of Medicaid enrollees.

The senator noted that the OIG’s national evaluation of Medicaid MCOs, published in July, examined 115 plans with a minimum of 10,000 enrollees operating across 37 states and managed by seven companies. For example, the report found that, on average, MCOs denied 12.5 percent of requests for prior authorization in 2019, with notable variations from state to state and among different companies and plans.

Casey said one insurer in 13 states exhibited denial rates ranging from 5 percent to 29 percent. In California, denial rates for various MCOs ranged from 7 percent to 29 percent. The OIG report also identified 2.7 million individuals enrolled in MCOs with 25 percent or higher denial rates. Notably, one Illinois plan had a denial rate of 41 percent, while two other plans in Georgia and Texas denied one-third of claims.

Casey has called for a thorough examination of the MCO system to ensure that patients enrolled in Medicaid have unfettered access to the services they are entitled to. Additionally, he has urged the CMS to provide robust oversight to safeguard the interests of enrollees in receiving the care they need.

“When patients are denied coverage of medically necessary services, they often face tight timelines to file actionable appeals,” Casey said. “Assuming such appeals are filed in a timely manner, the process can be complicated and time-consuming, creating barriers that can make it difficult for Medicaid enrollees to seek recourse.”

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MCOS- Iowa Medicaid contract triggers legal action over alleged conflicts of interest

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: In which an extensively documented set of concerns about the way the state made its MCO award decision is discussed. TL/DR- Lucy, you got some splainin’ to do.

 
 

Clipped from: https://iowacapitaldispatch.com/2023/06/13/iowa-medicaid-contract-triggers-legal-action-over-alleged-conflicts-of-interest/

 
 

The state of Iowa is accused of conflicts of interest in hiring a company that soon will begin managing the state’s billion-dollar Medicaid program. (Photo illustration via Canva)

With Iowa’s newest Medicaid managed-care provider set to begin work in less than three weeks, the state is now being accused of conflicts of interest in hiring the company.

A civil petition filed in Polk County District Court alleges Iowa’s newest Medicaid managed-care provider, Molina Healthcare of Iowa, was selected last fall in part because its CEO, Jennifer Vermeer, is Iowa’s former Medicaid director.

Vermeer, the petition claims, “worked closely over time” with those who played a key role in hiring her company to help deliver billions of dollars’ worth of Medicaid-funded health care services to almost 800,000 Iowans.

Molina is expected to begin working in Iowa on July 1.

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The petition was filed recently by CareSource Iowa Co., an Ohio-based nonprofit Medicaid managed-care company that failed to win the Iowa contract.

CareSource now seeks judicial review of the Iowa Department of Health and Human Services’ decision to hire Molina over CareSource, alleging the competitive bidding process used by DHHS produced an “unfair, biased result” that resulted in the hiring of “the only bidder that hired as its CEO a longtime colleague/supervisor” of state workers tasked with evaluating the bidders.

The petition notes that Molina earned 98% of the available points handed out during the evaluation process — a score that “even DHHS’s top witnesses admitted was shockingly high” and which CareSource argues “was no coincidence and demonstrates unfair bias” on the part of DHHS.

In court filings, DHHS has admitted to many of the factual claims made by CareSource, but has denied any bias or wrongdoing.

Bid evaluators allegedly lacked experience 

The hiring process that sparked the petition dates back to May 2021, when DHHS published a notice of its intent to solicit proposals from companies to manage Iowa’s Medicaid program. At the time, DHHS said it planned to select “up to four” companies for the work.

DHHS’s written solicitation for proposals did not disclose the specific evaluation criteria to be used in selecting the winning companies, and instead said only that DHHS would conduct a “comprehensive, fair and impartial evaluation.”

CareSource says it “invested millions of dollars and thousands of hours in learning about Iowa Medicaid’s needs and preparing an extensive and detailed proposal” to submit.

Each of the five members of DHHS’s evaluation committee independently reviewed each of the proposals submitted by five bidders: CareSource, Molina, UCare Iowa, Aetna Health of Iowa, and an incumbent Iowa Medicaid managed-care provider, Amerigroup.

According to CareSource, none of the evaluators compared any features of the proposals to any of the competing proposals, nor did they compare the proposals to the specific evaluation criteria or any other objective scoring methods.

The five evaluators eventually met to engage in scoring the bids through a pro

cess of consensus – although, according to Care Source, “there is no documentation of the reasoning justifying the consensus scores assigned to the various proposals.”

CareSource alleges the evaluation committee was comprised of DHHS staffers who “had spare time to devote to the evaluation process,” but didn’t necessarily have the expertise the job required.

“The disparity of the evaluators’ levels of experience with Medicaid managed care contracts was striking,” CareSource alleges. One evaluator, Jennifer Steenblock, had more than 30 years of experience specifically in Medicaid, but was the only member of Iowa’s Medicaid Leadership Team to assist with the evaluations.

