Gregory Twachtman

The Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act, April 14 by a vote of 92-8.

“Fixing how you’re paid under Medicare has been a top legislative priority for AGA, and all of organized medicine, and we’re celebrating this success! Thanks to everyone who called your lawmakers over the years,” AGA said in a statement to its members.

President Obama signed the bill into law April 16.

The bill matches the language that the House passed by an overwhelming majority on March 26 and clears the way for the White House to permanently end the practice of temporary “doc fix” patches necessitated by the Medicare Sustainable Growth Rate formula.

President Obama indicated back in March that he would sign the bill into law.

The bill also extends funding for the Children’s Health Insurance Program for 2 years.

A number of amendments, including attempts to reauthorize CHIP for 4 years and to enforce pay-as-you-go rules that require the bill be fully offset, did not gain the necessary 60 votes for adoption.

The latest cut, a 21% reduction to Medicare physician payments went into effect on April 1, but the Centers for Medicare & Medicaid Services has been holding off on paying claims in anticipation of the bill’s passage. The agency had planned to pay the difference of the claims retroactively if there was a further delay in the passage.

This article was updated April 17, 2015.

[email protected]

The Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act, April 14 by a vote of 92-8.

“Fixing how you’re paid under Medicare has been a top legislative priority for AGA, and all of organized medicine, and we’re celebrating this success! Thanks to everyone who called your lawmakers over the years,” AGA said in a statement to its members.

President Obama signed the bill into law April 16.

The bill matches the language that the House passed by an overwhelming majority on March 26 and clears the way for the White House to permanently end the practice of temporary “doc fix” patches necessitated by the Medicare Sustainable Growth Rate formula.

President Obama indicated back in March that he would sign the bill into law.

The bill also extends funding for the Children’s Health Insurance Program for 2 years.

A number of amendments, including attempts to reauthorize CHIP for 4 years and to enforce pay-as-you-go rules that require the bill be fully offset, did not gain the necessary 60 votes for adoption.

The latest cut, a 21% reduction to Medicare physician payments went into effect on April 1, but the Centers for Medicare & Medicaid Services has been holding off on paying claims in anticipation of the bill’s passage. The agency had planned to pay the difference of the claims retroactively if there was a further delay in the passage.

This article was updated April 17, 2015.

[email protected]

The Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act, April 14 by a vote of 92-8.

“Fixing how you’re paid under Medicare has been a top legislative priority for AGA, and all of organized medicine, and we’re celebrating this success! Thanks to everyone who called your lawmakers over the years,” AGA said in a statement to its members.

President Obama signed the bill into law April 16.

The bill matches the language that the House passed by an overwhelming majority on March 26 and clears the way for the White House to permanently end the practice of temporary “doc fix” patches necessitated by the Medicare Sustainable Growth Rate formula.

President Obama indicated back in March that he would sign the bill into law.

The bill also extends funding for the Children’s Health Insurance Program for 2 years.

A number of amendments, including attempts to reauthorize CHIP for 4 years and to enforce pay-as-you-go rules that require the bill be fully offset, did not gain the necessary 60 votes for adoption.

The latest cut, a 21% reduction to Medicare physician payments went into effect on April 1, but the Centers for Medicare & Medicaid Services has been holding off on paying claims in anticipation of the bill’s passage. The agency had planned to pay the difference of the claims retroactively if there was a further delay in the passage.

This article was updated April 17, 2015.

[email protected]

The Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act, April 14 by a vote of 92-8.

The bill matches the language that the House passed by an overwhelming majority on March 26 and clears the way for the White House to permanently end the practice of temporary “doc fix” patches necessitated by the Medicare Sustainable Growth Rate formula.

President Obama signed the bill into law April 16.

The bill also extends funding for the Children’s Health Insurance Program for 2 years.

A number of amendments, including attempts to reauthorize CHIP for 4 years and to enforce pay-as-you-go rules that require the bill be fully offset, did not gain the necessary 60 votes for adoption.

The latest cut, a 21% reduction to Medicare physician payments went into effect on April 1, but the Centers for Medicare & Medicaid Services has been holding off on paying claims in anticipation of the bill’s passage. The agency had planned to pay the difference of the claims retroactively if there was a further delay in the passage.

*This article was updated April 17, 2015.

[email protected]

The Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act, April 14 by a vote of 92-8.

The bill matches the language that the House passed by an overwhelming majority on March 26 and clears the way for the White House to permanently end the practice of temporary “doc fix” patches necessitated by the Medicare Sustainable Growth Rate formula.

President Obama signed the bill into law April 16.

The bill also extends funding for the Children’s Health Insurance Program for 2 years.

A number of amendments, including attempts to reauthorize CHIP for 4 years and to enforce pay-as-you-go rules that require the bill be fully offset, did not gain the necessary 60 votes for adoption.

The latest cut, a 21% reduction to Medicare physician payments went into effect on April 1, but the Centers for Medicare & Medicaid Services has been holding off on paying claims in anticipation of the bill’s passage. The agency had planned to pay the difference of the claims retroactively if there was a further delay in the passage.

*This article was updated April 17, 2015.

[email protected]

The Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act, April 14 by a vote of 92-8.

The bill matches the language that the House passed by an overwhelming majority on March 26 and clears the way for the White House to permanently end the practice of temporary “doc fix” patches necessitated by the Medicare Sustainable Growth Rate formula.

President Obama signed the bill into law April 16.

The bill also extends funding for the Children’s Health Insurance Program for 2 years.

A number of amendments, including attempts to reauthorize CHIP for 4 years and to enforce pay-as-you-go rules that require the bill be fully offset, did not gain the necessary 60 votes for adoption.

The latest cut, a 21% reduction to Medicare physician payments went into effect on April 1, but the Centers for Medicare & Medicaid Services has been holding off on paying claims in anticipation of the bill’s passage. The agency had planned to pay the difference of the claims retroactively if there was a further delay in the passage.

*This article was updated April 17, 2015.

[email protected]

Despite some lingering objections, observers in Washington expect the Senate will move quickly to pass legislation that repeals the Medicare Sustainable Growth Rate formula.

