American Hospital Association, December 2020

Introduction

Health care coverage has never been more important as the nation battles the COVID-19 pandemic – now and for the foreseeable future. Two-thirds of the population relies on the private sector for health insurance coverage and thus access to health care. While private health insurance coverage has long served as the backbone of our national system, that very coverage and the security it offers millions of Americans is eroding at an alarming pace. Health care insurance was originally designed to be a straightforward financial agreement between a health plan and a consumer: the consumer paid a premium in exchange for coverage of a set of health care services offered by a certain group of providers. If disputes arose, consumers could expect that adjudication of the claim would follow a fair, efficient, and transparent process. This agreement, underpinning America’s system of health insurance for decades, is beginning to slip away in some markets across the country, and the COVID-19 public health emergency is further shining light on its erosion.

Not only are private health insurance plans the dominant source of health care coverage for most Americans, but employers, as well as the Medicare and Medicaid programs, rely on private health plans to provide or administer their health benefits. Approximately one-third of Medicare beneficiaries are enrolled in a private Medicare Advantage health plan, and nearly all states enroll some or all of their beneficiaries into Medicaid managed care plans.

Coverage through these plans is eroding as some health insurers restrict access to health care services by abusing utilization management programs and changing health plan rules in the middle of a contract year. For example, prior authorization, one of the most widely used utilization management tools, is designed to help patients obtain the right care in the right place. Insurers use prior authorization to ensure that providers order care that is consistent with clinical guidelines and protocols, as well as to confirm that such care is covered by the patient’s plan. This tool was designed to primarily help guide (and monitor) providers’ decision-making around treatments that are new, particularly high cost, or that have a history of questionable use. However, some plans are now applying prior authorization to a wide range of services, including those for which the treatment protocol has remained the same for decades and there is no evidence of abuse.

Unjustified use of utilization management tools like prior authorization has a number of negative implications for patients and the health care system. Patients are often blindsided by denials and can face unexpected medical bills as a result. The extensive approval process that doctors and nurses must go through adds billions of wasted dollars to the health care system and contributes to clinician burnout.

Evidence of the negative impact of these practices is mounting. The Department of Health & Human Services Office of the Inspector General (OIG) warned in a September 2018 report that high rates of Medicare Advantage (MA) health plan payment denials and prior authorization delays could negatively impact patients’ access to care. In 2019, a federal court found that the largest commercial insurer in the United States was abrogating the entire point of health insurance by systematically denying medically necessary, covered behavioral health services for financial reasons. It is worthy of note that in response to COVID-19, many health insurers, including at the urging of government, scaled back the use of many of these tactics precisely because they create barriers to care. State governments, as the primary regulators of insurance, have also taken action. For example, New York State passed a number of insurer accountability measures at the beginning of the COVID-19 to help ensure patient access to care and to remove unnecessary burdens on providers on the front lines.

In 2019, the American Hospital Association (AHA) fielded a survey to better understand the impacts of health plan utilization management practices on patients and providers. More than 200 hospitals and health systems responded. Their data was supplemented with interviews and group discussions with several hundred additional hospital and health system executives. The following report documents our findings related specifically to prior authorization and payment delays and denials. While these findings pre-date the COVID-19 public health emergency, they remain not only relevant but serve to underscore the urgency to address these issues as hospitals remain on the front line of care for COVID-19 patients. The report offers policymakers solutions to reduce the risk and burden of these programs while still enabling health insurance plans to compete on quality, benefit package design, provider networks, and other important aspects of coverage.

(This nine page report then discusses problems with interacting with the private commercial insurers, especially with prior authorization and with reimbursement delays and denials. They then discuss their view of potential policy solutions.)