A second evaluator had worked at Iowa Medicaid for only nine months at the time, while a third had no experience with Medicaid managed care oversight and helped run a state-run, long-term care facility that was the focus of a U.S. Department of Justice investigation.The remaining two evaluators had some management experience within DHHS but lacked “substantial experience with Medicaid managed care,” CareSource alleges.

Questions raised about conflicts of interest

While two of the five evaluators allegedly individually contacted the state’s procurement officer to raise concerns about their potential or perceived conflicts of interest due to their close working relationship with Amerigroup, these same evaluators would later testify that they “were told not to worry” about the issue, the petition claims.

Two other evaluators identified potential conflicts of interest on DHHS-supplied disclosure forms but, according to CareSource, there was no follow-up by DHS and the two were never asked if they could set aside any bias or personal opinions they might have.

The most qualified evaluator, Steenblock, had worked closely with Molina’s CEO, Vermeer, when Vermeer served as Iowa’s Medicaid director and when she later consulted for Iowa Medicaid, CareSource alleges in its petition to the court.

CareSource also claims that documents produced by DHHS demonstrate that the department’s “leadership was concerned Amerigroup would pursue litigation if not selected for an managed care organization contract.”

In the end, Molina was the top-scoring bidder, followed by Amerigroup and then CareSource. Rather than award all three of the companies a contract, DHHS Director Kelly Garcia opted to award only two contracts — one for Molina and one for Amerigroup.

Separately, Iowa Total Care has a managed care contract with Iowa that is expected to run through 2025. Together, the three companies are expected to manage the Medicaid program that each year provides $7 billion worth of health care services to 788,000 low-income or disabled Iowans.

According to the petition, Garcia later testified that her decision to hire Molina was based solely on the points awarded by the evaluators. According to CareSource, Garcia was “surprised and concerned by Molina’s extraordinarily high score,” but didn’t go back to the evaluation committee to investigate the basis for the score.

Withheld documents allegedly contradict testimony 

Last September, CareSource filed a formal request to have DHHS reconsider its decision, but the request was denied. CareSource then filed an administrative appeal, sought documents from DHHS and deposed the five evaluators and Garcia.

An administrative law judge held a hearing over several days last November and eventually issued a decision denying CareSource’s appeal.

On March 24, DHHS allegedly advised CareSource that it had discovered in its own offices three binders of procurement-related materials belonging to one of the evaluators, Brandi Archibald, that had not been turned over to CareSource in response to prior requests for such information.

The newly disclosed documents included handwritten notes on the proposals submitted by Molina, Amerigroup, and CareSource and “were squarely covered by CareSource’s September 2022 public records request” to DHHS, the petition alleges. The state agency admits the records “were merely sitting on a shelf in DHHS’s own offices,” according to the petition. The records allegedly contradict testimony by Archibald that she took no notes during her review of the bid proposals.

After the discovery of those records, CareSource asked DHHS to conduct another sweep of its offices to ensure no other relevant materials were missed. In April, DHHS turned over “still more evaluator materials it had failed to produce in response to the public records request,” the petition alleges.

This second batch of newly discovered records include handwritten notes from another evaluator who had testified that he took no notes, as well as extensive, typed notes prepared by Steenblock, the petition alleges.

Molina has been sanctioned by states, feds

CareSource is now asking that a district court judge review DHHS’s decision, reverse that decision, and order the department to either add CareSource as a third winning bidder or begin a new evaluation process, using a “fresh slate of unbiased and properly trained evaluators who are instructed to compare the proposals as required by Iowa law.”

A hearing on the matter is scheduled for Oct. 20. Amerigroup and Molina have each been granted the right to intervene and be heard in the case.

In recent years, Molina has had problems with state and federal regulators.

Last June, the state of California took enforcement action against Molina Healthcare of California and imposed a $1 million fine against the company for its failure to acknowledge and resolve 29,124 provider disputes between September 2017 and September 2018.

Days later, Molina Healthcare and its previously owned subsidiary, Pathways of Massachusetts, agreed to pay $4.6 million for alleged violations of the False Claims Act. Federal officials had alleged that Molina owned and operated a group of mental health centers that improperly submitted claims for reimbursement while failing to properly license and supervise mental health center staff.

In 2019, the Molina of Texas was fined $500,000 by regulators in Texas who alleged the company had been unable to pay beneficiaries’ claims on time. That penalty was imposed one year after the company agreed to settle allegations of late payments by paying a combined total of $7.7 million to the Texas Department of Insurance and various health care providers in the state.

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EXPANSION- NC will get $1 billion Medicaid expansion ‘bonus,’ but there’s disagreement on how to spend it

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: How do we split the loot?