Some tense moments could happen early in the process as it is expected the Senate will allow amendments to H.R. 2, the Medicare Access and CHIP Reauthorization Act.

Alicia Ault/Frontline Medical Media

The Senate is expected to take up the bill shortly after members return from spring recess on April 13.

They are under the gun to act quickly as the Centers for Medicare & Medicaid Services has been holding claims submitted since the last temporary SGR fix expired on April 1. Unless a legislative fix is completed, the agency will begin to pay those claims – reduced by 21% because of the SGR – on April 15.

The first hurdle the bill faces is a waiving of the rules that require a bill’s costs to be fully offset, something that will require 60 votes. G. William Hoagland, senior vice president at the Bipartisan Policy Center, expects that to be cleared.

Even those who see the bill as being bad for Medicare and for the deficit long term believe the bill will pass.

“I think there are concerns in the Senate about what this means in terms of the long-term deficit, but I suspect that it has enough bipartisan support to patch together the votes it needs,” Michael D. Tanner, senior fellow at the Cato Institute, said in an interview.

Mr. Tanner said that he supports the SGR because it has forced Congress to continually examine and refine the Medicare program .

“The threat of the SGR cuts every couple of years has served to force changes within the Medicare system,” he said. Congress has “had to come up with substitute cuts every time they played with this, and that has had an effect in holding down the growth rate in Medicare and holding down the budget deficit. By removing that threat ... I think in the future they are going to find that the budget deficit increases.”

Dan Mendelson, CEO of the health consultancy AvalereHealth, challenged that assertion. “There’s really nothing good about the SGR policy,” he said in an interview. “It didn’t work to control costs. It didn’t introduce a quality-based payment system, and it’s a relic. I think it’s also fair to say that the discussions around the SGR every year were really not productive in moving the health care system forward.”

Among the amendments that could be offered would be to reauthorize the Children’s Health Insurance Program for 4 years instead of the 2-year reauthorization included in the House bill. Mr. Hoagland said he does not expect any amendments will be passed to alter the current form of H.R. 2, thus allowing it to move directly to the White House. President Obama already has voiced his support of the bill.

[email protected]

Despite some lingering objections, observers in Washington expect the Senate will move quickly to pass legislation that repeals the Medicare Sustainable Growth Rate formula.

Some tense moments could happen early in the process as it is expected the Senate will allow amendments to H.R. 2, the Medicare Access and CHIP Reauthorization Act.

Alicia Ault/Frontline Medical Media

The Senate is expected to take up the bill shortly after members return from spring recess on April 13.

They are under the gun to act quickly as the Centers for Medicare & Medicaid Services has been holding claims submitted since the last temporary SGR fix expired on April 1. Unless a legislative fix is completed, the agency will begin to pay those claims – reduced by 21% because of the SGR – on April 15.

The first hurdle the bill faces is a waiving of the rules that require a bill’s costs to be fully offset, something that will require 60 votes. G. William Hoagland, senior vice president at the Bipartisan Policy Center, expects that to be cleared.

Even those who see the bill as being bad for Medicare and for the deficit long term believe the bill will pass.

“I think there are concerns in the Senate about what this means in terms of the long-term deficit, but I suspect that it has enough bipartisan support to patch together the votes it needs,” Michael D. Tanner, senior fellow at the Cato Institute, said in an interview.

Mr. Tanner said that he supports the SGR because it has forced Congress to continually examine and refine the Medicare program .

“The threat of the SGR cuts every couple of years has served to force changes within the Medicare system,” he said. Congress has “had to come up with substitute cuts every time they played with this, and that has had an effect in holding down the growth rate in Medicare and holding down the budget deficit. By removing that threat ... I think in the future they are going to find that the budget deficit increases.”

Dan Mendelson, CEO of the health consultancy AvalereHealth, challenged that assertion. “There’s really nothing good about the SGR policy,” he said in an interview. “It didn’t work to control costs. It didn’t introduce a quality-based payment system, and it’s a relic. I think it’s also fair to say that the discussions around the SGR every year were really not productive in moving the health care system forward.”

Among the amendments that could be offered would be to reauthorize the Children’s Health Insurance Program for 4 years instead of the 2-year reauthorization included in the House bill. Mr. Hoagland said he does not expect any amendments will be passed to alter the current form of H.R. 2, thus allowing it to move directly to the White House. President Obama already has voiced his support of the bill.

[email protected]

Despite some lingering objections, observers in Washington expect the Senate will move quickly to pass legislation that repeals the Medicare Sustainable Growth Rate formula.

Some tense moments could happen early in the process as it is expected the Senate will allow amendments to H.R. 2, the Medicare Access and CHIP Reauthorization Act.

Alicia Ault/Frontline Medical Media

The Senate is expected to take up the bill shortly after members return from spring recess on April 13.

They are under the gun to act quickly as the Centers for Medicare & Medicaid Services has been holding claims submitted since the last temporary SGR fix expired on April 1. Unless a legislative fix is completed, the agency will begin to pay those claims – reduced by 21% because of the SGR – on April 15.

The first hurdle the bill faces is a waiving of the rules that require a bill’s costs to be fully offset, something that will require 60 votes. G. William Hoagland, senior vice president at the Bipartisan Policy Center, expects that to be cleared.

Even those who see the bill as being bad for Medicare and for the deficit long term believe the bill will pass.

“I think there are concerns in the Senate about what this means in terms of the long-term deficit, but I suspect that it has enough bipartisan support to patch together the votes it needs,” Michael D. Tanner, senior fellow at the Cato Institute, said in an interview.

Mr. Tanner said that he supports the SGR because it has forced Congress to continually examine and refine the Medicare program .

“The threat of the SGR cuts every couple of years has served to force changes within the Medicare system,” he said. Congress has “had to come up with substitute cuts every time they played with this, and that has had an effect in holding down the growth rate in Medicare and holding down the budget deficit. By removing that threat ... I think in the future they are going to find that the budget deficit increases.”