Conclusion

Certain health plan practices threaten patient access to care and drive excessive administrative costs and burden in the health care system. While these concerns pre-date COVID-19, the current public health emergency both highlights and demands immediate action to protect patients and providers. Regulators should increase their oversight of health plans and implement a comprehensive simplification agenda, beginning with streamlining prior authorization requirements and processes, as well as monitoring for abusive payment delays and denials. These efforts will go a long way to addressing unnecessary costs in the system and allow for a more rational, navigable health system for patients.

https://www.aha.org…

AHA Comments on “Medicare for All”

By Tom Nickels, Executive Vice President AHA
American Hospital Association, February 27, 2019

America’s hospitals and health systems are working with policymakers to help expand coverage and improve affordability for all Americans. However, we are opposed to “Medicare for All,” as it would impede our shared goals.

To start, a one-size-fits-all approach would disrupt coverage for the more than 180 million Americans who are covered by employer-sponsored health plans. That coverage, and plans sold on the marketplaces, offer benefits that Medicare doesn’t. Importantly, enrollees in these plans are protected from catastrophic costs.

Further, the government can be an unreliable business partner, as we just witnessed with the longest partial government shutdown in our nation’s history. Congress also has a history of slashing provider payments for government health programs to meet its budgetary goals.

Additionally, important delivery system reforms to improve care, enhance quality and reduce costs would no longer be a priority once government controls all payments to providers.

Finally, public programs like Medicare and Medicaid reimburse providers less than the cost of delivering care for patients, which exacerbates access problems.

The AHA believes there is a better alternative to help all Americans access health coverage – one built on fixing our existing system rather than ripping it apart and starting from scratch. In addition to expanding Medicaid in the remaining non-expansion states, we support strengthening the marketplaces to improve their stability and affordability, and increasing enrollment efforts to connect people to coverage.

https://www.aha.org…

Comment:

By Don McCanne, M.D.

It is no surprise that members of the American Hospital Association (AHA) recognize the abuses of the private commercial insurance plans since they have to deal with them on a daily or even hourly basis. Although this report focuses on prior authorization and payment abuses, the extensive other problems, especially private insurers being the primary source and cause of the hundreds of billions of dollars in administrative waste in health care financing, should lead us to the conclusion that this industry should be eliminated. But what does AHA say?

In slamming the private commercial insurance industry, including private employer-sponsored plans, AHA certainly recognizes the source of these problems. But what about public insurance programs such as Medicare and Medicaid? AHA’s expressed complaint in today’s report is not with government administered plans but rather with private Medicare Advantage and the private Medicaid managed care plans.

AHA’s proposed solutions for prior authorization and payment abuses would leave in place our very expensive, fragmented and highly dysfunctional health care financing system, and would only tweak some of the administrative complexities. If the corrective measures would reduce the insurers’ net revenue, being masters of innovation, they would find other means of milking more out of the system. It is in their nature, and they will not change.

The hospitals would clearly benefit from a well designed, single payer, improved version of Medicare that covered everyone, so why do they not support it? The statement from AHA advances specious arguments such as the trite contention that “a one-size-fits-all approach would disrupt coverage.” Actually we should want the current coverage to be disrupted since it is the source of much of the dysfunction with health care financing.

Medicare does need to be improved and that would occur with enactment of Medicare for All, but the only real complaint AHA has is that the reimbursement rates are low. With the PNHP single payer model, hospital payment would be converted to global budgets, much like fire departments. The government would have to budget enough funds to be certain that the capacity of the system is adequate and that distribution is appropriate for the needs.

AHA and the AMA should concede that the health care system should be designed and financed to meet the health care needs of the patients. That means that the system needs to be adequate and then the physicians and hospitals will do just fine. And just think how pleasant the task will be when the system is finally cleared of all of the administrative garbage dumped on us by the private insurers.

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By Sheryl Gay Stolberg and Michael D. Shear
The New York Times, December 6, 2020

President-elect Joseph R. Biden Jr. has selected Xavier Becerra, the Democratic attorney general of California, as his nominee for secretary of health and human services, tapping a former congressman who would be the first Latino to run the department as it battles the surging coronavirus pandemic.