 
 

Clipped from: https://www.bpr.org/2023-06-14/nc-billion-medicaid-expansion-bonus-disagreement-spend

 
 

The decision by North Carolina lawmakers to expand Medicaid will come with a billion dollars of new federal funds for the state. But the House and Senate disagree on how to spend the money.

The billion-dollar allocation from the federal government is called a “signing bonus” for expanding the government health care program to hundreds of thousands of people. It’s an incentive from Washington to convince more states to expand Medicaid.

Gov. Roy Cooper and leading House Republicans think the billion dollars should be used to fix the state’s troubled mental healthcare system. Supporters of the plan, including Ashish George with the National Alliance on Mental Illness, say the federal money creates a rare opportunity.

“I think it’s the best shot we’ve had in many, many years,” George said.

A state House bill calls for about a quarter of the money to go toward increasing Medicaid reimbursement rates to mental health providers.

Health and Human Services Secretary Kody Kinsley says the current reimbursement rates are too low, and that makes it hard to keep enough mental health professionals in North Carolina.

“If you can’t get an increased rate, or if you can’t get a rate that will sustain your business, you won’t stay in business in any place,” Kinsley said. “This is really stark, and I want to make this clear: Medicaid has not increased its behavioral health rates since 2012.”

The House plan also includes $50 million to help mental health practitioners pay back student loans. And it would fund a variety of new mental health care facilities.

Rep. Donny Lambeth, R-Forsyth, developed the House plan. He says hundreds of patients are stuck daily in emergency rooms waiting for treatment beds to come available at mental health facilities.

“We have a once-in-a-generation opportunity to strengthen our care,” Lambeth said. “Thus, the focus will be on opening more care options, providing incentives to staff more beds.”

Senate leaders want to spend ‘bonus’ on new children’s hospital, health sciences training

But Senate leaders want to take a different approach to spending the billion-dollar fund. Their budget directs the money to a wider variety of health care projects, including new hospital construction and new health sciences training facilities at community colleges and universities.

 
 

WUNC Politics

The WUNC Politics Podcast is a free-flowing discussion of what we’re hearing in the back hallways of the General Assembly and on the campaign trail across North Carolina.

Senate leader Phil Berger says he recognizes the state’s mental health crisis, but he’s not sure a one-time infusion of money can fix it.

“There is some concern as to whether or not just throwing a lot of money at a particular problem is actually going to move the needle that much, and maybe if there are other things in the health space that we can actually have some impact on with some of those dollars, it’s probably better to do that,” Berger said.

The biggest project in the Senate’s proposal is a hundred million dollars for a new UNC children’s hospital, which will include a mental health component.

Sen. Ralph Hise, R-Mitchell, says the children’s hospital is in need of an expansion.

“A lot of young kids are having to travel to Atlanta and Pennsylvania to get high-end children’s services and we hope to be able to offer that here,” he said.

The Senate plan also includes $40 million in incentives to entice more health care providers to locate in rural areas of the state. And it includes funding to help keep rural hospitals from closing.

Senators also want to build new community college health sciences buildings in smaller counties like Caldwell, Robeson and Pamlico. The goal is to train more health care providers in those areas.

Working on a compromise

Budget writers from the House and the Senate are now working to negotiate a compromise plan for the final budget. Kinsley says he’s hearing support from both chambers for mental health, but there’s disagreement on whether to use the Medicaid expansion money or other funding sources. He argues that while the backlog of mental health needs looks costly, it can ultimately save the state money.

“What I try to remind folks is that, you know, when you spend money on behavioral health, you drive down costs in the short and long term in a number of other buckets, right?” Kinsley said. “You drive down costs in incarceration costs and jail-based costs, you drive down costs for physical health controls. We know that people that have their behavioral health issues managed, their costs for diabetes and other chronic diseases decrease. You drive down costs around homelessness and other social services.”

Kinsley added: “Investing in behavioral health is not just about finding more money to spend, it is about spending that money first, because the payoff is huge in a number of other places.”

The final budget agreement will likely be released in the coming weeks.

 
 

 
 

 
 

 
 

 
 

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PROVIDERS- Montana governor boosts Medicaid payments for health care providers by hundreds of millions

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: The pretend Medicaid math is out for Montana this year.

 
 

Clipped from: https://montanafreepress.org/2023/06/14/montana-governor-boosts-medicaid-payments-for-health-care-providers-by-hundreds-of-millions/

 
 

Gov. Greg Gianforte gives his State of the State address in the state House chamber on Wednesday, Jan. 25, 2023. Credit: Samuel Wilson / Bozeman Daily Chronicle

Gov. Greg Gianforte on Wednesday announced signing the state’s roughly $14.3 billion primary budget bill, creating a roadmap for funding state government for the next two years and substantially increasing reimbursement rates for health care providers who care for Medicaid patients. 

In a press release Wednesday afternoon, the governor’s office touted many aspects included in House Bill 2, including income and property tax cuts, investments in state infrastructure, boosts to affordable childcare and housing programs, and a “historic” increase to Medicaid provider rates. 