Dan Mendelson, CEO of the health consultancy AvalereHealth, challenged that assertion. “There’s really nothing good about the SGR policy,” he said in an interview. “It didn’t work to control costs. It didn’t introduce a quality-based payment system, and it’s a relic. I think it’s also fair to say that the discussions around the SGR every year were really not productive in moving the health care system forward.”

Among the amendments that could be offered would be to reauthorize the Children’s Health Insurance Program for 4 years instead of the 2-year reauthorization included in the House bill. Mr. Hoagland said he does not expect any amendments will be passed to alter the current form of H.R. 2, thus allowing it to move directly to the White House. President Obama already has voiced his support of the bill.

[email protected]

Despite being billed as a permanent solution to the annual threat of Medicare payment cuts to physicians, a bill repealing the Sustainable Growth Rate formula will not ensure adequate physician payments in the long term, according to actuaries at the Centers for Medicare & Medicaid Services.

In an April 9 report outlining the effect of the Medicare Access and CHIP Reauthorization Act (H.R. 2), the CMS Office of the Actuary said it anticipates “that physician payment rates under H.R. 2 would be lower than scheduled under the current SGR formula by 2048 and would continue to worsen thereafter.

thinkstockphotos.com

“Absent a change in the method or level of update by subsequent legislation, we expect access to Medicare-participating physicians to become a significant issue in the long term under H.R. 2,” the report’s authors noted.

The actuarial report attributes the long-term issues to a number of the bill’s provisions. First, it notes the expiration in 2025 of updates totaling $500 million per year and a 5% annual bonus, which will result in a payment reduction for most physicians.

Second, “this bill specifies the physician payment update amounts for all years in the future, and these amounts do not vary based on underlying economic conditions, nor are they expected to keep pace with the average rate of physician cost increases,” the report warned. That will result in payments that will be inadequate when rates of inflation are higher or when price updates are not enough to cover cost increases.

Compared with costs under current law, the CMS actuaries estimated the legislation’s net cost to the federal government from 2015 through 2025 would be $102.8 billion.

The SGR repeal bill, which also reauthorizes the Children’s Health Insurance Program for 2 more years, passed in the House March 26 with overwhelming bipartisan support. The bill is expected to pass the Senate after members return April 13 from their spring recess.

[email protected]

Despite being billed as a permanent solution to the annual threat of Medicare payment cuts to physicians, a bill repealing the Sustainable Growth Rate formula will not ensure adequate physician payments in the long term, according to actuaries at the Centers for Medicare & Medicaid Services.

In an April 9 report outlining the effect of the Medicare Access and CHIP Reauthorization Act (H.R. 2), the CMS Office of the Actuary said it anticipates “that physician payment rates under H.R. 2 would be lower than scheduled under the current SGR formula by 2048 and would continue to worsen thereafter.

thinkstockphotos.com

“Absent a change in the method or level of update by subsequent legislation, we expect access to Medicare-participating physicians to become a significant issue in the long term under H.R. 2,” the report’s authors noted.

The actuarial report attributes the long-term issues to a number of the bill’s provisions. First, it notes the expiration in 2025 of updates totaling $500 million per year and a 5% annual bonus, which will result in a payment reduction for most physicians.

Second, “this bill specifies the physician payment update amounts for all years in the future, and these amounts do not vary based on underlying economic conditions, nor are they expected to keep pace with the average rate of physician cost increases,” the report warned. That will result in payments that will be inadequate when rates of inflation are higher or when price updates are not enough to cover cost increases.

Compared with costs under current law, the CMS actuaries estimated the legislation’s net cost to the federal government from 2015 through 2025 would be $102.8 billion.

The SGR repeal bill, which also reauthorizes the Children’s Health Insurance Program for 2 more years, passed in the House March 26 with overwhelming bipartisan support. The bill is expected to pass the Senate after members return April 13 from their spring recess.

[email protected]

Despite being billed as a permanent solution to the annual threat of Medicare payment cuts to physicians, a bill repealing the Sustainable Growth Rate formula will not ensure adequate physician payments in the long term, according to actuaries at the Centers for Medicare & Medicaid Services.

In an April 9 report outlining the effect of the Medicare Access and CHIP Reauthorization Act (H.R. 2), the CMS Office of the Actuary said it anticipates “that physician payment rates under H.R. 2 would be lower than scheduled under the current SGR formula by 2048 and would continue to worsen thereafter.

thinkstockphotos.com

“Absent a change in the method or level of update by subsequent legislation, we expect access to Medicare-participating physicians to become a significant issue in the long term under H.R. 2,” the report’s authors noted.

The actuarial report attributes the long-term issues to a number of the bill’s provisions. First, it notes the expiration in 2025 of updates totaling $500 million per year and a 5% annual bonus, which will result in a payment reduction for most physicians.

Second, “this bill specifies the physician payment update amounts for all years in the future, and these amounts do not vary based on underlying economic conditions, nor are they expected to keep pace with the average rate of physician cost increases,” the report warned. That will result in payments that will be inadequate when rates of inflation are higher or when price updates are not enough to cover cost increases.

Compared with costs under current law, the CMS actuaries estimated the legislation’s net cost to the federal government from 2015 through 2025 would be $102.8 billion.

The SGR repeal bill, which also reauthorizes the Children’s Health Insurance Program for 2 more years, passed in the House March 26 with overwhelming bipartisan support. The bill is expected to pass the Senate after members return April 13 from their spring recess.

[email protected]

High-cost advances in diagnosis and treatment are entering medicine each and every month. As Medicare turns 50 this year, how can the program – with its growing number of beneficiaries and their advancing age – cope with the onslaught?

“When we look at the price of something in health care, very often we just look at one bucket,” Amy Miller, Ph.D., executive vice president at the Personalized Medicine Coalition, said in an interview. “We look at the drug bucket or we look at the diagnostic bucket or we look at the hospital bucket or the doctor visit bucket, but when we are talking about the targeted therapy that is more or less known to work for a particular patient with a particular condition, we need to think about the price more broadly. We need to think about the systemic cost savings of getting that drug to the right patient the first time, without failing first on other drugs.”