An outspoken advocate of improved health care access, Mr. Becerra said in 2017 that he would “absolutely” support Medicare for all, a proposal for government-run health care that Mr. Biden has explicitly rejected. A source familiar with the selection said Mr. Becerra would support the president-elect’s call for strengthening and preserving the A.C.A. and would not be pushing Medicare for all while in office.

https://www.nytimes.com…

Comment:

By Don McCanne, M.D.

Supporters of single payer Medicare for All should be pleased that President-elect Biden has selected Xavier Becerra as his nominee for HHS Secretary since Becerra has been a long time supporter of single payer, having repeatedly been a co-sponsor of John Conyers’ H.R. 676 Medicare for All Act.

At the same time, we should understand why Becerra is willing to agree to honor Biden’s campaign promise to reject Medicare for All. Becerra had a choice to do all he can to support health care justice short of single payer reform, or to reject the offer, leaving the opportunity for someone else who would likely be more friendly with the medical-industrial complex, including the private insurers. There is no way that Becerra, or anyone else, could have convinced Biden to permit single payer advocacy by his administration’s HHS Secretary.

Becerra’s most urgent task will be, with other members of the Biden team, to quash the COVID-19 pandemic. At the same time, he will have to supervise the reversal of the harmful policies implemented by Trumps’ team that wreaked so much havoc at HHS, significantly impairing the government’s role in ensuring health care justice in America. He will be buried in essential work that must be done immediately, so it is not the time to spin his wheels trying to make Biden change his mind on this one issue.

It is not clear that efforts will begin soon on enacting a public option, but it is unlikely considering that they have their hands full. Nevertheless, if and when the public option process begins, the private insurance industry will be working behind the scenes to be certain that the government will not produce a product that can successfully compete with the private insurance industry as long as we perpetuate our fragmented, dysfunctional financing infrastructure. There is absolutely no chance that a public option would be created that has all of the features of the PNHP single payer model and still would cost less than the private plans. Yet the risk is that a mediocre plan could be used to convince the public that the government role has been fulfilled and that Medicare for All should be dismissed permanently from consideration, especially when they find out how mediocre a government plan can be, while remaining oblivious to the sabotage.

At this point, it is not Becerra who has to be convinced that single payer Medicare for All is a much better approach for the intermediate and long term. It is Joe Biden that needs convincing.

So that brings it back to us.

We need to step up the education of our colleagues and the public at large since they still do not understand the vast superiority of the single payer model and still believe that everyone should be offered the option of private insurance.

We need to work with others in the social justice movement, bringing us together in coalition activities that will be effective in delivering the message.

We need to build a grassroots movement that will reach the very high political threshold of “make me do it.” Joe Biden is not asking us to make him do it; we need to change the politics so that he will.

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By Arush Lal, M.Sc.; Ngozi A Erondu, Ph.D.; David L Heymann, M.D.; Githinji Gitahi, M.D.; Robert Yates, M.B.A.
The Lancet, December 1, 2020

Summary

The COVID-19 pandemic has placed enormous strain on countries around the world, exposing long-standing gaps in public health and exacerbating chronic inequities. Although research and analyses have attempted to draw important lessons on how to strengthen pandemic preparedness and response, few have examined the effect that fragmented governance for health has had on effectively mitigating the crisis. By assessing the ability of health systems to manage COVID-19 from the perspective of two key approaches to global health policy—global health security and universal health coverage—important lessons can be drawn for how to align varied priorities and objectives in strengthening health systems. This Health Policy paper compares three types of health systems (ie, with stronger investments in global health security, stronger investments in universal health coverage, and integrated investments in global health security and universal health coverage) in their response to the ongoing COVID-19 pandemic and synthesises four essential recommendations (ie, integration, financing, resilience, and equity) to reimagine governance, policies, and investments for better health towards a more sustainable future.

