Second annual release provides clearer look into Part D costs

CMS’s second annual release of privacy-protected data details information on prescription drugs paid under the Medicare Part D prescription drug program. The data provides key information to consumers, providers, researchers, and other stakeholders to help transform the health care delivery system. With data from 2013 and 2014, CMS will now be able to analyze trends, prescribing habits for specific providers, brand versus generic drug prescribing rates, and state- and local-level differences in drug utilization and costs.

The new release is based on 2014 data describing the specific medications prescribed for 38 million enrollees in Medicare Advantage (MA) prescription drug plans (PDPs) and stand-alone PDPs. The 2014 data set includes new aggregated information on opioids, antibiotics, antipsychotics, and high-risk medications among the elderly. A prescriber enrollment status field has also been added to the 2014 data set to indicate whether the prescriber is enrolled, is not enrolled, or opted out of the Medicare program.

Public data set

The public data set, the Medicare Provider Utilization and Payment Data: Part D Prescriber Public Use File (PUF), was created by CMS using information on prescription drugs prescribed by individual physicians and other health care providers and paid for under the Medicare Part D. The Part D Prescriber PUF is based on information from CMS’ Chronic Conditions Data Warehouse,which contains prescription drug event records submitted by MA-PD plans and by stand-alone PDPs. The dataset identifies providers using their National Provider Identifier and presents the specific prescriptions dispensed at their direction, listed by brand and generic name.

For each prescriber and drug, the dataset includes the total number of prescriptions dispensed and the total drug cost. The total drug cost includes the ingredient cost of the medication, dispensing fees, sales tax, and any applicable administration fees. The total cost is based on the amounts paid by the Part D plan, Medicare beneficiary, other government subsidies, and any other third-party payers (such as employers and liability insurers). Total drug costs do not reflect any manufacturer rebates paid to Part D plan sponsors through direct and indirect remuneration or point-of sale rebates.

Drugs by claim count

For 2014, the top 10 drugs based on claim count were generic drugs, and the top nine drugs were among the drugs with the highest claim counts in 2013. The 2014 claim counts for these drugs ranged from 22.1 to 38.3 million claims,andthe total drug costs for each drug ranged from $136 million to $748 million. From 2013 to 2014, the total number of claims increased from 1.37 billion to 1.42 billion, a 3 percent increase from 2013 to 2014.

Drugs by cost

The drugs with the highest cost in 2014 were all brand name drugs. In 2014, Solvaldi® (Hepatitis C antiviral) had the highest total drug costs at $3.1 billion, with the costs for each of the top 10 drugs all more than $1 billion. Total drug costs increased from $104 billion in 2013 to $121 billion in 2014, reflecting a 17 percent increase.

Lantus Solostar® and Lantus® insulin products had the highest growth in total drug costs between 2013 and 2014 with growth rates of 47 percent and 32 percent, respectively. Abilify® (antipsychotic), Januvia® (diabetes), and Revlimid® (cancer) also had high growth rates of 20 percent or higher. Advair Discus® (asthma and COPD) had a very low growth in total drug costs of only 1 percent.

Antibiotic prescribing

The new 2014 dataset also can be used to examine patterns of antibiotic prescribing in the Medicare program. These data can inform where high rates of antibiotic prescribing are occurring across the U.S. The 2014 data shows that states in the South and Midwest have rates of antibiotic prescribing that are higher than the national average of 1.39 fills per beneficiary.

New cardiac rehab incentives model could hit high spenders hard

On July 25, 2016, HHS announced a bundled cardiac rehabilitation incentive payment model to test the impact of providing an incentive payment to hospitals where beneficiaries are hospitalized for a heart attack or bypass surgery. The model (81 FR 50793), which officially published on August 2, 2016, would be based on beneficiary utilization of cardiac rehabilitation and intensive cardiac rehabilitation services in the 90-day care period following a hospital discharge.

Experts at Avalere Health contend that the financial impact will be modest for most hospitals who are required to use this model or those that use the model voluntarily. The Avalere analysis found that 85 percent of hospitals would not experience gains or losses that exceed $500,000 per year. Avalere notes, however, that some institutions could face significant penalties if their current spending far exceeds the average spending for their region.

The model

Under the model, hospitals will use the incentive payment to coordinate cardiac rehabilitation and support beneficiary adherence to the cardiac rehabilitation treatment plan. The new cardiac bundled payments will be phased in starting July 1, 2017, and will apply to three types of cardiac care:

  • coronary artery graft (bypass) surgery (CABG);
  • heart attack patients who are medically managed with drugs and other non-interventional therapies; and
  • heart attack patients receiving percutaneous coronary intervention (PCI), such as stents, angioplasty, or other interventions.