For some high-priced drugs, that appears to be the case. Take for example the direct-acting antiviral agents (DAA) recently approved to treat hepatitis C (HCV) infection.

“If you have a drug like [sofosbuvir], which is extremely expensive at face value, it may not have such a big long-term effect because [sofosbuvir] is a cure,” said Dr. Soeren Mattke, senior scientist in RAND Corp. in Boston. “So if you take patients with hepatitis C that have a certain trajectory of spending over the next decade or so – treatment, liver transplantation, and the like – it basically wipes out the infection. In the long run, even though the drug is very, very expensive, it may not be such a bad deal for Medicare.”

And while some physicians would like to see these new DAAs prescribed to all appropriate patients with HCV, even they acknowledge that the high price tag can be fiscally constraining in the long run and can handle some restrictions to ease the financial burden.

“If you have a 70-year-old patient who has no evidence of any liver fibrosis and they have lived with hepatitis C for 30 or 40 years, I don’t think it’s unreasonable to suggest that maybe they wait for their therapy until an even less expensive option comes along,” said Dr. Sean Koppe, director of hepatology at University of Illinois at Chicago. “I think if the payer is going to be a little bit restrictive but still allow us to treat the majority of our patients who are showing some signs of fibrosis, I wouldn’t be too bothered by that approach.”

Oncology, another area where high-priced treatments are prevalent, is not as cut and dried in terms of medical outcomes as HCV.

“Some of the oncology drugs [have a cost of] $50,000-$60,000 per treatment course, but you extend life expectancy of a terminal cancer patient by weeks,” Dr. Mattke said. “So while you are looking at this drug, and they cost practically the same [as some DAAs], the impact is quite different.”

But one bright spot that can potentially help alleviate pricing pressures is the growing emphasis on personalized or precision medicine.

“When we talk about a high-priced therapeutic, we have to remember that not too long ago, when a drug came to market, it was marketed to everyone with a particular condition,” Dr. Miller said. “But when [crizotinib] hit the market, it only treated 4% of those with non–small-cell lung cancer initially based on its approved label.”

Identifying the right users will be key to moderating the impact of high-priced therapeutics.

“But if diagnostics aren’t adequately covered or reimbursed or if a particular therapy is on a higher tier or there’s more risk for the physician, giving that drug to a patient, even if diagnostics indicate it’s the right one, then the models might not work,” Dr. Miller said, adding that she is “encouraged” that the federal government is talking about more active use of precision medicine.

But, according to Dr. Mattke, there are pitfalls to precision medicine, too.

“If personalized medicine means that you are able to design a drug that targets the very specific molecular [structure] of a particular cancer and reverses it, this could be a very, very expensive drug, but it could be totally worth it,” he said. “If personalized medicine means there’s a highly differentiated range of drugs out there that all are so-so effective, you may end up with some marginally valuable drugs at extremely high prices, and yet force Medicare to pay for it because they cannot take cost into consideration.”

When it comes to costly medications and treatments, Medicare’s fee-for-service design isn’t helping either.

“We have a payment system that works through a third party payer, so the person who needs the care is not usually the person who is paying for the care,” said Dr. Jeffery Ward, an oncologist who serves on the clinical practice committee of the American Society of Clinical Oncology. “Prices and the fees are set based on what you do. I don’t get paid better for doing a good job than I would get for doing a cruddy job. [Once,] that served medicine and Medicare well, but now we have a health care crisis.”

Dr. Ward added that incentives are misaligned in a manner that rewards doctors for choosing more expensive drugs and procedures for their patients.

As oncologists, “we are going to have get over our addiction to [being compensated on the] margin on drugs,” Dr. Ward said. “We’re going to have to be able to develop a system and have faith in a system that will pay us fairly for what we do instead of paying us based on what drugs we choose.”

However, Dr. Steven Allen, who chairs the American Society of Hematology committee on practice, said that he doesn’t believe that is a key issue.

“I think you are really only referring to a very small percentage of physicians,” Dr. Allen said. “I think the vast majority of physicians do what’s right for their patients. ... They will choose the best drug for their patients regardless of the reimbursement the physician may receive given that drug.”

Dr. Ward said that to address the need to cover these potent, high-cost treatments, “I think what Medicare is going to have to do at its 50th birthday is figure out how to begin to reward physicians for doing the right thing and for providing quality care instead of simply paying for quantity.”

The federal government is moving in that direction. In January, Health and Human Services Secretary Sylvia Burwell announced a new goal for Medicare: Fifty percent of all payments should be value based by 2018 (N. Engl. J. Med. 2015;372:897-9 [doi 10.1056.NEJMp1500445]). But what exactly does value mean? While that point is debated on a broad scale, one thing that is obvious is that it will require a culture shift on a many levels.

[email protected]

High-cost advances in diagnosis and treatment are entering medicine each and every month. As Medicare turns 50 this year, how can the program – with its growing number of beneficiaries and their advancing age – cope with the onslaught?

“When we look at the price of something in health care, very often we just look at one bucket,” Amy Miller, Ph.D., executive vice president at the Personalized Medicine Coalition, said in an interview. “We look at the drug bucket or we look at the diagnostic bucket or we look at the hospital bucket or the doctor visit bucket, but when we are talking about the targeted therapy that is more or less known to work for a particular patient with a particular condition, we need to think about the price more broadly. We need to think about the systemic cost savings of getting that drug to the right patient the first time, without failing first on other drugs.”

For some high-priced drugs, that appears to be the case. Take for example the direct-acting antiviral agents (DAA) recently approved to treat hepatitis C (HCV) infection.

“If you have a drug like [sofosbuvir], which is extremely expensive at face value, it may not have such a big long-term effect because [sofosbuvir] is a cure,” said Dr. Soeren Mattke, senior scientist in RAND Corp. in Boston. “So if you take patients with hepatitis C that have a certain trajectory of spending over the next decade or so – treatment, liver transplantation, and the like – it basically wipes out the infection. In the long run, even though the drug is very, very expensive, it may not be such a bad deal for Medicare.”