” Any one of these accomplishments would be historic on its own. Taken together, we’ve passed one of the most transformational budgets in state history,” Gianforte said.

The governor’s deputy communications director, Brooke Stroyke, later confirmed that Gianforte approved the Medicaid rate increases as passed by the Legislature, despite a suggestion in May from House Majority Leader Steve Fitzpatrick, R-Great Falls, to cut $15 million from the overall rate increases. The most recently available analysis of the final rates from the Legislative Fiscal Division calculated an increase of $339.4 million in combined state and federal funds over fiscal years 2024 and 2025. 

Advocates for behavioral health providers and other impacted services heralded the governor’s announcement. 

“Montana’s mental health system and our citizens who rely on it desperately needed better reimbursements,” said Matt Kuntz, director of NAMI Montana, a mental health advocacy group, in a Wednesday text message. “It’s wonderful to have them pass.” 

The fight over how much to increase Medicaid reimbursements for certain types of providers dominated much of the 2023 Legislature. Republicans and Democrats, responding to a recently commissioned study that found the state underpays behavioral health, developmental disabilities and senior and long-term care providers, pushed to close that gap beyond what Gianforte’s budget originally proposed, though to different degrees.

While Democrats and providers sought to raise rates to meet the benchmarks identified in the 2022 study, some Republicans were wary of releasing a sudden flood of funding into that sector of the health care industry. Other members of the party, including the health budget subcommittee chair, Rep. Bob Keenan, R-Bigfork, supported record increases to rates but raised concerns that the surge in funds suggested by Democrats and service providers would put rates on the chopping block during future budget shortfalls.  

Health care providers, many of whom testified to lawmakers that Medicaid patients make up the majority of their caseloads, insisted that fully funding the rates identified in the study was the only way to prevent further closures of health care providers. At least 11 nursing homes shuttered around the state in 2021 and 2022, a trend also seen at local group homes and behavioral health services. In addition to inflation and a pervasive strain on direct-service providers during the pandemic, providers often pointed to inadequate Medicaid reimbursement rates as a leading cause of the closures. 

Throughout the course of the session, bipartisan support for funding for rate increases eventually brought levels up to those in the contracted study. Providers slated to receive the largest rate increases said Wednesday that the governor’s approval signaled less financial strain in the years ahead.

“The provider rate increase combined with our temporary county tax levy that we are receiving will allow us some more time to continue caring for our own community members that built and maintained our towns and that they will not have to relocate due to a closure,” said Wes Thompson, administrator at Valley View Home, a nursing home in Glasgow. “Stabilization in long-term care is not met with this rate increase but it’s a starting point that is so desperately needed due to Montana’s growing elderly population.”

The roughly month-long delay between the session’s conclusion and the governor’s approval of the budget created anxiety among many in the health care fields. In recent weeks, Democrats accused Gianforte’s office of holding provider rates and other high-profile bills hostage while legislators debated whether to override his vetoes of bipartisan reforms to the state psychiatric hospital in Warm Springs and the child welfare system. Two out of three of those override efforts were successful — lawmakers fell seven votes short of turning the child welfare reform into law. 

Members of both parties endorsed the final rates approved by Gianforte. 

“Good to see that’s checked off the list,” Keenan said in a Wednesday statement. 

Democrats celebrated the news as well while taking credit for their role in the result.

“This session, Montana Democrats finally convinced Republicans to invest in our community health care providers, and Montana’s seniors and working families will at last have a better shot at getting the care they need close to home,” said Rep. Mary Caferro, D-Helena in an emailed Democratic press release. 

The fiscal year begins July 1. 

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RX- Inflationary Rebates for Generic Drugs Offset Medicaid Spending

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: Good luck figuring out this nonsense. Will drug costs go down? Why did they go up? Stop asking those questions and believe the official “we have a clue what we are doing” line from HHS.

 
 

 
 

Clipped from: https://healthpayerintelligence.com/news/inflationary-rebates-for-generic-drugs-offset-medicaid-spending

Inflationary rebates for generic drugs totaled between 2 and 12 percent of the $53.6 billion Medicaid spent on the drugs between 2017 and 2020.

 
 

Source: Getty Images

 
 

By Victoria Bailey

June 14, 2023 – Inflationary rebates for generic drugs helped offset Medicaid spending from 2017 to 2020, but additional policies are needed to improve generic competition, according to a study published in Health Affairs.

Competition from generic drugs helps reduce spending on expensive brand-name drugs. Between 2014 and 2017, one in five generic drugs doubled in price over one year, leading to $1.5 billion of excess Medicaid spending.

The Bipartisan Budget Act of 2015 extended inflationary rebates under the Medicaid Drug Rebate Program to generic drugs starting in 2017 to help limit Medicaid spending when drug prices increase. Before this, generic drugs were subject to a baseline rebate of 13 percent of the average manufacturer price (AMP).

