Hi there. Welcome back to the Weekly Muse. I write about the 5 biggest, trending healthcare stories from the last 7 days in a once-weekly newsletter. Today’s edition covers the week ended February 11, 2019.
If you’re interested in getting these delivered straight to your inbox, go here.
Happen to miss last week’s stories? Get caught up here.
5 Big Stories
1. State of the Union
2019 Healthcare Agenda.
As we’re all pretty aware, we live in America, and our fearless leader addressed the Union Tuesday, pushing major policy items for the year. Major healthcare takeaways from the State of the Union included lowering ‘unfair’ drug prices, maintaining protections for pre-existing conditions, ending HIV once and for all, and increasing price transparency for healthcare consumers.
2019 is all about the drugs so far.
There’s actually a rare bipartisan push on a lot of these issues – especially for ending balance billing practices and lowering drug costs. Last week, I touched on an interesting HHS proposal, which would effectively force pharmacy benefit managers to give 100% of negotiated drug rebates to the end consumer. Insurers say that the proposal would let Big Pharma off the hook in their drug pricing tendencies, while raising premiums for all. Of course, drugmakers hopped on the political bandwagon and blamed PBMs for out-of-control drug costs, too.
Next steps: comments.
The proposal will soon be opened to a 60 day comment period, which I’m sure will be chock full of opinions from both sides of the aisle. And even though this proposal has some traction, some are still concerned about the actual feasibility of implementing the policy, along with the still-uncertain net effect on healthcare costs. Keep an eye out, peeps.
2. PillPackin’ a Punch
In the background.
As if Amazon could stay out of the spotlight even for a second (hello, National Enquirer and Jeff Bezos), the online retail conglomerate’s recently acquired pharmacy retail business, PillPack, has been quietly accumulating state licenses at a pretty good pace. Before too long, we may see a national roll out of PillPack.
Competitive threats.
Paired with Amazon Prime’s subscription network effects and the powerful logistical network that Amazon possesses, PillPack could be a major national player very quickly. Of course, CVS and Walgreens have pivoted their businesses accordingly, offering free and fast shipping on prescription drugs. But it remains to be seen whether or not that’ll be enough to keep Amazon materially out of the pharmacy bottom lines.
3. The Medicare Advantage Advantage
See what I did with that title?
A lump of insurance (Humana, Cigna, Anthem, WellCare, and Centene) providers reported earnings this week, with several firms particularly highlighting the growth of Medicare Advantage plans nationwide. In fact, Medicare Advantage is growing quite a bit in popularity.
Medicare Advantage?
Medicare Advantage is a health insurance plan that is regulated by Medicare, but managed by private insurance companies like the ones mentioned above in the forms of HMO or PPO plans. You might have heard Medicare Advantage referred to as “Managed Medicare,” which is also a popular term. Some companies, like Centene and WellCare, manage Medicaid plans as well.
Why the buzz?
Although ‘Medicare for All’ is gaining all the media traction, Medicare Advantage has been gaining popularity at the state level. The insurance model could potentially be considered as a viable alternative/compromise to an all-out ‘Medicare for All’ solution, which is interesting to note. Let the numbers speak for themselves, though: major payors like Humana are adding hundreds of thousands of seniors to these plans. Centene and WellCare have seen MA enrollment surge, too. As these exchanges grow at the state level, we may see new, innovative healthcare models implemented through the new plans.
An unexpected entrant.
Lyft, for instance, is looking to add to its healthcare services by providing non-emergency transport services for certain MA beneficiaries. Medicare Advantage could be a spot where we see a lot of change in healthcare first.
4. Moratoria GONE
The streak is over.
In home health news, an important development occurred – or rather, didn’t, occur. This week, CMS allowed the current moratoria on new home health agencies to expire in several states. Rather than continuing to extend the moratoria as had been customary over the previous 5 years, CMS felt comfortable with lifting the regulation after assuring that important patient safeguards were in place.
Moratoria?
Yeah. Basically it means that no new home health agencies (beyond the agencies that were already there )could begin operations in that particular state. It’s gone now, which could have major competitive implications since new home health agencies can enter these markets.
Now what?
Well, CMS and other ‘experts’ expect that the increased competition in these states will improve patient access to home-based care services. As an aside, I would expect the home health agencies in these markets to lose at least some leverage with payors and have tightening margins as a result of the changes. The policy change comes at a time when home health agencies may begin to struggle with rising labor costs (as labor is a HUGE part of these business’ expense structure) and a challenging reimbursement environment.
5. Merger off, Merger on
Different directions.
Out of the not for profit sector, big news from Texas made headlines this week when the two largest health systems, Baylor Scott & White, and Memorial Hermann, called off their previously planned merger. While there was no official word why the two called it quits, Baylor announced that the organization believed it could achieve its healthcare objectives without the need for a state-wide merger. The cancelled deal comes at a time when large health systems are consolidating more frequently at the state level, with increasing levels of regulatory scrutiny. Interestingly enough, the long-awaited Dignity Health and Catholic Health Initiatives merger finally closed this week. Say an official hello to CommonSpirit Health!
Quick Hits
- Apparently, it’s not the drugs like everyone thinks: hospital prices keep going up
- Why the cost of healthcare is so hard to understand, and what to do about it (paywall – WSJ)
- In an industry first, Johnson & Johnson is planning to disclose drug list prices in TV ads. The ads will include both the list price and potential patient out-of-pocket costs.
- Earnings Reports:
Looking for more?
Missed last week’s Muse? Get caught up on the latest here
Thanks for reading the 9th ever Healthy Muse. If you enjoyed the content, please consider subscribing!