And while some physicians would like to see these new DAAs prescribed to all appropriate patients with HCV, even they acknowledge that the high price tag can be fiscally constraining in the long run and can handle some restrictions to ease the financial burden.

“If you have a 70-year-old patient who has no evidence of any liver fibrosis and they have lived with hepatitis C for 30 or 40 years, I don’t think it’s unreasonable to suggest that maybe they wait for their therapy until an even less expensive option comes along,” said Dr. Sean Koppe, director of hepatology at University of Illinois at Chicago. “I think if the payer is going to be a little bit restrictive but still allow us to treat the majority of our patients who are showing some signs of fibrosis, I wouldn’t be too bothered by that approach.”

Oncology, another area where high-priced treatments are prevalent, is not as cut and dried in terms of medical outcomes as HCV.

“Some of the oncology drugs [have a cost of] $50,000-$60,000 per treatment course, but you extend life expectancy of a terminal cancer patient by weeks,” Dr. Mattke said. “So while you are looking at this drug, and they cost practically the same [as some DAAs], the impact is quite different.”

But one bright spot that can potentially help alleviate pricing pressures is the growing emphasis on personalized or precision medicine.

“When we talk about a high-priced therapeutic, we have to remember that not too long ago, when a drug came to market, it was marketed to everyone with a particular condition,” Dr. Miller said. “But when [crizotinib] hit the market, it only treated 4% of those with non–small-cell lung cancer initially based on its approved label.”

Identifying the right users will be key to moderating the impact of high-priced therapeutics.

“But if diagnostics aren’t adequately covered or reimbursed or if a particular therapy is on a higher tier or there’s more risk for the physician, giving that drug to a patient, even if diagnostics indicate it’s the right one, then the models might not work,” Dr. Miller said, adding that she is “encouraged” that the federal government is talking about more active use of precision medicine.

But, according to Dr. Mattke, there are pitfalls to precision medicine, too.

“If personalized medicine means that you are able to design a drug that targets the very specific molecular [structure] of a particular cancer and reverses it, this could be a very, very expensive drug, but it could be totally worth it,” he said. “If personalized medicine means there’s a highly differentiated range of drugs out there that all are so-so effective, you may end up with some marginally valuable drugs at extremely high prices, and yet force Medicare to pay for it because they cannot take cost into consideration.”

When it comes to costly medications and treatments, Medicare’s fee-for-service design isn’t helping either.

“We have a payment system that works through a third party payer, so the person who needs the care is not usually the person who is paying for the care,” said Dr. Jeffery Ward, an oncologist who serves on the clinical practice committee of the American Society of Clinical Oncology. “Prices and the fees are set based on what you do. I don’t get paid better for doing a good job than I would get for doing a cruddy job. [Once,] that served medicine and Medicare well, but now we have a health care crisis.”

Dr. Ward added that incentives are misaligned in a manner that rewards doctors for choosing more expensive drugs and procedures for their patients.

As oncologists, “we are going to have get over our addiction to [being compensated on the] margin on drugs,” Dr. Ward said. “We’re going to have to be able to develop a system and have faith in a system that will pay us fairly for what we do instead of paying us based on what drugs we choose.”

However, Dr. Steven Allen, who chairs the American Society of Hematology committee on practice, said that he doesn’t believe that is a key issue.

“I think you are really only referring to a very small percentage of physicians,” Dr. Allen said. “I think the vast majority of physicians do what’s right for their patients. ... They will choose the best drug for their patients regardless of the reimbursement the physician may receive given that drug.”

Dr. Ward said that to address the need to cover these potent, high-cost treatments, “I think what Medicare is going to have to do at its 50th birthday is figure out how to begin to reward physicians for doing the right thing and for providing quality care instead of simply paying for quantity.”

The federal government is moving in that direction. In January, Health and Human Services Secretary Sylvia Burwell announced a new goal for Medicare: Fifty percent of all payments should be value based by 2018 (N. Engl. J. Med. 2015;372:897-9 [doi 10.1056.NEJMp1500445]). But what exactly does value mean? While that point is debated on a broad scale, one thing that is obvious is that it will require a culture shift on a many levels.

[email protected]

High-cost advances in diagnosis and treatment are entering medicine each and every month. As Medicare turns 50 this year, how can the program – with its growing number of beneficiaries and their advancing age – cope with the onslaught?

“When we look at the price of something in health care, very often we just look at one bucket,” Amy Miller, Ph.D., executive vice president at the Personalized Medicine Coalition, said in an interview. “We look at the drug bucket or we look at the diagnostic bucket or we look at the hospital bucket or the doctor visit bucket, but when we are talking about the targeted therapy that is more or less known to work for a particular patient with a particular condition, we need to think about the price more broadly. We need to think about the systemic cost savings of getting that drug to the right patient the first time, without failing first on other drugs.”

For some high-priced drugs, that appears to be the case. Take for example the direct-acting antiviral agents (DAA) recently approved to treat hepatitis C (HCV) infection.

“If you have a drug like [sofosbuvir], which is extremely expensive at face value, it may not have such a big long-term effect because [sofosbuvir] is a cure,” said Dr. Soeren Mattke, senior scientist in RAND Corp. in Boston. “So if you take patients with hepatitis C that have a certain trajectory of spending over the next decade or so – treatment, liver transplantation, and the like – it basically wipes out the infection. In the long run, even though the drug is very, very expensive, it may not be such a bad deal for Medicare.”

And while some physicians would like to see these new DAAs prescribed to all appropriate patients with HCV, even they acknowledge that the high price tag can be fiscally constraining in the long run and can handle some restrictions to ease the financial burden.

“If you have a 70-year-old patient who has no evidence of any liver fibrosis and they have lived with hepatitis C for 30 or 40 years, I don’t think it’s unreasonable to suggest that maybe they wait for their therapy until an even less expensive option comes along,” said Dr. Sean Koppe, director of hepatology at University of Illinois at Chicago. “I think if the payer is going to be a little bit restrictive but still allow us to treat the majority of our patients who are showing some signs of fibrosis, I wouldn’t be too bothered by that approach.”

