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 of February 1, 2019.

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5 Big Stories

1. Attack on Drug Rebates

Going for the Jugular. A recent Health and Human Services report outlined a potential way to lessen the sting for patients coughing up the dough at the pharmacy: aiming straight for drug rebates. Drug rebates are the heart of Pharmacy Benefit Manager’s (think CVS, Express Scripts and also insurers who run PBMs like UnitedHealth) bread and butter. The HHS proposal would force PBMs and insurers into giving patients 100% of the rebate that they negotiate for them.

Rebate? Right now, PBMs claim to lower the cost of drugs for insurers and patients by negotiating for lower rates on drugs. The “rebate” is essentially the difference between any drug’s list price and the price that the PBM negotiates the drug down to.

Smoke N Mirrors. Nobody knows exactly how the system works, but apparently PBMs and insurers take a cut off the rebates to pocket for themselves as profit. This practice would stop if the new HHS proposal were to pass.

What’s the Effect? Since PBMs are widely seen as “middlemen” in the healthcare industry, it makes sense that Congress would go for these rebates first. Obviously the big insurers and PBM players aren’t happy about the changes. Most think that from these changes, patients would pay more in premiums each month, but less at the counter of the pharmacy. HHS seems to think that the total dollars spent by patients would be less overall, even with the premium offset.

Winners and Losers. Obviously, the big losers would be PBMs and insurers. The net overall effect on patients is still unknown. But a surprising winner of this proposal could be drug companies themselves, who wouldn’t have to cut back on pricing policies.

Remember. This proposal would only cover Medicare and Medicaid. The HHS thinks it may be likely that commercial insurers would follow suit, though. 

2. Dems Split on Medicare for All

Confusion. Remember last week when we talked about the support that Medicare For All has? Well, a new poll from the insurance industry claims that 66% of people are fine with the current system. That’s not stopping Democrats from ratcheting up their efforts for healthcare reform in 2020, though. The problem is agreeing on a system (which they can’t seem to do), and not giving voters political fatigue in the process.

Divided Dems. Hopeful candidates for the 2020 election are already campaigning on healthcare. Once these started, it was apparent how stratified the Democratic Party appeared to be. On one side are those who have proposed highly progressive policies, like Rep. Kamala Harris calling for the end to private health insurance and a complete transformation to total Medicare For All. On the other hand are those desiring less drastic measures and incremental changes, claiming that voters would reject major policy changes.

Beef. This divide became pretty apparent after Michael Bloomberg, a widely known Democratic centrist, blasted Medicare For All in a recent interview (and essentially sub-tweeting Harris), stating it could never be done due to the cost alone. The jury is still out as to whether or not Dems can come to a consensus on healthcare reform for 2020.

3. Anthem Ditches Express Scripts, Cigna

Hopping on the PBM Bandwagon. In its Q4 earnings report released this week, Anthem announced the creation of its own PBM, Ingenio Rx (with the help of CVS) scrapping its current deal with Cigna and Express Scripts way earlier than anticipated. Cigna officials called the announcement “disappointing,” but the move might not come as a shock, considering the history of drama between the two firms. The two companies have an involved history, including a failed merger where Anthem accused Cigna executives of sabotaging the deal. Now, they’re scuffling over the break-up fee in court. Who said that feuds and drama end after you grow up?

4. HCA Earnings

The Machine Keeps on Rolling. The largest public hospital operator, Hospital Corporation of America, announced its Q4 and full year earnings this week. Once again, they killed it, beating analyst expectations on both revenue and EPS. HCA reported strong same-store admissions and revenue growth. In fact, bucking the trend, HCA has grown its admissions for 19 straight quarters. 80% of its hospitals grew EBITDA year-over-year, with 70% of those hospitals growing admissions, and 65% growing outpatient surgeries.

Surging Revenue. HCA’s strong revenue growth per same-facility of 3.9% was fueled by higher patient acuity mix (meaning they were treating patients with more complex problems, so they got paid more for it) along with favorable commercial payor rates. A large part of the company’s strategy revolves around providing valuable and effective care to patients, proving to payors that care at HCA facilities is valuable and cost-effective.

5. An End to Balance Billing?

Emergency Care Costs. The countless stories of patients receiving extravagant bills from the ER for simple care (like a flu shot) gives bad optics to the healthcare industry. The issue has gotten so out of hand, in fact, that Vox started asking individuals to submit their emergency room bills to create an online database.

Balance Billing Bonanza. The problem of Balance Billing emerged from a few sources, including payor-provider scuffles over emergency care coverage, and the increased prevalence of freestanding emergency rooms (think urgent cares, but for emergency services). Because these emergency rooms were freestanding and not connected to a hospital, patients 1) initially did not understand the difference between this facility and an urgent care, and 2) were billed emergency room rates, instead of what they thought were urgent care rates. Imagine receiving a $20,000 bill from a small bike accident.

What Balance Billing Is. Needless to say, a lot of people were confused by emergency care billing practices. Insurers stopped paying the exorbitant rates charged by emergency care providers. Naturally, the emergency care providers then simply would pass on the rest of the bill to the patient, hence the name ‘Balance Billing.’ Patients grew confused – “Wait,” they thought. “I thought my insurance covered an emergency room visit?” Well, yes, Timmy – your insurance might cover the facility portion of the bill, but the emergency physician treating you (who is separately contracted and probably works in an emergency physician practice) might not be covered at all. Which would put YOU on the hook for 100% of the bill.

In the News. Obviously, the practice of Balance Billing gained huge notoriety and a vast media presence. Now, emergency physicians and bi-partisan lawmakers are looking for solutions to the problem to end Balance Billing once and for all. Intermountain Healthcare in Utah is already ahead of the game . Frankly, I can’t say I feel bad about the end of Balance Billing.

Quick Hits

• If you’re trying to sell a doctor a drug, it’s…probably a bad look to give him a lap dance.
• We’re learning a bit more each day about the Amazon-JP Morgan-Berkshire Hathaway healthcare joint venture (paywall – WSJ).
• UnitedHealth just abruptly decided to stop sharing its healthcare cost data with the not for profit Health Care Cost Institute.
• The number of nurse practitioners in the US is on the rise.
• Coca-Cola might have a bit too much influence in shaping public health.

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