The payments would be available to hospital participants in 45 geographic areas that were not selected for the cardiac care bundled payment models, as well as 45 geographic areas that were selected for the cardiac care bundled payment models.

The payments will be made as follows: (1) an initial payment of $25 per cardiac rehabilitation service for each of the first 11 services paid for by Medicare during the care period for a heart attack or bypass surgery; and (2) after 11 services are paid for by Medicare for a beneficiary, the payment would increase to $175 per service.

The number of cardiac rehabilitation program sessions would be limited to a maximum of two one-hour sessions per day for up to 36 sessions over up to 36 weeks, with the option for an additional 36 sessions over an extended period of time if approved by the Medicare Administrative Contractor. Intensive cardiac rehabilitation program sessions would be limited to 72 one-hour sessions, up to six sessions per day, over a period of up to 18 weeks.

Further findings

Avalere believes that hospitals could achieve savings under the payment model by targeting both device spending and care management for surgical and medically-managed patients. Avalere’s analysis also found that:

  • 60 to 70 percent of spending for CABG and PCI episodes are incurred during the initial hospital stay;
  • only 35 percent of spending for heart attack patients who are managed with drugs are related to the inpatient stay; and
  • 47 percent of spending on medically-managed heart attack patients is linked to post-discharge care, including post-acute services and readmissions to acute care settings.

Avalere’s analysis was based on a review of Medicare Part A data from 2013 and 2014.

Comments on the proposed payment model may be submitted until October 3, 2016.

Medicare readmission penalties exceed $500M for FY 2017

A Kaiser Health News (KHN) analysis of CMS data indicates that Medicare plans to apply reimbursement penalties of $528 million to a total of 2,597 U.S. hospitals during fiscal year (FY) 2017 (October 1, 2016, through September 30, 2017) based on the readmission rate for patients with six common conditions. KHN reports that this aggregate penalty is about $108 million more than the $420 million assessed against hospitals in FY 2016, due to the addition of coronary bypass graft surgery to the list of common conditions for FY 2017.

Section 3025 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) added section 1886(q) to the Social Security Act establishing the Hospital Readmissions Reduction Program (HRRP), which requires CMS to reduce payments to inpatient prospective payment system (IPPS) hospitals with excess readmissions, effective for discharges beginning on October 1, 2012. The HRRP is designed to support the national goals of improving the quality of care and saving taxpayer dollars by incentivizing hospitals to reduce excess readmissions. The HRRP program began in FY 2013. FY 2017 is the fifth year of the program.

In FY 2013-2014, the HRRP measured readmissions for three conditions, acute myocardial infarction (heart attacks), heart failure, and pneumonia. In FY 2015, the HRRP added the measurement of readmissions for chronic obstructive pulmonary disease (COPD) and total hip and knee replacements. For 2017, the HRRP has added readmissions for coronary artery bypass graft surgery.

As finalized in the FY 2013 IPPS Final rule (77 FR 53397, August 31, 2012), readmissions for the following hospitals and hospital units are exempt from the HRRP:

  • long-term care hospitals;
  • critical access hospitals;
  • rehabilitation hospitals and units;
  • psychiatric hospitals and units;
  • children’s hospitals; and
  • PPS-exempt cancer hospitals.

According to KHN, the maximum reimbursement reduction for FY 2017 is 3 percent and it does not affect special Medicare payments for hospitals that treat large numbers of low-income patients or train residents. Forty-nine hospitals received the maximum fine, according to KHN. The average penalty was 0.73 percent of each Medicare payment, which is the highest to date. In 2016, KHN reported that the average penalty was 0.61 percent.

Hospitals will receive information on their FY 2017 HRRP results from Medicare in their Hospital-Specific Reports (HSRs). The HSRs will include a summary of the hospital’s results along with national observed readmission rates, detailed discharge-level data, and risk factor information. CMS will provide hospitals with their HSRs via QualityNet secure portal accounts at the beginning of the Review and Corrections period.

Hospitals will have 30 days to review their HSR data to ensure that excess readmission ratios were calculated correctly. CMS will notify hospitals of the exact dates of this Review and Corrections period, and will post these dates on QualityNet once they are finalized. Hospitals are cautioned that the Review and Corrections period is a time for them to review their HSR data and submit questions about their result calculations, as needed. The Review and Corrections process is not designed to allow hospitals to submit additional corrections related to the underlying claims data or to add new claims to the data extract used to calculate the rates.

A KHN chart lists the hospitals penalized in FY 2017. The chart notes that in addition to exempt hospitals and hospital units, Maryland hospitals were not penalized because the state has federal permission to set its own Medicare payment rules. CMS also did not levy penalties against hospitals that had too few cases to be fairly evaluated.

