Capsule: Trump’s Health Team, Payment Guinea Pigs & Underdogs

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By Jacquie Lee

Welcome to Capsule—your weekly dose of health-care news, where we give you a recap of this week’s highs and lows for key players in the health-care industry. You can expect us every Friday morning as a bookend for your week.

You might have been preoccupied with checking in on loved ones this week as the storm formerly known as Hurricane Michael approached the U.S. Let’s check in on some of the health-care news you may have missed in the meantime.

Here’s who ended the week on a high note:

Short Term Health Plans
  • Republicans were able to fight off Democratic efforts to roll back a Trump regulation that would expand the number of health insurance plans that don’t have to meet Obamacare’s benefit rules, Alex Ruoff reports. Democrats have vowed to repeal it in 2019, but for now the plans appear safe.
  • Short-term health plans are skimpier than what’s required under the Affordable Care Act. Republicans say they are an affordable option for healthy Americans who have been priced out of the ACA market.
  • One of the biggest critiques of the plans is that they aren’t required to cover pre-existing conditions, which are typically expensive to treat. However, as the midterm elections get closer some Republicans—like this Representative from California— have made pre-existing conditions a part of their campaign platforms.
Trump’s Health Team
  • President Trump took a lap in the winner’s circle this week when he signed two bills into law that end pharmacy gag clauses. Before these laws, pharmacists couldn’t tell a customer if their drugs would be cheaper if they paid without insurance unless the customer explicitly asked. Trump said he expects an immediate impact and that drug costs at the pharmacy counter will go down.
  • Trump’s Medicare leaders also announced a novel drop in ACA premiums, Sara Hansard writes. Rates will drop by 1.5 percent in 2019, the first premium drop since the ACA took effect in 2014.
  • Consumers should be wary though because the 2019 drop could be short-lived, Stephen Joyce reports. Lots of states applied for a federal waiver program that subsidizes insurers when individuals experience atypically high medical costs. That’s likely driving premiums down for next year, state insurance officials told Joyce, but reining in skyrocketing prices over the longer term remains elusive.
Experimental Bundles
  • Over 1,500 hospitals and physician practices are going to be guinea pigs for a new Medicare payment model, James Swann writes. The initiative steers participants toward a lump sum payment model versus the current model of fee-for-service.
  • The new model is the Centers for Medicare and Medicaid Services’ chance to experiment with value-based care. Seema Verma, head of the CMS, said Oct. 9 bundled payments will “provide an off-ramp to the inefficient fee-for-service system” while improving quality and reducing costs.
  • The experiment will run through December 2023. It follows on the heels of CMS’ original bundled payments initiative that ended Sept. 30, but that program was much more limited in scope.

It was a bleak week for others. Here’s whose Thursday closed on a downswing:

The Little Guy
  • CVS Health Corp.'s $68 billion merger with Aetna Inc. spells trouble for any other pharmacy benefit service looking to set up shop, Eleanor Tyler reports. The two health-care giants got the thumbs-up from the Justice Department Oct. 10.
  • Proponents of the merger—including the head of the DOJ—say the new combo will be a boon for consumers. But critics are concerned with potential oligarchies. “With the larger consolidation, it means only larger and larger companies can play,” one critic told Tyler.
  • Small insurers will also be strained because of the deal because CVS will likely pass on its savings to the insurer and charge full freight for its pharmacy benefit manager work to other carriers.
Agency Sovereignty
  • Judge Brett Kavanaugh’s judicial track record should concern federal agencies who enjoy a good deal of autonomy, Mary Anne Pazanowski writes.
  • Kavanaugh once invalidated a Department of Health and Human Services formula for reimbursing hospitals that serve a disproportionate number of low-income patients. He’s also written or joined in several opinions in cases challenging Food and Drug Administration actions involving pharmaceuticals and medical devices.
  • His reluctance to defer to agency interpretations of their own regulations could lead to changes in the law, Pazanowski writes. Keep an eye out for whether Kavanaugh overturns this case that sets up the legal test to determine when courts should defer to federal agencies’ decision-making.
Six Former Pharmacy Employees
  • You might remember when 753 people got sick and 64 died from a contaminated drug that was created in a Massachusetts compounding pharmacy in 2012. It created a ripple effect of compounding caution that’s still felt today. Six people involved in that bad batch of medicine will head to court soon, and prosecutors are trying to prove they knowingly marketed non-sterile drugs, Adrianne Appel reports.
  • Compounded drugs are personalized formulas mixed in-house and sold in very small batches. They’re in a regulatory gray area, which creates concern among some FDA officials that they’re more likely to be tainted than other drugs.
  • The pharmacy, New England Compounding Center, folded long ago, and some people involved in the outbreak have already gone to jail. But another trial in Massachusetts is slated to start Oct. 15 and is expected to drag out for a month, legal analysts tell Appel.

Thanks for joining us this week and have a great weekend. I’m all ears when it comes to your two cents, tips, critiques, or coordinating exclusive interviews. Send them my way at jlee1@bloomberglaw.com.

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