Introduction

National responses to COVID-19 have varied greatly, from swift and proactive at best to haphazard and negligent at worst. That countries have managed the pandemic differently is expected, but COVID-19 has pushed all health systems to their limits, exposing severe gaps in public health infrastructure, even in nations once lauded as the gold standard for readiness. Although much has been discussed about how countries could have been better prepared, these analyses have largely missed a focus on how fragmented governance for health and the resulting silos in financing of health systems (ie, vertical funding streams towards single disease categories, independence of tertiary care from primary care, and differences in domestic health priorities vs global health priorities) continue to hamper response efforts. Analysing the spread of COVID-19 from the perspective of global health security (GHS) and universal health coverage (UHC) offers a useful opportunity to uncover blind spots in fostering health-system resilience moving forward. In this Health Policy paper, we seek to understand how health systems that are heavily influenced by either GHS or UHC policies have initially fared with the shock of the ongoing COVID-19 pandemic, and we conclude with four key recommendations to redesign health systems for a sustainable future.

Health systems with stronger investments in GHS capacities

Despite the USA receiving top ratings for pandemic preparedness in the Global Health Security Index, it has, to date, reported the world’s highest number of COVID-19 cases and deaths. Although the country has an impressive array of public and private laboratories, innovative pharmaceutical and technology companies, and a national public health institute with high capacity, the USA ultimately relies on a greatly fragmented health-care system. Each state funds and operates its own systems for public health and surveillance, and the nation has been reluctant to build a unified health system that is publicly funded. This absence of clear coordination, a crucial IHR (International Health Regulations) core capacity, has so far hindered the country’s ability to accurately estimate and forecast the effect of COVID-19, resulting in delayed response activities, including testing and contact tracing. Additionally, the scarcity of centralised funding has led to chronic misuse and underuse of human and financial resources. Finally, high rates of underinsurance could disincentivise health-care use and discourage citizens from seeking emergency care, leading to untreated chronic diseases, reducing capacity for syndromic surveillance, and undermining overall trust in public services; thus further accelerating the effect of COVID-19. The USA is one of the most prominent examples, showing that reliance on traditional GHS capacities to provide an accurate assessment of health-system readiness does not account for the effect of incoherent coordination and inadequate UHC and political economy during health emergencies.

Health systems that align GHS and UHC investments

Although not mutually exclusive, GHS and UHC tend to have different policies in practice. Thus far, countries with policies that are closely aligned with both frameworks have generally fared better and might be better equipped to recover after COVID-19 compared with nations with health systems that are not aligned to both frameworks, which could struggle to cope with challenges in the long term. Importantly, health systems that successfully integrated GHS core capacities with PHC services have been particularly effective at mitigating the effects of COVID-19.

Reimagining governance, policies, and investments for global health

Although breaking the cycle of panic and neglect, which is necessary for sustained GHS, might be unlikely, re-envisioning UHC as the foundation for solidarity and action, including for health security and healthy societies, offers a necessary path forward in the world after COVID-19. A system with programmes for social protection, cost-effective PHC, inclusive leadership, and adequate public financing can guarantee quality services for all, especially in fragile contexts where poverty, overcrowded housing, and inadequate resources make communities most susceptible. In the recovery from COVID-19, economic fallout and public fear might push countries to favour isolationist approaches to health, favouring privatised health care and quick fixes to provide the illusion of health security. Donors and advocates should be wary of overly securitised or neoliberal solutions that have long restricted both GHS and UHC, instead backing truly universal, publicly financed, and country-owned health systems that promote health equity and upstream determinants of health to leave no-one behind. This expanded implementation of GHS capacities that are embedded and delivered through UHC can be developed along four core recommendations: integration, financing, resilience, and equity.