Voluntary retirement and resignations primary drivers of VHA loss of clinical employees

While the Veterans Health Administration (VHA) provided health care to about 6.7 million veterans in fiscal year (FY) 2015, it continues to face growing demand, a trend that is expected to continue. For example, the total annual outpatient medical appointments the VHA provided increased by 17.1 million visits (20 percent) from FY 2011 through 2015. To serve these veterans, in 2015, the VHA had 195,900 employees in 45 types of clinical occupations. And despite a number of target hiring initiatives by the VHA, the U.S. Senate’s Committee on Veterans’ Affairs and others have expressed concern about the VHA’s ability to maintain the appropriate clinical workforce to meet the needs of veterans, due to factors such as national shortages and increased competition for clinical employees.

After the Veterans Access, Choice, and Accountability Act of 2014 (P.L. 113-146) required the VA Office of Inspector General (OIG) to identify and report annually on the five VHA clinical occupations with the largest staffing shortages, in January 2015, the VA OIG reported that these occupations were physicians, registered nurses, physician assistants, psychologists, and physical therapists. The Committee on Veterans’ Affairs then asked the Government Accountability Office (GAO) to review the issues related to retention of clinical employees at VHA. Specifically, the GAO was asked to examine: (1) how the VHA collects and uses information on employees’ decisions to leave clinical occupations; and (2) what trends, if any, exist over the last five years in the number of, and reasons for, VHA employee losses from the five shortage occupations.

The GAO report found that the VHA collects data on the reasons clinical employees leave the agency and uses that data for planning purposes. For example, the VHA collects personnel data on the number of and reasons for clinical employee losses, including voluntary resignations, retirements, or removals due to adverse actions, in its HR databases and through a voluntary exit survey. The VHA uses this information to evaluate its workforce needs and inform its recruitment and retention efforts.

The GAO reported that the VHA losses for the five shortage occupations increased from about 5,900 employees in FY 2011 to about 7,700 in FY year 2015. Voluntary resignations and retirements were the primary reasons for the VHA’s losses for these occupations, with resignations accounting for about 54 percent, and retirements 36 percent of losses annually. Physician assistants consistently had the highest loss rate among the five shortage occupations. The loss rate for physician assistants increased from 9.3 to 10.9 percent during this period. The loss rate for physical therapists decreased from FY 2011 to 2012 (from 8.3 to 6.4 percent), but then increased to 8.0 percent in FY 2015. The GAO found a similar trend for all clinical occupations across the VHA.

In addition to its review of the VHA’s five shortage occupations, the GAO also identified the 10 clinical occupations within the VHA with the highest loss rates as of FY 2015.  These occupations included: physician assistant, medical support assistant, medical supply aide and technician, optometrist, nursing assistant, medical records technician, health technician (optometry), physician, medical records administration, and practical nurse. The loss rates for these 10 occupations ranged from 5.3 percent to 10.9 percent from fiscal year 2011 through 2015. Two of the five shortage occupations—physician assistants and physicians—were among the 10 highest loss-rate occupations each year from FY 2011 through 2015. In addition, two other occupations—medical support assistants and nursing assistants—were also consistently among the 10 highest loss-rate occupations each year during this period. The six remaining occupations were technical positions that were generally small in overall number, such as medical supply aides and technicians. Because employees in these occupations generally do not require specialized education or licensing, the VHA told the GAO that they tend to be more easily replaced than those in the five shortage occupations.

The GAO also found the VHA’s exit survey indicated that advancement issues or dissatisfaction with certain aspects of the work were commonly cited as the primary reasons respondents in the five shortage occupations left VHA. According to the exit surveys, the reasons why respondents in the five shortage categories left the VHA can be summarized as follows:

  • 28 percent said that advancement and 21 percent said that dissatisfaction with certain aspects of the work, such as concerns about management and obstacles to getting the work done, was the primary reason they were leaving.
  • 71 percent said that a single event generally did not cause them to think about leaving, while 28 percent reported that it did.
  • 50 percent indicated that they were generally satisfied with the quality of senior management, while 31 percent were not.
  • 73 percent felt that their immediate supervisors treated them fairly at work, while 15 percent reported that they did not.
  • 67 percent felt that they were treated with respect at work, while 19 percent reported they were not.
  • 50 percent reported that one or more benefits would have encouraged them to stay, such as alternative or part-time schedules (25 percent) or student loan repayment or tuition assistance (12 percent).

The GAO made no recommendations in its report. The VA, however, provided written comments, citing a historical context for loss rate trends. For example, they noted that loss rates decreased during the economic downturn of 2008 to 2009 and that current loss rates represent a return to the rates seen in FYs 2006 to 2007. The VA also noted that the VHA’s workforce challenges mirror those of the health care industry, including the growing national shortage of physicians and nurses and increased competition for health care professionals in hard-to-fill occupations. The VA further suggested that the GAO use other, non-VA data sources to provide additional context.