Oncology, another area where high-priced treatments are prevalent, is not as cut and dried in terms of medical outcomes as HCV.

“Some of the oncology drugs [have a cost of] $50,000-$60,000 per treatment course, but you extend life expectancy of a terminal cancer patient by weeks,” Dr. Mattke said. “So while you are looking at this drug, and they cost practically the same [as some DAAs], the impact is quite different.”

But one bright spot that can potentially help alleviate pricing pressures is the growing emphasis on personalized or precision medicine.

“When we talk about a high-priced therapeutic, we have to remember that not too long ago, when a drug came to market, it was marketed to everyone with a particular condition,” Dr. Miller said. “But when [crizotinib] hit the market, it only treated 4% of those with non–small-cell lung cancer initially based on its approved label.”

Identifying the right users will be key to moderating the impact of high-priced therapeutics.

“But if diagnostics aren’t adequately covered or reimbursed or if a particular therapy is on a higher tier or there’s more risk for the physician, giving that drug to a patient, even if diagnostics indicate it’s the right one, then the models might not work,” Dr. Miller said, adding that she is “encouraged” that the federal government is talking about more active use of precision medicine.

But, according to Dr. Mattke, there are pitfalls to precision medicine, too.

“If personalized medicine means that you are able to design a drug that targets the very specific molecular [structure] of a particular cancer and reverses it, this could be a very, very expensive drug, but it could be totally worth it,” he said. “If personalized medicine means there’s a highly differentiated range of drugs out there that all are so-so effective, you may end up with some marginally valuable drugs at extremely high prices, and yet force Medicare to pay for it because they cannot take cost into consideration.”

When it comes to costly medications and treatments, Medicare’s fee-for-service design isn’t helping either.

“We have a payment system that works through a third party payer, so the person who needs the care is not usually the person who is paying for the care,” said Dr. Jeffery Ward, an oncologist who serves on the clinical practice committee of the American Society of Clinical Oncology. “Prices and the fees are set based on what you do. I don’t get paid better for doing a good job than I would get for doing a cruddy job. [Once,] that served medicine and Medicare well, but now we have a health care crisis.”

Dr. Ward added that incentives are misaligned in a manner that rewards doctors for choosing more expensive drugs and procedures for their patients.

As oncologists, “we are going to have get over our addiction to [being compensated on the] margin on drugs,” Dr. Ward said. “We’re going to have to be able to develop a system and have faith in a system that will pay us fairly for what we do instead of paying us based on what drugs we choose.”

However, Dr. Steven Allen, who chairs the American Society of Hematology committee on practice, said that he doesn’t believe that is a key issue.

“I think you are really only referring to a very small percentage of physicians,” Dr. Allen said. “I think the vast majority of physicians do what’s right for their patients. ... They will choose the best drug for their patients regardless of the reimbursement the physician may receive given that drug.”

Dr. Ward said that to address the need to cover these potent, high-cost treatments, “I think what Medicare is going to have to do at its 50th birthday is figure out how to begin to reward physicians for doing the right thing and for providing quality care instead of simply paying for quantity.”

The federal government is moving in that direction. In January, Health and Human Services Secretary Sylvia Burwell announced a new goal for Medicare: Fifty percent of all payments should be value based by 2018 (N. Engl. J. Med. 2015;372:897-9 [doi 10.1056.NEJMp1500445]). But what exactly does value mean? While that point is debated on a broad scale, one thing that is obvious is that it will require a culture shift on a many levels.

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Low-income patients who receive health care coverage from Medicaid and the Children’s Health Insurance Plan would get greater coverage for mental health and substance abuse services under a federal proposed rule issued April 6.

The proposed rule extends to Medicaid and CHIP certain aspects of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, which requires private health insurance to cover mental health and substance abuse treatments as they do medical and surgical services. The 2008 law originally applied to group health plans and group insurance coverage; the Affordable Care Act extended it to individual health insurance policies as well.

Alexander Raths/Fotolia.com

According to the proposed rule, Medicaid managed care organizations will be required to offer the same mental health and substance abuse services, subject to the same financial and treatment limitations consistent with regulations applicable to private insurers in that state. The rule does not applied to fee-for-service Medicaid.

The proposed rule also applies to states that offer Medicaid alternative benefit plans. States delivering services through a non-Medicaid managed care organization “must comply with the same requirements that would be necessary if such services were delivered through a managed care organization,” officials from the Centers for Medicare & Medicaid Services said in a fact sheet about the proposed rule.

All CHIP programs, including fee-for-service and managed care plans, would be subject to the parity standards.

“The proposed rule is a way to advance equity in the delivery of mental health and substance use disorder services. The proposal will support federal and state efforts to promote access to mental health and substance use services as part of broader delivery system reform through the Affordable Care Act,” Vikki Wachino, acting director of the Center for Medicaid and CHIP Services, said in a statement.

Approximately 21.6 million Medicaid beneficiaries and 850,000 CHIP beneficiaries would benefit from action, based on estimates from 2012 Medicaid and CHIP enrollment, according to the proposed rule. Among adults aged 18-64 years with Medicaid coverage, about 10% have a serious mental illness, 31% have any mental illness, and 12% have a substance abuse disorder, according to CMS. Additionally, 8% of CHIP beneficiaries “experience serious behavioral or emotional difficulties.”

The proposed rule is slated for publication in the Federal register on April 10; comments will be accepted until June 9 at www.regulations.gov.

[email protected]

Low-income patients who receive health care coverage from Medicaid and the Children’s Health Insurance Plan would get greater coverage for mental health and substance abuse services under a federal proposed rule issued April 6.

The proposed rule extends to Medicaid and CHIP certain aspects of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, which requires private health insurance to cover mental health and substance abuse treatments as they do medical and surgical services. The 2008 law originally applied to group health plans and group insurance coverage; the Affordable Care Act extended it to individual health insurance policies as well.