Researchers used Medicaid State Drug Utilization and CMS data to assess the economic impact of Medicaid inflationary rebates for generic drugs between 2017 and 2020.

They looked at three different drug price measures: AMP or the average price paid by pharmacies that purchase the drug directly from a manufacturer, the National Average Drug Acquisition Cost (NADAC) or the price paid by independent and chain retail pharmacies, and the average spending per unit reimbursed by state Medicaid programs.

Researchers obtained spending and utilization data for 33,656 national drug codes (NCDs) between 2017 and 2020. The median Medicaid reimbursement per prescription was $18. Total Medicaid generic drug spending over the four years was $53.6 billion, ranging from $2.9 billion to $4.1 billion per quarter.

AMP estimates were available in at least one quarter for 20,353 generic NDCs, representing $29.8 billion of gross generic drug spending. NADAC values were available for 27,583 NDCs, accounting for $43.2 billion of generic drug spending.

The percentage of generic drugs with non-zero inflationary rebates in each quarter across the study period ranged from 14 percent to 33 percent. Around half of the drugs owed inflationary rebates when they were calculated using AMPs (46 percent) and average Medicaid reimbursement (51 percent). A third of drugs had inflationary rebates when NADACs were used for calculations.

Inflationary rebates calculated using AMPs totaled $516 million between 2017 and 2020, offsetting 1.7 percent of the $29.8 billion pre-rebate Medicaid spending on generic drugs. In comparison, the baseline rebates of 13 percent of AMP totaled $1.7 billion or 5.7 percent of spending.

When using NADAC values, the total inflationary rebates were $1.5 billion, representing 3.5 percent of the $43.2 million in Medicaid spending. The baseline rebates totaled $3.5 billion or 8.2 percent of spending.

When using average Medicaid reimbursement prices, inflationary rebates totaled $6.5 billion or 12.1 percent of spending, while baseline rebates were $7.0 billion or 13 percent of spending.

Rebates were higher for drugs that were not orally administered, the study found. Using average Medicaid reimbursement, orally administered drugs accounted for 68 percent of drugs with rebates but only 30 percent of the total rebate amount. Meanwhile, injected drugs accounted for only 18 percent of drugs with rebates and 61 percent of the rebate amount.

Rebates were also concentrated among drugs with the highest use and prices. When using average Medicaid reimbursement to calculate rebates, drugs with 5,000 or more prescriptions per quarter accounted for 14 percent of rebated drugs but 67 percent of rebates. Drugs costing Medicaid $50 per prescription or more accounted for 28 percent of rebated drugs but 78 percent of total rebates.

The study findings suggest that some generic manufacturers continued to raise drug prices despite Medicaid implementing inflationary rebates in 2017.

“This may be because Medicaid represented only 10 percent of the prescription drug market, so Medicaid rebates were more than offset by higher revenue from private insurers and Medicare, which were not subject to inflationary rebates,” researchers wrote.

The Inflation Reduction Act of 2022 implemented similar inflationary rebates in Medicare, but it may still not be enough to stop manufacturers from raising prices.

“Inflationary rebates do not address the root causes of market failures that lead to rising generic prices, and it will be important for policymakers to ensure that the implementation of inflationary rebates now across both Medicare and Medicaid does not lead to market exits and shortages of essential generic drugs,” the study stated.

Future initiatives should target drugs with little or no generics, as prices are lower when more generic options are available.

 
 

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RX- 340 B Medicaid MCO Duplicate Discount Confusion and HHS

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: MCOs will have to add a field to the drug claims they manage under proposed CMS rules. The new field will make it easier for manufacturers to not get dinged having to offer discounts on drugs twice.

 
 

 
 

Clipped from: https://www.natlawreview.com/article/hhs-takes-steps-to-resolve-340-b-medicaid-mco-duplicate-discount-confusion

On May 26, 2023, the Centers for Medicare and Medicaid Services (CMS) proposed an update to the Medicaid Drug Rebate Program (MDRP) rules, which includes provisions aimed at preventing 340B duplicate discounts on claims billed to Medicaid managed care organizations (MCOs). Duplicate discounts arise when both 340B discounts and Medicaid rebates are provided by a manufacturer for the same drug. Although drug manufacturers that participate in Medicaid are required to provide discounts on 340B drugs under the 340B Drug Pricing Program and are also required to provide state Medicaid programs with rebates under the MDRP on drugs dispensed to Medicaid beneficiaries, including Medicaid MCO enrollees, manufacturers are not required to provide both a 340B discount and a Medicaid rebate under the MDRP for the same drug.