• Integration: build robust GHS capacities into comprehensive UHC systems
• Financing: break narrow funding pathways that prevent unified health systems
• Resilience: develop and assess health-system resilience
• Equity: apply a rights-based approach as the necessary foundation for health systems

From the Conclusion

With the effects of additional sociopolitical factors, such as protracted crises, race, gender, climate change, economic status, and differing social contracts between citizens and their governments, the influence of competing priorities in the governance for global health should be integrated into traditional preparedness and response guidance. A reimagined framework for global health that prioritises health-system integration across UHC and GHS domains, innovative and unified health financing, cross-sector resilience indicators, and equity as a core value offers a necessary path ahead. National authorities developing health-system priorities and funders, who control expenditure, agenda setting, and prioritisation of investment, cannot continue business as usual. To rebuild a more sustainable future after COVID-19, embedding the core capacities of GHS into holistic, publicly financed UHC systems is the clear next step forward. We cannot keep jumping from one epidemic to the next while ignoring the political will that is required to invest in the foundations of health for all. In the end, truly universal, comprehensive health systems in all countries, which have integrated core capacities for public health and are aligned across all levels of governance, will be our strongest defence against the next great pandemic.

https://www.thelancet.com…

Comment:

By Don McCanne, M.D.

In response to the enormous strain placed on countries by the COVID-19 pandemic, the authors recommend rectifying the misalignment between global health security and universal health coverage.

How does this apply to the greatest health care system on earth, er, well, the most expensive one? Our current commitment to global health security is perhaps best represented by our withdrawal from the World Health Organization just at the time or our greatest need – not much of a commitment. Also, of all wealthy nations, ours is the only one that is not fully committed to universal health coverage.

Next month we will have a new administration. President-elect Joe Biden has told us that we will immediately rejoin the WHO, obviously a very important first step toward improving global health security, though much more will need to be done.

Regarding universal health coverage, Biden has already rejected the most efficient and effective model that would achieve that goal – single payer improved Medicare for All. Although he proposes policy patches to our current system, those measures are not adequate to correct the severe dysfunctions in our financing system and will still leave an unacceptable number of us without adequate coverage.

The authors state that we need “a reimagined framework for global health that prioritises health-system integration across UHC and GHS domains, innovative and unified health financing, cross-sector resilience indicators, and equity as a core value.” With our wealth and our renewed pledge for cooperative leadership in the world, the United States should lead the way.

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By Anirban Basu, Peter J. Neumann, Sean Sullivan
Health Affairs Blog, December 2, 2020

Pharmaceutical pricing is a perpetually contentious policy issue. Branded drug list prices grew annually by 9.1 percent over the last decade. The growth rate in net prices (reflecting discounts and rebates) was lower, at around 4.5 percent, but still much higher than gross domestic product (GDP) growth.

Recent legislative proposals, including US Senate Bill S.2543, US House of Representatives Bill HR 3, and various Trump Administration proposals and plans, have advanced some form of international reference pricing (IRP) to lower drug prices. As its name suggests, IRP seeks to benchmark US drug prices to prices of similar or comparable drugs in other counties. On November 20, the Trump Administration issued an Interim Final Rule on its IRP plan that it refers to as a “most-favored-nations-rule.” Compared to the proposed rule the Administration issued in 2018, several changes were advanced. In our view, the assorted IRP policies are misguided attempts to address the real issue of aligning drug prices with value in the US.

Failure To Align American Drug Prices With Value

American drug pricing policy rewards large capital investments and risks the biomedical industry undertakes in bringing innovations to the market by allowing companies to charge temporary monopoly prices. Because most Americans have insurance and face a fraction of the monopoly price, demand is greater than it would otherwise be in a market without insurance. Consequently, insurers pay for drugs at monopoly prices, a practice that fuels industry profits and raises premiums to employers and out-of-pocket costs to patients. Health plans, especially public ones, would want patients who might benefit from a drug to receive it, subject to budget constraints. Therefore, in principle, they should aggressively negotiate a lower price that still maintains appropriate incentives for manufacturers to innovate. However, the private health insurance market in the US is heavily regulated in ways that limit the full power of such negotiations, such as through imposition of requirements that all drugs in a protected class be covered, even though not all drugs within a class show similar value. Public health insurers, like Medicare, are sometimes expressly prohibited from negotiating prices, and, in the Part D outpatient drug benefit, Medicare has ceded this role to private managed care organizations.