Alexander Raths/Fotolia.com

According to the proposed rule, Medicaid managed care organizations will be required to offer the same mental health and substance abuse services, subject to the same financial and treatment limitations consistent with regulations applicable to private insurers in that state. The rule does not applied to fee-for-service Medicaid.

The proposed rule also applies to states that offer Medicaid alternative benefit plans. States delivering services through a non-Medicaid managed care organization “must comply with the same requirements that would be necessary if such services were delivered through a managed care organization,” officials from the Centers for Medicare & Medicaid Services said in a fact sheet about the proposed rule.

All CHIP programs, including fee-for-service and managed care plans, would be subject to the parity standards.

“The proposed rule is a way to advance equity in the delivery of mental health and substance use disorder services. The proposal will support federal and state efforts to promote access to mental health and substance use services as part of broader delivery system reform through the Affordable Care Act,” Vikki Wachino, acting director of the Center for Medicaid and CHIP Services, said in a statement.

Approximately 21.6 million Medicaid beneficiaries and 850,000 CHIP beneficiaries would benefit from action, based on estimates from 2012 Medicaid and CHIP enrollment, according to the proposed rule. Among adults aged 18-64 years with Medicaid coverage, about 10% have a serious mental illness, 31% have any mental illness, and 12% have a substance abuse disorder, according to CMS. Additionally, 8% of CHIP beneficiaries “experience serious behavioral or emotional difficulties.”

The proposed rule is slated for publication in the Federal register on April 10; comments will be accepted until June 9 at www.regulations.gov.

[email protected]

Low-income patients who receive health care coverage from Medicaid and the Children’s Health Insurance Plan would get greater coverage for mental health and substance abuse services under a federal proposed rule issued April 6.

The proposed rule extends to Medicaid and CHIP certain aspects of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, which requires private health insurance to cover mental health and substance abuse treatments as they do medical and surgical services. The 2008 law originally applied to group health plans and group insurance coverage; the Affordable Care Act extended it to individual health insurance policies as well.

Alexander Raths/Fotolia.com

According to the proposed rule, Medicaid managed care organizations will be required to offer the same mental health and substance abuse services, subject to the same financial and treatment limitations consistent with regulations applicable to private insurers in that state. The rule does not applied to fee-for-service Medicaid.

The proposed rule also applies to states that offer Medicaid alternative benefit plans. States delivering services through a non-Medicaid managed care organization “must comply with the same requirements that would be necessary if such services were delivered through a managed care organization,” officials from the Centers for Medicare & Medicaid Services said in a fact sheet about the proposed rule.

All CHIP programs, including fee-for-service and managed care plans, would be subject to the parity standards.

“The proposed rule is a way to advance equity in the delivery of mental health and substance use disorder services. The proposal will support federal and state efforts to promote access to mental health and substance use services as part of broader delivery system reform through the Affordable Care Act,” Vikki Wachino, acting director of the Center for Medicaid and CHIP Services, said in a statement.

Approximately 21.6 million Medicaid beneficiaries and 850,000 CHIP beneficiaries would benefit from action, based on estimates from 2012 Medicaid and CHIP enrollment, according to the proposed rule. Among adults aged 18-64 years with Medicaid coverage, about 10% have a serious mental illness, 31% have any mental illness, and 12% have a substance abuse disorder, according to CMS. Additionally, 8% of CHIP beneficiaries “experience serious behavioral or emotional difficulties.”

The proposed rule is slated for publication in the Federal register on April 10; comments will be accepted until June 9 at www.regulations.gov.

[email protected]

Medicare physician pay was cut by approximately 21% effective April 1, due to the expiration of the last temporary fix to the Sustainable Growth Rate formula.

Because legislation to repeal the SGR has passed the House and awaits action in the Senate, the Centers for Medicare & Medicaid Services announced it will hold Medicare payments for 2 weeks, allowing Congress to complete action on the issue.

© crazydiva/Thinkstock

Without a legislative fix, beginning April 15, “CMS will begin processing claims received on or after April 1 with a 21% reduction in the physician’s rate to limit the impact on Medicare providers and beneficiaries,” the agency said in a statement.

The House on March 26 overwhelming passed H.R.2, the Medicare Access and CHIP Reauthorization Act, which would repeal the SGR, reauthorize the Children’s Health Insurance Program for 2 years, and reform Medicare. The Senate did not address the bill before taking a recess until April 13.

Should SGR repeal legislation pass Congress and be signed by the President – something he has indicated he will do – CMS will reprocess any claims processed at the lower rate.

[email protected]

Medicare physician pay was cut by approximately 21% effective April 1, due to the expiration of the last temporary fix to the Sustainable Growth Rate formula.

Because legislation to repeal the SGR has passed the House and awaits action in the Senate, the Centers for Medicare & Medicaid Services announced it will hold Medicare payments for 2 weeks, allowing Congress to complete action on the issue.

© crazydiva/Thinkstock

Without a legislative fix, beginning April 15, “CMS will begin processing claims received on or after April 1 with a 21% reduction in the physician’s rate to limit the impact on Medicare providers and beneficiaries,” the agency said in a statement.

The House on March 26 overwhelming passed H.R.2, the Medicare Access and CHIP Reauthorization Act, which would repeal the SGR, reauthorize the Children’s Health Insurance Program for 2 years, and reform Medicare. The Senate did not address the bill before taking a recess until April 13.

Should SGR repeal legislation pass Congress and be signed by the President – something he has indicated he will do – CMS will reprocess any claims processed at the lower rate.

[email protected]

Medicare physician pay was cut by approximately 21% effective April 1, due to the expiration of the last temporary fix to the Sustainable Growth Rate formula.

Because legislation to repeal the SGR has passed the House and awaits action in the Senate, the Centers for Medicare & Medicaid Services announced it will hold Medicare payments for 2 weeks, allowing Congress to complete action on the issue.

© crazydiva/Thinkstock

Without a legislative fix, beginning April 15, “CMS will begin processing claims received on or after April 1 with a 21% reduction in the physician’s rate to limit the impact on Medicare providers and beneficiaries,” the agency said in a statement.