IN DEPTH

Because the relevant statutory provisions do not clearly articulate whether the state Medicaid program, the Medicaid MCO or the 340B-participating provider (covered entity) is responsible for ensuring that duplicate discounts do not occur for Medicaid MCO claims, there currently is no uniform system for identifying Medicaid MCO claims for 340B drugs. In the years since Medicaid MCO drugs became eligible for rebates under the MDRP, the US Department of Health and Human Services (HHS) has generally encouraged the relevant stakeholders and affected parties to work together to develop a solution. To date, that has not occurred. It appears that HHS may finally be stepping in to develop, or at least work towards, a solution.

Under the proposed rule, CMS would modify the standard Medicaid MCO contract requirements to require Medicaid MCOs that provide coverage of covered outpatient drugs to use unique, Medicaid-specific codes and group numbers on beneficiary insurance cards. The use of these identifiers would assist state Medicaid programs, MCOs and 340B covered entities to identify Medicaid MCO claims that might not otherwise be readily apparent as Medicaid MCO claims. Currently it is not uncommon for Medicaid MCOs to use the same group identifiers as claims for patients with private insurance. If implemented as proposed, the various stakeholders could more efficiently develop additional tools to identify such claims as being for 340B drugs or to exclude such claims for being filled using 340B drugs. CMS indicated that this change would allow the MDRP to run more efficiently, and would be helpful to all parties by ensuring that Medicaid rebates and 340B discounts are being provided appropriately. CMS proposed that this new requirement be implemented into Medicaid MCO contracts no later than the next rating period, following the effective date of the final rule adopting this provision.

While the proposed rule would provide an important tool to assist in the development of additional policies to prevent duplicate discounts on Medicaid MCO claims, it would not itself effectuate a full solution. The proposed rule also does not address the ongoing concern among 340B covered entities that state Medicaid programs or Medicaid MCOs could expand 340B “carve out” requirements or reduce reimbursement rates on 340B drugs dispensed to Medicaid MCO enrollees, thereby removing the opportunity for 340B covered entities to obtain the benefit that Congress intended for them to receive through the 340B Program—i.e., generating revenue from 340B drug sales to enable 340B covered entities to provide and expand services in their communities.

CMS solicited comments on the proposed change by July 25, 2023, and specifically requested comments regarding the implementation timeframe and operational issues that may arise from requiring the inclusion of unique Medicaid identifiers on Medicaid MCO beneficiary identification cards.

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TECH- Colorado Medicaid members’ data may have been stolen in cyberattack

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: Oopsie.

 
 

 
 

Clipped from: https://www.denverpost.com/2023/06/16/colorado-medicaid-chp-moveit-cyber-attack/

Vendor used compromised MOVEit software

 
 

A laptop displays a message after being infected by a ransomware as part of a worldwide cyberattack on June 27, 2017 in Geldrop.

People covered by Medicaid or Child Health Plan Plus should take steps to protect their identities after their information likely was exposed in a cyberattack, the state agency that runs the programs said Friday.

On Thursday, several U.S. government agencies announced they’d been hit by an attack on a piece of software called MOVEit, which allows organizations to transfer large files in a way that’s similar to consumer products like Dropbox.

A criminal group called Clop has claimed responsibility and demanded extortion payments from companies, but said it didn’t mean to hit government agencies and would delete their data, according to The Washington Post. There’s no way to hold it to that promise, though.

The Colorado Department of Health Care Policy and Financing announced Friday that a vendor it worked with had used MOVEit, and there’s a good chance that Medicaid and Child Health Plan Plus members’ information may have been stolen. The department will notify individuals once it knows who was affected, it said.

The department recommended that anyone who has been covered by either program since 2015 monitor their credit reports and consider asking the credit monitoring agencies to freeze their files. It also said it’s a good idea to change passwords on your online accounts; request an Identity Protection PIN from the Internal Revenue Service so someone else can’t claim your refund; and register for a ssa.gov account if you are eligible for Social Security benefits.

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TECH Personal data for 233,000 Iowa Medicaid members compromised in cyber attack

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: 3 (4?) oopsies in Iowa the last year. Latest one is tied to MCNA Dental bennies.

 
 

Clipped from: https://www.thegazette.com/state-government/personal-data-for-233000-iowa-medicaid-members-compromised-in-cyber-attack/

Russian group claims responsibility

DES MOINES — More than a quarter of Iowa Medicaid patients had their personal data compromised in a data breach affecting one of Iowa’s two Dental Wellness Plan managed care organizations.

The personal information of approximately 233,000 Iowa Medicaid members was included in a data breach of MCNA Dental earlier this year, according to the Iowa Department of Health and Human Services.

It is among the largest medical data breaches in Iowa to date, according to federal data, and the largest involving Iowa Medicaid.

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MCNA Dental, one of the largest dental insurers for government-sponsored Medicaid and CHIP programs, suffered a ransomware attack between February and March that led to unauthorized access to personal health data of nearly 9 million people, according to a filing with the Maine Attorney General.