In contrast, most public-funded health care systems worldwide engage in rigorous negotiations, often supported by transparent value assessment processes. Their prices, which the US plans to reference, are a product of these processes. The US’s fundamental challenge has been the lack of political will to formally address drug pricing using any form of national value assessment that explicitly considers drugs’ relative costs and benefits, and informs prices accordingly. Cost-effectiveness analysis, one of the methodological tools of value assessments, is effectively prohibited for major federal payers and evaluators under the Affordable Care Act. The US Congress does not allow the Centers for Medicare and Medicaid Services (CMS) to consider explicitly any value assessment inclusive of costs and prices to determine coverage for drugs or services.

The IRP proposals are misguided as they do not address these central limitations of US statutes – the barriers to systematic use of value assessment and negotiation in drug pricing.

A Recipe For Inaction

Two vocal camps tend to dominate the US drug pricing debate, and neither supports IRP. The first supports explicit consideration of a drug’s value (costs in relation to benefit) in setting prices.

The second camp defends the status quo of free pricing (with certain restrictions) and rejects formal value assessments or government price negotiations.

An IRP policy would fail to satisfy either faction, leading to continued inaction on drug pricing.

The Dynamics Of IRP

It is also naïve to think that observed low prices in other countries would remain low (or even transparent) once the US implements IRP. This is especially true under the most-favored-nations model, which targets only one country’s price for any particular drug as the reference (i.e., the OECD country with the lowest price for that drug — as long as the country has a GDP per capita of at least 60 percent of the US level). Recently, researchers estimated that Medicare Part D plans could save $73 billion in 2018 if their prices for single-source brand-name drugs that had been on the market for at least three years reflected prices from UK, Japan, and Ontario (Canada). However, such hypothesized savings are unlikely to be realized. Unfettered IRP will lead to increases in market prices for the countries referenced, which may align with the goal of having other countries pay a bigger share of pharmaceutical development expenditures. More importantly, it should be expected that the referenced countries will resist this price creep in their own country by hiding their negotiated prices, while letting list prices equate to those of US prices. The real losers of such an outcome would be lower-income countries that do not have the resources and expertise to implement their own value assessment practices and must rely on negotiated prices from other counties. We believe it is highly dubious that IRP, in the long-run, would reduce US drug prices and, more importantly, reduce patient out-of-pocket burden.

Conclusions

The latest bills and proposals that promote IRP fail to learn from the experience of public purchasers, such as the Veterans Administration (VA) and Medicaid, that often achieve lower prices through negotiation and best-price rules. For example, the federal supply schedule drug prices, or the prices available to the “Big Four” (VA, Department of Defense, Public Health Service, and Coast Guard), often resemble prices in European counties. The Veterans Administration contracting mechanism often beats Big Four prices, although it comes with access restrictions.

Any serious attempt to address drug prices in the US – whether through negotiation or some other means – should start by establishing a national center for health technology assessment. This center would be charged with developing a transparent, scientifically rigorous, and deliberative process of assessing drug value, taking into account the US population preferences and benchmark value-based prices for price negotiations proposed in the current bills. Without such a formal mechanism, drug prices will continue to be misaligned with their value for the US.

https://www.healthaffairs.org…

Comment:

By Don McCanne, M.D.

With U.S. politicians and policymakers being obsessed with catering to the medical-industrial complex, we continue to pay excessive prices for our drugs. Right now there is a movement to introduce international reference pricing as a means to reduce excessive drug spending, but the authors explain why that is not a good idea, for us or for the reference nations.

More importantly, they explain that we can “learn from the experience of public purchasers, such as the Veterans Administration (VA) and Medicaid, that often achieve lower prices through negotiation and best-price rules.” Of course, this is what is proposed for the single payer model of Medicare for All. Only instead of limiting reform to pharmaceutical pricing, we should go for the full package and enact and implement Medicare for All.

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