The House on March 26 overwhelming passed H.R.2, the Medicare Access and CHIP Reauthorization Act, which would repeal the SGR, reauthorize the Children’s Health Insurance Program for 2 years, and reform Medicare. The Senate did not address the bill before taking a recess until April 13.

Should SGR repeal legislation pass Congress and be signed by the President – something he has indicated he will do – CMS will reprocess any claims processed at the lower rate.

[email protected]

Physicians cannot sue state governments over low Medicaid payments, the U.S. Supreme Court ruled.

In a 5-4 decision, the high court overturned a decision by the 9th Circuit Court of Appeals that said physicians and other providers could sue to hold states accountable to the equal access provisions of the Medicaid Act (states accepting federal Medicaid funding are required to set pay rates at levels sufficient to ensure access to care).

©trekandshoot/thinkstockphotos.com

In the case, Armstrong v. Exceptional Child Centers Inc., justices were determining whether the Constitution’s Supremacy Clause – which establishes the Constitution and federal law as the law of the land – gives providers the right to sue. The case originates from a 2009 lawsuit by Exceptional Child Center Inc., of Twin Falls, Idaho, and four other residential habilitation centers against Richard Armstrong, director of the Idaho Department of Health and Welfare.

In the majority opinion, Justice Antonin Scalia noted that physicians who believe Medicaid rates are inadequate have an administrative remedy by petitioning the Centers for Medicare & Medicaid Services, a remedy that “shows that the Medicaid Act precludes private enforcement ... in the courts.” He added that the plaintiffs must first seek relief through CMS first before instigating legal action.

In the dissenting opinion, Justice Sonia Sotomayor noted that seeking administrative relief could lead to reduced federal funding to a state for violating the Medicaid Act’s rate requirements, adding that “HHS is often reluctant to initiate compliance actions because a ‘state’s noncompliance creates a damned-if-you-do, damned-if-you-don’t scenario where withholding of state funds will lead to depriving the poor of essential medical assistance.’ ”

Justice Scalia dismissed that logic. “The dissent’s complaint that the sanction available to the [HHS] Secretary (the cut-off of funding) is too massive to be a realistic source of relief seems to us mistaken. We doubt that the Secretary’s notice to a state that its compensation scheme is inadequate will be ignored.”

[email protected]

Physicians cannot sue state governments over low Medicaid payments, the U.S. Supreme Court ruled.

In a 5-4 decision, the high court overturned a decision by the 9th Circuit Court of Appeals that said physicians and other providers could sue to hold states accountable to the equal access provisions of the Medicaid Act (states accepting federal Medicaid funding are required to set pay rates at levels sufficient to ensure access to care).

©trekandshoot/thinkstockphotos.com

In the case, Armstrong v. Exceptional Child Centers Inc., justices were determining whether the Constitution’s Supremacy Clause – which establishes the Constitution and federal law as the law of the land – gives providers the right to sue. The case originates from a 2009 lawsuit by Exceptional Child Center Inc., of Twin Falls, Idaho, and four other residential habilitation centers against Richard Armstrong, director of the Idaho Department of Health and Welfare.

In the majority opinion, Justice Antonin Scalia noted that physicians who believe Medicaid rates are inadequate have an administrative remedy by petitioning the Centers for Medicare & Medicaid Services, a remedy that “shows that the Medicaid Act precludes private enforcement ... in the courts.” He added that the plaintiffs must first seek relief through CMS first before instigating legal action.

In the dissenting opinion, Justice Sonia Sotomayor noted that seeking administrative relief could lead to reduced federal funding to a state for violating the Medicaid Act’s rate requirements, adding that “HHS is often reluctant to initiate compliance actions because a ‘state’s noncompliance creates a damned-if-you-do, damned-if-you-don’t scenario where withholding of state funds will lead to depriving the poor of essential medical assistance.’ ”

Justice Scalia dismissed that logic. “The dissent’s complaint that the sanction available to the [HHS] Secretary (the cut-off of funding) is too massive to be a realistic source of relief seems to us mistaken. We doubt that the Secretary’s notice to a state that its compensation scheme is inadequate will be ignored.”

[email protected]

Physicians cannot sue state governments over low Medicaid payments, the U.S. Supreme Court ruled.

In a 5-4 decision, the high court overturned a decision by the 9th Circuit Court of Appeals that said physicians and other providers could sue to hold states accountable to the equal access provisions of the Medicaid Act (states accepting federal Medicaid funding are required to set pay rates at levels sufficient to ensure access to care).

©trekandshoot/thinkstockphotos.com

In the case, Armstrong v. Exceptional Child Centers Inc., justices were determining whether the Constitution’s Supremacy Clause – which establishes the Constitution and federal law as the law of the land – gives providers the right to sue. The case originates from a 2009 lawsuit by Exceptional Child Center Inc., of Twin Falls, Idaho, and four other residential habilitation centers against Richard Armstrong, director of the Idaho Department of Health and Welfare.

In the majority opinion, Justice Antonin Scalia noted that physicians who believe Medicaid rates are inadequate have an administrative remedy by petitioning the Centers for Medicare & Medicaid Services, a remedy that “shows that the Medicaid Act precludes private enforcement ... in the courts.” He added that the plaintiffs must first seek relief through CMS first before instigating legal action.

In the dissenting opinion, Justice Sonia Sotomayor noted that seeking administrative relief could lead to reduced federal funding to a state for violating the Medicaid Act’s rate requirements, adding that “HHS is often reluctant to initiate compliance actions because a ‘state’s noncompliance creates a damned-if-you-do, damned-if-you-don’t scenario where withholding of state funds will lead to depriving the poor of essential medical assistance.’ ”

Justice Scalia dismissed that logic. “The dissent’s complaint that the sanction available to the [HHS] Secretary (the cut-off of funding) is too massive to be a realistic source of relief seems to us mistaken. We doubt that the Secretary’s notice to a state that its compensation scheme is inadequate will be ignored.”

[email protected]