MCNA Dental managed dental coverage under Medicaid for more than 295,000 Iowans at the end of last year, according to a report from Iowa HHS.

Delta Dental is the other managed care organization in Iowa’s dental program. It manages 486,000 Dental Wellness plans.

The Iowa Department of Health and Human Services did not respond to a request for comment by the time of publication.

What information was taken?

The hackers potentially obtained a trove of data from the managed care organization, including full names, addresses, phone numbers, Social Security numbers, driver’s license numbers, health insurance plan information, bills and insurance claims, according to a notice provided to affected patients.

The attack happened between Feb. 26 and March 7 of this year, and MCNA Dental sent notices to patients and states impacted May 26.

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The Russia-linked ransomware organization LockBit took credit for the attack and has claimed on its dark web site to have published 700 GB of patient data from MCNA, according to TechCrunch.

Who is affected?

More than 233,000 Iowans whose Medicaid dental coverage was managed by MCNA were affected. Those impacted received a notification in the mail. Names of parents, guardians or guarantors may also have been taken.

MCNA is offering free credit monitoring and identity protection services to affected individuals.

In an emailed statement, MCNA Dental said it is committed to protecting patients’ information and maintaining the integrity of its systems.

“As soon as we discovered recent unauthorized activity affecting our network, we took steps to mitigate the risk and reported the matter to law enforcement and customers,” the company said. “We continue to fortify our systems, as appropriate, to minimize the risk of a similar incident in the future.”

Other cyber incidents

The security breach is among three reported this year by Iowa Health and Human Services affecting Medicaid members.

On April 10, the department reported more than 20,000 Iowans had their data breached in an attack on an Iowa Medicaid subcontractor, Independent Living Systems.

In May, it reported Amerigroup accidentally disclosed personal health information for 8,333 Iowa Medicaid members to providers in explanation of payment notices.

Also in May, the Clarke County Hospital in Osceola reported it had been the victim of a ransomware attack, which led to the potential exposure of thousands of patients, including their names, Social Security numbers and driver’s license numbers.

Comments: cmccullough@qctimes.com

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FINANCE- CMS Office of the Actuary Releases 2022-2031 National Health Expenditure Projections

MM Curator summary

The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

 
 

[MM Curator Summary]: Oh lookie- another CMS crystal ball about Medicaid and Medicare future spending that no one will check to see if it came anywhere close in 10 years. But at least we feel like someone’s managing the spend, amirite?

 
 

 
 

Clipped from: https://www.cms.gov/newsroom/press-releases/cms-office-actuary-releases-2022-2031-national-health-expenditure-projections

Average annual growth in national health spending over the next decade projected to be 5.4%

The Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary released projections of National Health Expenditures (NHE) and health insurance enrollment for the years 2022-2031. The report contains expected impacts from the Inflation Reduction Act (IRA), including that people with Medicare prescription drug coverage (Part D) are projected to experience lower out-of-pocket spending on prescription drugs for 2024 and beyond as several provisions from the law begin to take effect.

CMS projects that over 2022-2031, average annual growth in NHE (5.4%) will outpace average annual growth in gross domestic product (GDP) (4.6%), resulting in an increase in the health spending share of GDP from 18.3% in 2021 to 19.6% in 2031. The insured percentage of the population is projected to have reached a historic high of 92.3% in 2022 (due to high Medicaid enrollment and gains in Marketplace coverage). It is expected to remain at that rate through 2023. Given the expiration of the Medicaid continuous enrollment condition on March 31, 2023 and the resumption of Medicaid redeterminations, Medicaid enrollment is projected to fall over 2023-2025, most notably in 2024, with an expected net loss in enrollment of 8 million beneficiaries. If current law provisions in the Affordable Care Act are allowed to expire at the end of 2025, the insured share of the population is projected to be 91.2%.  In 2031, the insured share of the population is projected to be 90.5%, similar to pre-pandemic levels.

The NHE is published annually and is often referred to as the “official” estimates of U.S. health spending and health insurance enrollment. The historical and projected estimates of NHE measure total annual U.S. spending for the delivery of health care goods and services by type of good or service (hospital, physician, prescription drugs, etc.) and by payer (private health insurance (PHI), Medicare, Medicaid, etc.).

Selected highlights on the IRA as well as NHE spending by major payer include:

Inflation Reduction Act (IRA) on Medicare Part D Enrollees: Several provisions from the IRA are expected to result in out-of-pocket savings for individuals enrolled in Medicare Part D.  Those include: i) limitations on price increases for Part D drugs beginning in 2023, ii) elimination of the cost-sharing requirement in the Part D catastrophic phase (typically 5% beneficiary coinsurance) starting in 2024, iii) implementation of a $2,000 annual cap on out-of-pocket spending on drugs under Part D beginning in 2025, and iv) reduced prices for certain high-cost drugs through negotiation resulting in lower out-of-pocket payments beginning in 2026. These provisions have notable effects on the growth rates for total out-of-pocket spending for prescription drugs, which are projected to decline by 5.9% in 2024, 4.2% in 2025, and 0.2% in 2026.

Medicare: Average annual expenditure growth of 7.5% is projected for Medicare over 2022-2031. In 2022, the combination of fee-for-service beneficiaries utilizing emergent hospital care at lower rates and the reinstatement of payment rate cuts associated with the Medicare Sequester Relief Act of 2022 resulted in slower Medicare spending growth of 4.8% (down from 8.4% in 2021). In 2025, Medicare spending is projected to grow 8.9%, reflecting the effect of the IRA’s cap ($2,000 in 2025) on out-of-pocket spending for Part D enrollees and the associated shift in responsibility for those payments that exceed the cap from the beneficiaries to the program. Projected Medicare spending growth slows to 6.8% in 2030 and 2031, associated with the IRA’s provisions related to drug price negotiations and inflation rebates, as well as slower enrollment growth as the last of the demographic cohort known as the baby boomer generation (those born between 1946-1964) enrolls in 2029.  

Medicaid:  On average, over 2022-2031, Medicaid expenditures are projected to grow by 5.0%. With the end of the continuous enrollment condition in 2023, Medicaid enrollment is projected to decline over 2023-2025, with most of the net loss in enrollment (8 million) occurring in 2024 as states resume annual Medicaid redeterminations. Medicaid enrollment is expected to increase and average less than 1% through 2031, with average expenditure growth of 5.6% over 2025-2031.  

Private Health Insurance: Over 2022-2031, private health insurance spending growth is projected to average 5.4%. Despite faster growth in private health insurance enrollment in 2022 (led by increases in Marketplace enrollment related to the American Rescue Plan Act’s subsidies), private health insurance expenditures are expected to have risen 3.0% (compared to 5.8% in 2021) due to lower utilization growth, especially for hospital services. Faster projected growth in utilization and health care prices in 2023 leads to a 7.7% increase in private health insurance spending. In 2026, private health insurance spending is expected to be impacted by the expiration of enhanced subsidies for Marketplace plans and the associated 10% decline for those enrolled in directly-purchased insurance that year.    

Selected highlights in NHE for the three largest goods and services categories include:

Overview of Hospital Trends: Over 2022-2031, hospital spending growth is expected to average 5.8% annually. In 2022, hospital spending is projected to have increased 0.8%, reflecting declines in PHI and out-of-pocket spending and low growth for Medicare, as growth in the use of hospital services slowed from higher rates in 2021. In 2023, faster growth in hospital utilization rates and accelerating growth in hospital prices (related to economywide inflation and rising labor costs) are expected to lead to faster hospital spending growth of 9.3%.  For 2025-2031, hospital spending trends are expected to normalize (with projected average annual growth of 6.1%) as there is a transition away from pandemic public health emergency funding impacts on spending.

Overview of Physician and Clinical Services Trends: Growth in physician and clinical services spending is projected to average 5.3% over 2022-2031. An expected deceleration in growth in 2022, to 2.4% from 5.6% in 2021, reflects slowing growth in the use of services following the pandemic-driven rebound in use in 2021. For 2025-2031, average spending growth for physician and clinical services is projected to be 5.7%, with an expectation that average Medicare spending growth (8.1%) for these services will exceed that of average Private Health Insurance growth (4.6%) partly as a result of comparatively faster growth in Medicare enrollment.

Overview of Retail Prescription Drugs Trends: Total expenditures for retail prescription drugs are projected to grow at an average annual rate of 4.6% over 2022-2031. Drug spending growth is projected to have slowed from 7.8% in 2021 to 5.1% in 2022, partly due to a decline in private health insurance spending, particularly on newly introduced drugs. Expenditure growth for prescription drugs in 2024 (3.7%) is similar to 2023 (3.6%). It reflects the net impacts from: i) the elimination of 5% coinsurance in the catastrophic phase in Part D, lowering out-of-pocket spending), ii) higher Medicare spending as the program absorbs a portion of out-of-pocket costs formerly paid by beneficiaries, and iii) a decline in Medicaid prescription drug spending due to 8 million in net enrollment losses. For 2025-2031, total spending growth on prescription drugs is projected to average 4.8%, reflecting the net effects of key IRA provisions: i) Part D benefit enhancements (putting upward pressure on Medicare spending growth) and ii) price negotiations/inflation rebates (putting downward pressure on Medicare and out-of-pocket spending growth). 

The Office of the Actuary’s 2022-2031 projections will be published at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html

A Health Affairs journal article from CMS’ Office of the Actuary is available here: https://www.healthaffairs.org/. To view the Health Affairs’ study on these projections, you can do so at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2023.00403.

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